Medicare and Medicaid Programs; Home Health Prospective Payment System Rate Update for CY 2014, Home Health Quality Reporting Requirements, and Cost Allocation of Home Health Survey Expenses, 40271-40308 [2013-15766]
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Vol. 78
Wednesday,
No. 128
July 3, 2013
Part II
Department of Health and Human Services
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Centers for Medicare & Medicaid Services
42 CFR Part 431
Medicare and Medicaid Programs; Home Health Prospective Payment
System Rate Update for CY 2014, Home Health Quality Reporting
Requirements, and Cost Allocation of Home Health Survey Expenses;
Proposed Rule
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Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 431
[CMS–1450–P]
RIN 0938–AR52
Medicare and Medicaid Programs;
Home Health Prospective Payment
System Rate Update for CY 2014,
Home Health Quality Reporting
Requirements, and Cost Allocation of
Home Health Survey Expenses
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
update the Home Health Prospective
Payment System (HH PPS) rates,
including the national, standardized 60day episode payment rates, the national
per-visit rates, the low-utilization
payment adjustment (LUPA) add-on, the
nonroutine medical supplies (NRS)
conversion factor, and outlier payments
under the Medicare prospective
payment system for home health
agencies (HHAs), effective January 1,
2014. As required by the Affordable
Care Act, this rule also proposes
rebasing adjustments, with a 4-year
phase-in, to the national, standardized
60-day episode payment rates; the
national per-visit rates; and the NRS
conversion factor. Finally, the proposed
rule would also establish home health
quality reporting requirements for CY
2014 payment and subsequent years and
would clarify that a state Medicaid
program must provide that, in certifying
home health agencies, the state’s
designated survey agency must carry out
certain other responsibilities that
already apply to surveys of nursing
facilities and Intermediate Care
Facilities for Individuals with
Intellectual Disabilities (ICF–IID),
including sharing in the cost of HHA
surveys. For that portion of costs
attributable to Medicare and Medicaid,
we would assign 50 percent to Medicare
and 50 percent to Medicaid, the
standard method that CMS and states
use in the allocation of expenses related
to surveys of SNF/NF nursing homes.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on August 26, 2013.
ADDRESSES: In commenting, please refer
to file code CMS–1450–P. Because of
staff and resource limitations, we cannot
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SUMMARY:
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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 ‘‘Submit a comment’’ instructions.
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–1450–
P, P.O. Box 8016, Baltimore, MD 21244–
8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–1450–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. If you prefer,
you may deliver (by hand or courier)
your written comments before the close
of the comment period to either of the
following addresses:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–
1850.
If you intend to deliver your
comments to the Baltimore address,
please call (410) 786–7195 in advance to
schedule your arrival with one of our
staff members.
Comments mailed to the addresses
indicated as appropriate for hand or
courier delivery may be delayed and
received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
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FOR FURTHER INFORMATION CONTACT:
Kristine Chu, (410) 786–8953, for
information about rebasing and the HH
payment reform study and report. Jenny
Filipovits, (410) 786–8141, for
information about cost allocation of
survey expenses. Mollie Knight, (410)
786–7948, for information about the HH
market basket. Hillary Loeffler, (410)
786–0456, for general information about
the HH PPS. Joan Proctor, (410) 786–
0949, for information about the HH PPS
Grouper and ICD–10 Conversion. Kim
Roche, (410) 786–3524, for information
about the HH quality reporting program.
Lori Teichman, (410) 786–6684, for
information about HH CAHPS®.
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. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Costs and Benefits
II. Background
A. Statutory Background
B. System for Payment of Home Health
Services
C. Updates to the HH PPS
III. Provisions of the Proposed Rule
A. Proposed ICD–9–CM Grouper
Refinements, Effective January 1, 2014
B. International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM) Conversion and Diagnosis
Reporting on Home Health Claims
1. International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM) Conversion
2. Diagnosis Reporting on Home Health
Claims
C. Proposed Adjustment to the HH PPS
Case-Mix Weights
D. Rebasing the National, Standardized 60day Episode Payment Rate, LUPA Per-
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Visit Payment Amounts, and Nonroutine
Medical Supply (NRS) Conversion Factor
1. Rebasing the National, Standardized 60day Episode Payment Rate
2. Rebasing the Low-Utilization Payment
Adjustment (LUPA) Per-Visit Payment
Amounts
3. Rebasing the Nonroutine Medical
Supply (NRS) Conversion Factor
E. Proposed CY 2014 Rate Update
1. Proposed CY 2014 Home Health Market
Basket Update
2. Home Health Care Quality Reporting
Program
3. Proposed Home Health Wage Index
4. Proposed CY 2014 Annual Payment
Update
a. National, Standardized 60-Day Episode
Payment Rate
b. Proposed CY 2014 National,
Standardized 60-Day Episode Payment
Rate
c. Proposed CY 2014 National Per-Visit
Rates
d. Proposed Low-Utilization Payment
Adjustment (LUPA) Add-On Factor
e. Proposed Nonroutine Medical Supply
(NRS) Conversion Factor and Relative
Weights
5. Rural Add-On
F. Outlier Policy
1. Background
2. Regulatory Updates
3. Statutory Updates
4. Loss-Sharing Ratio and Fixed Dollar
Loss (FDL) Ratio
5. Outlier Relationship to the Home Health
Study and Report
G. Payment Reform: Home Health Study
and Report
H. Cost Allocation of Survey Expenses
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis
VII. Federalism Analysis
Regulations Text
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Acronyms
In addition, because of the many
terms to which we refer by abbreviation
in this proposed rule, we are listing
these abbreviations and their
corresponding terms in alphabetical
order below:
ACA The Affordable Care Act.
ACH LOS Acute care hospital length of
stay.
ADL Activities of daily living.
AHRQ Agency for Healthcare Research and
Quality.
APU Annual payment update.
BBA Balanced Budget Act of 1997 (Pub. L.
105–33, enacted August 5, 1997).
BBRA Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999
(Pub. L. 106–113, enacted November 29,
1999).
CAD Coronary artery disease.
CAH Critical access hospital.
CAHPS® Consumer assessment of
healthcare providers and systems.
CBSA Core-based statistical area.
CASPER Certification and survey provider
enhanced reports.
CHF Congestive heart failure.
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CMI Case-mix index.
CMP Civil monetary penalties.
CMS Centers for Medicare & Medicaid
Services.
CoPs Conditions of participation.
COPD Chronic obstructive pulmonary
disease.
CVD Cardiovascular disease.
CY Calendar year.
DG Diagnostic group.
DHHS Department of Health and Human
Services.
DM Diabetes mellitus.
DME Durable medical equipment.
DRA Deficit Reduction Act of 2005 (Pub. L.
109–171, enacted February 8, 2006).
FDL Fixed dollar loss.
FFP Federal financial participation.
FI Fiscal intermediaries.
FR Federal Register
FY Fiscal year.
GEM General equivalency mapping.
HAVEN Home assessment validation and
entry system.
HCC Hierarchical condition categories.
HCIS Health care information system.
HH Home health.
HHABN Home health advance beneficiary
notice.
HHAs Home health agencies.
HHCAHPS® Home Health Care Consumer
Assessment of Healthcare Providers and
Systems Survey.
HH PPS Home health prospective payment
system.
HHQRP Home Health Quality Reporting
Program.
HHRG Home health resource group.
HIPAA Health Insurance Portability
Accountability Act of 1996 (Pub. L. 104–
191, enacted August 21, 1996).
HIPPS Health insurance prospective
payment system.
ICD–9 International Classification of
Diseases, 9th Edition.
ICD–9–CM International Classification of
Diseases, 9th Edition, Clinical
Modification.
ICD–10 International Classification of
Diseases, 10th Edition.
ICD–10–CM International Classification of
Diseases, 10th Edition, Clinical
Modification.
ICF–IID Intermediate care facilities for
individuals with intellectual disabilities.
IH Inpatient hospitalization.
IPPS Acute Inpatient Prospective Payment
System.
IRF Inpatient rehabilitation facility.
LTCH Long-term care hospital.
LUPA Low-utilization payment adjustment.
MAC Medicare Administrative Contractor.
MAP Measure applications partnership.
MedPAC Medicare Payment Advisory
Commission.
MEPS Medical Expenditures Panel Survey.
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (Pub. L. 108–173, enacted December
8, 2003).
MSA Metropolitan statistical areas.
MSS Medical Social Services.
NF Nursing facility.
NQF National Quality Forum.
NRS Non-routine supplies.
OASIS Outcome & Assessment Information
Set.
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OBRA Omnibus Budget Reconciliation Act
of 1987 (Pub. L. 100–2–3, enacted
December 22, 1987).
OCESAA Omnibus Consolidated and
Emergency Supplemental Appropriations
Act (Pub. L. 105–277, enacted October 21,
1998).
OES Occupational employment statistics.
OIG Office of Inspector General.
OT Occupational therapy.
OMB Office of Management and Budget.
P4R Pay-for-reporting.
PAC–PRD Post-Acute Care Payment Reform
Demonstration.
PEP Partial episode payment [Adjustment].
POC Plan of care.
PRRB Provider Reimbursement Review
Board.
PT Physical therapy.
QAP Quality assurance plan.
QIES CMS Health Care Quality
Improvement System.
PRRB Provider Reimbursement Review
Board.
RAP Request for anticipated payment.
RF Renal failure.
RFA Regulatory Flexibility Act (Pub. L. 96–
354, enacted on September 19, 1980).
RHHIs Regional home health
intermediaries.
RIA Regulatory impact analysis.
SCHIP State Children’s Health Insurance
Program.
SLP Speech-language pathology.
SN Skilled nursing.
SNF Skilled nursing facility.
TEP Technical Expert Panel.
UMRA Unfunded Mandates Reform Act of
1995 (Pub. L. 104–04, enacted on March
22, 1995).
I. Executive Summary
A. Purpose
This rule proposes updates to the
payment rates for home health agencies
(HHAs) for calendar year (CY) 2014, as
required under section 1895(b) of the
Social Security Act (the Act), including
the rebasing adjustments to the national,
standardized 60-day episode payment
rate, the national per-visit rates, the
non-routine supplies (NRS) conversion
factor, required under section 3131(a) of
the Patient Protection and Affordable
Care Act of 2010 (Pub. L. 111–148), as
amended by the Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152) (collectively referred
to as the ‘‘Affordable Care Act’’). This
proposed rule would also address:
International Classification of Diseases,
9th Edition (ICD–9) grouper
refinements; implementation of the
International Classification of Diseases,
10th Edition (ICD–10); an adjustment to
the case-mix weights; updates to the
payment rates by the HH payment
update percentage (market basket);
adjustments for geographic differences
in wage levels; outlier payments; the
submission of quality data; and
additional payments for services
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provided in rural areas. This proposed
rule would also clarify state Medicaid
program requirements related to the cost
of HHA surveys.
B. Summary of the Major Provisions
We recently completed a thorough
review of the ICD–9–CM codes included
in our home health prospective payment
system (HH PPS) Grouper as part of our
work transitioning from the ICD–9–CM
to ICD–10–CM code set. As a result of
that review, we identified two categories
of codes, made up of 170 ICD–9–CM
diagnosis codes, which we are
proposing to remove from the HH PPS
Grouper, effective January 1, 2014. In
addition, we are proposing to
implement, on October 1, 2014, the use
of ICD–10–CM codes within our HH
PPS Grouper.
Section 3131(a) of the Affordable Care
Act requires that, starting in CY 2014,
we apply an adjustment to the national,
standardized 60-day episode payment
rate and other applicable payment
amounts to reflect factors such as
changes in the number of visits in an
episode, the mix of services in an
episode, the level of intensity of services
in an episode, the average cost of
providing care per episode, and other
relevant factors. In addition, we must
phase-in any adjustment over a 4-year
period in equal increments, not to
exceed 3.5 percent of the amount (or
amounts) in any given year, and be fully
implemented by CY 2017. As such, we
are proposing rebasing adjustments to
the national, standardized 60-day
Provision description
Total costs
N/A
Cost Allocation of HHA
Survey Expenses.
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CY 2014 HH PPS Payment Rate Update.
N/A
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episode payment rate, the national pervisit rates, the NRS conversion factor,
and an update to the LUPA add-on
amount.
Section 3131(d) of the Affordable Care
Act also requires us to report on
whether a home health care access
problem exists for patients with high
severity of illness, low income patients,
and/or patients in medically
underserved areas and assess the costs
associated with providing access to care
for these populations. It also gives us
the authority to analyze other areas of
concern in the HH PPS and allows for
demonstration authority to test the PPS
changes. Finally, it requires us to
recommend HH PPS improvements, if
needed, based on the study findings
and/or necessary additional analysis, in
a Report to Congress due in March 2014.
Our contractor held a Technical Expert
Panel (TEP) meeting and a special Open
Door Forum to gather input from the
industry on the three vulnerable
populations. We are currently
conducting surveys of HHAs and
physicians on access to care, and
performing analyses of cost report and
claims data to determine whether
patient characteristics/types may be
under-reimbursed. We will continue to
collaborate with stakeholders, soliciting
them for their thoughts, and provide
updates on our progress.
We also propose to continue to use
Outcome & Assessment Information Set
(OASIS) data, claims data, and patient
experience of care data, as forms of
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quality data to meet the requirement
that HHAs submit data appropriate for
the measurement of HH care quality for
annual payment update (APU) 2014 and
each subsequent year thereafter until
further notice. Additionally, we propose
two claims-based measures of HH
patients who were recently hospitalized,
as these patients are at an increased risk
of additional acute care hospital use. We
also propose to reduce the number of
HH quality measures currently reported
to HHAs. Lastly, we propose to review
each state’s allocation of costs for HHA
surveys for compliance with OMB
Circular A–87 principles and the
statutes in 2014 with the goal of
ensuring full compliance no later than
July 2014. This proposed rule would
clarify that a state Medicaid program
must provide that, in certifying HHAs,
the state’s designated survey agency
must carry out certain other
responsibilities that already apply to
surveys of nursing facilities (NF) and
Intermediate Care Facilities for
Individuals with Intellectual Disabilities
(ICF–IID), including sharing in the cost
of HHA surveys. For that portion of
costs attributable to Medicare and
Medicaid, we would assign 50 percent
to Medicare and 50 percent to Medicaid.
This is the standard method that CMS
and states use in the allocation of
expenses related to surveys of skilled
nursing facility (SNF)/NF nursing
homes.
C. Summary of Costs and Benefits
Total benefits
Transfers
The benefits of this proposed rule include paying
more accurately for the delivery of home
health services.
The benefits of this rule include clarifying that
state Medicaid programs must share in the
cost of HHA surveys. For that portion of costs
attributable to Medicare and Medicaid, we
would assign 50 percent to Medicare and 50
percent to Medicaid.
The overall economic impact of this proposed
rule is an estimated $290 million in decreased
payments to HHAs.
If implemented in the beginning of FY 2014 we
project that aggregate Medicare and Medicaid
home health survey costs in FY 2014 would
be approximately $37.2 million. As these costs
would be assigned 50 percent to Medicare
and 50 percent to Medicaid for each state, the
anticipated national state Medicaid share
would amount to $18.6 million. The cost of
surveys is treated as a Medicaid administrative
cost, reimbursable at the professional staff
rate of 75 percent. At this rate the maximum
net state costs for Medicaid matching funds incurred in FY 2014 would be approximately
$4.65 million, spread out across all states and
2 territories. However, the proposed adherence date of July FY 2014 would reduce the
Medicaid aggregate share to $4.65 million and
the state Medicaid share to approximately
$1.16 million. Some state Medicaid programs
may currently pay for HHA surveys to some
extent, but the amount is unknown.
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II. Background
A. Statutory Background
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Home Health PPS
The Balanced Budget Act of 1997
(BBA) (Pub. L. 105–33, enacted August
5, 1997), significantly changed the way
Medicare pays for Medicare HH
services. Section 4603 of the BBA
mandated the development of the HH
PPS. Until the implementation of a HH
PPS on October 1, 2000, HHAs received
payment under a retrospective
reimbursement system.
Section 4603(a) of the BBA mandated
the development of a HH PPS for all
Medicare-covered HH services provided
under a plan of care (POC) that were
paid on a reasonable cost basis by
adding section 1895 of the Act, entitled
‘‘Prospective Payment For Home Health
Services.’’ Section 1895(b)(1) of the Act
requires the Secretary to establish a HH
PPS for all costs of HH services paid
under Medicare.
Section 1895(b)(3)(A) of the Act
requires the following: (1) the
computation of a standard prospective
payment amount that includes all costs
for HH services that would have been
covered and paid for on a reasonable
cost basis had the HH PPS not been in
effect and that such amounts be initially
based on the most recent audited cost
report data available to the Secretary;
and (2) the standardized prospective
payment amount be adjusted to account
for the effects of case-mix and wage
levels among HHAs.
Section 1895(b)(3)(B) of the Act
addresses the annual update to the
standard prospective payment amounts
by the HH applicable percentage
increase. Section 1895(b)(4) of the Act
governs the payment computation.
Sections 1895(b)(4)(A)(i) and
(b)(4)(A)(ii) of the Act require the
standard prospective payment amount
to be adjusted for case-mix and
geographic differences in wage levels.
Section 1895(b)(4)(B) of the Act requires
the establishment of an appropriate
case-mix change adjustment factor for
significant variation in costs among
different units of services.
Similarly, section 1895(b)(4)(C) of the
Act requires the establishment of wage
adjustment factors that reflect the
relative level of wages, and wage-related
costs applicable to HH services
furnished in a geographic area
compared to the applicable national
average level. Under section
1895(b)(4)(C) of the Act, the wageadjustment factors used by the Secretary
may be the factors used under section
1886(d)(3)(E) of the Act.
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Section 1895(b)(5) of the Act gives the
Secretary the option to make additions
or adjustments to the payment amount
otherwise paid in the case of outliers
due to unusual variations in the type or
amount of medically necessary care.
Section 3131(b)(2) of the Affordable
Care Act revised section 1895(b)(5) of
the Act so that total outlier payments in
a given year would not exceed 2.5
percent of total payments projected or
estimated. The provision also made
permanent a 10 percent agency-level
outlier payment cap.
In accordance with the statute, as
amended by the BBA, we published a
final rule in the July 3, 2000 Federal
Register (65 FR 41128) to implement the
HH PPS legislation. The July 2000 final
rule established requirements for the
new HH PPS for HH services as required
by section 4603 of the BBA, as
subsequently amended by section 5101
of the Omnibus Consolidated and
Emergency Supplemental
Appropriations Act (OCESAA) for Fiscal
Year 1999, (Pub. L. 105–277, enacted
October 21, 1998); and by sections 302,
305, and 306 of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement
Act (BBRA) of 1999, (Pub. L. 106–113,
enacted November 29, 1999). The
requirements include the
implementation of a HH PPS for HH
services, consolidated billing
requirements, and a number of other
related changes. The HH PPS described
in that rule replaced the retrospective
reasonable cost-based system that was
used by Medicare for the payment of HH
services under Part A and Part B. For a
complete and full description of the HH
PPS as required by the BBA, see the July
2000 HH PPS final rule (65 FR 41128
through 41214).
Section 5201(c) of the Deficit
Reduction Act of 2005 (DRA) (Pub. L.
109–171, enacted February 8, 2006)
added new section 1895(b)(3)(B)(v) to
the Act, requiring HHAs to submit data
for purposes of measuring health care
quality, and links the quality data
submission to the annual applicable
percentage increase. This data
submission requirement is applicable
for CY 2007 and each subsequent year.
If an HHA does not submit quality data,
the HH market basket percentage
increase is reduced 2 percentage points.
In the CY 2007 HH PPS final rule (71
FR 65884, 65935), we implemented the
pay-for-reporting requirement of the
DRA, which was codified at
§ 484.225(h) and (i). The pay-forreporting requirement was implemented
on January 1, 2007.
The Affordable Care Act made
additional changes to the HH PPS. One
of the changes in section 3131(c) of the
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Affordable Care Act is the amendment
to section 421(a) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173, enacted on December 8,
2003) as amended by section 5201(b) of
the DRA. The amended section 421(a) of
the MMA now requires, for HH services
furnished in a rural area (as defined in
section 1886(d)(2)(D) of the Act) for
episodes and visits ending on or after
April 1, 2010, and before January 1,
2016, that the Secretary increase, by 3
percent, the payment amount otherwise
made under section 1895 of the Act.
Section 3131(a) of the Affordable Care
Act mandates that, starting in CY 2014,
the Secretary must apply an adjustment
to the national, standardized 60-day
episode payment rate and other
amounts applicable under section
1895(b)(3)(A)(i)(III) of the Act to reflect
factors such as changes in the number
of visits in an episode, the mix of
services in an episode, the level of
intensity of services in an episode, the
average cost of providing care per
episode, and other relevant factors. In
addition, section 3131(a) of the
Affordable Care Act mandates that this
rebasing must be phased-in over a 4year period in equal increments, not to
exceed 3.5 percent of the amount (or
amounts) in any given year applicable
under section 1895(b)(3)(A)(i)(III) of the
Act and be fully implemented in CY
2017.
B. System for Payment of Home Health
Services
Generally, Medicare makes payment
under the HH PPS on the basis of a
national, standardized 60-day episode
payment rate that is adjusted for the
applicable case-mix and wage index.
The national, standardized 60-day
episode rate includes the six HH
disciplines (skilled nursing, HH aide,
physical therapy (PT), speech-language
pathology (SLP), occupational therapy
(OT), and medical social services
(MSS)). Payment for NRS is no longer
part of the national, standardized 60-day
episode rate and is computed by
multiplying the relative weight for a
particular NRS severity level by the NRS
conversion factor (See section II.D.4.e.
of this proposed rule). Payment for
durable medical equipment (DME)
covered under the HH benefit is made
outside the HH PPS payment system. To
adjust for case-mix, the HH PPS uses a
153-category case-mix classification
system to assign patients to a home
health resource group (HHRG). The
clinical severity level, functional
severity level, and service utilization are
computed from responses to selected
data elements in the OASIS assessment
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instrument and are used to place the
patient in a particular HHRG. Each
HHRG has an associated case-mix
weight which is used in calculating the
payment for an episode. Specifically,
the 60-day episode base rate is
multiplied by the case-mix weight when
determining the payment for an episode.
For episodes with four or fewer visits,
Medicare pays national per-visit rates
based on the discipline(s) providing the
services. An episode consisting of four
or fewer visits within a 60-day period
receives what is referred to as a 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. The August 29, 2007
final rule with comment period set forth
an update to the 60-day national
episode rates and the national per-visit
rates under the Medicare prospective
payment system for HHAs for CY 2008.
The CY 2008 rule included an analysis
performed on CY 2005 HH claims data,
which indicated a 12.78 percent
increase in the observed case-mix since
2000. Case-mix represents the variations
in conditions of the patient population
served by the HHAs. Subsequently, a
more detailed analysis was performed
on the 2005 case-mix data to evaluate if
any portion of the 12.78 percent
increase was associated with a change
in the actual clinical condition of HH
patients. We examined data on
demographics, family severity, and nonHH Part A Medicare expenditures to
predict the average case-mix weight for
2005. We identified 8.03 percent of the
total case-mix change as real, and
therefore, decreased the 12.78 percent of
total case-mix change by 8.03 percent to
get a final nominal case-mix increase
measure of 11.75 percent (0.1278 * (1 ¥
0.0803) = 0.1175).
To account for the changes in casemix that were not related to an
underlying change in patient health
status, we implemented a reduction
over 4 years in the national,
standardized 60-day episode payment
rates. That reduction was to be 2.75
percent per year for 3 years beginning in
CY 2008 and 2.71 percent for the fourth
year in CY 2011. In the CY 2011 HH PPS
final rule (76 FR 68532), we updated our
analyses of case-mix change and
finalized a reduction of 3.79 percent,
instead of 2.71 percent, for CY 2011 and
deferred finalizing a payment reduction
for CY 2012 until further study of the
case-mix change data and methodology
was completed.
In the CY 2012 HH PPS final rule (76
FR 68526), we updated the 60-day
national episode rates and the national
per-visit rates. In addition, as discussed
in the CY 2012 HH PPS final rule (76
FR 68528), our analysis indicated that
there was a 22.59 percent increase in
overall case-mix from 2000 to 2009 and
that only 15.76 percent of that overall
observed case-mix percentage increase
was due to real case-mix change. As a
result of our analysis, we identified a
19.03 percent nominal increase in casemix. To fully account for the 19.03
percent nominal case-mix growth which
was identified from 2000 to 2009, we
finalized a 3.79 percent payment
reduction in CY 2012.
In the CY 2013 HH PPS final rule (77
FR 67078), we implemented a 1.32
percent reduction to the payment rates
for CY 2013 to account for nominal
case-mix growth through 2010. When
taking into account the total measure of
case-mix change (23.90 percent) and the
15.97 percent of total case-mix change
estimated as real from 2000 to 2010, we
obtained a final nominal case-mix
change measure of 20.08 percent from
2000 to 2010 (0.2390 * (1 ¥ 0.1597) =
0.2008). To fully account for the
remainder of the 20.08 percent increase
in nominal case-mix beyond that which
was accounted for in previous payment
reductions, we estimated that the
percentage reduction to the national,
standardized 60-day episode rates for
nominal case-mix change would be 2.18
percent. We considered proposing a
2.18 percent reduction to account for
the remaining increase in measured
nominal case-mix; however, we moved
forward with the 1.32 percent payment
reduction to the national, standardized
60-day episode rates in the CY 2012 HH
PPS final rule (76 FR 68532).
III. Provisions of the Proposed Rule
A. Proposed ICD–9–CM Grouper
Refinements, Effective January 1, 2014
CMS clinical staff (along with clinical
and coding staff from Abt Associates
(our support contractor) and 3M (our
HH PPS grouper maintenance
contractor), recently completed a
thorough review of the ICD–9–CM codes
included in our HH PPS Grouper. The
HH PPS Grouper, which is used by the
CMS OASIS submission system, is the
official grouping software of the HH
PPS. As a result of that review, we
identified two categories of codes, made
up of 170 ICD–9–CM diagnosis codes,
which we are proposing to remove from
the HH PPS Grouper, effective January
1, 2014. The first category (Category 1 in
Table 2) includes codes that we propose
to remove from the HH PPS grouper
based upon clinical judgment that the
ICD–9–CM code is ‘‘too acute’’, meaning
that this condition could not be
appropriately cared for in a HH setting.
These codes likely reflect conditions the
patient had prior to the HH admission
(for example, while being treated in a
hospital setting). It is anticipated that
the condition progressed to a less acute
state, or is completely resolved for the
patient to be cared for in the home
setting (and that often times another
diagnosis code would have been a more
accurate reflection of the patient’s
condition in the home). The second
category (Category 2 in Table 2)
includes codes that we propose to
remove from the HH PPS Grouper based
upon clinical judgment that the
condition would not require HH
intervention, would not impact the HH
plan of care (POC), or would not result
in additional resource use when
providing HH services to the patient.
Table 2 comprises ICD–9–CM codes that
we propose to remove from the HH PPS
grouper, effective January 1, 2014, along
with the category classification.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
TABLE 2—ICD–9–CM CODES REMOVED FROM THE HH PPS GROUPER AS OF JANUARY 1, 2014
ICD–9–CM
Code
ICD–9–CM Long description
003.1 ..............................
250.20 ............................
250.21 ............................
250.22 ............................
250.23 ............................
250.30 ............................
Salmonella septicemia ............................................................................................................................
Diabetes with hyperosmolarity, type II or unspecified type, not stated as uncontrolled ........................
Diabetes with hyperosmolarity, type I [juvenile type], not stated as uncontrolled .................................
Diabetes with hyperosmolarity, type II or unspecified type, uncontrolled ..............................................
Diabetes with hyperosmolarity, type I [juvenile type], uncontrolled ........................................................
Diabetes with other coma, type II or unspecified type, not stated as uncontrolled ...............................
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TABLE 2—ICD–9–CM CODES REMOVED FROM THE HH PPS GROUPER AS OF JANUARY 1, 2014—Continued
ICD–9–CM
Code
ICD–9–CM Long description
250.31 ............................
250.32 ............................
250.33 ............................
282.42 ............................
282.5 ..............................
282.62 ............................
282.64 ............................
282.69 ............................
285.1 ..............................
289.52 ............................
333.81 ............................
333.84 ............................
333.93 ............................
333.94 ............................
348.5 ..............................
401.0 ..............................
414.12 ............................
447.2 ..............................
493.21 ............................
530.21 ............................
530.4 ..............................
530.7 ..............................
530.81 ............................
530.82 ............................
531.00 ............................
531.01 ............................
531.10 ............................
531.11 ............................
531.20 ............................
531.21 ............................
531.31 ............................
531.40 ............................
531.41 ............................
531.50 ............................
531.51 ............................
531.60 ............................
531.61 ............................
531.71 ............................
531.91 ............................
Diabetes with other coma, type I [juvenile type], not stated as uncontrolled .........................................
Diabetes with other coma, type II or unspecified type, uncontrolled .....................................................
Diabetes with other coma, type I [juvenile type], uncontrolled ...............................................................
Sickle-cell thalassemia with crisis ...........................................................................................................
Sickle-cell trait .........................................................................................................................................
Hb-SS disease with crisis .......................................................................................................................
Sickle-cell/Hb-C disease with crisis ........................................................................................................
Other sickle-cell disease with crisis ........................................................................................................
Acute posthemorrhagic anemia ..............................................................................................................
Splenic sequestration ..............................................................................................................................
Blepharospasm .......................................................................................................................................
Organic writers’ cramp ............................................................................................................................
Benign shuddering attacks ......................................................................................................................
Restless legs syndrome ..........................................................................................................................
Cerebral edema ......................................................................................................................................
Malignant essential hypertension ............................................................................................................
Dissection of coronary artery ..................................................................................................................
Rupture of artery .....................................................................................................................................
Chronic obstructive asthma with status asthmaticus ..............................................................................
Ulcer of esophagus with bleeding ...........................................................................................................
Perforation of esophagus ........................................................................................................................
Gastroesophageal laceration-hemorrhage syndrome .............................................................................
Esophageal reflux ...................................................................................................................................
Esophageal hemorrhage .........................................................................................................................
Acute gastric ulcer with hemorrhage, without mention of obstruction ....................................................
Acute gastric ulcer with hemorrhage, with obstruction ...........................................................................
Acute gastric ulcer with perforation, without mention of obstruction ......................................................
Acute gastric ulcer with perforation, with obstruction .............................................................................
Acute gastric ulcer with hemorrhage and perforation, without mention of obstruction ..........................
Acute gastric ulcer with hemorrhage and perforation, with obstruction .................................................
Acute gastric ulcer without mention of hemorrhage or perforation, with obstruction .............................
Chronic or unspecified gastric ulcer with hemorrhage, without mention of obstruction .........................
Chronic or unspecified gastric ulcer with hemorrhage, with obstruction ................................................
Chronic or unspecified gastric ulcer with perforation, without mention of obstruction ...........................
Chronic or unspecified gastric ulcer with perforation, with obstruction ..................................................
Chronic or unspecified gastric ulcer with hemorrhage and perforation, without mention of obstruction
Chronic or unspecified gastric ulcer with hemorrhage and perforation, with obstruction ......................
Chronic gastric ulcer without mention of hemorrhage or perforation, with obstruction ..........................
Gastric ulcer, unspecified as acute or chronic, without mention of hemorrhage or perforation, with
obstruction.
Acute duodenal ulcer with hemorrhage, without mention of obstruction ...............................................
Acute duodenal ulcer with hemorrhage, with obstruction .......................................................................
Acute duodenal ulcer with perforation, without mention of obstruction ..................................................
Acute duodenal ulcer with perforation, with obstruction .........................................................................
Acute duodenal ulcer with hemorrhage and perforation, without mention of obstruction ......................
Acute duodenal ulcer with hemorrhage and perforation, with obstruction .............................................
Acute duodenal ulcer without mention of hemorrhage or perforation, with obstruction .........................
Chronic or unspecified duodenal ulcer with hemorrhage, without mention of obstruction ....................
Chronic or unspecified duodenal ulcer with hemorrhage, with obstruction ............................................
Chronic or unspecified duodenal ulcer with perforation, without mention of obstruction .......................
Chronic or unspecified duodenal ulcer with perforation, with obstruction ..............................................
Chronic or unspecified duodenal ulcer with hemorrhage and perforation, without mention of obstruction.
Chronic or unspecified duodenal ulcer with hemorrhage and perforation, with obstruction ..................
Chronic duodenal ulcer without mention of hemorrhage or perforation, with obstruction .....................
Duodenal ulcer, unspecified as acute or chronic, without mention of hemorrhage or perforation, with
obstruction.
Acute peptic ulcer of unspecified site with hemorrhage, without mention of obstruction ......................
Acute peptic ulcer of unspecified site with hemorrhage, with obstruction .............................................
Acute peptic ulcer of unspecified site with perforation, without mention of obstruction ........................
Acute peptic ulcer of unspecified site with perforation, with obstruction ................................................
Acute peptic ulcer of unspecified site with hemorrhage and perforation, without mention of obstruction.
Acute peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction ....................
Acute peptic ulcer of unspecified site without mention of hemorrhage and perforation, with obstruction.
Chronic or unspecified peptic ulcer of unspecified site with hemorrhage, without mention of obstruction.
Chronic or unspecified peptic ulcer of unspecified site with hemorrhage, with obstruction ..................
Chronic or unspecified peptic ulcer of unspecified site with perforation, without mention of obstruction.
532.00
532.01
532.10
532.11
532.20
532.21
532.31
532.40
532.41
532.50
532.51
532.60
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
532.61 ............................
532.71 ............................
532.91 ............................
533.00
533.01
533.10
533.11
533.20
............................
............................
............................
............................
............................
533.21 ............................
533.31 ............................
533.40 ............................
533.41 ............................
533.50 ............................
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40278
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TABLE 2—ICD–9–CM CODES REMOVED FROM THE HH PPS GROUPER AS OF JANUARY 1, 2014—Continued
ICD–9–CM
Code
ICD–9–CM Long description
533.51 ............................
533.60 ............................
Chronic or unspecified peptic ulcer of unspecified site with perforation, with obstruction .....................
Chronic or unspecified peptic ulcer of unspecified site with hemorrhage and perforation, without
mention of obstruction.
Chronic or unspecified peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction.
Chronic peptic ulcer of unspecified site without mention of hemorrhage or perforation, with obstruction.
Peptic ulcer of unspecified site, unspecified as acute or chronic, without mention of hemorrhage or
perforation, with obstruction.
Acute gastrojejunal ulcer with hemorrhage, without mention of obstruction ..........................................
Acute gastrojejunal ulcer, with hemorrhage, with obstruction ................................................................
Acute gastrojejunal ulcer with perforation, without mention of obstruction ............................................
Acute gastrojejunal ulcer with perforation, with obstruction ...................................................................
Acute gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction ................
Acute gastrojejunal ulcer with hemorrhage and perforation, with obstruction .......................................
Acute gastrojejunal ulcer without mention of hemorrhage or perforation, with obstruction ...................
Chronic or unspecified gastrojejunal ulcer with hemorrhage, without mention of obstruction ...............
Chronic or unspecified gastrojejunal ulcer, with hemorrhage, with obstruction .....................................
Chronic or unspecified gastrojejunal ulcer with perforation, without mention of obstruction .................
Chronic or unspecified gastrojejunal ulcer with perforation, with obstruction ........................................
Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction.
Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, with obstruction ............
Chronic gastrojejunal ulcer without mention of hemorrhage or perforation, with obstruction ................
Gastrojejunal ulcer, unspecified as acute or chronic, without mention of hemorrhage or perforation,
with obstruction.
Acute gastritis, with hemorrhage ............................................................................................................
Atrophic gastritis, with hemorrhage ........................................................................................................
Gastric mucosal hypertrophy, with hemorrhage .....................................................................................
Alcoholic gastritis, with hemorrhage .......................................................................................................
Other specified gastritis, with hemorrhage .............................................................................................
Unspecified gastritis and gastroduodenitis, with hemorrhage ................................................................
Duodenitis, with hemorrhage ..................................................................................................................
Eosinophilic gastritis, with hemorrhage ..................................................................................................
Acute dilatation of stomach .....................................................................................................................
Other obstruction of duodenum ..............................................................................................................
Fistula of stomach or duodenum ............................................................................................................
Hourglass stricture or stenosis of stomach ............................................................................................
Angiodysplasia of stomach and duodenum with hemorrhage ................................................................
Dielulafoy lesion (hemorrhagic) of stomach and duodenum ..................................................................
Acute appendicitis with generalized peritonitis .......................................................................................
Acute appendicitis with peritoneal abscess ............................................................................................
Acute appendicitis without mention of peritonitis ....................................................................................
Appendicitis, unqualified .........................................................................................................................
Other appendicitis ...................................................................................................................................
Hyperplasia of appendix (lymphoid) .......................................................................................................
Acute vascular insufficiency of intestine .................................................................................................
Intussusception .......................................................................................................................................
Paralytic ileus ..........................................................................................................................................
Volvulus ...................................................................................................................................................
Intestinal or peritoneal adhesions with obstruction (postoperative) (postinfection) ................................
Other specified intestinal obstruction ......................................................................................................
Unspecified intestinal obstruction ...........................................................................................................
Diverticulosis of small intestine with hemorrhage ...................................................................................
Diverticulitis of small intestine with hemorrhage .....................................................................................
Diverticulosis of colon with hemorrhage .................................................................................................
Diverticulitis of colon with hemorrhage ...................................................................................................
Peritonitis in infectious diseases classified elsewhere ...........................................................................
Pneumococcal peritonitis ........................................................................................................................
Peritonitis (acute) generalized ................................................................................................................
Peritoneal abscess ..................................................................................................................................
Spontaneous bacterial peritonitis ............................................................................................................
Other suppurative peritonitis ...................................................................................................................
Psoas muscle abscess ...........................................................................................................................
Other retroperitoneal abscess .................................................................................................................
Choleperitonitis ........................................................................................................................................
Sclerosing mesenteritis ...........................................................................................................................
Other specified peritonitis .......................................................................................................................
Unspecified peritonitis .............................................................................................................................
Hemoperitoneum (nontraumatic) ............................................................................................................
Hemorrhage of rectum and anus ............................................................................................................
533.61 ............................
533.71 ............................
533.91 ............................
534.00
534.01
534.10
534.11
534.20
534.21
534.31
534.40
534.41
534.50
534.51
534.60
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
534.61 ............................
534.71 ............................
534.91 ............................
535.01 ............................
535.11 ............................
535.21 ............................
535.31 ............................
535.41 ............................
535.51 ............................
535.61 ............................
535.71 ............................
536.1 ..............................
537.3 ..............................
537.4 ..............................
537.6 ..............................
537.83 ............................
537.84 ............................
540.0 ..............................
540.1 ..............................
540.9 ..............................
541 .................................
542 .................................
543.0 ..............................
557.0 ..............................
560.0 ..............................
560.1 ..............................
560.2 ..............................
560.81 ............................
560.89 ............................
560.9 ..............................
562.02 ............................
562.03 ............................
562.12 ............................
562.13 ............................
567.0 ..............................
567.1 ..............................
567.21 ............................
567.22 ............................
567.23 ............................
567.29 ............................
567.31 ............................
567.38 ............................
567.81 ............................
567.82 ............................
567.89 ............................
567.9 ..............................
568.81 ............................
569.3 ..............................
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TABLE 2—ICD–9–CM CODES REMOVED FROM THE HH PPS GROUPER AS OF JANUARY 1, 2014—Continued
ICD–9–CM
Code
ICD–9–CM Long description
569.43 ............................
569.83 ............................
569.85 ............................
569.86 ............................
572.0 ..............................
572.1 ..............................
574.00 ............................
574.01 ............................
574.10 ............................
574.11 ............................
574.21 ............................
574.30 ............................
574.31 ............................
574.41 ............................
574.51 ............................
574.60 ............................
574.61 ............................
574.71 ............................
574.80 ............................
Anal sphincter tear-old ............................................................................................................................
Perforation of intestine ............................................................................................................................
Angiodysplasia of intestine with hemorrhage .........................................................................................
Dieulafoy lesion (hemorrhagic) of intestine ............................................................................................
Abscess of liver .......................................................................................................................................
Portal pyemia ..........................................................................................................................................
Calculus of gallbladder with acute cholecystitis, without mention of obstruction ...................................
Calculus of gallbladder with acute cholecystitis, with obstruction ..........................................................
Calculus of gallbladder with other cholecystitis, without mention of obstruction ...................................
Calculus of gallbladder with other cholecystitis, with obstruction ...........................................................
Calculus of gallbladder without mention of cholecystitis, with obstruction .............................................
Calculus of bile duct with acute cholecystitis, without mention of obstruction .......................................
Calculus of bile duct with acute cholecystitis, with obstruction ..............................................................
Calculus of bile duct with other cholecystitis, with obstruction ...............................................................
Calculus of bile duct without mention of cholecystitis, with obstruction .................................................
Calculus of gallbladder and bile duct with acute cholecystitis, without mention of obstruction .............
Calculus of gallbladder and bile duct with acute cholecystitis, with obstruction ....................................
Calculus of gallbladder and bile duct with other cholecystitis, with obstruction .....................................
Calculus of gallbladder and bile duct with acute and chronic cholecystitis, without mention of obstruction.
Calculus of gallbladder and bile duct with acute and chronic cholecystitis, with obstruction ................
Calculus of gallbladder and bile duct without cholecystitis, with obstruction .........................................
Acute cholecystitis ...................................................................................................................................
Obstruction of gallbladder .......................................................................................................................
Hydrops of gallbladder ............................................................................................................................
Perforation of gallbladder ........................................................................................................................
Cholangitis ...............................................................................................................................................
Obstruction of bile duct ...........................................................................................................................
Perforation of bile duct ............................................................................................................................
Acute pancreatitis ....................................................................................................................................
Hematemesis ..........................................................................................................................................
Hemorrhage of gastrointestinal tract, unspecified ..................................................................................
Broken tooth-uncomplic ..........................................................................................................................
Hemorrhage complicating a procedure ...................................................................................................
Hematoma complicating a procedure .....................................................................................................
Accidental puncture or laceration during a procedure, not elsewhere classified ...................................
574.81 ............................
574.91 ............................
575.0 ..............................
575.2 ..............................
575.3 ..............................
575.4 ..............................
576.1 ..............................
576.2 ..............................
576.3 ..............................
577.0 ..............................
578.0 ..............................
578.9 ..............................
873.63 ............................
998.11 ............................
998.12 ............................
998.2 ..............................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Analysis of CY 2012 claims data
shows that the average case-mix weight
before the removal of the codes in Table
2 was 1.3517. It is estimated that the
proposed removal of the 170 codes in
Table 2 results in an average case-mix
weight for CY 2012 of 1.3417. As
described above, clinical judgment is
that these codes are ‘‘too acute,’’
meaning that this condition could not
be appropriately cared for in a HH
setting (Category 1) or would not impact
the HH POC or result in additional
resource use (Category 2). Therefore, the
inclusion of these diagnosis codes in the
grouper was producing inaccurate
overpayments.
B. International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM) Conversion
and Diagnosis Reporting on Home
Health Claims
1. International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM) Conversion
The Compliance date for adoption of
the ICD–10–CM and ICD–10–PCS
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2014, as announced in September 5,
2012 final rule, ‘‘Administrative
Simplification: Adoption of a Standard
for a Unique Health Plan Identifier;
Addition to the National Provider
Identifier Requirements; and a Change
to the Compliance Date for the
International Classification of Diseases,
10th Edition (ICD–10–CM and ICD–10–
PCS) Medical Data Code Sets’’ (77 FR
54664). Under that final rule, the
transition to ICD–10–CM is required for
entities covered by the Health Insurance
Portability and Accountability Act of
1996 (HIPAA) (Pub. L. 104–191, enacted
on August 21, 1996). CMS, along with
our support contractors, Abt Associates
and 3M, spent the last 2 years
implementing a process for the
transition from the use of ICD–9–CM
diagnosis codes to ICD–10–CM
diagnosis codes within the HH PPS
Grouper. As we outlined in the section
above, we began this process with a
review of the ICD–9–CM codes included
in our HH PPS Grouper and identified
certain codes that should be removed,
and thus will not be included in our
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translation list of ICD–9–CM to ICD–10–
CM codes.
3M produced a translation list using
the General Equivalency Mappings
(GEMs) tool. That translation list,
produced by the GEMs tool, was then
reviewed and revised to ensure the
included codes are appropriate for use
in the HH setting, based upon ICD–10–
CM coding guidance. Modifications
included:
• Elimination of codes with ‘‘initial
encounter’’ extensions listed in the
GEMs translation. ICD–10–CM codes
that begin with S and T are used for
reporting traumatic injuries, such as
fractures and burns. These codes have a
7th character that indicates whether the
treatment is for an initial encounter,
subsequent encounter or a sequela (a
residual effect (condition produced)
after the acute phase of an illness or
injury has terminated). The GEMs
translation mapped ICD–9–CM
traumatic injury codes to ICD–10–CM
codes with the 7th character for an
initial encounter. This extension is
intended to be used when the patient is
receiving active treatment such as
E:\FR\FM\03JYP2.SGM
03JYP2
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surgical treatment, an emergency
department encounter, or evaluation
and treatment by a new physician.
These initial encounter extension codes
are not appropriate for care in the HH
setting and were deleted. Code
extensions D, E, F, G, H, J, K, M, N, P,
Q and R indicate the patient is being
treated for a subsequent encounter (care
for the injury during the healing or
recovery phase) were included in the
translation list in place of the initial
encounter extensions. For example,
S72.024A ‘‘Nondisplaced fracture of
epiphysis (separation) (upper) of right
femur, initial encounter for closed
fracture’’ was deleted and S72.024D,
S72.024E, S72.024F, S72.024G,
S72.024H, S72.024J, S72.024K,
S72.024M, S72.024N, S72.024P,
S27.024Q, and S72.024R were retained
for the reporting of aftercare provided
by the HHA.
• Elimination of codes for nonspecific conditions when the clinician
should be able to identify a more
specific diagnosis based on clinical
assessment. The initial GEMs
translation included non-specific codes,
for example, ICD–10–CM code L02.519
‘‘cutaneous abscess of unspecified
hand’’. These have been deleted from
the translation list whenever a more
specific diagnosis could be identified by
the clinician performing the initial
assessment. The example code above
(L02.519) was deleted because the
clinician should be able to identify
which hand had the abscess, and
therefore, would report the injury using
the code that specifies the right or left
hand.
• The diagnostic group (DG)
assignment of ICD–10–CM codes in the
translation replicates the ICD–9–CM
assignment whenever possible. Since
ICD–9–CM to ICD–10–CM translation is
not a 1-to-1 mapping process, there were
cases where the DG assignment was
ambiguous. When there was a conflict
(such as 2 ICD–9–CM codes being
translated to a single ICD–10–CM code
that covered both conditions), DG
assignment was based on clinical
appropriateness and comparisons of
relative resource use data (when
available), such that the code was
assigned to single DG that included
other codes with similar resource use.
A draft list of ICD–10–CM codes to be
included in the HH PPS Grouper has
been developed based upon the process
outlined above and 3M, our HH PPS
Grouper maintenance contractor, has
begun building and testing a Grouper
version for use starting October 1, 2014,
when OASIS–C1, the new version of the
OASIS assessment which will use ICD–
10–CM diagnosis codes, will be
VerDate Mar<15>2010
19:27 Jul 02, 2013
Jkt 229001
implemented. The draft translation list
is available on the CMS HHA Center
Web site at https://www.cms.gov/Center/
Provider-Type/Home-Health-AgencyHHA-Center.html. We plan to
participate in any ICD–10–CM provider
outreach sessions that are scheduled
and to provide updates, such as
notifying HHAs of the draft translation
list’s availability during the HH,
Hospice, and DME Open Door Forums
and through list-serve announcements.
We plan to post a draft ICD–10–CM
HH PPS Grouper via the CMS Web site
on or before July 1, 2014. We also plan
to share the draft ICD–10–CM HH PPS
Grouper with those vendors that have
registered as beta-testers in advance of
posting the draft ICD–10 HH PPS
Grouper on the CMS Web site. The
purpose of early release to the beta
testers is to identify any significant
issues early in the process. Providers
who are interested in enrolling as a beta
site can obtain more information on the
HH PPS Grouper Web site at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/
CaseMixGrouperSoftware.html.
2. Diagnosis Reporting on Home Health
Claims
Adherence to coding guidelines when
assigning diagnosis codes is required
under HIPAA. 3M conducted analysis of
OASIS records and claims from CY 2011
and found that some HHAs were not
complying with coding guidelines.
Section 1.A.6 in the 2012 ICD–9–CM
Coding Guidelines require that the
underlying condition be sequenced first
followed by the manifestation.
Wherever such a combination exists,
there is a ‘‘use additional code’’ note at
the etiology code, and a ‘‘code first’’
note at the manifestation code. These
instructional notes indicate the proper
sequencing order of the codes, etiology
followed by manifestation. In most
cases, the title of these manifestation
codes will include ‘‘in diseases
classified elsewhere’’ or ‘‘in conditions
classified elsewhere.’’ Codes with these
phrases in the title are generally
manifestation codes. ‘‘In diseases
classified elsewhere’’ or ‘‘in conditions
classified elsewhere’’ codes are never
permitted to be used as first listed or
principal diagnosis codes and they must
be listed following the underlying
condition. In ICD–10–CM, the same
coding convention applies and can be
found in section 1.A.13 of the ICD–10–
CM guidance. Note, however, that there
are also other manifestation codes that
do not have ‘‘in diseases classified
elsewhere’’ or ‘‘in conditions classified
elsewhere’’ in their title. For such codes
a ‘‘use additional code’’ note would still
PO 00000
Frm 00010
Fmt 4701
Sfmt 4702
be present, and the rules for coding
sequencing still apply. It should be
noted that several dementia codes,
which are not allowable as principal
diagnoses per ICD–9–CM coding
guidelines, are under the classification
of ‘‘Mental, Behavioral and
Neurodevelopmental Disorders’’.
According to section 1.A6 of the ICD–
9–CM coding guidelines for ‘‘Mental,
Behavioral and Neurodevelopmental
Disorders’’, dementias that fall under
this category are ‘‘most commonly a
secondary manifestation of an
underlying causal condition.’’ To ensure
additional compliance with ICD–10–CM
Coding Guidelines, we will be adopting
additional claims processing edits for all
HH claims effective October 1, 2014. HH
claims containing inappropriate
principal or secondary diagnosis codes
will be returned to the provider and will
have to be corrected and resubmitted to
be processed and paid. Additional
details describing the specific edits that
will be applied will be announced
through a change request, an
accompanying Medicare Learning
Network article, and other CMS
communication channels, such as the
HH, Hospice, and DME Open Door
Forum.
Finally, effective October 1, 2014,
with the implementation of ICD–10–CM
diagnosis code reporting, we anticipate
that HHAs will be able to report all of
the conditions included in the HH PPS
Grouper as a primary or secondary
diagnosis. There will no longer be a
need for any conditions to be reported
in the payment diagnosis field because
all of the ICD–10–CM codes included in
our HH PPS Grouper will be appropriate
for reporting as a primary or secondary
condition. As such, we are retiring
Appendix D of OASIS (also referred to
as Attachment D), effective October 1,
2014. All necessary guidance for
providers is provided in the ICD–10–CM
Coding Guidelines.
C. Proposed Adjustment to the HH PPS
Case-Mix Weights
In the November 4, 2011 CY 2012 HH
PPS final rule (76 FR 68543), we
recalibrated the HH PPS case-mix
weights to address incentives that
existed in the HH PPS to provide
unnecessary therapy services. In that
final rule, we described that our review
of HH PPS utilization data showed an
increase in the share of episodes with
very high numbers of therapy visits.
This shift was first observed in 2008 and
it continued in 2009. As described in
the CY 2012 HH PPS final rule, we
observed an increase of 25 percent in
the share of episodes with 14 or more
therapy visits from 2007 to 2008. In the
E:\FR\FM\03JYP2.SGM
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2009 sample, the share with 14 or more
therapy visits continued to increase
while the share of episodes with no
therapy visits continued to decrease.
The frequencies also indicated that the
share of episodes with 20 or more
therapy visits was 6 percent in 2009.
This was a 50 percent increase from the
share of episodes in 2007, when
episodes with at least 20 therapy visits
accounted for only 4 percent of episodes
(76 FR 41003). Furthermore, in the CY
2012 HH PPS final rule, we described
that in their 2010 and 2011 Reports to
Congress, the Medicare Payment
Advisory Commission (MedPAC)
suggested that the HH PPS contains
incentives which likely result in
agencies providing more therapy than is
needed. Moreover, in its 2011 Report to
Congress, MedPAC suggested that the
HH PPS may ‘‘overvalue therapy
services and undervalue nontherapy
services.’’ Our analysis of cost report
data showed that in 2009, the average
amount that payment exceeded cost for
a normal (non-LUPA, non-PEP, nonoutlier) episode with 14–19 therapy
visits was more than $1,100 and the
average amount that payment exceeded
costs for a normal episode with 20 or
more therapy visits was more than
$1,500. In contrast, we noted that the
average amount that payment exceeded
costs for a normal episode with 1 to 5
therapy visits was around $300 (76 FR
68556). Therefore, we lowered the case-
mix weights for high therapy episodes
and increased the weights for episodes
with little or no therapy. We then
increased the average case-mix weights
to 1.3440 to achieve budget neutrality to
the most current, complete data
available at the time, which was 2009.
We stated that we believed the revision
to the payment weights would result in
more accurate HH PPS payments for
targeted case-mix groups while
addressing MedPAC’s concerns that our
reimbursement for therapy episodes was
too high and our reimbursement for
non-therapy episodes was too low. Also,
we stated that we believed our revision
of the payment weights will discourage
the provision of unnecessary therapy
services and will slow the growth of
nominal case-mix (76 FR 68545).
As described in section III.D. of this
proposed rule, we are proposing to
rebase the national, standardized 60-day
episode payment rate. One view of the
goal for rebasing is to reset the payments
under the HH PPS. When the HH PPS
was created, we expected that the
average case-mix weight would be
around 1.00, but analysis has shown
that it has consistently been above 1.00
since the start of the HH PPS. Therefore,
as part of rebasing, for CY 2014, we
propose to reset the average case-mix
weight to 1.00. Specifically, we propose
to use the 2012 revised case-mix
weights, but lower them to an average
case-mix weight of 1.00. We plan to
40281
implement the weight reduction by
applying the same reduction factor to
each weight, thereby maintaining the
relative values in the weight set.
Preliminary CY 2012 claims data shows
that the average case-mix weight for
non-LUPA episodes in 2012 is 1.3517.
For CY 2014, we propose to reduce the
average case-mix weight for 2012 from
1.3517 to 1.0000. We obtain the CY 2014
proposed weights shown in Table 3 by
dividing the CY 2013 weights (which
are the same weights as those finalized
in CY 2012 rulemaking) by 1.3517. To
offset the effect of resetting the case-mix
weights such that the average is 1.00, we
inflate the national, standardized 60-day
episode payment rate by the same factor
(1.3517) used to decrease the weights.
The result will be the starting point
from which rebasing adjustments are
implemented. We note that the average
case-mix weight for 2012 of 1.3517 is
based on non-LUPA episodes starting
from January 1, 2012 to May 31, 2012.
As more 2012 data become available, we
plan to update the estimated average
case-mix weight for CY 2012 and adjust
the case-mix weights and budget
neutrality factor accordingly. Therefore,
the weight reduction factor in the CY
2014 HH PPS final rule may be different
from the one used to produce the
proposed weights in this proposed rule.
Please see the proposed weights in the
Table 3.
TABLE 3—PROPOSED CY 2014 CASE-MIX WEIGHTS
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Payment
group
10111
10112
10113
10114
10115
10121
10122
10123
10124
10125
10131
10132
10133
10134
10135
10211
10212
10213
10214
10215
10221
10222
10223
10224
10225
10231
10232
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
VerDate Mar<15>2010
Clinical,
functional,
and service
levels
Description
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
2nd
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
Episodes,
19:27 Jul 02, 2013
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
7 to 9 Therapy Visits ....................................................
10 Therapy Visits .........................................................
11 to 13 Therapy Visits ................................................
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
7 to 9 Therapy Visits ....................................................
10 Therapy Visits .........................................................
11 to 13 Therapy Visits ................................................
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
7 to 9 Therapy Visits ....................................................
10 Therapy Visits .........................................................
11 to 13 Therapy Visits ................................................
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
7 to 9 Therapy Visits ....................................................
10 Therapy Visits .........................................................
11 to 13 Therapy Visits ................................................
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
7 to 9 Therapy Visits ....................................................
10 Therapy Visits .........................................................
11 to 13 Therapy Visits ................................................
0 to 5 Therapy Visits ....................................................
6 Therapy Visits ............................................................
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E:\FR\FM\03JYP2.SGM
03JYP2
2013 HH PPS
case-mix
weights
0.8186
0.9793
1.1401
1.3008
1.4616
1.0275
1.1657
1.3039
1.4421
1.5804
1.1233
1.2520
1.3807
1.5094
1.6381
0.8340
1.0302
1.2265
1.4228
1.6190
1.0429
1.2166
1.3903
1.5641
1.7378
1.1387
1.3029
2014
Proposed
HH PPS
case-mix
weights
0.6056
0.7245
0.8435
0.9623
1.0813
0.7602
0.8624
0.9646
1.0669
1.1692
0.8310
0.9262
1.0215
1.1167
1.2119
0.6170
0.7622
0.9074
1.0526
1.1978
0.7715
0.9001
1.0286
1.1571
1.2856
0.8424
0.9639
40282
Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
TABLE 3—PROPOSED CY 2014 CASE-MIX WEIGHTS—Continued
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Payment
group
10233
10234
10235
10311
10312
10313
10314
10315
10321
10322
10323
10324
10325
10331
10332
10333
10334
10335
21111
21112
21113
21121
21122
21123
21131
21132
21133
21211
21212
21213
21221
21222
21223
21231
21232
21233
21311
21312
21313
21321
21322
21323
21331
21332
21333
22111
22112
22113
22121
22122
22123
22131
22132
22133
22211
22212
22213
22221
22222
22223
22231
22232
22233
22311
22312
22313
22321
22322
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...........
...........
...........
...........
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VerDate Mar<15>2010
Clinical,
functional,
and service
levels
Description
1st and 2nd Episodes, 7 to 9 Therapy Visits ....................................................
1st and 2nd Episodes, 10 Therapy Visits .........................................................
1st and 2nd Episodes, 11 to 13 Therapy Visits ................................................
1st and 2nd Episodes, 0 to 5 Therapy Visits ....................................................
1st and 2nd Episodes, 6 Therapy Visits ............................................................
1st and 2nd Episodes, 7 to 9 Therapy Visits ....................................................
1st and 2nd Episodes, 10 Therapy Visits .........................................................
1st and 2nd Episodes, 11 to 13 Therapy Visits ................................................
1st and 2nd Episodes, 0 to 5 Therapy Visits ....................................................
1st and 2nd Episodes, 6 Therapy Visits ............................................................
1st and 2nd Episodes, 7 to 9 Therapy Visits ....................................................
1st and 2nd Episodes, 10 Therapy Visits .........................................................
1st and 2nd Episodes, 11 to 13 Therapy Visits ................................................
1st and 2nd Episodes, 0 to 5 Therapy Visits ....................................................
1st and 2nd Episodes, 6 Therapy Visits ............................................................
1st and 2nd Episodes, 7 to 9 Therapy Visits ....................................................
1st and 2nd Episodes, 10 Therapy Visits .........................................................
1st and 2nd Episodes, 11 to 13 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
1st and 2nd Episodes, 14 to 15 Therapy Visits ................................................
1st and 2nd Episodes, 16 to 17 Therapy Visits ................................................
1st and 2nd Episodes, 18 to 19 Therapy Visits ................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
19:27 Jul 02, 2013
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E:\FR\FM\03JYP2.SGM
03JYP2
2013 HH PPS
case-mix
weights
1.4671
1.6313
1.7956
0.9071
1.1348
1.3624
1.5900
1.8177
1.1160
1.3211
1.5262
1.7313
1.9364
1.2118
1.4074
1.6030
1.7986
1.9942
1.6223
1.8331
2.0438
1.7186
1.9496
2.1807
1.7668
2.0252
2.2836
1.8153
2.0224
2.2294
1.9116
2.1389
2.3663
1.9598
2.2145
2.4691
2.0453
2.2682
2.4911
2.1415
2.3848
2.6280
2.1897
2.4603
2.7309
1.6822
1.8730
2.0638
1.7628
1.9791
2.1954
1.9247
2.1305
2.3362
1.8508
2.0460
2.2412
1.9314
2.1521
2.3729
2.0933
2.3035
2.5136
2.0747
2.2878
2.5009
2.1553
2.3940
2014
Proposed
HH PPS
case-mix
weights
1.0854
1.2069
1.3284
0.6711
0.8395
1.0079
1.1763
1.3448
0.8256
0.9774
1.1291
1.2808
1.4326
0.8965
1.0412
1.1859
1.3306
1.4753
1.2002
1.3561
1.5120
1.2714
1.4423
1.6133
1.3071
1.4983
1.6894
1.3430
1.4962
1.6493
1.4142
1.5824
1.7506
1.4499
1.6383
1.8267
1.5131
1.6780
1.8429
1.5843
1.7643
1.9442
1.6200
1.8202
2.0203
1.2445
1.3857
1.5268
1.3041
1.4642
1.6242
1.4239
1.5762
1.7283
1.3692
1.5136
1.6581
1.4289
1.5921
1.7555
1.5486
1.7042
1.8596
1.5349
1.6925
1.8502
1.5945
1.7711
Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
40283
TABLE 3—PROPOSED CY 2014 CASE-MIX WEIGHTS—Continued
Payment
group
tkelley on DSK3SPTVN1PROD with PROPOSALS2
22323
22331
22332
22333
30111
30112
30113
30114
30115
30121
30122
30123
30124
30125
30131
30132
30133
30134
30135
30211
30212
30213
30214
30215
30221
30222
30223
30224
30225
30231
30232
30233
30234
30235
30311
30312
30313
30314
30315
30321
30322
30323
30324
30325
30331
30332
30333
30334
30335
40111
40121
40131
40211
40221
40231
40311
40321
40331
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
Description
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 14 to 15 Therapy Visits ............................................................
3rd+ Episodes, 16 to 17 Therapy Visits ............................................................
3rd+ Episodes, 18 to 19 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
3rd+ Episodes, 0 to 5 Therapy Visits ................................................................
3rd+ Episodes, 6 Therapy Visits .......................................................................
3rd+ Episodes, 7 to 9 Therapy Visits ................................................................
3rd+ Episodes, 10 Therapy Visits .....................................................................
3rd+ Episodes, 11 to 13 Therapy Visits ............................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
All Episodes, 20+ Therapy Visits .......................................................................
We also note that we plan to continue
to evaluate and potentially revise the
case-mix weights relative to one another
as more recent utilization and cost
report data become available. Fully
addressing MedPAC’s concerns with the
VerDate Mar<15>2010
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functional,
and service
levels
19:27 Jul 02, 2013
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way the HH PPS factors therapy visits
into the case-mix system is a complex
process which will require more
comprehensive analysis and potentially
additional structural changes to the HH
PPS. While we plan to address
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C3F2S3
C3F3S1
C3F3S2
C3F3S3
C1F1S1
C1F1S2
C1F1S3
C1F1S4
C1F1S5
C1F2S1
C1F2S2
C1F2S3
C1F2S4
C1F2S5
C1F3S1
C1F3S2
C1F3S3
C1F3S4
C1F3S5
C2F1S1
C2F1S2
C2F1S3
C2F1S4
C2F1S5
C2F2S1
C2F2S2
C2F2S3
C2F2S4
C2F2S5
C2F3S1
C2F3S2
C2F3S3
C2F3S4
C2F3S5
C3F1S1
C3F1S2
C3F1S3
C3F1S4
C3F1S5
C3F2S1
C3F2S2
C3F2S3
C3F2S4
C3F2S5
C3F3S1
C3F3S2
C3F3S3
C3F3S4
C3F3S5
C1F1S1
C1F2S1
C1F3S1
C2F1S1
C2F2S1
C2F3S1
C3F1S1
C3F2S1
C3F3S1
2013 HH PPS
case-mix
weights
2.6326
2.3172
2.5453
2.7734
0.6692
0.8718
1.0744
1.2770
1.4796
0.8421
1.0263
1.2104
1.3945
1.5787
0.9352
1.1331
1.3310
1.5289
1.7268
0.7361
0.9591
1.1820
1.4049
1.6278
0.9091
1.1136
1.3180
1.5225
1.7269
1.0022
1.2204
1.4386
1.6568
1.8751
0.9324
1.1609
1.3893
1.6178
1.8463
1.1054
1.3154
1.5254
1.7353
1.9453
1.1985
1.4222
1.6460
1.8697
2.0935
2.2546
2.4117
2.5419
2.4364
2.5936
2.7238
2.7140
2.8712
3.0014
2014
Proposed
HH PPS
case-mix
weights
1.9476
1.7143
1.8830
2.0518
0.4951
0.6450
0.7949
0.9447
1.0946
0.6230
0.7593
0.8955
1.0317
1.1679
0.6919
0.8383
0.9847
1.1311
1.2775
0.5446
0.7096
0.8745
1.0394
1.2043
0.6726
0.8239
0.9751
1.1264
1.2776
0.7414
0.9029
1.0643
1.2257
1.3872
0.6898
0.8588
1.0278
1.1969
1.3659
0.8178
0.9731
1.1285
1.2838
1.4392
0.8867
1.0522
1.2177
1.3832
1.5488
1.6680
1.7842
1.8805
1.8025
1.9188
2.0151
2.0078
2.1241
2.2205
MedPAC’s concerns in a more
comprehensive way in future years, we
propose that for the short term, we use
the CY 2012 case-mix weights reset to
an average case-mix of 1.0. We plan to
continue to monitor case-mix growth
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(both real and nominal case-mix
growth), and address it accordingly in
the future.
D. Rebasing the National, Standardized
60-day Episode Payment Rate, LUPA
Per-Visit Payment Amounts, and
Nonroutine Medical Supply (NRS)
Conversion Factor
tkelley on DSK3SPTVN1PROD with PROPOSALS2
1. Rebasing the National, Standardized
60-Day Episode Payment Rate
Section 3131(a) of the Affordable Care
Act mandates that starting in CY 2014,
the Secretary must apply an adjustment
to the national, standardized 60-day
episode payment rate and other
amounts applicable under section
1895(b)(3)(A)(i)(III) of the Act to reflect
factors such as changes in the number
of visits in an episode, the mix of
services in an episode, the level of
intensity of services in an episode, the
average cost of providing care per
episode, and other relevant factors. In
addition, section 3131(a) of the
Affordable Care Act mandates that this
rebasing must be phased-in over a 4year period in equal increments, not to
exceed 3.5 percent of the amount (or
amounts) in any given year applicable
under section 1895(b)(3)(A)(i)(III) of the
Act, and be fully implemented by CY
2017. To fulfill this mandate, we have
performed extensive analysis of cost
report and claims data. We used FY
2011 cost report data as of December 31,
2012; which was the latest, complete
cost report data available at the time of
the analysis.
a. Trimming Methodology
When examining data from all 10,327
Medicare cost reports from FY 2011, we
found that a number of the cost reports
had missing or questionable data and
extreme values. These cost reports were
often missing necessary information for
calculating episode costs, reported
significantly different data than data
from prior cost reports for the same
provider, or were markedly different
than cost reports from the majority of
HHAs during the same time period.
Since these extreme values can
significantly affect average estimated
costs and are more indicative of
misreporting rather than actual costs,
we developed a trimming methodology
to obtain a more robust estimate of
costs.
The trimming methodology applied to
the cost reports consisted of a two-tier
process. First, providers’ cost reports
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were compared longitudinally to
identify large year-to-year discrepancies.
Second, cost reports were compared
cross-sectionally to cost reports from the
same fiscal year. It should be noted that
the trimming methodology was
developed using FY 2000 through FY
2010 cost reports and then applied to
the FY 2011 cost reports. The first step
in the trimming methodology excluded
all cost reports with missing provider
numbers. In FY 2011, zero providers
were excluded by this exclusion
criterion. Next, cost reports that did not
report the number of episodes were
excluded from the FY 2011 sample. This
restriction eliminated 2,348 of the FY
2011 cost reports. Of these 2,348 cost
reports, 1,629 were also missing data on
total costs or payments. The next step in
the trimming methodology excluded
cost reports that were significantly
different from prior cost reports from
the same provider. Specifically, we
sorted the FY 2000 to FY 2011 cost
reports by fiscal year for each provider
and excluded a cost report if the number
of episodes reported increased from the
provider’s previous cost report to the
current cost report by: (1) More than a
factor of ten and the new report of
episodes is greater than 1,000; or (2)
more than a factor of five and the new
report of episodes is greater than or
equal to 5,000. After dropping cost
reports which met these exclusion
criteria, the process was repeated for
two additional iterations. This exclusion
criterion resulted in the exclusion of
171 cost reports from the FY 2011
sample. The goal of this longitudinal
exclusion criterion was to
systematically eliminate misreporting of
episodes.
Initially, we did not apply
longitudinal trims; however, when
looking at the cost reports from FY 2000
through FY 2011, we identified large
drops in the average number of visits
per episode across the years, which then
resulted in a lower average cost per
episode. Further examination of the
cause of the drops in average visits per
episode led to the identification of a
number of providers who seemingly
misreported the number of episodes on
the cost report. The data showed that
the number of episodes on the cost
reports often outnumbered the number
of episodes from the claims by factors of
10 or 20. Therefore, we developed the
longitudinal trim to increase the
accuracy of the data from the cost
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Fmt 4701
Sfmt 4702
reports. After the longitudinal
restriction was applied, there were
7,808 cost reports in the FY 2011 cost
report sample.
After the longitudinal trims, we
applied cross sectional trims to the
sample, consisting of basic exclusions,
some of which are similar to MedPAC’s
exclusion criteria. Specifically, cost
reports were excluded if they met any
of the following criteria:
• Cost report was not settled or
tentatively settled (for freestanding
facilities only).
• Time covered by the cost report was
less than 10 months or greater than 14
months.
• The cost report was missing total
payment or total cost information.
• Costs per episode were in the
highest and lowest 1 percent across
providers in the given year.
• The cost report had a negative value
for the number of visits per episode for
any discipline, as reported directly in
the visit information.1
• The cost report showed an
unreasonably high visit count (greater
than 500,000,000) in any discipline.
(Note: There were no cost reports with
unreasonable high visit counts in FY
2011.)
• The cost report had negative
average costs per visit in any discipline,
derived from reported costs and visits
on the cost report.
• The cost report had negative total
costs.
• The provider reported fewer than
10 Medicare non-LUPA episodes on the
FY cost report.
• The cost report was missing
discipline-specific cost information
where there was information on visits or
vice versa.
In Table 4, we list information on the
number of cost reports trimmed for each
criterion. After applying the cross
sectional trims, 6,252 cost reports were
left in the 2011 sample. These cost
reports were then used to estimate the
average cost per visit and average cost
per episode for 2011. We note that using
the trimmed sample results in an
estimated average cost per episode that
was $1,000 more than the estimated cost
per episode using the untrimmed,
complete cost report sample.
1 Visit information was taken from worksheet S3,
column 5, rows 1–6 for freestanding providers and
worksheet H6, column 4, rows 1–6 for hospitalbased providers.
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TABLE 4—COUNTS FOR EXCLUSION CRITERIA USED TO DEVELOP THE TRIMMED COST REPORT SAMPLE
Number of
cost reports
Restrictions in cost report sample
Untrimmed sample size .................................................................................................................................................................
Longitudinal restrictions:
Missing Provider Number .......................................................................................................................................................
Missing Episode Count ...........................................................................................................................................................
Significant Episode Change from year to year ......................................................................................................................
2nd iteration .....................................................................................................................................................................
3rd iteration .....................................................................................................................................................................
Sample Size after Longitudinal Restrictions ..................................................................................................................................
Cross Sectional Restrictions:
Not Settled (freestanding only) ...............................................................................................................................................
<10 or >14 months in report ..................................................................................................................................................
Missing Payments or Costs ....................................................................................................................................................
Top and Bottom 1% of costs/episode ....................................................................................................................................
Greater than 500,000,000 visits .............................................................................................................................................
Negative costs per visit ..........................................................................................................................................................
Negative visits per episode ....................................................................................................................................................
Negative total costs ................................................................................................................................................................
Less than ten episodes ..........................................................................................................................................................
Missing visits when costs are reported or vice versa ............................................................................................................
Number of Cost Reports excluded by Cross Sectional Restrictions .....................................................................................
10,327
Trimmed Cost Report sample .........................................................................................................................................
6,252
0
2348
92
54
25
7808
874
210
11
163
0
5
0
0
60
375
1,556
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Note(s): The cross sectional restrictions are implemented simultaneously so cost reports may be counted in a number of the cross sectional
restrictions (the numbers describing the cost reports for each of the cross sectional restrictions are not mutually exclusive). There were 1,556
cost reports excluded from the sample as a result of the cross sectional restrictions.
b. Cost Report Audits
To verify the integrity of the cost
report data and to assess the validity of
the trimming methodology, one of our
Medicare Administrative Contractors
(MAC) was tasked with performing
audits of 100 HH cost reports. The cost
reports were selected from a trimmed
sample of FY 2010 cost reports, which
was the latest data available at the time,
and the audit sample was stratified
across provider characteristics (such as
agency size and ownership status) to
ensure representation across provider
types. Cost reports with 95 or fewer
episodes were excluded from the audit
sample so that we could focus the audits
on providers that have a significant
weight in the sample and that may have
a substantial influence on the average
costs per visit and the cost per episode
estimates. In addition, we note that the
audit sample was selected from a
trimmed sample that had additionally
been cross-referenced with claims data
for accuracy.
The MAC conducted 98 audits. Two
providers did not provide the
information needed to complete the
audit. The audit results showed that the
majority of providers in the audit
sample overstated their costs on the cost
report by an average of about 8 percent.
Commonly, providers reported nonallowable costs or lacked sufficient
documentation to justify the allowable
costs, which led to a decrease in the
costs per visit. There were a small
number of cases where the costs per
VerDate Mar<15>2010
19:27 Jul 02, 2013
Jkt 229001
visit either increased or were unchanged
as a result of the audit. Of the 98
providers audited, eight providers were
referred to the Zone Program Integrity
Contractors for further fraud
investigation as a result of the findings
in their audits.
After obtaining the audit results, we
applied weights to the data in the audit
sample so that it would be
representative of the trimmed sample
and we could compare the costs per
visit per discipline in the trimmed
sample to the pre-audit sample and the
post audit sample. The trimmed sample
resulted in a slightly higher average cost
per episode when compared to data in
the pre-audit sample. When comparing
the pre-audit sample data to the postaudit sample data, we observed an
average reduction of 8 to 9 percent in
the costs per visit across all disciplines,
except medical social services which
averaged a 5 percent reduction in the
allowable costs per visit. These audited
costs per visit across the disciplines
reduced the average cost per episode by
7.8 percent when comparing the preaudit data to the post-audit adjusted
data. The results of the audits indicate
that the trimmed sample used for this
proposed rule likely over-estimates the
average cost per visit and average cost
per episode for providers.
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c. Weighting the 2011 Trimmed
Medicare Cost Report Sample and
Computation of the 2011 Estimated Cost
per Episode
After applying the trimming
methodology to the 2011 Medicare cost
reports, we computed the estimated
mean cost per visit per discipline by
dividing the total costs for a discipline
by the total number of visits in our
sample. We then applied weights to the
sample to ensure that the costs per visit,
per discipline used to calculate the
average costs per episode were
nationally representative. We calculated
and applied weights based on three
characteristics: provider type, provider
size, and the providers’ urban/rural
status. We determined provider size by
examining the number of episodes by
provider on the 2011 claim. We
determined provider type and urban/
rural status by matching the trimmed
cost report sample to the Provider of
Services file. The Provider of Service
file is data collected through the survey
and certification process conducted for
any institutional provider seeking
inclusion in the Medicare and Medicaid
programs. It contains information such
as provider name, address, staffing,
number of beds, ownership, and is used
internally and by researchers to obtain
certification information about the
provider.
To weight the costs per visit per
discipline in our sample to be nationally
representative, we compared the
number of visits in our sample in each
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provider type-size-urban/rural
combination to the number of visits in
the provider type-size-urban/rural
combination as taken from the national
2011 claims. The visits for a particular
provider were weighted by the ratio of
the number of visits in the type-sizeurban/rural combination in the national
claims over the number of visits in the
type-size-urban/rural combination in
our sample. That is, the total number of
visits in the sample were weighted such
that the total weights (weighted visits)
in each of the type-size-urban/rural
combination equaled the number of
visits in the type-size-urban/rural
combination as recorded on the claims,
and the sum of weighted visits across all
type-size-urban/rural combinations
equals the total number of visits
recorded on the claims. After
reweighting the visits, the average costs
per visit for each discipline for a
provider was recalculated. We note that
the weight each provider contributes to
the average costs per visit is equal to the
number of visits the provider reported
on the cost report times the total
number of visits for the provider’s typesize-urban/rural combination in the
national claims divided by the number
of visits in the provider’s type-sizeurban/rural combination in our sample.
As such, providers with a higher
number of visits still receive more
weight in calculating the mean, aside
from the type-size-urban/rural
representativeness adjustment. The
estimated costs per visit per episode
before and after weighting are shown in
Table 5. The weighting results in higher
average costs per visit for all disciplines
as compared to the un-weighted average
costs per visit. The CMS Home Health
Agency (HHA) Center Web site (https://
www.cms.gov/Center/Provider-Type/
Home-Health-Agency-HHACenter.html?redirect=/center/hha.asp)
provides a file with the resulting
weights, the provider number, provider
type, provider size, and urban/rural
status and average costs per visit by
discipline that can be used to produce
the weighted average costs per visit for
all disciplines as presented in Table 5.
Documentation describing the fields on
the cost report we used in our
calculations is also available at https://
www.cms.gov/Center/Provider-Type/
Home-Health-Agency-HHACenter.html?redirect=/center/hha.asp.
TABLE 5—2011 ESTIMATED COSTS PER VISIT, UN-WEIGHTED AND WEIGHTED
2011 Per-visit
costs,
unweighted
Discipline
Skilled Nursing .................................................................................................................................................
Home Health Aide ...........................................................................................................................................
Physical Therapy .............................................................................................................................................
Occupational Therapy ......................................................................................................................................
Speech-Language Pathology ..........................................................................................................................
Medical Social Services ...................................................................................................................................
2011 Per-visit
costs, weighted
$129.56
65.07
159.99
158.96
169.28
217.63
$131.51
65.22
160.69
159.55
170.80
218.91
Source: CY 2011 Medicare claims data and FY 2011 Medicare cost report data as of December 31, 2012.
Notes(s): The costs per visit, per discipline for providers were weighted by provider type, provider size and urban/rural status to be nationally
representative.
Using the nationally-weighted average
costs per visit from the trimmed FY
2011 HH Medicare cost report sample
and the visits per episode estimates for
each discipline from 2011 national
claims data, we estimated the 2011
average cost per episode. As shown in
Table 6, we multiplied the average cost
per visit by the average number of visits
for each of the six disciplines and
summed the results to generate an
estimated 60-day episode cost for 2011
of $2,453.71. This methodology used to
calculate the episode cost is consistent
with the methodology used in setting
the 60-day episode base rate for the HH
PPS in 2000. We note that the 2011
estimated cost per episode includes
normal, PEP, and outlier episodes.
TABLE 6—2011 AVERAGE COSTS PER VISIT AND AVERAGE NUMBER OF VISITS FOR A 60-DAY EPISODE
2011 Average
costs per visit
Discipline
2011 Average
number of visits
2011 60-Day
episode costs
Skilled Nursing .......................................................................................................................
Home Health Aide .................................................................................................................
Physical Therapy ...................................................................................................................
Occupational Therapy ............................................................................................................
Speech- Language Pathology ...............................................................................................
Medical Social Services .........................................................................................................
$131.51
65.22
160.69
159.55
170.80
218.91
9.43
2.80
4.86
1.15
0.21
0.14
$1,240.14
182.62
780.95
183.48
35.87
30.65
Total ................................................................................................................................
..........................
..........................
$2,453.71
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Source: CY 2011 Medicare claims data and 2011 Medicare cost report data as of December 31, 2012.
d. Calculating the Estimated Average
Cost per Episode
To determine the rebasing adjustment
to the 60-day national, standardized
episode payment rate, we compared the
2013 estimated average payment per
episode to the 2013 estimated average
cost per episode. To calculate the 2013
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estimated average cost per episode, we
first applied an adjustment to account
for the visit distribution change
observed in claims data from 2011 to
2012 (Table 7). We compared the 2011
estimated cost per episode using the
2011 visit distribution to the 2011
estimated cost per episode using the
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2012 visit distribution. The 2011
estimated cost per episode is $2,453.71
when using the 2011 visit profile and
the 2011 estimated cost per episode is
$2,443.34 when using the 2012 visit
profile. Using the two 2011 estimated
costs per episode, we calculated an
adjustment factor to account for the visit
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difference between 2011 and 2012
claims (1 + (2443.34–2453.71)/2453.71 =
0.9958). We plan to update the 2012
visit distribution as more data become
available, and therefore, the estimated
40287
cost per episode may change slightly for
the final rule.
TABLE 7—COMPARISON OF THE 2011 AND 2012 VISIT DISTRIBUTION FROM CLAIMS DATA
2011 Average
number of visits
per episode
2012 Average
number of visits
per episode
Skilled Nursing .................................................................................................................................................
Home Health Aide ...........................................................................................................................................
Physical Therapy .............................................................................................................................................
Occupational Therapy ......................................................................................................................................
Speech- Language Pathology .........................................................................................................................
Medical Social Services ...................................................................................................................................
9.43
2.80
4.86
1.15
0.21
0.14
9.39
2.62
4.88
1.15
0.23
0.14
Total Number of Visits per Episode .........................................................................................................
18.59
18.41
Discipline
Source: CY 2011 Medicare claims data and CY 2012 Medicare claims data for episodes starting between January 1, 2012, and May 31, 2012.
After applying the adjustment to
account for the visit distribution change
between 2011 and 2012, we multiplied
the estimated, average cost per episode
by the HH market basket update for
2012 and by the HH market basket
update for 2013. We note that when
setting the 60-day episode base rate for
the HH PPS in 2000, we also updated
costs from cost reports by the market
basket updates to reflect expected cost
increases. This gives us an estimated,
average cost per episode for CY 2013.
TABLE 8—2013 ESTIMATED COST PER EPISODE
Factor for
2011–2012
visit
distribution
difference
2011 Estimated cost per episode
To develop the 2013 estimated
average payment per episode, we started
with the CY 2012 national, standardized
60-day episode payment rate and
applied a number of factors. Since we
are proposing to reset the average casemix weight from 1.3517 to 1.0000 (see
section III.C. of this proposed rule), we
first increased the CY 2012 60-day
episode payment rate by 1.3517. The 60day episode payment rate in CY 2012
was $2,138.52. By inflating the CY 2012
2013 Market
basket update
× 1.024
× 1.023
× 0.9958
$2,453.71 .........................................................................................................
e. Calculating the Estimated Average
Payment per Episode
2012 Market
basket update
60-day episode payment rate by the
budget neutrality factor to account for
the downward adjustment of the
weights to an average case-mix of
1.0000, we obtain the average CY 2012
payment per episode. Then by applying
the CY 2013 payment policy updates
(1.3 percent HH payment update
percentage and the 1.32 percent
payment reduction for nominal casemix growth), we obtain the estimated
average CY 2013 payment per episode.
We note that the Medicare cost reports
do not differentiate between normal,
PEP, and outlier episodes in the
2013
Estimated
cost per
episode
= $2,559.59
reporting of costs per discipline.
Therefore, the CY 2013 estimated
average cost per episode includes costs
for normal, PEP, and outlier episodes.
To compare the episode payment to the
average cost of an episode, we add the
dollars from the 2.5 percent outlier pool
back into the payment per episode
(Table 9). In our calculation of the
proposed CY 2014 national,
standardized 60-day episode payment
rate, we remove the outlier dollars (see
Tables 16 and 17 in section III.E.4.b. of
this proposed rule).
TABLE 9—2013 ESTIMATED AVERAGE PAYMENT PER EPISODE
tkelley on DSK3SPTVN1PROD with PROPOSALS2
2012 National, standardized 60-day episode payment rate
Budget
neutrality
factor to account for casemix weight
adjustment to
1.00
2013 Payment
reduction for
nominal
case-mix
growth
$2,138.52 .............................................................................
× 1.3517
× 0.9868
f. Calculating the Rebasing Adjustment
to the National, Standardized 60-day
Episode Payment Rate
Comparing the 2013 estimated
average payment per episode to the
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2013 HH
Payment
update
percentage
× 1.013
2013 estimated average cost per episode;
we obtain a difference of ¥13.63
percent (($2,559.59–$2,963.65)/
$2,963.65) (see Table 10).
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Outlier
adjustment
÷ 0.975
2013
Estimated
average
payment per
episode
= $2,963.65
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TABLE 10—COMPARISON OF THE AVERAGE PAYMENT PER EPISODE TO THE AVERAGE COST PER EPISODE
2013 Estimated
cost per episode
2013 Payment per episode
$2,963.65 .........................................................................................................................................................
Phasing-in the ¥13.63 percent
reduction over 4 years in equal
increments would result in an annual
reduction of 3.60 percent. Since the
Affordable Care Act states that the
reduction may be no more than 3.5
percent, we propose to reduce payments
in each year from CY 2014 to CY 2017
by 3.5 percent.
2. Rebasing the Low Utilization
Payment Adjustment (LUPA) Per-Visit
Payment Amounts
For episodes with four or fewer visits,
Medicare pays on the basis of a national
per-visit amount by discipline, referred
to as a LUPA.
a. Calculating the Rebasing Adjustment
to the LUPA Per-Visit Amounts
To determine the rebasing adjustment
for the per-visit payment rates, we
compare the current per-visit, perdiscipline payment rates to the
estimated cost per visit, per discipline.
The 2013 estimated per-visit costs per
discipline are shown in Table 11. The
2011 per-visit costs per discipline are
the same as those derived for the
rebasing of the national, standardized
$2,559.59
Percent
difference
¥13.63
60-day episode payment rate (see Table
6). The average cost per-visit for NRS
from the cost report sample is added to
the 2011 estimated per-visit costs per
discipline (see section III.D.3. of this
proposed rule for more information on
the calculation of the average NRS cost
per visit). The per-visit costs are then
increased by the HH market basket in
2012 and 2013 to obtain an estimate of
the 2013 costs per visit, per discipline.
TABLE 11—2013 ESTIMATED AVERAGE COST PER-VISIT, PER-DISCIPLINE
2011
Estimated
average costs
per visit
Discipline
Average NRS
cost per visit
2012 Market
basket update
$131.51
65.22
160.69
159.55
170.80
218.91
+ $2.26
+ 2.26
+ 2.26
+ 2.26
+ 2.26
+ 2.26
× 1.024
×1.024
×1.024
× 1.024
× 1.024
× 1.024
Skilled Nursing .....................................................................
Home Health Aide ................................................................
Physical Therapy .................................................................
Occupational Therapy ..........................................................
Speech-Language Pathology ...............................................
Medical Social Services .......................................................
Similar to the methodology used to
determine the rebasing adjustment to
the national, standardized 60-day
episode payment rate, we took the
current 2013 per-visit payment rates
and, for comparison purposes only, put
the dollars from the 2.5 percent outlier
pool back into the payment rates (see
Table 12). This allows us to compare the
CY 2013 cost per-visit, per-discipline on
2013 Market
basket update
×
×
×
×
×
×
1.023
1.023
1.023
1.023
1.023
1.023
2013
Estimated
average cost
per visit
= $140.13
= 70.69
= 170.70
= 169.50
= 181.29
= 231.69
the Medicare cost reports (which
includes normal and outlier episodes) to
the CY 2013 payment per-visit, per
discipline.
TABLE 12—2013 PER-VISIT PAYMENT RATES
2013 Per-visit
payment rates
(excluding
outliers)
Discipline
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Skilled Nursing .............................................................................................................................
Home Health Aide .......................................................................................................................
Physical Therapy .........................................................................................................................
Occupational Therapy ..................................................................................................................
Speech-Language Pathology ......................................................................................................
Medical Social Services ...............................................................................................................
When comparing the payment pervisit, per discipline for LUPA episodes
to the estimated average cost per-visit,
per-discipline, we observe that costs per
visit are higher than the 2013 per-visit
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payment rates (see Table 13) in the
range of 19.5 percent to 33.1 percent.
However, section 3131(a) of the
Affordable Care Act mandates that we
can only adjust the per-visit payment
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$114.35
51.79
125.03
125.88
135.86
183.31
Outlier
adjustment
÷
÷
÷
÷
÷
÷
0.975
0.975
0.975
0.975
0.975
0.975
2013 Per-visit
payment rates
(including
outliers)
= 117.28
= 53.12
= 128.24
= 129.11
= 139.34
= 188.01
rates by 3.5 percent each year.
Therefore, in this CY 2014 HH PPS
propose rule, we propose to increase the
per-visit payment rates by 3.5 percent
every year from 2014 to 2017.
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40289
TABLE 13—DIFFERENCES BETWEEN THE CY 2013 PER VISIT PAYMENT RATES AND THE CY 2013 ESTIMATED AVERAGE
COST PER VISIT
2013 Per-visit
payment rates
Discipline
Skilled Nursing .............................................................................................................................
Home Health Aide .......................................................................................................................
Physical Therapy .........................................................................................................................
Occupational Therapy ..................................................................................................................
Speech- Language Pathology .....................................................................................................
Medical Social Services ...............................................................................................................
3. Rebasing the Nonroutine Medical
Supply (NRS) Conversion Factor
Payments for NRS are currently paid
for by multiplying one of six severity
levels by the NRS conversion factor.
When the HH PPS was implemented on
October 1, 2000, the national,
standardized 60-day episode payment
rate included an amount for NRS that
was calculated based on costs from
audited FY 1997 cost reports and the
average cost of NRS unbundled and
billed through Medicare part B (65 FR
41180). The NRS costs for all the
providers in the audited cost report
sample were weighted to represent the
national population. That weighted total
was divided by the number episodes for
the providers in the audited cost report
sample, to obtain an average cost per
episode for NRS of $43.54. Added to
this amount was $6.08 to account for the
average cost of unbundled NRS billed
through Medicare Part B, resulting in a
total of $49.62 included in the national,
standardized 60-day episode payment
rate to account for NRS.
As stated in our CY 2008 HH PPS
proposed rule, after the HH PPS went
into effect, we received comments and
correspondence expressing concern
about the cost of supplies for certain
patients with ‘‘high’’ supply costs (72
FR 25427, May 4, 2007). We
acknowledged that, in general, NRS use
is unevenly distributed across episodes
of care. Therefore, we created an NRS
conversion factor of $52.35 (the amount
CMS originally included in the national,
standardized 60-day episode payment
rate of $49.62, updated by the market
basket, and after an adjustment to
account for nominal change in case-mix)
that is further adjusted by one of six
severity levels to ensure that the
variation in NRS usage is more
appropriately reflected in the HH PPS
(72 FR 49852, August 29, 2007). Using
additional variables from OASIS items
and targeting certain conditions
expected to be predictors of NRS use
based on clinical considerations, a
classification algorithm puts cases into
one of the six severity levels and a
regression model was used to develop
the payment weights associated with
each severity level. For more detail on
how the final six NRS severity levels
and associated payment weights were
developed please see the CY 2008 HH
PPS final rule (72 FR 49850, August 29,
2007). The 2008 NRS conversion factor
has been updated by HH payment
update percentages in years 2009
through 2013. The CY 2013 NRS
conversion factor is $53.97 and CY 2013
NRS payments range from $14.56 for
$117.28
53.12
128.24
129.11
139.34
188.01
2013
Estimated
average cost
per visit
$140.13
70.69
170.70
169.50
181.29
231.69
Difference
+19.48%
+33.08%
+33.11%
+31.28%
+30.11%
+23.23%
severity level 1 to $568.06 for severity
level 6 (77 FR 67102).
a. Calculating the Rebasing Adjustment
to the NRS Conversion Factor
In rebasing the NRS conversion factor,
we used the trimmed sample of 6,252
cost reports from FY 2011, as described
in section III.D.1. of this proposed rule,
to calculate a visit-weighted estimate of
NRS costs per visit. We additionally
weight these estimates to be nationally
representative based on the same factors
described in section III.D.1. of this
proposed rule (that is, facility type,
urban/rural status, and facility size).
The 2011 average NRS cost per visit was
calculated to be $2.26.
To calculate, a 2011 estimated average
NRS cost per episode we multiplied the
average NRS costs per visit of $2.26 by
the average number of visits per episode
of 18.59 from 2011 claims data for a
2011 estimated average NRS cost per
episode of $42.01. This amount was
then adjusted to reflect the change in
the average number of visits from 18.59,
using 2011 claims data, to 18.41, using
preliminary 2012 claims data
((1+((18.41–18.59)/18.59))= 0.9903). We
inflated the result by the 2012 and 2013
HH market basket updates for a 2013
estimated average NRS cost per episode
of $43.59 as shown in Table 14.
TABLE 14—2013 ESTIMATED AVERAGE NRS COST PER EPISODE
2012 Market
basket update
(2.4%)
2013 Market
basket update
(2.3%)
2013
Estimated
average NRS
cost per
episode
$42.01 ..............................................................................................................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
2011 Estimated average NRS cost per episode
Adjustment for
change in
average
episode visits
(2011 to 2012)
× 0.9903
×1.024
× 1.023
$43.58
To compare the 2013 estimated
average NRS cost per episode to 2013
estimated average NRS payment per
episode; we used preliminary 2012
claims data for non-LUPA episodes and
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the CY 2013 NRS conversion factor of
$53.97 to determine the estimated 2013
average NRS payment per episode. The
preliminary 2012 claims data shows that
the distribution of episodes amongst the
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six severity levels differs from the
distribution used when the NRS
conversion factor and relative weights
were established in CY 2008 as shown
in Table 15.
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TABLE 15—PERCENTAGE OF EPISODES BY NRS SEVERITY LEVEL
Relative
weight
Severity level
1
2
3
4
5
6
...............................................................................................................................................................
...............................................................................................................................................................
...............................................................................................................................................................
...............................................................................................................................................................
...............................................................................................................................................................
...............................................................................................................................................................
0.2698
0.9742
2.6712
3.9686
6.1198
10.5254
Percent of
episodes,
CY 2008
Percent of
episodes,
CY 2012
(percent)
63.7
20.6
6.7
5.4
3.2
0.3
69.5
16.8
6.2
4.3
2.9
0.3
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Source: The CY 2008 HH PPS Final Rule (72 FR 49852, August 29, 2007) and CY 2012 Medicare claims data for non-LUPA HH episodes beginning on or before May, 31, 2012, as of December 31, 2012.
Note(s): The distribution of episodes used to establish the CY 2008 relative weights was based on CY 2004 and CY 2005 claims data and a
sample consisting of all agencies whose total charges reported on their 2001 claims matched their total charges reported in their 2001 cost reports (72 FR 49852).
Using the distribution of 2012 claims
by severity level (Table 15), the relative
weights, and the CY 2013 conversion
factor of $53.97, the CY 2013 estimated
average NRS payment per episode is
$48.38. Comparing the 2013 estimated
average NRS cost per episode to the
2013 estimated average NRS payment
per episode, we obtain a difference of
¥9.92 percent (($43.58¥$48.38)/
$48.38). Phasing-in the ¥9.92 percent
reduction over 4 years in equal
increments would result in an annual
reduction of 2.58 percent. Therefore, we
propose to reduce the NRS conversion
factor in each year from 2014 to 2017 by
2.58 percent. We note that during our
analysis of NRS costs and payments, we
found that a significant number of
providers listed charges for NRS on the
home health claim, but those same
providers did not list any NRS costs on
their cost reports. Specifically, out of
the 6,252 cost reports from FY 2011, as
described in section III.D.1. of this
proposed rule, 1,756 cost reports (28.1
percent) reported NRS charges in their
claims, but listed $0 NRS costs on their
cost reports. Given the need for
extensive trimming of the cost reports as
well as the findings from the audits and
our analysis of NRS payments and costs,
we are exploring possible additional
edits to the cost report and quality
checks at the time of submission to
improve future cost reporting accuracy.
We plan to update the 2012 distribution
of episodes amongst the six severity
levels as more data become available,
and therefore, the estimated NRS cost
per episode may change slightly for the
final rule. For more information on the
rebasing analyses performed, refer to the
technical report titled ‘‘Analyses in
Support of Rebasing & Updating the
Medicare Home Health Payment Rates’’
available on the CMS Home Health
Agency (HHA) Center Web site at:
https://www.cms.gov/Center/Provider-
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Type/Home-Health-Agency-HHACenter.html?redirect=/center/hha.asp.
2. Home Health Quality Reporting
Program (HHQRP)
E. Proposed CY 2014 Rate Update
a. General Considerations Used for
Selection of Quality Measures for the
HHQRP
The successful development of the
HH Quality Reporting Program
(HHQRP) that promotes the delivery of
high quality healthcare services is our
paramount concern. We seek to adopt
measures for the HHQRP that promote
efficient and safer care. Our measure
selection activities for the HHQRP takes
into consideration input we receive
from the Measure Applications
Partnership (MAP), convened by the
National Quality Forum (NQF), as part
of a pre-rulemaking process that we
have established and are required to
follow under section 1890A of the Act.
The MAP is a public-private partnership
comprised of multi-stakeholder groups
convened by the NQF for the primary
purpose of providing input to CMS on
the selection of certain categories of
quality and efficiency measures, as
required by section 1890A(a)(3) of the
Act. By February 1st of each year, the
NQF must provide that input to CMS.
Input from the MAP is located at https://
www.qualityforum.org/Setting_
Priorities/Partnership/Measure_
Applications_Partnership.aspx. For
more details about the pre-rulemaking
process, see the FY 2013 IPPS/LTCH
PPS final rule at 77 FR 53376 (August
31, 2012).
We also take into account national
priorities, such as those established by
the National Priorities Partnership at
https://www.qualityforum.org/npp/, the
HHS Strategic Plan https://www.hhs.gov/
secretary/about/priorities/priorities.
html, and the National Strategy for
Quality Improvement in Healthcare
located at https://www.healthcare.gov/
news/reports/nationalqualitystrategy
032011.pdf.
To the extent practicable, we have
sought to adopt measures that have been
1. Proposed CY 2014 Home Health
Market Basket Update
Section 1895(b)(3)(B) of the Act, as
amended by section 3401(e) of the
Affordable Care Act, adds new clause
(vi) which states, ‘‘After determining the
home health market basket percentage
increase . . . the Secretary shall reduce
such percentage . . . for each of 2011,
2012, and 2013, by 1 percentage point.
The application of this clause may
result in the home health market basket
percentage increase under clause (iii)
being less than 0.0 for a year, and may
result in payment rates under the
system under this subsection for a year
being less than such payment rates for
the preceding year.’’ Therefore, as
mandated by the Affordable Care Act,
for CYs 2011, 2012, and 2013, the HH
market basket update was reduced by 1
percentage point. For CY 2014, there is
no such percentage reduction.
Therefore, the CY 2014 payment rates
will be increased by the full HH market
basket update.
Section 1895(b)(3)(B) of the Act
requires that the standard prospective
payment amounts for CY 2014 be
increased by a factor equal to the
applicable HH market basket update for
those HHAs that submit quality data as
required by the Secretary. The proposed
HH PPS market basket update for CY
2014 is 2.4 percent. This is based on
Global Insight Inc.’s second quarter
2013 forecast, utilizing historical data
through the first quarter of 2013. The
HH market basket was rebased and
revised in CY 2013. A detailed
description of how we derive the HHA
market basket is available in the CY
2013 HH PPS final rule (77 FR 67080,
67090).
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endorsed by the national consensus
organization, under contract to endorse
standardized healthcare quality
measures pursuant to section 1890 of
the Act, recommended by multistakeholder organizations, and
developed with the input of providers,
purchasers/payers, and other
stakeholders.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
b. Background and Quality Reporting
Requirements
Section 1895(b)(3)(B)(v)(II) of the Act
states that ‘‘each home health agency
shall submit to the Secretary such data
that the Secretary determines are
appropriate for the measurement of
health care quality. Such data shall be
submitted in a form and manner, and at
a time, specified by the Secretary for
purposes of this clause.’’
In addition, section 1895(b)(3)(B)(v)(I)
of the Act states that ‘‘for 2007 and each
subsequent year, in the case of a HHA
that does not submit data to the
Secretary in accordance with subclause
(II) with respect to such a year, the HH
market basket percentage increase
applicable under such clause for such
year shall be reduced by 2 percentage
points.’’ This requirement has been
codified in regulations at § 484.225(i).
HHAs that meet the quality data
reporting requirements are eligible for
the full HH market basket percentage
increase. HHAs that do not meet the
reporting requirements are subject to a
2 percentage point reduction to the HH
market basket increase.
Section 1895(b)(3)(B)(v)(III) of the Act
further states that ‘‘[t]he Secretary shall
establish procedures for making data
submitted under sub clause (II) available
to the public. Such procedures shall
ensure that a HHA has the opportunity
to review the data that is to be made
public with respect to the agency prior
to such data being made public.’’
As codified at § 484.250(a), we
established that the quality reporting
requirements could be met by the
submission of OASIS assessments and
HH Care Consumer Assessment of
Healthcare Providers and Systems
Survey (HHCAHPS®). CMS has
provided quality measures to HHAs via
the Certification and Survey Provider
Enhanced Reports (CASPER) reports
available on the CMS Health Care
Quality Improvement System (QIES)
since 2002. A subset of the HH quality
measures has been publicly reported on
the HH Compare Web site since 2003.
The CY 2012 HH PPS final rule (76 FR
68576), identifies the current HH QRP
measures. The selected measures that
are made available to the public can be
viewed on the HH Compare Web site
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located at https://www.medicare.gov/
HHCompare/Home.asp.
As stated in the CY 2012 and CY 2013
HH PPS final rules (76 FR68575 and 77
FR67093, respectively), we finalized
that we would also use measures
derived from Medicare claims data to
measure HH quality.
c. OASIS Data Submission and OASIS
Data for Annual Payment Update
The HH conditions of participation
(CoPs) at § 484.55(d) require that the
comprehensive assessment must be
updated and revised (including the
administration of the OASIS) no less
frequently than: (1) The last 5 days of
every 60 days beginning with the startof-care date, unless there is a beneficiary
elected transfer, significant change in
condition, or discharge and return to the
same HHA during the 60-day episode;
(2) within 48 hours of the patient’s
return to the home from a hospital
admission of 24 hours or more for any
reason other than diagnostic tests; and
(3) at discharge.
It is important to note that to calculate
quality measures from OASIS data,
there must be a complete quality
episode, which requires both a Start of
Care (initial assessment) or Resumption
of Care OASIS assessment and a
Transfer or Discharge OASIS
assessment. Failure to submit sufficient
OASIS assessments to allow calculation
of quality measures, including transfer
and discharge assessments, is failure to
comply with the CoPs.
HHAs do not need to submit OASIS
data for those patients who are excluded
from the OASIS submission
requirements under the HH CoPs § 484.1
through § 484.265. As described in the
December 23, 2005 Medicare and
Medicaid Programs: Reporting Outcome
and Assessment Information Set Data as
Part of the Conditions of Participation
for Home Health Agencies final rule (70
FR 76202), we define the exclusion as
those patients:
• Receiving only nonskilled services;
• For whom neither Medicare nor
Medicaid is paying for HH care (patients
receiving care under a Medicare or
Medicaid Managed Care Plan are not
excluded from the OASIS reporting
requirement);
• Receiving pre- or post-partum
services; or
• Under the age of 18 years.
As set forth in the CY 2008 HH PPS
final rule (72 FR 49863), HHAs that
become Medicare-certified on or after
May 31 of the preceding year are not
subject to the OASIS quality reporting
requirement nor any payment penalty
for quality reporting purposes for the
following year. For example, HHAs
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40291
certified on or after May 31, 2013 are
not subject to the 2 percentage point
reduction to their market basket update
for CY 2014. These exclusions only
affect quality reporting requirements
and do not affect the HHA’s reporting
responsibilities as announced in the
December 23,2005 final rule, ‘‘Medicare
and Medicaid Programs; Reporting
Outcome and Assessment Information
Set Data as Part of the Conditions of
Participation for Home Health
Agencies’’ (70 FR 76202).
d. Home Health Care Quality Reporting
Program Requirements for CY 2014
Payment and Subsequent Years
(1) Submission of OASIS Data
For CY 2014, we propose to consider
OASIS assessments submitted by HHAs
to CMS in compliance with HH CoPs
and Conditions for Payment for
episodes beginning on or after July 1,
2012, and before July 1, 2013 as
fulfilling one portion of the quality
reporting requirement for CY 2014. This
time period would allow for 12 full
months of data collection and would
provide us with the time necessary to
analyze and make any necessary
payment adjustments to the payment
rates for CY 2014. We propose to
continue this pattern for each
subsequent year beyond CY 2014,
considering OASIS assessments
submitted in the time frame between
July 1 of the calendar year 2 years prior
to the calendar year of the Annual
Payment Update (APU) effective date
and July 1 of the calendar year 1 year
prior to the calendar year of the APU
effective date as fulfilling the OASIS
portion of the quality reporting
requirement for the subsequent APU.
(2) Home Health Rehospitalization and
Emergency Department Use Without
Readmission Claims-Based Measures
We propose to adopt two claimsbased measures: (1) Rehospitalization
during the first 30 days of HH; and (2)
Emergency Department Use without
Hospital Readmission during the first 30
days of HH. These measures were
included on the Measures Under
Consideration list reviewed by the MAP
in December 2012 and the MAP
supported the direction of both
measures. The Rehospitalization during
the first 30 days of HH measure
estimates the risk-standardized rate of
unplanned, all-cause hospital
readmissions for cases in which patients
who had an acute inpatient
hospitalization in the 5 days before the
start of their HH stay were admitted to
an acute care hospital during the 30
days following the start of the HH stay.
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The Emergency Department Use without
Readmission measure estimates the riskstandardized rate of unplanned, allcause hospital readmissions for cases in
which patients who had an acute
inpatient hospitalization in the 5 days
before the start of a HH stay used an
emergency department but were not
admitted to an acute care hospital
during the 30 days following the start of
a HH stay.
We seek to develop a set of quality
measures to report on HH patients who
are recently hospitalized as these
patients are at an increased risk of acute
care hospital use, either through
inpatient admission or emergency
department use without inpatient
admission. Addressing unplanned
hospital readmissions is a high priority
for HHS as our focus continues on
promoting patient safety, eliminating
healthcare associated infections,
improving care transitions, and
reducing the cost of healthcare.
Readmissions are costly to the Medicare
program and have been cited as
sensitive to improvements in
coordination of care and discharge
planning for patients. Rates of
rehospitalization remain substantial
with 14.4 percent of HH patients
experiencing an unplanned
rehospitalization in the first 30 days of
care. Currently, HHAs focus on
measures of acute care hospitalization
(applied to all HH patients) as a measure
of their effectiveness. We will continue
to publicly report the Acute Care
Hospitalization and Emergency
Department Use without Hospitalization
measures, as these measures apply to all
home health patients and will continue
to be useful in selecting a home health
agency. The proposed rehospitalization
measures will allow HHAs to further
target patients who entered HH after a
hospitalization.
The proposed measures of acute care
utilization by previously hospitalized
patients are developed out of the NQF
endorsed claims-based measures: (1)
Acute Care Hospitalization (NQF
#0171); and (2) Emergency Department
Use without Hospitalization (NQF
#0173) to better capture acute care
hospitalizations and use of an
emergency department for patients who
are recently discharged from the
hospital. These rehospitalization
measures are harmonized with NQFendorsed Hospital-Wide Risk-Adjusted
All-Cause Unplanned Readmission
Measure (NQF #1789) (see https://www.
qualityforum.org/Publications/2012/07/
Patient_Outcomes_All-Cause_
Readmissions_Expedited_Review_2011.
aspx) finalized for the Hospital IQR
Program in the FY 2013 IPPS/LTCH PPS
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Final Rule (77 FR 53521 through 53528).
Further, to the extent appropriate, the
proposed HH rehospitalization
measures are being harmonized with
this measure and other measures of
readmission rates developed for postacute care (PAC) settings.
We intend to seek NQF endorsement
of the: (1) Rehospitalization during the
first 30 days of HH; and (2) Emergency
Department Use without Readmission
during the first 30 days of HH measures.
We are proposing to begin reporting
feedback to HHAs on performance on
these measures in CY 2014. These
measures will be added to Home Health
Compare for public reporting in
CY2015. Additional details pertaining to
these measures, including technical
specifications, can be found at the HH
Quality Initiative Web page located at
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HomeHealthQualityInits/
HHQIQualityMeasures.html.
We seek public comment on our
proposed quality measures: (1)
Rehospitalization during the first 30
days of HH; and (2) Emergency
Department Use without Hospital
Readmission during the first 30 days of
HH.
(3) Elimination of Stratification by
Episode Length Process Measures
We are exploring ways to reduce the
number of HH quality measures
reported to HHAs on confidential
CASPER reports. We propose to reduce
the total number of measures on the
CASPER reports by beginning to report
only all-episodes measures for 9 process
measures currently also stratified by
episode length. We seek comments on
this proposal to simplify reporting of
process measures, which is based on the
recommendation from the MAP to seek
greater parsimony in these measures.
Currently there are 97 quality measures
included on the CASPER reports, of
which 45 are process measures. This
proposed reduction would decrease the
total number of HH quality measures to
79 and reduce the number of process
measures from 45 to 27. This change
will enable HHAs to obtain the
information they require for quality
improvement activities related to the
process measures in a less burdensome
manner. Reducing the number of
measures also facilitates the future
development and implementation of
other superior HH measures.
Nine measures currently stratified by
episode length on CASPER reports
include:
• Depression Interventions
Implemented.
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• Diabetic Foot Care and Patient/
Caregiver Education Implemented.
• Heart Failure Symptoms Addressed.
• Pain Interventions Implemented.
• Treatment of Pressure Ulcers Based
on Principles of Moist Wound Healing
Implemented.
• Pressure Ulcer Prevention
Implemented.
• Drug Education on All Medications
Provided to Patient/Caregiver.
• Potential Medication Issues
Identified and Timely Physician
Contact.
• Falls Prevention Steps
Implemented.
For each of these nine measures, three
versions of each measure are currently
included on CASPER reports. The three
versions are: (1) Short term episodes of
care; (2) long term episodes of care; and
(3) all episodes of care. We propose to
eliminate the stratification by episode
length, so that these measures are
reported only for ‘‘all episodes of care’’.
Thus, we propose to eliminate the
‘‘short term’’ and ‘‘long term episodes of
care’’ measures from CASPER reports.
This would remove 18 process measures
from the current CASPER reports. Of
note, only the ‘‘short term episodes of
care’’ measures are currently reported
on HH Compare. These would be
replaced with the analogous ‘‘all
episodes of care’’ measures.
No data will be lost in the elimination
of the ‘‘short and long term episodes of
care’’ measures as the ‘‘all episodes of
care’’ measures capture all care
interventions, regardless of episode
length. Using only the ‘‘all episodes of
care’’ measures would substantially
increase the number of HHAs eligible
for public reporting of these measures.
To summarize, for the CY 2014
payment update and for subsequent
annual payment updates, we propose to
continue to use a HHA’s submission of
OASIS assessments between July 1, and
June 30 as fulfilling one portion of the
quality reporting requirement for each
payment year. Medicare claims data and
HHCAHPS® data will also be used to
measure HH care quality. We propose to
adopt two claims-based measures: (1)
rehospitalization during the first 30
days of HH; and (2) Emergency
Department Use without Hospital
Readmission during the first 30 days of
HH. We propose to reduce the number
of process measures by eliminating the
stratification by episode length, only
reporting on the ‘‘all episodes of care’’
measures. By eliminating the
stratification of the short and long term
episodes of care measures, there will be
a reduction in the number of HH quality
measures reported to HHAs on
confidential CASPER reports.
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e. Home Health Care CAHPS® Survey
(HHCAHPS) ®
In the CY 2013 HH PPS final rule (77
FR 67094), we stated that the HH quality
measures reporting requirements for
Medicare-certified agencies includes the
CAHPS® HH Care (HHCAHPS®) Survey
for the CY 2013 APU. In CY 2012, we
moved forward with the HHCAHPS®
linkage to the pay-for-reporting (P4R)
requirements affecting the HH PPS rate
update for CY 2012. We maintained the
stated HHCAHPS data requirements for
CY 2013 that were set out in the CY
2012 HH PPS final rule, and in the CY
2013 HH PPS final rule, for the
continuous monthly data collection and
quarterly data submission of
HHCAHPS® data.
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(1) Background and Description of
HHCAHPS®
As part of the HHS’ Transparency
Initiative, we have implemented a
process to measure and publicly report
patient experiences with HH care, using
a survey developed by the Agency for
Healthcare Research and Quality’s
(AHRQ’s) Consumer Assessment of
Healthcare Providers and Systems
(CAHPS®) program and endorsed by the
NQF in March 2009 (NQF Number
0517). The HHCAHPS® survey is part of
a family of CAHPS® surveys that asks
patients to report on and rate their
experiences with health care. The HH
Care CAHPS® (HHCAHPS®) survey
presents HH patients with a set of
standardized questions about their HH
care providers and about the quality of
their HH care.
Prior to this survey, there was no
national standard for collecting
information about patient experiences
that would enable valid comparisons
across all HHAs. The history and
development process for HHCAHPS®
has been described in previous rules
and it also available on the official
HHCAHPS® Web site at https://
homehealthcahps.org and in the
annually-updated HHCAHPS® Protocols
and Guidelines Manual, which is
downloadable from https://
homehealthcahps.org.
For public reporting purposes, we
required HHAs to report five
measures—three composite measures
and two global ratings of care that are
derived from the questions on the
HHCAHPS® survey. The publicly
reported data are adjusted for
differences in patient mix across HHAs.
We update the HHCAHPS® data on HH
Compare on www.medicare.gov
quarterly. Each HHCAHPS® composite
measure consists of four or more
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individual survey items regarding one of
the following related topics:
• Patient care (Q9, Q16, Q19, and
Q24);
• Communications between providers
and patients (Q2, Q15, Q17, Q18, Q22,
and Q23); and
• Specific care issues on medications,
home safety, and pain (Q3, Q4, Q5, Q10,
Q12, Q13, and Q14).
The two global ratings are the overall
rating of care given by the HHA’s care
providers (Q20), and the patient’s
willingness to recommend the HHA to
family and friends (Q25).
The HHCAHPS® survey focuses on
areas where the HH patient is the best
or only source for the information. The
developmental work for the HHCAHPS®
survey began in mid-2006, and the first
HHCAHPS® survey was field-tested (to
validate the length and content of the
survey) in 2008 by the AHRQ and the
CAHPS® grantees, and the final
HHCAHPS® survey was used in a
national randomized mode experiment
in 2009 through 2010.
The HHCAHPS® survey is currently
available in English, Spanish, Chinese,
Russian, and Vietnamese. The OMB
Number on these surveys is the same
(0938–1066). All of these surveys are on
the Home Health Care CAHPS® Web
site, https://homehealthcahps.org. We
will continue to consider additional
language translations of the HHCAHPS®
in response to the needs of the HH
patient population.
All of the requirements about HH
patient eligibility for the HHCAHPS®
survey and conversely, which HH
patients are ineligible for the
HHCAHPS® survey are delineated and
detailed in the HHCAHPS® Protocols
and Guidelines Manual, which is
downloadable at https://
homehealthcahps.org. HH patients are
eligible for HHCAHPS® if they received
at least two skilled HH visits in the past
2 months, which are paid for by
Medicare or Medicaid.
HH patients are ineligible for
inclusion in HHCAHPS® surveys if one
of these conditions pertains to them:
• Are under the age of 18;
• Are deceased prior to the date the
sample is pulled;
• Receive hospice care;
• Receive routine maternity care only;
• Are not considered survey eligible
because the state in which the patient
lives restricts release of patient
information for a specific condition or
illness that the patient has; or
• No Publicity patients, defined as
patients who on their own initiative at
their first encounter with the HHAs
make it very clear that no one outside
of the agencies can be advised of their
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patient status, and no one outside of the
HHAs can contact them for any reason.
We stated in previous rules that
Medicare-certified HHAs are required to
contract with an approved HHCAHPS®
survey vendor. Medicare-certified
agencies also must provide on a
monthly basis a list of their patients
served to their respective HHCAHPS®
survey vendors. Agencies are not
allowed to influence at all how their
patients respond to the HHCAHPS®
survey.
HHCAHPS® survey vendors are
required to attend introductory and all
update trainings conducted by CMS and
the HHCAHPS® Survey Coordination
Team, as well as to pass a post-training
certification test. We now have
approximately 30 approved HHCAHPS®
survey vendors. The list of approved
HHCAHPS® survey vendors is available
at https://homehealthcahps.org.
(2) HHCAHPS® Oversight Activities
We stated in prior final rules that all
approved HHCAHPS survey vendors are
required to participate in HHCAHPS®
oversight activities to ensure
compliance with HHCAHPS® protocols,
guidelines, and survey requirements.
The purpose of the oversight activities
is to ensure that approved HHCAHPS®
survey vendors follow the HHCAHPS®
Protocols and Guidelines Manual. As
stated previously in the CY 2010, CY
2011, CY 2012, and CY 2013 final rules,
all approved survey vendors must
develop a Quality Assurance Plan (QAP)
for survey administration in accordance
with the HHCAHPS® Protocols and
Guidelines Manual. An HHCAHPS®
survey vendor’s first QAP must be
submitted within 6 weeks of the data
submission deadline date after the
vendor’s first quarterly data submission.
The QAP must be updated and
submitted annually thereafter and at any
time that changes occur in staff or
vendor capabilities or systems. A model
QAP is included in the HHCAHPS®
Protocols and Guidelines Manual. The
QAP must include the following:
• Organizational Background and
Staff Experience
• Work Plan
• Sampling Plan
• Survey Implementation Plan
• Data Security, Confidentiality and
Privacy Plan
• Questionnaire Attachments
As part of the oversight activities, the
HHCAHPS® Survey Coordination Team
conducts on-site visits to all approved
HHCAHPS® survey vendors. The
purpose of the site visits is to allow the
HHCAHPS® Coordination Team to
observe the entire HH Care CAHPS®
Survey implementation process, from
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the sampling stage through file
preparation and submission, as well as
to assess data security and storage. The
HHCAHPS® Survey Coordination Team
reviews the HHCAHPS® survey
vendor’s survey systems, and assesses
administration protocols based on the
HHCAHPS® Protocols and Guidelines
Manual posted at https://
homehealthcahps.org. The systems and
program site visit review includes, but
is not limited to the following:
• Survey management and data
systems;
• Printing and mailing materials and
facilities;
• Telephone call center facilities;
• Data receipt, entry and storage
facilities; and
• Written documentation of survey
processes.
After the site visits, HHCAHPS®
survey vendors are given a defined time
period in which to correct any
identified issues and provide follow-up
documentation of corrections for
review. HHCAHPS® survey vendors are
subject to follow-up site visits on an asneeded basis.
In the CY 2013 HH PPS final rule (77
FR 67094), we codified the current
guideline that all approved HHCAHPS®
survey vendors fully comply with all
HHCAHPS® oversight activities. We
included this survey requirement at
§ 484.250(c).
(3) HHCAHPS® Requirements for the CY
2014 APU
In the CY 2013 HH PPS final rule (77
FR 67094), we stated that we would
require continued monthly HHCAHPS®
data collection and reporting for 4
quarters for the HHCAHPS®
requirements for CY 2014 APU. The
data collection period for the CY 2014
APU includes the second quarter 2012
through first quarter 2013 (the months
of April 2012 through March 2013).
HHAs were required to submit their
HHCAHPS® data files to the HH
CAHPS® Data Center for the second
quarter 2012 by 11:59 p.m., Eastern
daylight time (e.d.t.) on October 18,
2012; for the third quarter 2012 by 11:59
p.m., Eastern standard time (e.s.t.) on
January 17, 2013; for the fourth quarter
2012 by 11:59 p.m., e.d.t. on April 18,
2013; and for the first quarter 2013 by
11:59 p.m., e.d.t. on July 18, 2013. These
deadlines are firm; no exceptions are
permitted.
We stated that we exempt HHAs
receiving Medicare certification on or
after April 1, 2012, from the full
HHCAHPS® reporting requirement for
the CY 2014 APU, because these HHAs
were not Medicare-certified in the
period of April 1, 2011, through March
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31, 2012. These HHAs would not need
to complete a HHCAHPS® Participation
Exemption Request form for the CY
2014 APU. The Participation Exemption
Form is discussed in the Collection of
Information section of this rule. The
form was used since CY 2012, and it
was cited in the PRA package in 2010,
but it did not have its own OMB
number. We have submitted a revised
PRA package about the HHCAHPS®
survey (the package expires in March
2014) that also includes more
information regarding the Participation
Exemption Form.
As noted in the CY 2013 HH PPS final
rule (77 FR 67094), HHAs that had
fewer than 60 HHCAHPS®-eligible
unduplicated or unique patients in the
period of April 1, 2011, through March
31, 2012, are exempt from the
HHCAHPS® data collection and
submission requirements for the CY
2014 APU. Such HHAs were required to
submit their patient counts for the
period of April 1, 2011, through March
31, 2012, on the HHCAHPS®
Participation Exemption Request form
for the CY 2014 APU posted on
https://homehealthcahps.org beginning
April 1, 2012, by 11:59 p.m., e.d.t. on
January 17, 2013. This deadline is firm,
as are all of the quarterly data
submission deadlines.
(4) HHCAHPS® Requirements for the CY
2015 APU
In the CY 2013 HH PPS final rule (77
FR 67094), we stated that for the CY
2015 APU, we would require continued
monthly HHCAHPS® data collection
and reporting for 4 quarters. The data
collection period for CY 2015 APU
includes the second quarter 2013
through the first quarter 2014 (the
months of April 2013, through March
2014). HHAs are required to submit
their HHCAHPS® data files to the HH
CAHPS® Data Center for the second
quarter 2013 by 11:59 p.m., e.d.t. on
October 17, 2013; for the third quarter
2013 by 11:59 p.m., e.s.t. on January 16,
2014; for the fourth quarter 2013 by
11:59 p.m., e.d.t. on April 17, 2014; and
for the first quarter 2014 by 11:59 p.m.,
e.d.t. on July 17, 2014. These deadlines
are firm; no exceptions are permitted.
We will continue to exempt HHAs
receiving Medicare certification on or
after April 1, 2013, from the full
HHCAHPS® reporting requirement for
the CY 2015 APU because these HHAs
would not have been Medicare-certified
throughout the period of April 1, 2012
through March 31, 2013. These HHAs
do not need to complete a HHCAHPS®
Participation Exemption Request form
for the CY 2015 APU.
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We require that all HHAs that had
fewer than 60 HHCAHPS®-eligible
unduplicated or unique patients in the
period of April 1, 2012, through March
31, 2013 are exempt from the
HHCAHPS® data collection and
submission requirements for the CY
2015 APU. Agencies with fewer than 60
HHCAHPS®-eligible, unduplicated or
unique patients in the period of April 1,
2012, through March 31, 2013 are
required to submit their patient counts
on the HHCAHPS® Participation
Exemption Request form for the CY
2015 APU, posted on https://
homehealthcahps.org on April 1, 2013,
by 11:59 p.m., e.d.t. on January 16,
2014. This deadline is firm, as is true of
all quarterly data submission deadlines.
(5) HHCAHPS® Requirements for the CY
2016 APU
For the CY 2016 APU, we propose to
require continued monthly HHCAHPS®
data collection and reporting for 4
quarters. The data collection period for
the CY 2016 APU is proposed to include
the second quarter 2014 through the
first quarter 2015 (the months of April
2014 through March 2015). We propose
that HHAs would be required to submit
their HHCAHPS® data files to the HH
CAHPS® Data Center for the second
quarter 2014 by 11:59 p.m., e.d.t. on
October 16, 2014; for the third quarter
2014 by 11:59 p.m., e.s.t. on January 15,
2015; for the fourth quarter 2014 by
11:59 p.m., e.d.t. on April 16, 2015; and
for the first quarter 2015 by 11:59 p.m.,
e.d.t. on July 16, 2015. We propose that
these deadlines be firm; no exceptions
would be permitted.
We propose to continue to exempt
HHAs receiving Medicare certification
after the period in which HHAs do their
patient count (April 1, 2013 through
March 31, 2014) on or after April 1,
2014, from the full HHCAHPS®
reporting requirement for the CY 2016
APU, because these HHAs would not
have been Medicare-certified
throughout the period of April 1, 2013,
through March 31, 2014. These HHAs
would not need to complete a
HHCAHPS® Participation Exemption
Request form for the CY 2016 APU.
We propose to state that all HHAs that
had fewer than 60 HHCAHPS®-eligible
unduplicated or unique patients in the
period of April 1, 2013, through March
31, 2014 would be exempt from the
HHCAHPS® data collection and
submission requirements for the CY
2016 APU. Agencies with fewer than 60
HHCAHPS-eligible, unduplicated or
unique patients in the period of April 1,
2013, through March 31, 2014, would be
required to submit their patient counts
on the HHCAHPS® Participation
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Exemption Request form for the CY
2016 APU posted on https://
homehealthcahps.org on April 1, 2014,
by 11:59 p.m., e.s.t. on January 15, 2015.
This deadline would be firm, as would
be all of the quarterly data submission
deadlines.
(6) HHCAHPS® Reconsiderations and
Appeals Process
HHAs should monitor their respective
HHCAHPS® survey vendors to ensure
that vendors submit their HHCAHPS
data on time, by accessing their
HHCAHPS® Data Submission Reports
on https://homehealthcahps.org. This
will help HHAs ensure that their data
are submitted in the proper format for
data processing to the HHCAHPS® Data
Center.
We propose to continue the
HHCAHPS® reconsiderations and
appeals process that we have finalized
and that we have used for the CY 2012
APU and for the CY 2013 APU. We have
described the HHCAHPS®
reconsiderations process requirements
in the notification memorandum that
the Regional Home Health
Intermediaries (RHHI)/MACs send to
the affected HHAs, on behalf of CMS.
HHAs have 30 days to send their
documentation to support their request
for reconsideration to CMS. It is
important that the affected HHAs send
in comprehensive information in their
reconsideration letter/package because
CMS will not contact the affected HHAs
to request additional information or to
clarify incomplete or inconclusive
information. If clear evidence to support
a finding of compliance is not present,
the 2 percent reduction in the APU will
be upheld. If clear evidence of
compliance is present, the 2 percent
reduction for the APU will be reversed.
We will notify affected HHAS by about
mid-December. If we determine to
uphold the 2 percent reduction, the
HHA may further appeal the 2 percent
reduction via the Provider
Reimbursement Review Board (PRRB)
appeals process.
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f. Summary of Proposed Changes in CY
2014
We are not proposing any changes to
the HHCAHPS® Survey in CY 2014.
g. For Further Information on the
HHCAHPS® Survey
We strongly encourage HHAs to learn
about the survey and view the
HHCAHPS® Survey Web site at the
official Web site for the HHCAHPS® at
https://homehealthcahps.org. HHAs can
also send an email to the HHCAHPS®
Survey Coordination Team at
HHCAHPS@rti.org, or telephone toll-
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free (1–866–354–0985) for more
information about HHCAHPS®.
3. Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C)
of the Act require the Secretary to
provide appropriate adjustments to the
proportion of the payment amount
under the HH PPS that account for area
wage differences, using adjustment
factors that reflect the relative level of
wages and wage-related costs applicable
to the furnishing of HH services. For CY
2014, as in previous years, we are
proposing to base the wage index
adjustment to the labor portion of the
HH PPS rates on the most recent prefloor and pre-reclassified hospital wage
index. We would apply the appropriate
wage index value to the labor portion of
the HH PPS rates based on the site of
service for the beneficiary (defined by
section 1861(m) of the Act as the
beneficiary’s place of residence).
Previously, we determined each HHA’s
labor market area based on definitions
of metropolitan statistical areas (MSAs)
issued by the OMB. We have
consistently used the pre-floor, prereclassified hospital wage index data to
adjust the labor portion of the HH PPS
rates. We believe the use of the prefloor, pre-reclassified hospital wage
index data results in an appropriate
adjustment to the labor portion of the
costs, as required by statute.
In the CY 2006 HH PPS final rule for
(70 FR 68132), we began adopting
revised labor market area definitions as
discussed in the OMB Bulletin No. 03–
04 (June 6, 2003). This bulletin
announced revised definitions for MSAs
and the creation of micropolitan
statistical areas and core-based
statistical areas (CBSAs). The bulletin is
available online at
www.whitehouse.gov/omb/bulletins/
b03–04.html. In addition, OMB
published subsequent bulletins
regarding CBSA changes, including
changes in CBSA numbers and titles.
The OMB bulletins are available at
https://www.whitehouse.gov/omb/
bulletins/.
For CY 2014, as in previous years, we
are proposing to use the most recent
pre-floor, pre-reclassified hospital wage
index as the base for the wage index
adjustment to the labor portion of the
HH PPS rates. However, the FY 2014
pre-floor, pre-reclassified hospital wage
index does not reflect OMB’s new area
delineations, based on the 2010 Census
(outlined in OMB Bulletin 13–01,
released on February 28, 2013), as those
changes were not published until the
Hospital Inpatient Prospective Payment
System (IPPS) proposed rule (78 FR
27553) was in advanced stages of
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40295
development. We intend to propose
changes to the FY 2015 hospital wage
index based on the newest CBSA
changes in the FY 2015 IPPS proposed
rule. Therefore, if CMS incorporates
OMB’s new area delineations, based on
the 2010 Census, in the FY 2015
hospital wage index, those changes
would also be reflected in the FY 2015
HH wage index.
Finally, we would continue to use the
methodology discussed in the CY 2007
HH PPS final rule (71 FR 65884) to
address those geographic areas in which
there were no IPPS hospitals, and thus,
no hospital wage data on which to base
the calculation of the HH PPS wage
index. For rural areas that do not have
IPPS hospitals, and therefore, lack
hospital wage data on which to base a
wage index, we would use the average
wage index from all contiguous CBSAs
as a reasonable proxy. For rural Puerto
Rico, we do not apply this methodology
due to the distinct economic
circumstances that exist there, but
instead continue using the most recent
wage index previously available for that
area (from CY 2005).
For urban areas without IPPS
hospitals, we use the average wage
index of all urban areas within the State
as a reasonable proxy for the wage index
for that CBSA. For CY 2012, the only
urban area without IPPS hospital wage
data is Hinesville-Fort Stewart, Georgia
(CBSA 25980).
The wage index values are available
on the CMS Web site at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/
Home-Health-Prospective-PaymentSystem-Regulations-and-Notices.html.
4. Proposed CY 2014 Payment Update
a. National, Standardized 60-Day
Episode Payment Rate
The Medicare HH PPS has been in
effect since October 1, 2000. As set forth
in the July 3, 2000 final rule (65 FR
41128), the base unit of payment under
the Medicare HH PPS is a national,
standardized 60-day episode payment
rate. As set forth in § 484.220, we adjust
the national, standardized 60-day
episode payment rate by a case-mix
relative weight and a wage index value
based on the site of service for the
beneficiary.
To provide appropriate adjustments to
the proportion of the payment amount
under the HH PPS to account for area
wage difference, we apply the
appropriate wage index value to the
labor portion of the HH PPS rates. The
labor-related share of the case-mix
adjusted 60-day episode rate would
continue to be 78.535 percent and the
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non-labor-related share would continue
to be 21.465 percent as set out in the CY
2013 HH PPS final rule (77 FR 67068).
The proposed CY 2014 HH PPS rates
use the same case-mix methodology as
set forth in the CY 2008 HH PPS final
rule with comment period (72 FR
49762) and adjusted as described in
section III.C. of this proposed rule. The
following are the steps we take to
compute the case-mix and wageadjusted 60-day episode rate:
(1) Multiply the national 60-day
episode rate by the patient’s applicable
case-mix weight.
(2) Divide the case-mix adjusted
amount into a labor (78.535 percent)
and a non-labor portion (21.465
percent).
(3) Multiply the labor portion by the
applicable wage index based on the site
of service of the beneficiary.
(4) Add the wage-adjusted portion to
the non-labor portion, yielding the casemix and wage adjusted 60-day episode
rate, subject to any additional applicable
adjustments.
In accordance with section
1895(b)(3)(B) of the Act, this document
constitutes the annual update of the HH
PPS rates. Section 484.225 sets forth the
specific annual percentage update
methodology. In accordance with
§ 484.225(i), for a HHA that does not
submit HH quality data, as specified by
the Secretary, the unadjusted national
prospective 60-day episode rate is equal
to the rate for the previous calendar year
increased by the applicable HH market
basket index amount minus two
percentage points. Any reduction of the
percentage change will apply only to the
calendar year involved and will not be
considered in computing the
prospective payment amount for a
subsequent calendar year.
Medicare pays the national,
standardized 60-day case-mix and wageadjusted episode payment on a split
percentage payment approach. The split
percentage payment approach includes
an initial percentage payment and a
final percentage payment as set forth in
§ 484.205(b)(1) and § 484.205(b)(2). We
may base the initial percentage payment
on the submission of a request for
anticipated payment (RAP) and the final
percentage payment on the submission
of the claim for the episode, as
discussed in § 409.43. The claim for the
episode that the HHA submits for the
final percentage payment determines
the total payment amount for the
episode and whether we make an
applicable adjustment to the 60-day
case-mix and wage-adjusted episode
payment. The end date of the 60-day
episode as reported on the claim
determines which calendar year rates
Medicare would use to pay the claim.
We may also adjust the 60-day casemix and wage-adjusted episode
payment based on the information
submitted on the claim to reflect the
following:
• A low utilization payment provided
on a per-visit basis as set forth in
§ 484.205(c) and § 484.230.
• A partial episode payment
adjustment as set forth in § 484.205(d)
and § 484.235.
• An outlier payment as set forth in
§ 484.205(e) and § 484.240.
b. Proposed CY 2014 National,
Standardized 60-Day Episode Payment
Rate
The proposed CY 2014 national,
standardized 60-day episode payment
rate would be $2,862.99 as calculated in
Table 16. To determine the CY 2014
proposed national, standardized 60-day
episode payment rate, we start with the
2013 average payment per episode
($2,963.65) calculated in section III.D.1.
of this proposed rule. We then apply the
3.50 percent rebasing reduction
(1¥0.0350 = 0.9650) and remove the 2.5
percent for outlier payments that we put
back in the rates as described in section
III.D.1. of this proposed rule. We
subsequently apply a standardization
factor (1.0017) to ensure budget
neutrality in episode payments using
the 2014 wage index. The application of
a standardization factor was also done
when setting the original national,
standardized 60-day episode payment
rate for the HH PPS in 2000 per section
1895(3)(A)(i) of the Act. The Act
required that the 60-day episode base
rate and other applicable amounts be
standardized in a manner that
eliminates the effects of variations in
relative case mix and area wage
adjustments among different home
health agencies in a budget neutral
manner. To calculate the
standardization factor, we simulated
total payments for non-LUPA episodes
using the 2014 wage index and
compared it to our simulation of total
payments for non-LUPA episodes using
the 2013 wage index. By dividing the
total payments using the 2014 wage
index by the total payments using the
2013 wage index, we obtain a
standardization factor of 1.0017. We
note that since we are implementing the
adjustment to the case-mix weights in a
budget neutral manner, there is no
standardization factor needed to ensure
budget neutrality in episode payments
using the 2014 case-mix relative values.
Lastly, we update payments by the CY
2014 market basket update (2.4 percent).
TABLE 16—CY 2014 PROPOSED 60-DAY NATIONAL, STANDARDIZED 60-DAY EPISODE PAYMENT AMOUNT
2013 Estimated average payment per episode
2014rebasing
adjustment
× 0.9650
tkelley on DSK3SPTVN1PROD with PROPOSALS2
$2,963.65 .....................................................
The proposed CY 2014 national,
standardized 60-day episode payment
rate for an HHA that does not submit the
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Outlier
adjustment
factor
Standardization
factor
× 0.975
× 1.0017
required quality data is updated by the
proposed CY 2014 HH market basket
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2014 HH
market basket
× 1.024
CY 2014
proposed
national,
standardized
60-day episode
payment
= $2,860.20
update (2.4 percent) minus 2 percentage
points and is shown in Table 17.
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40297
TABLE 17—FOR HHAS THAT DO NOT SUBMIT THE QUALITY DATA—PROPOSED CY 2014 NATIONAL, STANDARDIZED 60DAY EPISODE PAYMENT AMOUNT
2013 estimated average payment per episode
Outlier
adjustment
factor
2014 rebasing
adjustment
× 0.9650
$2,963.65 .....................................................
c. National Per-Visit Rates
The national per-visit rates are used to
pay LUPAs and are also used to
compute imputed costs in outlier
calculations. The per-visit rates are paid
by type of visit or HH discipline. The
six HH disciplines are as follows:
• Home health aide (HH aide);
• Medical Social Services (MSS);
• Occupational therapy (OT);
• Physical therapy (PT);
• Skilled nursing (SN); and
• Speech-language pathology (SLP).
To calculate the CY 2014 national pervisit rates, we used the 2013 national
per-visit rates adjusted to include the
dollars from the 2.5 percent outlier pool
as described in section III.D.2. of this
proposed rule. We then apply the 3.5
2014 HH
market basket
minus 2
percentage points
Standardization
factor
× 0.975
× 1.0017
percent rebasing increase to the 2013
outlier adjusted per-visit rates (1 + 0.035
= 1.035), remove the outlier payment
adjustment that we used to inflate the
rates for comparison purposes (to
compare the rates to the estimated per
visit costs) in section III.D.2. of this
proposed rule, and apply a wage index
budget neutrality factor of 1.0003 to
ensure budget neutrality for LUPA pervisit payments after applying the 2014
wage index. We calculated the wage
index budget neutrality factor by
simulating total payments for LUPA
episodes using the 2014 wage index and
comparing it to simulated total
payments for LUPA episodes using the
2013 wage index. We note that the
LUPA per-visit payments are not
× 1.004
CY 2014
proposed
national,
standardized
60-day episode
payment
= $2,804.34
calculated using case-mix weights and
therefore, there is no case-mix
standardization factor needed to ensure
budget neutrality in LUPA payments.
The per-visit rates for each discipline
are then updated by the proposed CY
2014 HH market basket update of 2.4
percent. The national per-visit rates are
adjusted by the wage index based on the
site of service of the beneficiary. The
per-visit payment amounts for LUPAs
are separate from the LUPA add-on
payment amount, which is paid for
episodes that occur as the only episode
or initial episode in a sequence of
adjacent episodes. The proposed CY
2014 national per-visit rates are shown
in Tables 18 and 19.
TABLE 18—PROPOSED CY 2014 NATIONAL PER-VISIT PAYMENT AMOUNTS
CY 2013
per-visit rates
including
outliers
HH discipline type
Home Health Aide ....................................
Medical Social Services ...........................
Occupational Therapy ..............................
Physical Therapy .....................................
Skilled Nursing .........................................
Speech-Language Pathology ...................
$53.12
188.01
129.11
128.24
117.28
139.34
The proposed CY 2014 per-visit
payment rates for an HHA that does not
submit the required quality data is
CY 2014
rebasing
adjustment
Outlier
adjustment
Wage index
budget
neutrality
factor
2014 HH
market
basket
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
1.035
1.035
1.035
1.035
1.035
1.035
0.975
0.975
0.975
0.975
0.975
0.975
updated by the proposed CY 2014 HH
market basket update (2.4 percent)
1.0003
1.0003
1.0003
1.0003
1.0003
1.0003
1.024
1.024
1.024
1.024
1.024
1.024
Proposed
CY 2014
per-visit rates
$54.91
194.34
133.46
132.56
121.23
144.03
minus 2 percentage points and is shown
in Table 19.
TABLE 19—PROPOSED CY 2014 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE
REQUIRED QUALITY DATA
CY 2013
per-visit rates
including
outliers
tkelley on DSK3SPTVN1PROD with PROPOSALS2
HH discipline type
Home Health Aide ....................................
Medical Social Services ...........................
Occupational Therapy ..............................
Physical Therapy .....................................
Skilled Nursing .........................................
Speech-Language Pathology ...................
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$53.12
188.01
129.11
128.24
117.28
139.34
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CY 2014
rebasing
adjustment
Outlier
adjustment
Wage index
budget
neutrality
factor
2014
HH market
basket minus
2 percentage
points
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
×
1.0003
1.0003
1.0003
1.0003
1.0003
1.0003
×
×
×
×
×
×
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03JYP2
1.035
1.035
1.035
1.035
1.035
1.035
Fmt 4701
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0.975
0.975
0.975
0.975
0.975
0.975
1.004
1.004
1.004
1.004
1.004
1.004
Proposed
CY 2014
per-visit rates
$53.84
190.54
130.85
129.97
118.86
141.22
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d. Proposed Low-Utilization Payment
Adjustment (LUPA) Add-On Factor
For episodes with four or fewer visits,
Medicare pays on the basis of a national
per-visit amount by discipline, referred
to as a LUPA. As stated in our CY 2008
HH PPS proposed rule, after the HH PPS
went into effect we received comments
and correspondence suggesting that the
LUPA payment rates do not adequately
account for the front-loading of costs in
an episode. Commenters suggested that
because of the small number of visits in
a LUPA episode, HHAs have little
opportunity to spread the costs of
lengthy initial visits over a full episode
(72 FR 25424). In response to comments
received, we conducted an initial
descriptive analysis of visit log data
from prior to the establishment of the
HH PPS, showing that initial visits were
25 to 50 percent longer than subsequent
visits in LUPA episodes that occur as
the only or initial episode. These results
indicated that payment for LUPA
episodes may not offset the full cost of
visit if SLP. Those excess minutes were
then expressed as a proportion of the
average number of minutes for all nonfirst visits in non-LUPA episodes (42.5
minutes, 45.6 minutes, and 48.6
minutes for SN, PT, and SLP,
respectively). These proportions (90.6
percent, 55.0 percent, and 46.5 percent
for SN, PT, and SLP, respectively) were
used to inflate the LUPA per-visit
payment rates. Finally, using an
appropriate set of weights representing
the share of LUPA first visits for SN
(77.8 percent), PT (21.7 percent) and
SLP (0.5 percent), we calculated a LUPA
add-on payment amount of $87.93 for
LUPA episodes that occur as the only
episode or an initial episode in a
sequence of adjacent episodes (Table
20). When the LUPA add-on payment
amount was implemented in CY 2008,
to account for the additional payment to
LUPA episodes and maintain budget
neutrality, a reduction was made to the
national, standardized 60-day episode
payment rate (72 FR 49849).
initial visits. Therefore, as specified in
the CY 2008 HH PPS final rule, LUPA
episodes that occur as the only episode
or an initial episode in a sequence of
adjacent episodes are adjusted by
applying an additional amount to the
LUPA payment before adjusting for area
wage differences (72 FR 49849).
The CY 2008 LUPA add-on amount
was calculated using a large
representative sample of claims from
2005 (72 FR 49848). The analysis
examined minute data for skilled
nursing, physical therapy, and speechlanguage pathology (SLP) as, per the
Medicare CoPs at § 484.55(a)(1) and
(a)(2), only these three disciplines are
allowed to conduct the initial
assessment visit. The analysis showed
that the average excess of minutes for
the first visit in LUPA episodes that
were the only episode or an initial
LUPA in a sequence of adjacent
episodes was 38.5 minutes for the first
visit if SN, 25.1 minutes for the first
visit if PT, and 22.6 minutes for the first
TABLE 20—CALCULATION OF THE LUPA ADD-ON AMOUNT, CY 2008
Skilled nursing
(1)
(2)
(3)
(4)
(5)
Proportional increase in minutes for an initial visit over non-initial visits ..............................
CY 2008 Per-Visit Amounts ...................................................................................................
Excess cost for initial visits (1*2) ...........................................................................................
Percent of initial assessment visits provided by this discipline .............................................
Add-on amount per discipline (3*4) .......................................................................................
90.59%
$104.91
$95.04
77.8%
$73.94
tkelley on DSK3SPTVN1PROD with PROPOSALS2
(6) Total LUPA add-on Amount (Sum of row 5) .........................................................................
For this proposed rule we are using
the same methodology used to establish
the LUPA add-on amount for CY 2008.
Specifically, we updated the analysis
using 100 percent of LUPA episodes and
a 20 percent sample of non-LUPA first
episodes from preliminary CY 2012
claims data for episodes starting on or
before May 31, 2012. The analysis
showed that the average excess of
minutes for the first visit in LUPA
episodes that were the only episode or
an initial LUPA in a sequence of
adjacent episodes was 38.88 minutes for
the first visit if SN, 32.75 minutes for
the first visit if PT, and 32.28 minutes
for the first visit if SLP. The average
minutes for all non-first visits in nonLUPA episodes was 44.62 minutes for
SN, 47.88 minutes for PT, and 51.31
minutes for SLP. Those excess minutes
expressed as a proportion of the average
minutes for all non-first visits in nonLUPA episodes are 87.14 percent for
SN, 68.40 percent for PT, and 62.91
percent for SLP. We used these
proportions to inflate the proposed
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LUPA per-visit payment rates in Table
18 of $121.23 for SN, $132.56 for PT,
and $144.03 for SLP. We then calculated
a set of weights representing the share
of LUPA first visits for SN (81.74
percent), PT (17.87 percent) and SLP
(0.39 percent) and using these weights,
we calculated a LUPA add-on payment
amount of $102.91 for LUPA episodes
that occur as the only episode or an
initial episode in a sequence of adjacent
episodes.
In lieu of a single LUPA add-on
payment amount of $102.91, to ensure
that the LUPA add-on amount equitably
reflects the excess cost for an initial visit
for each of the three disciplines (SN, PT,
and SLP), we propose to multiply the
per-visit payment amount for the first
SN, PT, or SLP visit in LUPA episodes
that occur as the only episode or an
initial episode in a sequence of adjacent
episodes by 1 + the proportional
increase in minutes for an initial visit
over non-initial visits. The proposed
LUPA add-on factors are: 1.8714 for SN;
1.6841 for PT; and 1.6293 for SLP. For
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Sfmt 4702
Physical
therapy
Speechlanguage
pathology
55.04%
$114.71
$63.14
21.7%
$13.70
46.50%
$124.54
$57.91
0.5%
$0.29
$87.93
example, for LUPA episodes that occur
as the only episode or an initial episode
in a sequence of adjacent episodes, if
the first skilled visit is SN, the payment
for that visit would be $ $226.87 (1.8714
multiplied by $121.23). For more
information on the analyses performed
to update the LUPA add-on amount,
please refer to the technical report titled
‘‘Analyses in Support of Rebasing &
Updating the Medicare Home Health
Payment Rates’’ available on the CMS
Home Health Agency (HHA) Center Web
site at: https://www.cms.gov/Center/
Provider-Type/Home-Health-AgencyHHA-Center.html?redirect=/center/
hha.asp.
e. Nonroutine Medical Supply
Conversion Factor Update
Payments for NRS are computed by
multiplying the relative weight for a
particular severity level by the NRS
conversion factor. To determine the CY
2014 proposed NRS conversion factor,
we start with the 2013 NRS conversion
factor ($53.97) and apply the 2.58
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percent rebasing adjustment calculated
in section II.D.3. of this proposed rule
(1–0.0258 = 0.9742). We then update the
conversion factor by the proposed CY
2014 HH market basket update (2.4
percent). We do not apply a
standardization factor as the NRS
payment amount calculated from the
conversion factor is not wage or casemix adjusted when the final claim
40299
payment amount is computed. The
proposed NRS conversion factor for CY
2014 is $53.84, as shown in Table 21.
TABLE 21—PROPOSED CY 2014 NRS CONVERSION FACTOR
CY 2013 NRS conversion factor
2014
rebasing
adjustment
2014
HH market
basket
Proposed CY
2014 NRS
conversion
factor
$53.97 ..........................................................................................................................................
× 0.9742
× 1.024
= $53.84
Using the proposed CY 2014 NRS
conversion factor ($53.84), the payment
amounts for the six severity levels are
shown in Table 22.
TABLE 22—PROPOSED CY 2014 NRS PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA
Points
(scoring)
Severity level
1
2
3
4
5
6
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
For HHAs that do not submit the
required quality data, we again begin
with the CY 2013 NRS conversion factor
($53.97) and apply the 2.58 percent
rebasing adjustment calculated in
section II.D.3. of this proposed rule (1 ¥
0.0258 = 0.9742). We then update the
NRS conversion factor by the proposed
CY 2014 HH market basket update of 2.4
percent, minus 2 percentage points. The
1
15
28
49
0
to 14
to 27
to 48
to 98
99+
Relative
weight
0.2698
0.9742
2.6712
3.9686
6.1198
10.5254
Proposed
NRS payment
amount
$14.53
52.45
143.82
213.67
329.49
566.69
CY 2014 NRS conversion factor for
HHAs that do not submit quality data is
shown in Table 23.
TABLE 23—PROPOSED CY 2014 NRS CONVERSION FACTOR FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY
DATA
CY 2013 NRS conversion factor
2014
rebasing
adjustment
CY 2014
HH market
basket minus
2 percentage
points
Proposed CY
2014 NRS
conversion
factor
$53.97 ..........................................................................................................................................
× 0.9742
× 1.004
$52.79
The payment amounts for the various
severity levels based on the updated
conversion factor for HHAs that do not
submit quality data are calculated in
Table 24.
TABLE 24—PROPOSED CY 2014 NRS PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY
DATA
Points
(scoring)
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Severity level
1
2
3
4
5
6
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
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1
15
28
49
E:\FR\FM\03JYP2.SGM
0
to 14
to 27
to 48
to 98
99+
03JYP2
Relative
weight
0.2698
0.9742
2.6712
3.9686
6.1198
10.5254
Proposed
NRS payment
amount
$14.24
51.43
141.01
209.50
323.06
555.64
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5. Rural Add-On
Section 421(a) of the MMA required,
for HH services furnished in a rural
areas (as defined in section
1886(d)(2)(D) of the Act), for episodes or
visits ending on or after April 1, 2004,
and before April 1, 2005, that the
Secretary increase the payment amount
that otherwise would have been made
under section 1895 of the Act for the
services by 5 percent.
Section 5201 of the DRA amended
section 421(a) of the MMA. The
amended section 421(a) of the MMA
required, for HH services furnished in a
rural area (as defined in section
1886(d)(2)(D) of the Act), on or after
January 1, 2006 and before January 1,
2007, that the Secretary increase the
payment amount otherwise made under
section 1895 of the Act for those
services by 5 percent.
Section 3131(c) of the Affordable Care
Act amended section 421(a) of the MMA
to provide an increase of 3 percent of
the payment amount otherwise made
under section 1895 of the Act for HH
services furnished in a rural area (as
defined in section 1886(d)(2)(D) of the
Act), for episodes and visits ending on
or after April 1, 2010, and before
January 1, 2016.
Section 421 of the MMA, as amended,
waives budget neutrality related to this
provision, as the statute specifically
states that the Secretary shall not reduce
the standard prospective payment
amount (or amounts) under section 1895
of the Act applicable to HH services
furnished during a period to offset the
increase in payments resulting in the
application of this section of the statute.
The 3 percent rural add-on is applied
to the national, standardized 60-day
episode payment rate, national per-visit
rates, LUPA add-on payment, and NRS
conversion factor when HH services are
provided in rural (non-CBSA) areas.
Refer to Tables 25 through 28 for these
payment rates.
TABLE 25—PROPOSED CY 2014 PAYMENT AMOUNTS FOR 60-DAY EPISODES FOR SERVICES PROVIDED IN A RURAL AREA
For HHAs that DO submit quality data
For HHAs that DO NOT submit quality data
Proposed national standardized 60day episode payment rate
Multiply by the
3 percent rural
add-on
Proposed rural
national standardized 60-day
episode payment rate
Proposed national standardized 60day episode payment rate
Multiply by the
3 percent rural
add-on
Proposed rural
national standardized 60-day
episode payment Rate
$2,860.20 ..........................................
× 1.03
$2,946.01
$2,804.34 ..........................................
× 1.03
$2,888.47
TABLE 26—PROPOSED CY 2014 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA
For HHAs that DO submit quality data
HH discipline type
Proposed pervisit rate
HH Aide ....................................................
MSS .........................................................
OT ............................................................
PT .............................................................
SN ............................................................
SLP ..........................................................
Multiply by the
3 percent rural
add-on
$54.91
194.34
133.46
132.56
121.23
144.03
×
×
×
×
×
×
For HHAs that DO NOT submit quality data
Proposed rural
per-visit rate
Proposed pervisit rate
$56.56
200.17
137.46
136.54
124.87
148.35
$53.84
190.54
130.85
129.97
118.86
141.22
1.03
1.03
1.03
1.03
1.03
1.03
Multiply by the
3 percent rural
add-on
×
×
×
×
×
×
Proposed rural
per-visit rate
1.03
1.03
1.03
1.03
1.03
1.03
$55.46
196.26
134.78
133.87
122.43
145.46
TABLE 27—PROPOSED CY 2014 NRS CONVERSION FACTOR FOR SERVICES PROVIDED IN RURAL AREAS
For HHAs that DO submit quality data
Proposed conversion factor
For HHAs that DO NOT submit quality data
Multiply by the
3 percent rural
add-on
Proposed rural
conversion
factor
× 1.03
$55.46
$53.84 ...............................................
Proposed conversion factor
$52.79 ...............................................
Multiply by the
3 percent rural
add-on
Proposed rural
conversion
factor
× 1.03
$54.37
TABLE 28—PROPOSED CY 2014 NRS PAYMENT AMOUNTS FOR SERVICES PROVIDED IN RURAL AREAS
For HHAs that DO submit quality data (NRS conversion factor
= $55.46)
Points
(scoring)
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Severity level
Relative
weight
1
2
3
4
5
6
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
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1
15
28
49
0
to 14
to 27
to 48
to 98
99+
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Total NRS
payment
amount for
rural areas
0.2698
0.9742
2.6712
3.9686
6.1198
10.5254
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$14.96
54.03
148.14
220.10
339.40
583.74
03JYP2
For HHAs that DO NOT submit
quality data (NRS conversion
factor = $54.37)
Relative
weight
0.2698
0.9742
2.6712
3.9686
6.1198
10.5254
Total NRS
payment
amount for
rural areas
$14.67
52.97
145.23
215.77
332.73
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F. Outlier Policy
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1. Background
Section 1895(b)(5) of the Act allows
for the provision of an addition or
adjustment to the national, standardized
60-day case-mix and wage-adjusted
episode payment amounts in the case of
episodes that incur unusually high costs
due to patient care needs. Prior to the
enactment of the Affordable Care Act,
section 1895(b)(5)of the Act stipulated
that projected total outlier payments
could not exceed 5 percent of total
projected or estimated HH payments in
a given year. In the Medicare Program;
Prospective Payment System for Home
Health Agencies final rule (65 FR 41188
through 41190), we described the
method for determining outlier
payments. Under this system, outlier
payments are made for episodes whose
estimated costs exceed a threshold
amount for each HH Resource Group
(HHRG). The episode’s estimated cost is
the sum of the national wage-adjusted
per-visit payment amounts for all visits
delivered during the episode. The
outlier threshold for each case-mix
group or PEP adjustment is defined as
the 60-day episode payment or PEP
adjustment for that group plus a fixeddollar loss (FDL) amount. The outlier
payment is defined to be a proportion of
the wage-adjusted estimated cost
beyond the wage-adjusted threshold.
The threshold amount is the sum of the
wage and case-mix adjusted PPS
episode amount and wage-adjusted FDL
amount. The proportion of additional
costs over the outlier threshold amount
paid as outlier payments is referred to
as the loss-sharing ratio.
2. Regulatory Update
In the CY 2010 HH PPS final rule (74
FR 58080 through 58087), we discussed
excessive growth in outlier payments,
primarily the result of unusually high
outlier payments in a few areas of the
country. Despite program integrity
efforts associated with excessive outlier
payments in targeted areas of the
country, we discovered that outlier
expenditures still exceeded the 5
percent, target and, in the absence of
corrective measures, would continue do
to so. Consequently, we assessed the
appropriateness of taking action to curb
outlier abuse. To mitigate possible
billing vulnerabilities associated with
excessive outlier payments and adhere
to our statutory limit on outlier
payments, we adopted an outlier policy
that included a 10 percent agency-level
cap on outlier payments. This cap was
implemented in concert with a reduced
FDL ratio of 0.67. These policies
resulted in a projected target outlier
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pool of approximately 2.5 percent. (The
previous outlier pool was 5 percent of
total HH expenditures.)
For CY 2010, we first returned 5
percent of these dollars back into the
national, standardized 60-day episode
payment rates, the national per-visit
rates, the LUPA add-on payment
amount, and the NRS conversion factor.
Then, we reduced the CY 2010 rates by
2.5 percent to account for the new
outlier pool of 2.5 percent. This outlier
policy was adopted for CY 2010 only.
3. Statutory Update
As we noted in the CY 2011 HH PPS
final rule (75 FR 70397 through 70399),
section 3131(b)(1) of the Affordable Care
Act amended section 1895(b)(3)(C) of
the Act. As amended, ‘‘Adjustment for
outliers,’’ states that ‘‘The Secretary
shall reduce the standard prospective
payment amount (or amounts) under
this paragraph applicable to HH services
furnished during a period by such
proportion as will result in an aggregate
reduction in payments for the period
equal to 5 percent of the total payments
estimated to be made based on the
prospective payment system under this
subsection for the period.’’ In addition,
section 3131(b)(2) of the Affordable Care
Act amended section 1895(b)(5) of the
Act by re-designating the existing
language as section 1895(b)(5)(A) of the
Act, and revising it to state that the
Secretary, ‘‘subject to [a 10 percent
program-specific outlier cap], may
provide for an addition or adjustment to
the payment amount otherwise made in
the case of outliers because of unusual
variations in the type or amount of
medically necessary care. The total
amount of the additional payments or
payment adjustments made under this
paragraph with respect to a fiscal year
or year may not exceed 2.5 percent of
the total payments projected or
estimated to be made based on the
prospective payment system under this
subsection in that year.’’
As such, beginning in CY 2011, our
HH PPS outlier policy is that we reduce
payment rates by 5 percent and target
up to 2.5 percent of total estimated HH
PPS payments to be paid as outliers. To
do so, we first returned the 2.5 percent
held for the target CY 2010 outlier pool
to the national, standardized 60-day
episode payment rates, the national per
visit rates, the LUPA add-on payment
amount, and the NRS conversion factor
for CY 2010. We then reduced the rates
by 5 percent as required by section
1895(b)(3)(C) of the Act, as amended by
section 3131(b)(1) of the Affordable Care
Act. For CY 2011 and subsequent
calendar years we target up to 2.5
percent of estimated total payments to
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be paid as outlier payments, and apply
a 10 percent agency-level outlier cap.
4. Loss-Sharing Ratio and Fixed Dollar
Loss (FDL) Ratio
For a given level of outlier payments,
there is a trade-off between the values
selected for the FDL ratio and the losssharing ratio. A high FDL ratio reduces
the number of episodes that can receive
outlier payments, but makes it possible
to select a higher loss-sharing ratio, and
therefore, increase outlier payments for
outlier episodes. Alternatively, a lower
FDL ratio means that more episodes can
qualify for outlier payments, but outlier
payments per episode must then be
lower.
The FDL ratio and the loss-sharing
ratio must be selected so that the
estimated total outlier payments do not
exceed the 2.5 percent aggregate level
(as required by section 1895(b)(5)(A) of
the Act). Historically, we have used a
value of 0.80 for the loss-sharing ratio
which, we believe, preserves incentives
for agencies to attempt to provide care
efficiently for outlier cases. With a losssharing ratio of 0.80, Medicare pays 80
percent of the additional estimated costs
above the outlier threshold amount. We
are not proposing a change to the losssharing ratio in this proposed rule. In
the CY 2011 HH PPS final rule (75 FR
70398), in targeting total outlier
payments as 2.5 percent of total HH PPS
payments, we implemented an FDL
ratio of 0.67, and we maintained that
ratio in CY 2012. Simulations based on
CY 2010 claims data completed for the
CY 2013 HH PPS final rule showed that
outlier payments were estimated to
comprise approximately 2.18 percent of
total HH PPS payments in CY 2013, and
as such, we lowered the FDL ratio from
0.67 to 0.45. We stated that lowering the
FDL ratio to 0.45, while maintaining a
loss-sharing ratio of 0.80, struck an
effective balance of compensating for
high-cost episodes while allowing more
episodes to qualify as outlier payments
(77 FR 67080). The national,
standardized 60-day episode payment
amount is multiplied by the FDL ratio.
That amount is wage-adjusted to derive
the wage-adjusted FDL amount, which
is added to the case-mix and wageadjusted 60-day episode payment
amount to determine the outlier
threshold amount that costs have to
exceed before Medicare will pay 80
percent of the additional estimated
costs.
Based on simulations using
preliminary CY 2012 claims data, the
proposed CY 2014 payments rates in
section III.E. in this proposed rule, and
the FDL ratio of 0.45; we estimate that
outlier payments would comprise
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approximately 1.82 percent of total HH
PPS payments in CY 2014. Simulating
payments using preliminary CY 2012
claims data and the CY 2013 payment
rates (77 FR 67100 through 67105); we
estimate that outlier payments would
comprise 1.78 percent of total payments.
Given the proposed increases to the CY
2014 national per-visit payment rates,
our analysis estimates a 0.04 percentage
point increase in estimated outlier
payments as a percent of total HH PPS
payment. We further estimate that by
the end of the 4-year phase-in period
required by the Affordable Care Act,
estimated outlier payments as a percent
of total HH PPS payments would be
approximately 1.94 percent. We note,
however, that these estimates do not
take in to account any changes in
utilization that may have occurred in
CY 2013, and would continue to occur
in CY 2014, due to decreasing the FDL
ratio from 0.67 percent to 0.45 percent.
Therefore, we not proposing a change to
the FDL ratio for CY 2014 as the claims
data showing any utilization changes
that may have resulted from an FDL of
0.45 will not be available for analysis
until next year. In the final rule, we will
update our estimate of outlier payments
as a percent of total HH PPS payments
using the best analysis the most current
and complete year of HH PPS data and
will continue to monitor the percent of
total HH PPS payments paid as outlier
payments.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
5. Outlier Relationship to the HH
Payment Study
As we discuss in section III.G. of this
proposed rule, section 3131(d) of the
Affordable Care Act requires CMS to
conduct a study and report on
developing HH PPS payment revisions
that will ensure access to care and
payment for patients with high severity
of illness. Our Report to Congress
containing this study’s
recommendations is due no later than
March 1, 2014. Section 3131(d)(1)(A)(iii)
of the Affordable Care Act, in particular,
states that this study may include
analysis of potential revisions to outlier
payments to better reflect costs of
treating Medicare beneficiaries with
high levels of severity of illness.
G. Payment Reform: Home Health Study
and Report
To address concerns that some
beneficiaries are at risk of not having
access to Medicare HH services, and
that the current HH PPS may encourage
providers to adopt selective admission
patterns, section 3131(d) of the
Affordable Care Act requires the
Secretary to conduct a study on HHA
costs involved with providing ongoing
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access to care to low-income Medicare
beneficiaries or beneficiaries in
medically underserved areas, and in
treating beneficiaries with varying levels
of severity of illness (specifically,
beneficiaries with ‘‘high levels of
severity of illness’’). Section 3131(d) of
the Affordable Care Act also gives the
Secretary the authority to explore
methods to revise the HH PPS to
account for costs related to patient
severity of illness or to improving
beneficiary access to care and examine
the potential impacts of any potential
revisions to the payment system.
As we stated in the CY 2013 HH PPS
proposed rule (77 FR 41572), we
awarded a contract to L&M Policy
Research in the fall of 2010 to perform
exploratory work for the study on the
vulnerable patient populations (that is,
low-income Medicare beneficiaries,
beneficiaries in medically underserved
areas, and beneficiaries with high levels
of severity of illness). The contractor
performed a literature review of
potential HH PPS payment
vulnerabilities and access issues,
established and convened technical
expert panel (TEP) meetings and open
door forums to help define the
vulnerable patient populations and to
gain insight on access issues these
populations may face, and performed
preliminary analysis looking at resource
costs versus Medicare reimbursement.
In September 2011, we awarded a
study contract to L&M Policy Research,
along with subcontractors Avalere
Health, Mathematica Policy Research,
and Social & Scientific Systems, to
develop an analytic plan, perform
detailed analysis, and if necessary,
develop recommendations for changes
to the HH PPS. In 2012, we completed
preliminary analyses on HHA costs
associated with providing care for
vulnerable patient populations. We
presented our findings at a TEP meeting
in December 2012 and received
extensive feedback on our analyses. We
refined our analytic approach based on
feedback from the TEP meeting and we
are in the process of performing the
refined analyses. In addition to
examining the costs of providing care to
vulnerable patient populations, we are
assessing whether the vulnerable patient
populations experience access issues
and potential factors that may prevent
access to care. To do so, we mailed out
HHA and physician surveys on access to
care for vulnerable populations in
February 2013. We are in the process of
collecting and analyzing the data from
the surveys.
The findings from our analysis of
HHA costs and the survey on access to
care for vulnerable patient populations
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may be used to develop
recommendations on how to revise the
current HH PPS to better account for
costs and ensure access to care for these
beneficiaries. Methods to revise the
current HH PPS could include payment
adjustments for services that involve
either more or fewer resources, changes
to reflect resources involved with
providing HH services to low-income
Medicare beneficiaries or Medicare
beneficiaries residing in medically
underserved area, and ways outlier
payments could be revised to reflect
costs of treating Medicare beneficiaries
with high severity of illness. In
addition, as part of the study, we may
analyze operational issues involved
with potential implementation of
potential revisions to the HH payment
system.
The Affordable Care Act requires that
the Secretary submit a Report to
Congress regarding the study no later
than March 1, 2014. The report may
contain recommendations for revisions
to the HH PPS, recommendations for
legislation and administrative action,
and recommendations for whether
further research is needed. The Congress
also provided CMS with the authority to
conduct a separate demonstration
project to perform additional research
and further explore recommendations
from the study. We plan to provide
updates regarding our progress on the
HH study in future rulemaking and
open door forums.
H. Cost Allocation of Survey Expenses
In the CY 2013 HH PPS proposed rule
(77 FR 41548), we proposed to amend
§ 431.610(g), Relations with standardsetting and survey agencies, to require
that Medicaid state plans explicitly
include Medicaid’s appropriate
contribution to the cost of HH surveys.
We proposed to add a reference to
HHAs, along with NFs and ICFs/IIDs at
§ 431.610(g).
Surveys are required for determining
a provider’s or supplier’s compliance
with program participation
requirements and the HHA surveys
benefit both Medicare and Medicaid
programs where the HHAs seek such
dual certification. Thus, in accordance
with OMB Circular A–87, the costs for
surveys of HHAs that are certified for
both Medicare and Medicaid should be
shared between Medicare, Medicaid and
state-only programs in proportion to the
benefits received. However, to provide
more time for dialogue with states and
for any necessary adjustments to state
Medicaid Plans, we removed the
proposed provision at § 431.610(g) in
the for CY 2013 HH PPS final rule (77
FR 67068). We are now proposing to
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Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
proceed to amend § 431.610(g) with
additional explanation of our proposal,
updated cost information, and request
for comment on our proposed
methodologies.
This proposed rule would clarify that
a state Medicaid program must provide
that, in certifying HHAs, the state’s
designated survey agency must carry out
certain other responsibilities that
already apply to surveys of nursing
facilities and Intermediate Care
Facilities for Individuals with
Intellectual Disabilities (ICF–IID),
including sharing in the cost of HHA
surveys. Section 431.610(g) provides for
the availability of federal financial
participation (FFP) in the cost of such
surveys, except for expenditures that the
survey agency makes that are
attributable to the state’s overall
responsibilities under state law and
regulations. We believe that the
principles articulated in OMB Circular
A–87 require that HHA survey costs be
allocated to Medicaid, Medicare and
state-only programs in proportion to the
benefits received. However, we also
believe that the proposed amendment to
§ 431.610(g) would add clarity, and that
a proposed rule will offer states and the
public additional opportunity to
comment or pose questions that will
further aid adherence to the appropriate
cost allocation principles. We further
invite public comment on our proposed
methods to ensure compliance with
these requirements. Specifically, we
propose to review each state’s allocation
of costs for HHA surveys for adherence
to OMB Circular A–87 principles and
the statutes with the goal of ensuring
full adherence by each state no later
than July 2014. For that portion of costs
attributable to Medicare and Medicaid,
we would assign 50 percent to Medicare
and 50 percent to Medicaid. This is the
standard 50/50 method that CMS and
states have used effectively for many
years in the allocation of expenses
related to surveys of SNF/NF nursing
homes, an approach we consider to be
more straight-forward and economical
compared with calculation of unique
percentages that vary state-to-state and
year-by-year. Most importantly, a 50/50
method best reflects the reality that
Medicare and Medicaid requirements
for home health agencies are generally
the same and each program benefits
from the regulations.
An alternative to the proposed 50/50
method for allocating each state’s
Medicare/Medicaid HHS survey costs
would be to fix each state’s Medicaid
share each year based on the proportion
of Medicaid funding for HH services in
the state compared to the combined
Medicare and Medicaid total funding in
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the most recent years for which the data
are reasonably complete. This is the
method adopted for the disbursement of
civil monetary penalties (CMPs) in the
CY 2013 HH PPS proposed rule (77 FR
41548). However, the effective date of
HHA CMPs is not until July 1, 2014. Our
preparations for imposing such CMPs in
2014 indicate that the annual data
collection and calculations necessary for
that methodology are (a) More
complicated and burdensome than
necessary, (b) involve an inherent data
lag that could create uncertainty for
states and CMS in preparing state
survey agency budgets, (c) sufficiently
variable from year to year to create
further uncertainty for states, (d) unable
to anticipate the effects of substantial
expansion of Medicaid under the
Affordable Care Act (which could
increasingly enlarge the state Medicaid
share) and (e) would not recognize that
both Medicare and Medicaid programs
benefit from the regulations. Therefore,
we believe that the more efficient and
advantageous method, for both CMS and
states, would be the 50/50 allocation
method that has been used successfully
for many years in the allocation of
survey costs for SNF/NF nursing homes.
We invite comment not only on the 50/
50 allocation method for the costs of
HHA survey expenses, but on whether
the method of distribution for CMP
receipts back to states and to the U.S.
Treasury should be changed to the same
50/50 methodology. Based on such a 50/
50 ratio for each state, and based upon
the projected national HHA survey
budget for FY 2014 of $37.2 million, if
implemented in the beginning of FY
2014, the anticipated aggregate share for
Medicaid would amount to $18.6
million. The cost of surveys is treated as
a Medicaid administrative cost,
reimbursable at the professional staff
rate of 75 percent. Therefore, the state
Medicaid share will be approximately
$4.65 million on an annualized basis.
The $4.65 million cost is spread out
over the 53 states/jurisdictions that
currently conduct surveys under section
1864 of the Act. However, the proposed
adherence date of July FY 2014 would
reduce the Medicaid aggregate share to
approximately $4.65 million (for 3
months of the annual $18.6 million
aggregate cost) and the state Medicaid
share to approximately $1.16 million
(25 percent of expenses for the last
quarter of FY 2014).
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
solicit public comment before a
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collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
Unless otherwise noted, to derive
average costs we used data from the U.S.
Bureau of Labor Statistics for all salary
estimates. The salary estimates include
the cost of fringe benefits, calculated at
35 percent of salary, which is based on
the March 2011 Employer Costs for
Employee Compensation report by the
Bureau.
We are soliciting public comment on
each of the section 3506(c)(2)(A)required issues for the following
information collection requirements
(ICRs):
A. ICRs Regarding OASIS
The information collection
requirements and burden estimates
associated with OASIS have been
approved by OMB under OCN 0938–
0760. While OASIS is discussed in
preamble section III E.2a, this proposed
rule does not revise any of its
information collection requirements or
burden estimates and, therefore, does
not require additional OMB review
under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
B. ICRs Regarding Cost Allocation of
Home Health Agency (HHA) Survey
Expenses (§ 431.610)
In § 431.610, HHAs would be added
to the survey agency provision
concerning Medicaid state plans. Since
CMS already requires the state survey
agencies to have qualified personnel
perform onsite inspections as
appropriate, we believe that the
requirement to use qualified staff is met
in the current state Medicaid plans. As
explained in the preamble (section H,
Cost Allocation of Survey Expenses), we
also expect that the state Medicaid plans
will provide for the appropriate
Medicaid share of expenses for the
conduct of HHA surveys. This is a
budgeting task for which there may be
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some incidental information collection
burden. For some states we believe the
information collection responsibility
may be met within the context of their
current state plan, while other states
may need to make a simple amendment
to their state Medicaid plan via use of
the existing CMS–179 form (OCN 0938–
0193). While CMS–179 would be the
vehicle for transmitting the amendment
to CMS, the amendment will be
submitted to OMB for their review/
approval under CMS–10489 (OCN
0938–NEW).
Consistent with time estimates for
similar tasks, the time required to
complete this information collection is
estimated to average 15 minutes per
response, including the time to review
instructions, search existing data
resources, gather the data needed, and
complete and review the information
collection. If all states, DC, and 2
territories needed to make such a state
plan amendment, the aggregate hours
would be 13.25 non-recurring hours (15/
60 * 53). Applying a national average
professional surveyor cost per hour of
approximately $50.23 (inclusive of
salary and fringe benefits), we estimate
that the maximum information
collection cost would be approximately
$667 ($50.23 * 13.25) if all states needed
to file a state plan amendment.
Apart from the SPA-related
requirements, this proposed rule would
not revise any budget-related
recordkeeping or reporting requirements
or estimates and, therefore, does not
require additional OMB review under
the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
tkelley on DSK3SPTVN1PROD with PROPOSALS2
C. ICRs Regarding Home Health Care
CAHPS® (HHCAHPS®) Survey
(§ 484.250)
As part of the DHHS Transparency
Initiative on Quality Reporting, CMS
implements the HHCAHPS® Survey to
measure and to publicly report patients’
experiences with home health care they
receive from Medicare-certified
agencies. Section 484.250, Patient
Assessment Data, requires that HHAs
submit to CMS, HHCAHPS® data in
order to administer the payment rate
methodologies described in §§ 484.215,
484.230, and 484.235. The burden
associated with this is the time and
effort put forth by the HHAs to submit
the HHCAHPS® data, the patients’
burden to respond to the HHCAHPS®
survey, and the cost to the HHAs to pay
for the HHCAHPS® survey vendors to
collect the data on their behalf. This
burden is currently accounted for under
OCN 0938–1066 (CMS–10275).
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CMS allows Medicare-certified home
health agencies that serve 59 or fewer
HHCAHPS® eligible patients, to request
an exemption from participating in the
HHCAHPS® survey. Currently, we have
posted the HHCAHPS® Participation
Exemption Request (PER) Form for the
CY 2015 Annual Payment Update on
https://homehealthcahps.org. This form
is in use without an OMB control
number (OCN). The form is only to be
used if home health agencies have 59 or
fewer HHCAHPS® eligible patients in
the count period that is referenced for
a given calendar year. For the CY 2015
annual payment update, home health
agencies with 59 or fewer HHCAHPS®
patients in the period of April 2012
through March 2013 are exempt from
participation in the HHCAHPS® Survey
from April 2013 through March 2014, if
they complete the HHCAHPS
Participation Exemption Request Form
for the CY 2015 Annual Payment
Update, and the counts are verified in
the CMS database for the same period.
We are revising OCN 0938–1066 by
adding the HHCAHPS® Participation
Exemption Request Form for the CY
Annual Payment Update and by adding
our estimated burden that the form
presents to Medicare-certified home
health agencies.
The HHCAHPS® PER Form for the CY
2015 Annual Payment Update is a onepage form. We estimate that it would
take 15 minutes to complete the form
since it only has a few items to complete
including one item concerning the
count of HHCAHPS® eligible patients in
an annual period. We believe that it
would take an additional 20 minutes to
count the patients and to verify the
count. The annualized aggregated total
burden to completion of the form would
be 1,160 hr ((15 min + 20 min)/60 ×
2,000 Medicare-certified home health
agencies) at a total estimated cost of
$36,400 for 2,000 home health agencies.
In deriving these figures, we used the
following hourly labor rates and time to
complete each task: $36.27/hr and 20
min (.33 hr) for a home health care
agency director to check the work on the
Participation Exemption Request Form
and $24.92/hr and 15 min (.25 hr) for an
executive assistant to perform the
patient count and to complete the form.
This amounts to $18.20 per respondent
($11.97 + $6.23) or $36,400 ($18.20 ×
2,000) total.
D. Submission of PRA-Related
Comments
We have submitted a copy of this
proposed rule to OMB for its review of
the rule’s information collection and
recordkeeping requirements. These
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requirements are not effective until they
have been approved by the OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
referenced above, access CMS’ Web site
at www.cms.gov/Regulations-andGuidance/Legislation/
PaperworkReductionActof1995/, or call
the Reports Clearance Office at 410–
786–1326.
We invite public comments on these
potential information collection
requirements. If you comment on these
information collection and
recordkeeping requirements, please do
either of the following:
1. Submit your comments
electronically as specified in the
ADDRESSES section of this proposed rule;
or
2. Submit your comments to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Attention: CMS Desk Officer,
(CMS–1450–P) Fax: (202) 395–6974; or
Email: OIRA_submission@omb.eop.gov.
V. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
VI. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Act, section
202 of the Unfunded Mandates Reform
Act of 1995 (UMRA, March 22, 1995;
Pub. L. 104–4), Executive Order 13132
on Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
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Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
tkelley on DSK3SPTVN1PROD with PROPOSALS2
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This notice
has been designated as economically
significant rule, under section 3(f)(1)of
Executive Order 12866. Accordingly, we
have prepared a regulatory impact
analysis (RIA) that to the best of our
ability presents the costs and benefits of
the rulemaking. Also, the rule has been
reviewed by OMB.
B. Statement of Need
Section 1895(b)(1) of the Act requires
the Secretary to establish a HH PPS for
all costs of HH services paid under
Medicare. In addition, section
1895(b)(3)(A) of the Act requires (1) the
computation of a standard prospective
payment amount include all costs for
HH services covered and paid for on a
reasonable cost basis and that such
amounts be initially based on the most
recent audited cost report data available
to the Secretary, and (2) the
standardized prospective payment
amount be adjusted to account for the
effects of case-mix and wage levels
among HHAs. Section 1895(b)(3)(B) of
the Act addresses the annual update to
the standard prospective payment
amounts by the HH applicable
percentage increase. Section 1895(b)(4)
of the Act governs the payment
computation. Sections 1895(b)(4)(A)(i)
and (b)(4)(A)(ii) of the Act require the
standard prospective payment amount
to be adjusted for case-mix and
geographic differences in wage levels.
Section 1895(b)(4)(B) of the Act requires
the establishment of appropriate casemix adjustment factors for significant
variation in costs among different units
of services. Lastly, section 1895(b)(4)(C)
of the Act requires the establishment of
wage adjustment factors that reflect the
relative level of wages, and wage-related
costs applicable to HH services
furnished in a geographic area
compared to the applicable national
average level.
Section 1895(b)(5) of the Act gives the
Secretary the option to make changes to
the payment amount otherwise paid in
the case of outliers because of unusual
variations in the type or amount of
medically necessary care. Section
1895(b)(3)(B)(v) of the Act requires
HHAs to submit data for purposes of
measuring health care quality, and links
the quality data submission to the
annual applicable percentage increase.
Also, section 1886(d)(2)(D) of the Act
requires that HH services furnished in a
rural area for episodes and visits ending
on or after April 1, 2010, and before
January 1, 2016, receive an increase of
3 percent the payment amount
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otherwise made under section 1895 of
the Act.
Section 3131(a) of the Affordable Care
Act mandates that starting in CY 2014,
the Secretary must apply an adjustment
to the national, standardized 60-day
episode payment rate and other
amounts applicable under section
1895(b)(3)(A)(i)(III) of the Act to reflect
factors such as changes in the number
of visits in an episode, the mix of
services in an episode, the level of
intensity of services in an episode, the
average cost of providing care per
episode, and other relevant factors. In
addition, section 3131(a) of the
Affordable Care Act mandates that
rebasing must be phased-in over a 4year period in equal increments, not to
exceed 3.5 percent of the amount (or
amounts) in any given year, applicable
under section 1895(b)(3)(A)(i)(III) of the
Act and be fully implemented in CY
2017.
C. Overall Impact
The update set forth in this proposed
rule applies to Medicare payments
under HH PPS in CY 2014. Accordingly,
the following analysis describes the
impact in CY 2014 only. We estimate
that the net impact of the proposals in
this rule is approximately $290 million
in decreased payments to HHAs in CY
2014. The impact of the wage index
would be a decrease of $40 million.
However, we applied a standardization
factor to the rates as discussed earlier.
Therefore, the net effect of the wage
index impact is zero dollars. The $290
million impact reflects the
distributional effects of the 2.4 percent
HH payment update percentage ($460
million increase), the effects of the
rebasing adjustments to the national,
standardized 60-day episode payment
rate, the national per-visit payment
rates, and the NRS conversion factor
($650 million decrease), and the effects
of ICD–9 coding adjustments ($100
million decrease). The $290 million in
savings is reflected in the last column of
the first row in Table 29 as a 1.5 percent
decrease in expenditures when
comparing the CY 2013 HH PPS to the
proposed CY 2014 HH PPS.
The RFA requires agencies to analyze
options for regulatory relief of small
entities, if a rule has a significant impact
on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
hospitals and most other providers and
suppliers are small entities, either by
nonprofit status or by having revenues
of less than $7.0 million to $34.5
million in any 1 year. For the purposes
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40305
of the RFA, we estimate that almost all
HHAs are small entities as that term is
used in the RFA. Individuals and states
are not included in the definition of a
small entity. The Secretary has
determined that this proposed rule
would not have a significant economic
impact on a substantial number of small
entities.
A discussion on the alternatives
considered is presented in section VI.E.
of this proposed rule. The following
analysis, with the rest of the preamble,
constitutes our initial RFA analysis. We
solicit comment on the RFA analysis
provided.
In addition, section 1102(b) of the Act
requires us to prepare a RIA if a rule
may have a significant impact on the
operations of a substantial number of
small rural hospitals. This analysis must
conform to the provisions of section 603
of RFA. For purposes of section 1102(b)
of the Act, we define a small rural
hospital as a hospital that is located
outside of a metropolitan statistical area
and has fewer than 100 beds. This
proposed rule applies to HHAs.
Therefore, the Secretary has determined
that this proposed rule would not have
a significant economic impact on the
operations of small rural hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. In 2013, that
threshold is approximately $141
million. This proposed rule is not
anticipated to have an effect on state,
local, or tribal governments in the
aggregate, or by the private sector, of
$141 million or more.
D. Detailed Economic Analysis
This proposed rule sets forth updates
to the HH PPS rates contained in the CY
2013 HH PPS final rule. The impact
analysis of this proposed rule presents
the estimated expenditure effects of
policy changes proposed in this rule.
We use the latest data and best analysis
available, but we do not make
adjustments for future changes in such
variables as number of visits or casemix.
This analysis incorporates the latest
estimates of growth in service use and
payments under the Medicare HH
benefit, based primarily on preliminary
Medicare claims from 2012. We note
that certain events may combine to limit
the scope or accuracy of our impact
analysis, because such an analysis is
future-oriented and, thus, susceptible to
errors resulting from other changes in
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Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
the impact time period assessed. Some
examples of such possible events are
newly-legislated general Medicare
program funding changes made by the
Congress, or changes specifically related
to HHAs. In addition, changes to the
Medicare program may continue to be
made as a result of the Affordable Care
Act, or new statutory provisions.
Although these changes may not be
specific to the HH PPS, the nature of the
Medicare program is such that the
changes may interact, and the
complexity of the interaction of these
changes could make it difficult to
predict accurately the full scope of the
impact upon HHAs.
Table 29 represents how HHA
revenues are likely to be affected by the
policy changes proposed in this rule.
For this analysis, we used linked CY
2012 HH claims and OASIS
assessments; the claims are for dates of
service that started on or before May 31,
2012. The first column of Table 29
classifies HHAs according to a number
of characteristics including provider
type, geographic region, and urban and
rural locations. The third column shows
the payment effects of the wage index
only. The fourth column shows the
effects of the standardization factor
only. The fifth column shows the effects
of the rebasing adjustments to the
national, standardized 60-day episode
payment rate, the national per-visit
payment rates, and NRS conversion
factor; the 2014 wage index; and
standardization. The sixth column
displays the effects of ICD–9 coding
changes and the seventh column shows
the effects of the market basket increase.
The last column shows the payment
effects of all the proposed policies. For
CY 2014, the average impact for all
HHAs due to the effects of rebasing is
a 3.4 percent decrease in payments. The
overall impact for all HHAs, in
estimated total payments from CY 2013
to CY 2014, is a decrease of
approximately 1.5 percent.
TABLE 29—PROPOSED HOME HEALTH AGENCY POLICY IMPACTS FOR CY 2014, BY FACILITY TYPE AND AREA OF THE
COUNTRY
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Number of
agencies
All Agencies ..............................................................................
Facility Type and Control:
Free-Standing/Other Vol/NP ..............................................
Free-Standing/Other Proprietary ........................................
Free-Standing/Other Government .....................................
Facility-Based Vol/NP ........................................................
Facility-Based Proprietary ..................................................
Facility-Based Government ................................................
Subtotal: Freestanding .......................................................
Subtotal: Facility-based ......................................................
Subtotal: Vol/NP .................................................................
Subtotal: Proprietary ..........................................................
Subtotal: Government ........................................................
Facility Type and Control: Rural:
Free-Standing/Other Vol/NP ..............................................
Free-Standing/Other Proprietary ........................................
Free-Standing/Other Government .....................................
Facility-Based Vol/NP ........................................................
Facility-Based Proprietary ..................................................
Facility-Based Government ................................................
Facility Type and Control: Urban:
Free-Standing/Other Vol/NP ..............................................
Free-Standing/Other Proprietary ........................................
Free-Standing/Other Government .....................................
Facility-Based Vol/NP ........................................................
Facility-Based Proprietary ..................................................
Facility-Based Government ................................................
Facility Location: Urban or Rural ..............................................
Rural ...................................................................................
Urban .................................................................................
Facility Location: Region of the Country:
North ..................................................................................
Midwest ..............................................................................
South ..................................................................................
West ...................................................................................
Other ..................................................................................
Facility Location: Region of the Country (Census Region):
New England ......................................................................
Mid Atlantic ........................................................................
East North Central .............................................................
West North Central ............................................................
South Atlantic .....................................................................
East South Central .............................................................
West South Central ............................................................
Mountain ............................................................................
Pacific .................................................................................
Facility Size (Number of 1st Episodes):
< 100 episodes ..................................................................
100 to 249 ..........................................................................
250 to 499 ..........................................................................
500 to 999 ..........................................................................
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Proposed
CY 2014
wage index
(percent)
Standardization
(percent)
Proposed
rebasing,
2014 wage
index, and
standardization 1
(percent)
Proposed
ICD–9
coding
changes
(percent)
CY 2014
HH market
basket
(percent)
Impact of all
CY 2014
policies
(percent)
11,152
¥0.2
0.2
¥3.4
¥0.5
2.4
¥1.5
1,042
8,511
420
810
122
247
9,973
1,179
1,852
8,633
667
0.2
¥0.3
¥0.3
0.0
¥0.1
¥0.2
¥0.2
0.0
0.1
¥0.3
¥0.3
0.3
0.2
0.1
0.2
0.1
0.1
0.2
0.2
0.2
0.2
0.1
¥2.9
¥3.5
¥3.6
¥3.1
¥3.4
¥3.5
¥3.4
¥3.2
¥3.0
¥3.5
¥3.5
¥0.3
¥0.6
¥0.4
¥0.3
¥0.4
¥0.4
¥0.5
¥0.3
¥0.3
¥0.6
¥0.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
¥0.8
¥1.7
¥1.6
¥1.0
¥1.4
¥1.5
¥1.5
¥1.1
¥0.9
¥1.7
¥1.5
222
159
513
279
43
159
0.2
¥0.3
¥0.3
0.1
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
¥3.0
¥3.6
¥3.6
¥3.2
¥3.1
¥3.2
¥0.3
¥0.4
¥0.5
¥0.3
¥0.4
¥0.3
2.4
2.4
2.4
2.4
2.4
2.4
¥0.9
¥1.6
¥1.7
¥1.1
¥1.1
¥1.1
882
8,148
159
531
79
88
....................
1,265
9,887
0.2
¥0.3
¥0.4
0.0
¥0.2
¥0.5
....................
¥0.1
¥0.2
0.3
0.2
0.1
0.2
0.1
0.2
....................
0.1
0.2
¥2.9
¥3.5
¥3.6
¥3.1
¥3.5
¥3.6
....................
¥3.4
¥3.4
¥0.3
¥0.6
¥0.4
¥0.3
¥0.4
¥0.4
....................
¥0.4
¥0.5
2.4
2.4
2.4
2.4
2.4
2.4
....................
2.4
2.4
¥0.8
¥1.7
¥1.6
¥1.0
¥1.5
¥1.6
0.0
¥1.4
¥1.5
837
2,950
5,544
1,772
49
0.6
¥0.5
¥0.5
0.4
0.8
0.4
0.1
0.1
0.3
0.1
¥2.4
¥3.7
¥3.7
¥2.7
¥2.4
¥0.3
¥0.4
¥0.6
¥0.4
¥0.2
2.4
2.4
2.4
2.4
2.4
¥0.3
¥1.7
¥1.9
¥0.7
¥0.2
320
517
2,210
740
2,046
436
3,062
638
1,134
0.4
0.8
¥0.6
¥0.2
¥0.6
¥0.4
¥0.3
0.0
0.6
0.3
0.4
0.1
0.1
0.1
0.1
0.1
0.2
0.3
¥2.7
¥2.3
¥3.8
¥3.4
¥3.8
¥3.7
¥3.6
¥3.2
¥2.5
¥0.3
¥0.3
¥0.4
¥0.4
¥0.5
¥0.4
¥0.9
¥0.4
¥0.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
¥0.6
¥0.2
¥1.8
¥1.4
¥1.9
¥1.7
¥2.1
¥1.2
¥0.5
3,385
2,971
2,237
1,477
¥0.2
¥0.4
¥0.4
¥0.2
0.2
0.2
0.2
0.2
¥3.5
¥3.6
¥3.6
¥3.4
¥0.6
¥0.6
¥0.6
¥0.5
2.4
2.4
2.4
2.4
¥1.7
¥1.8
¥1.8
¥1.5
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TABLE 29—PROPOSED HOME HEALTH AGENCY POLICY IMPACTS FOR CY 2014, BY FACILITY TYPE AND AREA OF THE
COUNTRY—Continued
Number of
agencies
1,000 or More ....................................................................
Proposed
CY 2014
wage index
(percent)
1,082
¥0.1
Standardization
(percent)
Proposed
rebasing,
2014 wage
index, and
standardization 1
(percent)
0.2
Proposed
ICD–9
coding
changes
(percent)
¥3.2
¥0.4
CY 2014
HH market
basket
(percent)
Impact of all
CY 2014
policies
(percent)
2.4
¥1.2
1The
tkelley on DSK3SPTVN1PROD with PROPOSALS2
impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit rates, and the NRS
conversion factor and also includes the impact of the proposed LUPA add-on factors. The estimated impact of the NRS conversion factor rebasing adjustment, of
¥2.58 percent, is an overall ¥0.043 percent decrease in estimated payments to HHAs. The estimated impact of the proposed LUPA add-on factors is an overall
0.007 percent increase in payments to HHAs.
REGION KEY: New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic=Pennsylvania, New Jersey, New York;
South Atlantic=Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North Central=Illinois, Indiana,
Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North Central=Iowa, Kansas, Minnesota, Missouri, Nebraska, North
Dakota, South Dakota; West South Central=Arkansas, Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands.
E. Alternatives Considered
As described in section III.D. of this
proposed rule, ‘‘Rebasing the National,
Standardized 60-day Episode Payment
Rate, LUPA Per-Visit Payment Amounts,
and Nonroutine Medical Supply (NRS)
Conversion Factor,’’ the Affordable Care
Act mandates that we rebase payments
starting in CY 2014. In that section, we
described our methodology for
calculating the adjustments to the
national, standardized 60-day episode
payment rate and per-visit rates. We
note that additional factors were
considered but not incorporated into the
methodology for calculating the
rebasing adjustments. One such factor is
a downward adjustment to the costs pervisit as a result of the findings from the
audits of 98 Medicare HH cost reports.
The results of the audits showed that
agencies over-reported costs by an
average of about 8 percent. Given this
finding, we considered downward
adjusting the costs on the cost report in
order to better align payment with the
agencies’ true costs. We also considered
updating costs by the HH payment
update percentage (adjusted market
basket) rather than the full HH market
basket. In 2012 and 2013, HH payments
were increased by the HH market basket
minus one percentage point, as
mandated by the Affordable Care Act.
Furthermore, the Affordable Care Act
mandates that CMS remove 5 percent of
the national, standardized 60-day
episode payment rate to fund the 2.5
percent outlier pool. Given this
mandate, we considered setting our
target national, standardized 60-day
episode payment rate for rebasing at 5
percent below the estimated cost per
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episode that we derived from the 2011
cost reports. We plan to continue to
evaluate these alternative factors for
rebasing and may consider
incorporating these factors into the CY
2014 HH PPS final rule.
In addition to the rebasing
adjustments, we considered
implementing a prospective reduction
for nominal case-mix growth for CY
2014. In the past, various sources have
suggested implementing a prospective
nominal case-mix growth adjustment,
which would attempt to predict the
amount of nominal case-mix growth in
future years and implement a reduction
to prevent possible overpayments due to
nominal case-mix growth. To date, we
have implemented nominal case-mix
growth adjustments retrospectively.
That is, we use the most recent,
complete data available—typically two
to three years prior to the payment
year—to identify nominal case-mix
growth, and implement a payment
reduction to account for the observed
growth. The payment reductions for
nominal case-mix growth do not attempt
to re-coup overpayments made in
previous years due to nominal case-mix
growth. We plan to continue to monitor
case-mix growth (both real and nominal
case-mix growth) as more data become
available and will consider
implementing prospective reductions,
as well as other possible approaches, to
address nominal case-mix growth in
future rulemaking.
F. Cost Allocation of Survey Expenses
We project that aggregate Medicare
and Medicaid HH survey costs in FY
2014 will be approximately $37.2
PO 00000
Frm 00037
Fmt 4701
Sfmt 4702
million. As these costs would be
assigned 50 percent to Medicare and 50
percent to Medicaid for each state, the
anticipated national Medicaid share
would amount to $18.6 million, if
implemented at the beginning of FY
2014. However, the proposed adherence
date of July FY 2014 would reduce the
Medicaid aggregate share to
approximately $4.65 million. The cost
of surveys is treated as a Medicaid
administrative cost, reimbursable at the
professional staff rate of 75 percent.
State costs for Medicaid HH surveys
incurred in FY 2014, with an adherence
date of July FY 2014, would be
approximately $1.16 million (25 percent
of the aggregate $4.65 million Medicaid
cost for the last quarter of the FY),
spread out across all states and two
territories. While we regard Medicaid
fair share of costs to reflect an existing
cost allocation principle, the methods
for making the appropriate
determinations have not been clear.
Therefore, in this rule we delineate
those methods and provide that the
Medicaid responsibility be reflected in
the state Medicaid Plan.
G. Accounting Statement and Table
As required by OMB Circular A–4
(available at https://www.whitehouse.
gov/omb/circulars_a004_a-4), in Tables
30 and 31, we have prepared an
accounting statement showing the
classification of the transfers associated
with the provisions of this proposed
rule. Table 30 provides our best estimate
of the decrease in Medicare payments
under the HH PPS as a result of the
changes presented in this proposed rule.
E:\FR\FM\03JYP2.SGM
03JYP2
40308
Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 / Proposed Rules
TABLE 30—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS, FROM THE CY 2013 HH PPS TO THE
CY 2014 HH PPS
Category
Transfers
Annualized Monetized Transfers .......................................................................................
From Whom to Whom? .....................................................................................................
Table 31 provides our best estimate of
the proposed changes in the
¥$290 million.
Federal Government to HH providers.
classification of the cost allocation of
survey expenses.
TABLE 31—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS RELATING TO THE MEDICARE AND
MEDICAID HOME HEALTH SURVEY AND CERTIFICATION COSTS, FYS 2013 TO 2014
Category
Transfers
Federal Medicaid HH survey & certification costs:
Annualized Monetized Transfers .......................................................................................
From Whom to Whom? .....................................................................................................
State Medicaid HH survey & certification costs:
Annualized Monetized Transfers .......................................................................................
From Whom to Whom? .....................................................................................................
Medicare HH survey & certification costs:
Annualized Monetized Transfers .......................................................................................
From Whom to Whom? .....................................................................................................
H. Conclusion
In conclusion, we estimate that the
net impact of the proposals in this rule
is approximately $290 million in CY
2014 savings. The $290 million reflects
the distributional effects of an updated
wage index ($40 million decrease), a
standardization factor to ensure budget
neutrality in episode payments using
the 2014 wage index ($40 million
increase), the 2.4 percent HH payment
update percentage ($460 million
increase), the ICD–9 grouper refinement
($100 million decrease), and the
rebasing adjustments required by
section 3131(a) of the Affordable Care
Act ($650 million decrease). This
analysis, together with the remainder of
this preamble, provides a RIA.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Executive Order 13132 on Federalism
(August 4, 1999) establishes certain
requirements that an agency must meet
when it promulgates a final rule that
imposes substantial direct requirement
costs on state and local governments,
19:27 Jul 02, 2013
$1.16 Million.
State Governments to Medicaid HH Survey Agencies.
¥$18.6 Million.
Federal Government to Medicare HH Survey Agencies.
preempts state law, or otherwise has
Federalism implications. This rule
would have no substantial direct effect
on state and local governments, preempt
state law, or otherwise have Federalism
implications.
List of Subjects in 42 CFR Part 431
Grant programs—health, Health
facilities, Medicaid, Privacy, and
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services would amend 42 CFR
chapter IV as set forth below:
PART 431—STATE ORGANIZATION
AND GENERAL ADMINISTRATION
1. The authority citation for part 431
continues to read as follows:
■
VII. Federalism Analysis
VerDate Mar<15>2010
$17.44 Million.
Federal Government to Medicaid HH Survey Agencies.
Jkt 229001
Authority: Sec. 1102 of the Social Security
Act, (42 U.S.C. 1302).
2. Section 431.610 is amended by
revising paragraph (g) introductory text
to read as follows:
■
PO 00000
Frm 00038
Fmt 4701
Sfmt 9990
§ 431.610 Relations with standard-setting
and survey agencies.
*
*
*
*
*
(g) Responsibilities of survey agency.
The plan must provide that, in
certifying NFs, HHAs, and ICF–IIDs, the
survey agency designated under
paragraph (e) of this section will—
*
*
*
*
*
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program).
Dated: June 10, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: June 14, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2013–15766 Filed 6–27–13; 1:37 pm]
BILLING CODE 4120–01–P
E:\FR\FM\03JYP2.SGM
03JYP2
]]>Agencies
[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Proposed Rules]
[Pages 40271-40308]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15766]
[[Page 40271]]
Vol. 78
Wednesday,
No. 128
July 3, 2013
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 431
Medicare and Medicaid Programs; Home Health Prospective Payment System
Rate Update for CY 2014, Home Health Quality Reporting Requirements,
and Cost Allocation of Home Health Survey Expenses; Proposed Rule
Federal Register / Vol. 78, No. 128 / Wednesday, July 3, 2013 /
Proposed Rules
[[Page 40272]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 431
[CMS-1450-P]
RIN 0938-AR52
Medicare and Medicaid Programs; Home Health Prospective Payment
System Rate Update for CY 2014, Home Health Quality Reporting
Requirements, and Cost Allocation of Home Health Survey Expenses
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would update the Home Health Prospective
Payment System (HH PPS) rates, including the national, standardized 60-
day episode payment rates, the national per-visit rates, the low-
utilization payment adjustment (LUPA) add-on, the nonroutine medical
supplies (NRS) conversion factor, and outlier payments under the
Medicare prospective payment system for home health agencies (HHAs),
effective January 1, 2014. As required by the Affordable Care Act, this
rule also proposes rebasing adjustments, with a 4-year phase-in, to the
national, standardized 60-day episode payment rates; the national per-
visit rates; and the NRS conversion factor. Finally, the proposed rule
would also establish home health quality reporting requirements for CY
2014 payment and subsequent years and would clarify that a state
Medicaid program must provide that, in certifying home health agencies,
the state's designated survey agency must carry out certain other
responsibilities that already apply to surveys of nursing facilities
and Intermediate Care Facilities for Individuals with Intellectual
Disabilities (ICF-IID), including sharing in the cost of HHA surveys.
For that portion of costs attributable to Medicare and Medicaid, we
would assign 50 percent to Medicare and 50 percent to Medicaid, the
standard method that CMS and states use in the allocation of expenses
related to surveys of SNF/NF nursing homes.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 26, 2013.
ADDRESSES: In commenting, please refer to file code CMS-1450-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 ``Submit a
comment'' instructions.
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-1450-P, P.O. Box 8016, Baltimore, MD
21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1450-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call (410) 786-7195 in advance to schedule your arrival with one
of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Kristine Chu, (410) 786-8953, for
information about rebasing and the HH payment reform study and report.
Jenny Filipovits, (410) 786-8141, for information about cost allocation
of survey expenses. Mollie Knight, (410) 786-7948, for information
about the HH market basket. Hillary Loeffler, (410) 786-0456, for
general information about the HH PPS. Joan Proctor, (410) 786-0949, for
information about the HH PPS Grouper and ICD-10 Conversion. Kim Roche,
(410) 786-3524, for information about the HH quality reporting program.
Lori Teichman, (410) 786-6684, for information about HH CAHPS[supreg].
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. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Costs and Benefits
II. Background
A. Statutory Background
B. System for Payment of Home Health Services
C. Updates to the HH PPS
III. Provisions of the Proposed Rule
A. Proposed ICD-9-CM Grouper Refinements, Effective January 1,
2014
B. International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) Conversion and Diagnosis Reporting
on Home Health Claims
1. International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) Conversion
2. Diagnosis Reporting on Home Health Claims
C. Proposed Adjustment to the HH PPS Case-Mix Weights
D. Rebasing the National, Standardized 60-day Episode Payment
Rate, LUPA Per-
[[Page 40273]]
Visit Payment Amounts, and Nonroutine Medical Supply (NRS)
Conversion Factor
1. Rebasing the National, Standardized 60-day Episode Payment
Rate
2. Rebasing the Low-Utilization Payment Adjustment (LUPA) Per-
Visit Payment Amounts
3. Rebasing the Nonroutine Medical Supply (NRS) Conversion
Factor
E. Proposed CY 2014 Rate Update
1. Proposed CY 2014 Home Health Market Basket Update
2. Home Health Care Quality Reporting Program
3. Proposed Home Health Wage Index
4. Proposed CY 2014 Annual Payment Update
a. National, Standardized 60-Day Episode Payment Rate
b. Proposed CY 2014 National, Standardized 60-Day Episode
Payment Rate
c. Proposed CY 2014 National Per-Visit Rates
d. Proposed Low-Utilization Payment Adjustment (LUPA) Add-On
Factor
e. Proposed Nonroutine Medical Supply (NRS) Conversion Factor
and Relative Weights
5. Rural Add-On
F. Outlier Policy
1. Background
2. Regulatory Updates
3. Statutory Updates
4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
5. Outlier Relationship to the Home Health Study and Report
G. Payment Reform: Home Health Study and Report
H. Cost Allocation of Survey Expenses
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis
VII. Federalism Analysis
Regulations Text
Acronyms
In addition, because of the many terms to which we refer by
abbreviation in this proposed rule, we are listing these abbreviations
and their corresponding terms in alphabetical order below:
ACA The Affordable Care Act.
ACH LOS Acute care hospital length of stay.
ADL Activities of daily living.
AHRQ Agency for Healthcare Research and Quality.
APU Annual payment update.
BBA Balanced Budget Act of 1997 (Pub. L. 105-33, enacted August 5,
1997).
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (Pub. L. 106-113, enacted November 29, 1999).
CAD Coronary artery disease.
CAH Critical access hospital.
CAHPS[supreg] Consumer assessment of healthcare providers and
systems.
CBSA Core-based statistical area.
CASPER Certification and survey provider enhanced reports.
CHF Congestive heart failure.
CMI Case-mix index.
CMP Civil monetary penalties.
CMS Centers for Medicare & Medicaid Services.
CoPs Conditions of participation.
COPD Chronic obstructive pulmonary disease.
CVD Cardiovascular disease.
CY Calendar year.
DG Diagnostic group.
DHHS Department of Health and Human Services.
DM Diabetes mellitus.
DME Durable medical equipment.
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted February
8, 2006).
FDL Fixed dollar loss.
FFP Federal financial participation.
FI Fiscal intermediaries.
FR Federal Register
FY Fiscal year.
GEM General equivalency mapping.
HAVEN Home assessment validation and entry system.
HCC Hierarchical condition categories.
HCIS Health care information system.
HH Home health.
HHABN Home health advance beneficiary notice.
HHAs Home health agencies.
HHCAHPS[supreg] Home Health Care Consumer Assessment of Healthcare
Providers and Systems Survey.
HH PPS Home health prospective payment system.
HHQRP Home Health Quality Reporting Program.
HHRG Home health resource group.
HIPAA Health Insurance Portability Accountability Act of 1996 (Pub.
L. 104-191, enacted August 21, 1996).
HIPPS Health insurance prospective payment system.
ICD-9 International Classification of Diseases, 9th Edition.
ICD-9-CM International Classification of Diseases, 9th Edition,
Clinical Modification.
ICD-10 International Classification of Diseases, 10th Edition.
ICD-10-CM International Classification of Diseases, 10th Edition,
Clinical Modification.
ICF-IID Intermediate care facilities for individuals with
intellectual disabilities.
IH Inpatient hospitalization.
IPPS Acute Inpatient Prospective Payment System.
IRF Inpatient rehabilitation facility.
LTCH Long-term care hospital.
LUPA Low-utilization payment adjustment.
MAC Medicare Administrative Contractor.
MAP Measure applications partnership.
MedPAC Medicare Payment Advisory Commission.
MEPS Medical Expenditures Panel Survey.
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173, enacted December 8, 2003).
MSA Metropolitan statistical areas.
MSS Medical Social Services.
NF Nursing facility.
NQF National Quality Forum.
NRS Non-routine supplies.
OASIS Outcome & Assessment Information Set.
OBRA Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-2-3,
enacted December 22, 1987).
OCESAA Omnibus Consolidated and Emergency Supplemental
Appropriations Act (Pub. L. 105-277, enacted October 21, 1998).
OES Occupational employment statistics.
OIG Office of Inspector General.
OT Occupational therapy.
OMB Office of Management and Budget.
P4R Pay-for-reporting.
PAC-PRD Post-Acute Care Payment Reform Demonstration.
PEP Partial episode payment [Adjustment].
POC Plan of care.
PRRB Provider Reimbursement Review Board.
PT Physical therapy.
QAP Quality assurance plan.
QIES CMS Health Care Quality Improvement System.
PRRB Provider Reimbursement Review Board.
RAP Request for anticipated payment.
RF Renal failure.
RFA Regulatory Flexibility Act (Pub. L. 96-354, enacted on September
19, 1980).
RHHIs Regional home health intermediaries.
RIA Regulatory impact analysis.
SCHIP State Children's Health Insurance Program.
SLP Speech-language pathology.
SN Skilled nursing.
SNF Skilled nursing facility.
TEP Technical Expert Panel.
UMRA Unfunded Mandates Reform Act of 1995 (Pub. L. 104-04, enacted
on March 22, 1995).
I. Executive Summary
A. Purpose
This rule proposes updates to the payment rates for home health
agencies (HHAs) for calendar year (CY) 2014, as required under section
1895(b) of the Social Security Act (the Act), including the rebasing
adjustments to the national, standardized 60-day episode payment rate,
the national per-visit rates, the non-routine supplies (NRS) conversion
factor, required under section 3131(a) of the Patient Protection and
Affordable Care Act of 2010 (Pub. L. 111-148), as amended by the Health
Care and Education Reconciliation Act of 2010 (Pub. L. 111-152)
(collectively referred to as the ``Affordable Care Act''). This
proposed rule would also address: International Classification of
Diseases, 9th Edition (ICD-9) grouper refinements; implementation of
the International Classification of Diseases, 10th Edition (ICD-10); an
adjustment to the case-mix weights; updates to the payment rates by the
HH payment update percentage (market basket); adjustments for
geographic differences in wage levels; outlier payments; the submission
of quality data; and additional payments for services
[[Page 40274]]
provided in rural areas. This proposed rule would also clarify state
Medicaid program requirements related to the cost of HHA surveys.
B. Summary of the Major Provisions
We recently completed a thorough review of the ICD-9-CM codes
included in our home health prospective payment system (HH PPS) Grouper
as part of our work transitioning from the ICD-9-CM to ICD-10-CM code
set. As a result of that review, we identified two categories of codes,
made up of 170 ICD-9-CM diagnosis codes, which we are proposing to
remove from the HH PPS Grouper, effective January 1, 2014. In addition,
we are proposing to implement, on October 1, 2014, the use of ICD-10-CM
codes within our HH PPS Grouper.
Section 3131(a) of the Affordable Care Act requires that, starting
in CY 2014, we apply an adjustment to the national, standardized 60-day
episode payment rate and other applicable payment amounts to reflect
factors such as changes in the number of visits in an episode, the mix
of services in an episode, the level of intensity of services in an
episode, the average cost of providing care per episode, and other
relevant factors. In addition, we must phase-in any adjustment over a
4-year period in equal increments, not to exceed 3.5 percent of the
amount (or amounts) in any given year, and be fully implemented by CY
2017. As such, we are proposing rebasing adjustments to the national,
standardized 60-day episode payment rate, the national per-visit rates,
the NRS conversion factor, and an update to the LUPA add-on amount.
Section 3131(d) of the Affordable Care Act also requires us to
report on whether a home health care access problem exists for patients
with high severity of illness, low income patients, and/or patients in
medically underserved areas and assess the costs associated with
providing access to care for these populations. It also gives us the
authority to analyze other areas of concern in the HH PPS and allows
for demonstration authority to test the PPS changes. Finally, it
requires us to recommend HH PPS improvements, if needed, based on the
study findings and/or necessary additional analysis, in a Report to
Congress due in March 2014. Our contractor held a Technical Expert
Panel (TEP) meeting and a special Open Door Forum to gather input from
the industry on the three vulnerable populations. We are currently
conducting surveys of HHAs and physicians on access to care, and
performing analyses of cost report and claims data to determine whether
patient characteristics/types may be under-reimbursed. We will continue
to collaborate with stakeholders, soliciting them for their thoughts,
and provide updates on our progress.
We also propose to continue to use Outcome & Assessment Information
Set (OASIS) data, claims data, and patient experience of care data, as
forms of quality data to meet the requirement that HHAs submit data
appropriate for the measurement of HH care quality for annual payment
update (APU) 2014 and each subsequent year thereafter until further
notice. Additionally, we propose two claims-based measures of HH
patients who were recently hospitalized, as these patients are at an
increased risk of additional acute care hospital use. We also propose
to reduce the number of HH quality measures currently reported to HHAs.
Lastly, we propose to review each state's allocation of costs for HHA
surveys for compliance with OMB Circular A-87 principles and the
statutes in 2014 with the goal of ensuring full compliance no later
than July 2014. This proposed rule would clarify that a state Medicaid
program must provide that, in certifying HHAs, the state's designated
survey agency must carry out certain other responsibilities that
already apply to surveys of nursing facilities (NF) and Intermediate
Care Facilities for Individuals with Intellectual Disabilities (ICF-
IID), including sharing in the cost of HHA surveys. For that portion of
costs attributable to Medicare and Medicaid, we would assign 50 percent
to Medicare and 50 percent to Medicaid. This is the standard method
that CMS and states use in the allocation of expenses related to
surveys of skilled nursing facility (SNF)/NF nursing homes.
C. Summary of Costs and Benefits
----------------------------------------------------------------------------------------------------------------
Provision description Total costs Total benefits Transfers
----------------------------------------------------------------------------------------------------------------
CY 2014 HH PPS Payment Rate Update.. N/A The benefits of this The overall economic impact
proposed rule include of this proposed rule is an
paying more accurately for estimated $290 million in
the delivery of home health decreased payments to HHAs.
services.
Cost Allocation of HHA Survey N/A The benefits of this rule If implemented in the
Expenses. include clarifying that beginning of FY 2014 we
state Medicaid programs project that aggregate
must share in the cost of Medicare and Medicaid home
HHA surveys. For that health survey costs in FY
portion of costs 2014 would be approximately
attributable to Medicare $37.2 million. As these
and Medicaid, we would costs would be assigned 50
assign 50 percent to percent to Medicare and 50
Medicare and 50 percent to percent to Medicaid for
Medicaid. each state, the anticipated
national state Medicaid
share would amount to $18.6
million. The cost of
surveys is treated as a
Medicaid administrative
cost, reimbursable at the
professional staff rate of
75 percent. At this rate
the maximum net state costs
for Medicaid matching funds
incurred in FY 2014 would
be approximately $4.65
million, spread out across
all states and 2
territories. However, the
proposed adherence date of
July FY 2014 would reduce
the Medicaid aggregate
share to $4.65 million and
the state Medicaid share to
approximately $1.16
million. Some state
Medicaid programs may
currently pay for HHA
surveys to some extent, but
the amount is unknown.
----------------------------------------------------------------------------------------------------------------
[[Page 40275]]
II. Background
A. Statutory Background
Home Health PPS
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted
August 5, 1997), significantly changed the way Medicare pays for
Medicare HH services. Section 4603 of the BBA mandated the development
of the HH PPS. Until the implementation of a HH PPS on October 1, 2000,
HHAs received payment under a retrospective reimbursement system.
Section 4603(a) of the BBA mandated the development of a HH PPS for
all Medicare-covered HH services provided under a plan of care (POC)
that were paid on a reasonable cost basis by adding section 1895 of the
Act, entitled ``Prospective Payment For Home Health Services.'' Section
1895(b)(1) of the Act requires the Secretary to establish a HH PPS for
all costs of HH services paid under Medicare.
Section 1895(b)(3)(A) of the Act requires the following: (1) the
computation of a standard prospective payment amount that includes all
costs for HH services that would have been covered and paid for on a
reasonable cost basis had the HH PPS not been in effect and that such
amounts be initially based on the most recent audited cost report data
available to the Secretary; and (2) the standardized prospective
payment amount be adjusted to account for the effects of case-mix and
wage levels among HHAs.
Section 1895(b)(3)(B) of the Act addresses the annual update to the
standard prospective payment amounts by the HH applicable percentage
increase. Section 1895(b)(4) of the Act governs the payment
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act
require the standard prospective payment amount to be adjusted for
case-mix and geographic differences in wage levels. Section
1895(b)(4)(B) of the Act requires the establishment of an appropriate
case-mix change adjustment factor for significant variation in costs
among different units of services.
Similarly, section 1895(b)(4)(C) of the Act requires the
establishment of wage adjustment factors that reflect the relative
level of wages, and wage-related costs applicable to HH services
furnished in a geographic area compared to the applicable national
average level. Under section 1895(b)(4)(C) of the Act, the wage-
adjustment factors used by the Secretary may be the factors used under
section 1886(d)(3)(E) of the Act.
Section 1895(b)(5) of the Act gives the Secretary the option to
make additions or adjustments to the payment amount otherwise paid in
the case of outliers due to unusual variations in the type or amount of
medically necessary care. Section 3131(b)(2) of the Affordable Care Act
revised section 1895(b)(5) of the Act so that total outlier payments in
a given year would not exceed 2.5 percent of total payments projected
or estimated. The provision also made permanent a 10 percent agency-
level outlier payment cap.
In accordance with the statute, as amended by the BBA, we published
a final rule in the July 3, 2000 Federal Register (65 FR 41128) to
implement the HH PPS legislation. The July 2000 final rule established
requirements for the new HH PPS for HH services as required by section
4603 of the BBA, as subsequently amended by section 5101 of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act (OCESAA) for
Fiscal Year 1999, (Pub. L. 105-277, enacted October 21, 1998); and by
sections 302, 305, and 306 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act (BBRA) of 1999, (Pub. L. 106-113,
enacted November 29, 1999). The requirements include the implementation
of a HH PPS for HH services, consolidated billing requirements, and a
number of other related changes. The HH PPS described in that rule
replaced the retrospective reasonable cost-based system that was used
by Medicare for the payment of HH services under Part A and Part B. For
a complete and full description of the HH PPS as required by the BBA,
see the July 2000 HH PPS final rule (65 FR 41128 through 41214).
Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v)
to the Act, requiring HHAs to submit data for purposes of measuring
health care quality, and links the quality data submission to the
annual applicable percentage increase. This data submission requirement
is applicable for CY 2007 and each subsequent year. If an HHA does not
submit quality data, the HH market basket percentage increase is
reduced 2 percentage points. In the CY 2007 HH PPS final rule (71 FR
65884, 65935), we implemented the pay-for-reporting requirement of the
DRA, which was codified at Sec. 484.225(h) and (i). The pay-for-
reporting requirement was implemented on January 1, 2007.
The Affordable Care Act made additional changes to the HH PPS. One
of the changes in section 3131(c) of the Affordable Care Act is the
amendment to section 421(a) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173,
enacted on December 8, 2003) as amended by section 5201(b) of the DRA.
The amended section 421(a) of the MMA now requires, for HH services
furnished in a rural area (as defined in section 1886(d)(2)(D) of the
Act) for episodes and visits ending on or after April 1, 2010, and
before January 1, 2016, that the Secretary increase, by 3 percent, the
payment amount otherwise made under section 1895 of the Act.
Section 3131(a) of the Affordable Care Act mandates that, starting
in CY 2014, the Secretary must apply an adjustment to the national,
standardized 60-day episode payment rate and other amounts applicable
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such
as changes in the number of visits in an episode, the mix of services
in an episode, the level of intensity of services in an episode, the
average cost of providing care per episode, and other relevant factors.
In addition, section 3131(a) of the Affordable Care Act mandates that
this rebasing must be phased-in over a 4-year period in equal
increments, not to exceed 3.5 percent of the amount (or amounts) in any
given year applicable under section 1895(b)(3)(A)(i)(III) of the Act
and be fully implemented in CY 2017.
B. System for Payment of Home Health Services
Generally, Medicare makes payment under the HH PPS on the basis of
a national, standardized 60-day episode payment rate that is adjusted
for the applicable case-mix and wage index. The national, standardized
60-day episode rate includes the six HH disciplines (skilled nursing,
HH aide, physical therapy (PT), speech-language pathology (SLP),
occupational therapy (OT), and medical social services (MSS)). Payment
for NRS is no longer part of the national, standardized 60-day episode
rate and is computed by multiplying the relative weight for a
particular NRS severity level by the NRS conversion factor (See section
II.D.4.e. of this proposed rule). Payment for durable medical equipment
(DME) covered under the HH benefit is made outside the HH PPS payment
system. To adjust for case-mix, the HH PPS uses a 153-category case-mix
classification system to assign patients to a home health resource
group (HHRG). The clinical severity level, functional severity level,
and service utilization are computed from responses to selected data
elements in the OASIS assessment
[[Page 40276]]
instrument and are used to place the patient in a particular HHRG. Each
HHRG has an associated case-mix weight which is used in calculating the
payment for an episode. Specifically, the 60-day episode base rate is
multiplied by the case-mix weight when determining the payment for an
episode.
For episodes with four or fewer visits, Medicare pays national per-
visit rates based on the discipline(s) providing the services. An
episode consisting of four or fewer visits within a 60-day period
receives what is referred to as a 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.
The August 29, 2007 final rule with comment period set forth an update
to the 60-day national episode rates and the national per-visit rates
under the Medicare prospective payment system for HHAs for CY 2008. The
CY 2008 rule included an analysis performed on CY 2005 HH claims data,
which indicated a 12.78 percent increase in the observed case-mix since
2000. Case-mix represents the variations in conditions of the patient
population served by the HHAs. Subsequently, a more detailed analysis
was performed on the 2005 case-mix data to evaluate if any portion of
the 12.78 percent increase was associated with a change in the actual
clinical condition of HH patients. We examined data on demographics,
family severity, and non-HH Part A Medicare expenditures to predict the
average case-mix weight for 2005. We identified 8.03 percent of the
total case-mix change as real, and therefore, decreased the 12.78
percent of total case-mix change by 8.03 percent to get a final nominal
case-mix increase measure of 11.75 percent (0.1278 * (1 - 0.0803) =
0.1175).
To account for the changes in case-mix that were not related to an
underlying change in patient health status, we implemented a reduction
over 4 years in the national, standardized 60-day episode payment
rates. That reduction was to be 2.75 percent per year for 3 years
beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011.
In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses
of case-mix change and finalized a reduction of 3.79 percent, instead
of 2.71 percent, for CY 2011 and deferred finalizing a payment
reduction for CY 2012 until further study of the case-mix change data
and methodology was completed.
In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-
day national episode rates and the national per-visit rates. In
addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528),
our analysis indicated that there was a 22.59 percent increase in
overall case-mix from 2000 to 2009 and that only 15.76 percent of that
overall observed case-mix percentage increase was due to real case-mix
change. As a result of our analysis, we identified a 19.03 percent
nominal increase in case-mix. To fully account for the 19.03 percent
nominal case-mix growth which was identified from 2000 to 2009, we
finalized a 3.79 percent payment reduction in CY 2012.
In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a
1.32 percent reduction to the payment rates for CY 2013 to account for
nominal case-mix growth through 2010. When taking into account the
total measure of case-mix change (23.90 percent) and the 15.97 percent
of total case-mix change estimated as real from 2000 to 2010, we
obtained a final nominal case-mix change measure of 20.08 percent from
2000 to 2010 (0.2390 * (1 - 0.1597) = 0.2008). To fully account for the
remainder of the 20.08 percent increase in nominal case-mix beyond that
which was accounted for in previous payment reductions, we estimated
that the percentage reduction to the national, standardized 60-day
episode rates for nominal case-mix change would be 2.18 percent. We
considered proposing a 2.18 percent reduction to account for the
remaining increase in measured nominal case-mix; however, we moved
forward with the 1.32 percent payment reduction to the national,
standardized 60-day episode rates in the CY 2012 HH PPS final rule (76
FR 68532).
III. Provisions of the Proposed Rule
A. Proposed ICD-9-CM Grouper Refinements, Effective January 1, 2014
CMS clinical staff (along with clinical and coding staff from Abt
Associates (our support contractor) and 3M (our HH PPS grouper
maintenance contractor), recently completed a thorough review of the
ICD-9-CM codes included in our HH PPS Grouper. The HH PPS Grouper,
which is used by the CMS OASIS submission system, is the official
grouping software of the HH PPS. As a result of that review, we
identified two categories of codes, made up of 170 ICD-9-CM diagnosis
codes, which we are proposing to remove from the HH PPS Grouper,
effective January 1, 2014. The first category (Category 1 in Table 2)
includes codes that we propose to remove from the HH PPS grouper based
upon clinical judgment that the ICD-9-CM code is ``too acute'', meaning
that this condition could not be appropriately cared for in a HH
setting. These codes likely reflect conditions the patient had prior to
the HH admission (for example, while being treated in a hospital
setting). It is anticipated that the condition progressed to a less
acute state, or is completely resolved for the patient to be cared for
in the home setting (and that often times another diagnosis code would
have been a more accurate reflection of the patient's condition in the
home). The second category (Category 2 in Table 2) includes codes that
we propose to remove from the HH PPS Grouper based upon clinical
judgment that the condition would not require HH intervention, would
not impact the HH plan of care (POC), or would not result in additional
resource use when providing HH services to the patient. Table 2
comprises ICD-9-CM codes that we propose to remove from the HH PPS
grouper, effective January 1, 2014, along with the category
classification.
Table 2--ICD-9-CM Codes Removed From the HH PPS Grouper as of January 1,
2014
------------------------------------------------------------------------
ICD-9-CM Long
ICD-9-CM Code description Category
------------------------------------------------------------------------
003.1.......................... Salmonella septicemia.. 1
250.20......................... Diabetes with 1
hyperosmolarity, type
II or unspecified
type, not stated as
uncontrolled.
250.21......................... Diabetes with 1
hyperosmolarity, type
I [juvenile type], not
stated as uncontrolled.
250.22......................... Diabetes with 1
hyperosmolarity, type
II or unspecified
type, uncontrolled.
250.23......................... Diabetes with 1
hyperosmolarity, type
I [juvenile type],
uncontrolled.
250.30......................... Diabetes with other 1
coma, type II or
unspecified type, not
stated as uncontrolled.
[[Page 40277]]
250.31......................... Diabetes with other 1
coma, type I [juvenile
type], not stated as
uncontrolled.
250.32......................... Diabetes with other 1
coma, type II or
unspecified type,
uncontrolled.
250.33......................... Diabetes with other 1
coma, type I [juvenile
type], uncontrolled.
282.42......................... Sickle-cell thalassemia 1
with crisis.
282.5.......................... Sickle-cell trait...... 2
282.62......................... Hb-SS disease with 1
crisis.
282.64......................... Sickle-cell/Hb-C 1
disease with crisis.
282.69......................... Other sickle-cell 1
disease with crisis.
285.1.......................... Acute posthemorrhagic 1
anemia.
289.52......................... Splenic sequestration.. 1
333.81......................... Blepharospasm.......... 2
333.84......................... Organic writers' cramp. 2
333.93......................... Benign shuddering 2
attacks.
333.94......................... Restless legs syndrome. 2
348.5.......................... Cerebral edema......... 1
401.0.......................... Malignant essential 1
hypertension.
414.12......................... Dissection of coronary 1
artery.
447.2.......................... Rupture of artery...... 1
493.21......................... Chronic obstructive 1
asthma with status
asthmaticus.
530.21......................... Ulcer of esophagus with 1
bleeding.
530.4.......................... Perforation of 1
esophagus.
530.7.......................... Gastroesophageal 1
laceration-hemorrhage
syndrome.
530.81......................... Esophageal reflux...... 2
530.82......................... Esophageal hemorrhage.. 1
531.00......................... Acute gastric ulcer 1
with hemorrhage,
without mention of
obstruction.
531.01......................... Acute gastric ulcer 1
with hemorrhage, with
obstruction.
531.10......................... Acute gastric ulcer 1
with perforation,
without mention of
obstruction.
531.11......................... Acute gastric ulcer 1
with perforation, with
obstruction.
531.20......................... Acute gastric ulcer 1
with hemorrhage and
perforation, without
mention of obstruction.
531.21......................... Acute gastric ulcer 1
with hemorrhage and
perforation, with
obstruction.
531.31......................... Acute gastric ulcer 1
without mention of
hemorrhage or
perforation, with
obstruction.
531.40......................... Chronic or unspecified 1
gastric ulcer with
hemorrhage, without
mention of obstruction.
531.41......................... Chronic or unspecified 1
gastric ulcer with
hemorrhage, with
obstruction.
531.50......................... Chronic or unspecified 1
gastric ulcer with
perforation, without
mention of obstruction.
531.51......................... Chronic or unspecified 1
gastric ulcer with
perforation, with
obstruction.
531.60......................... Chronic or unspecified 1
gastric ulcer with
hemorrhage and
perforation, without
mention of obstruction.
531.61......................... Chronic or unspecified 1
gastric ulcer with
hemorrhage and
perforation, with
obstruction.
531.71......................... Chronic gastric ulcer 1
without mention of
hemorrhage or
perforation, with
obstruction.
531.91......................... Gastric ulcer, 1
unspecified as acute
or chronic, without
mention of hemorrhage
or perforation, with
obstruction.
532.00......................... Acute duodenal ulcer 1
with hemorrhage,
without mention of
obstruction.
532.01......................... Acute duodenal ulcer 1
with hemorrhage, with
obstruction.
532.10......................... Acute duodenal ulcer 1
with perforation,
without mention of
obstruction.
532.11......................... Acute duodenal ulcer 1
with perforation, with
obstruction.
532.20......................... Acute duodenal ulcer 1
with hemorrhage and
perforation, without
mention of obstruction.
532.21......................... Acute duodenal ulcer 1
with hemorrhage and
perforation, with
obstruction.
532.31......................... Acute duodenal ulcer 1
without mention of
hemorrhage or
perforation, with
obstruction.
532.40......................... Chronic or unspecified 1
duodenal ulcer with
hemorrhage, without
mention of obstruction.
532.41......................... Chronic or unspecified 1
duodenal ulcer with
hemorrhage, with
obstruction.
532.50......................... Chronic or unspecified 1
duodenal ulcer with
perforation, without
mention of obstruction.
532.51......................... Chronic or unspecified 1
duodenal ulcer with
perforation, with
obstruction.
532.60......................... Chronic or unspecified 1
duodenal ulcer with
hemorrhage and
perforation, without
mention of obstruction.
532.61......................... Chronic or unspecified 1
duodenal ulcer with
hemorrhage and
perforation, with
obstruction.
532.71......................... Chronic duodenal ulcer 1
without mention of
hemorrhage or
perforation, with
obstruction.
532.91......................... Duodenal ulcer, 1
unspecified as acute
or chronic, without
mention of hemorrhage
or perforation, with
obstruction.
533.00......................... Acute peptic ulcer of 1
unspecified site with
hemorrhage, without
mention of obstruction.
533.01......................... Acute peptic ulcer of 1
unspecified site with
hemorrhage, with
obstruction.
533.10......................... Acute peptic ulcer of 1
unspecified site with
perforation, without
mention of obstruction.
533.11......................... Acute peptic ulcer of 1
unspecified site with
perforation, with
obstruction.
533.20......................... Acute peptic ulcer of 1
unspecified site with
hemorrhage and
perforation, without
mention of obstruction.
533.21......................... Acute peptic ulcer of 1
unspecified site with
hemorrhage and
perforation, with
obstruction.
533.31......................... Acute peptic ulcer of 1
unspecified site
without mention of
hemorrhage and
perforation, with
obstruction.
533.40......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
hemorrhage, without
mention of obstruction.
533.41......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
hemorrhage, with
obstruction.
533.50......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
perforation, without
mention of obstruction.
[[Page 40278]]
533.51......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
perforation, with
obstruction.
533.60......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
hemorrhage and
perforation, without
mention of obstruction.
533.61......................... Chronic or unspecified 1
peptic ulcer of
unspecified site with
hemorrhage and
perforation, with
obstruction.
533.71......................... Chronic peptic ulcer of 1
unspecified site
without mention of
hemorrhage or
perforation, with
obstruction.
533.91......................... Peptic ulcer of 1
unspecified site,
unspecified as acute
or chronic, without
mention of hemorrhage
or perforation, with
obstruction.
534.00......................... Acute gastrojejunal 1
ulcer with hemorrhage,
without mention of
obstruction.
534.01......................... Acute gastrojejunal 1
ulcer, with
hemorrhage, with
obstruction.
534.10......................... Acute gastrojejunal 1
ulcer with
perforation, without
mention of obstruction.
534.11......................... Acute gastrojejunal 1
ulcer with
perforation, with
obstruction.
534.20......................... Acute gastrojejunal 1
ulcer with hemorrhage
and perforation,
without mention of
obstruction.
534.21......................... Acute gastrojejunal 1
ulcer with hemorrhage
and perforation, with
obstruction.
534.31......................... Acute gastrojejunal 1
ulcer without mention
of hemorrhage or
perforation, with
obstruction.
534.40......................... Chronic or unspecified 1
gastrojejunal ulcer
with hemorrhage,
without mention of
obstruction.
534.41......................... Chronic or unspecified 1
gastrojejunal ulcer,
with hemorrhage, with
obstruction.
534.50......................... Chronic or unspecified 1
gastrojejunal ulcer
with perforation,
without mention of
obstruction.
534.51......................... Chronic or unspecified 1
gastrojejunal ulcer
with perforation, with
obstruction.
534.60......................... Chronic or unspecified 1
gastrojejunal ulcer
with hemorrhage and
perforation, without
mention of obstruction.
534.61......................... Chronic or unspecified 1
gastrojejunal ulcer
with hemorrhage and
perforation, with
obstruction.
534.71......................... Chronic gastrojejunal 1
ulcer without mention
of hemorrhage or
perforation, with
obstruction.
534.91......................... Gastrojejunal ulcer, 1
unspecified as acute
or chronic, without
mention of hemorrhage
or perforation, with
obstruction.
535.01......................... Acute gastritis, with 1
hemorrhage.
535.11......................... Atrophic gastritis, 1
with hemorrhage.
535.21......................... Gastric mucosal 1
hypertrophy, with
hemorrhage.
535.31......................... Alcoholic gastritis, 1
with hemorrhage.
535.41......................... Other specified 1
gastritis, with
hemorrhage.
535.51......................... Unspecified gastritis 1
and gastroduodenitis,
with hemorrhage.
535.61......................... Duodenitis, with 1
hemorrhage.
535.71......................... Eosinophilic gastritis, 1
with hemorrhage.
536.1.......................... Acute dilatation of 1
stomach.
537.3.......................... Other obstruction of 1
duodenum.
537.4.......................... Fistula of stomach or 1
duodenum.
537.6.......................... Hourglass stricture or 1
stenosis of stomach.
537.83......................... Angiodysplasia of 1
stomach and duodenum
with hemorrhage.
537.84......................... Dielulafoy lesion 1
(hemorrhagic) of
stomach and duodenum.
540.0.......................... Acute appendicitis with 1
generalized
peritonitis.
540.1.......................... Acute appendicitis with 1
peritoneal abscess.
540.9.......................... Acute appendicitis 1
without mention of
peritonitis.
541............................ Appendicitis, 1
unqualified.
542............................ Other appendicitis..... 1
543.0.......................... Hyperplasia of appendix 1
(lymphoid).
557.0.......................... Acute vascular 1
insufficiency of
intestine.
560.0.......................... Intussusception........ 1
560.1.......................... Paralytic ileus........ 1
560.2.......................... Volvulus............... 1
560.81......................... Intestinal or 1
peritoneal adhesions
with obstruction
(postoperative)
(postinfection).
560.89......................... Other specified 1
intestinal obstruction.
560.9.......................... Unspecified intestinal 1
obstruction.
562.02......................... Diverticulosis of small 1
intestine with
hemorrhage.
562.03......................... Diverticulitis of small 1
intestine with
hemorrhage.
562.12......................... Diverticulosis of colon 1
with hemorrhage.
562.13......................... Diverticulitis of colon 1
with hemorrhage.
567.0.......................... Peritonitis in 1
infectious diseases
classified elsewhere.
567.1.......................... Pneumococcal 1
peritonitis.
567.21......................... Peritonitis (acute) 1
generalized.
567.22......................... Peritoneal abscess..... 1
567.23......................... Spontaneous bacterial 1
peritonitis.
567.29......................... Other suppurative 1
peritonitis.
567.31......................... Psoas muscle abscess... 1
567.38......................... Other retroperitoneal 1
abscess.
567.81......................... Choleperitonitis....... 1
567.82......................... Sclerosing mesenteritis 1
567.89......................... Other specified 1
peritonitis.
567.9.......................... Unspecified peritonitis 1
568.81......................... Hemoperitoneum 1
(nontraumatic).
569.3.......................... Hemorrhage of rectum 1
and anus.
[[Page 40279]]
569.43......................... Anal sphincter tear-old 2
569.83......................... Perforation of 1
intestine.
569.85......................... Angiodysplasia of 1
intestine with
hemorrhage.
569.86......................... Dieulafoy lesion 1
(hemorrhagic) of
intestine.
572.0.......................... Abscess of liver....... 1
572.1.......................... Portal pyemia.......... 1
574.00......................... Calculus of gallbladder 1
with acute
cholecystitis, without
mention of obstruction.
574.01......................... Calculus of gallbladder 1
with acute
cholecystitis, with
obstruction.
574.10......................... Calculus of gallbladder 1
with other
cholecystitis, without
mention of obstruction.
574.11......................... Calculus of gallbladder 1
with other
cholecystitis, with
obstruction.
574.21......................... Calculus of gallbladder 1
without mention of
cholecystitis, with
obstruction.
574.30......................... Calculus of bile duct 1
with acute
cholecystitis, without
mention of obstruction.
574.31......................... Calculus of bile duct 1
with acute
cholecystitis, with
obstruction.
574.41......................... Calculus of bile duct 1
with other
cholecystitis, with
obstruction.
574.51......................... Calculus of bile duct 1
without mention of
cholecystitis, with
obstruction.
574.60......................... Calculus of gallbladder 1
and bile duct with
acute cholecystitis,
without mention of
obstruction.
574.61......................... Calculus of gallbladder 1
and bile duct with
acute cholecystitis,
with obstruction.
574.71......................... Calculus of gallbladder 1
and bile duct with
other cholecystitis,
with obstruction.
574.80......................... Calculus of gallbladder 1
and bile duct with
acute and chronic
cholecystitis, without
mention of obstruction.
574.81......................... Calculus of gallbladder 1
and bile duct with
acute and chronic
cholecystitis, with
obstruction.
574.91......................... Calculus of gallbladder 1
and bile duct without
cholecystitis, with
obstruction.
575.0.......................... Acute cholecystitis.... 1
575.2.......................... Obstruction of 1
gallbladder.
575.3.......................... Hydrops of gallbladder. 1
575.4.......................... Perforation of 1
gallbladder.
576.1.......................... Cholangitis............ 1
576.2.......................... Obstruction of bile 1
duct.
576.3.......................... Perforation of bile 1
duct.
577.0.......................... Acute pancreatitis..... 1
578.0.......................... Hematemesis............ 1
578.9.......................... Hemorrhage of 1
gastrointestinal
tract, unspecified.
873.63......................... Broken tooth-uncomplic. 2
998.11......................... Hemorrhage complicating 1
a procedure.
998.12......................... Hematoma complicating a 1
procedure.
998.2.......................... Accidental puncture or 1
laceration during a
procedure, not
elsewhere classified.
------------------------------------------------------------------------
Analysis of CY 2012 claims data shows that the average case-mix
weight before the removal of the codes in Table 2 was 1.3517. It is
estimated that the proposed removal of the 170 codes in Table 2 results
in an average case-mix weight for CY 2012 of 1.3417. As described
above, clinical judgment is that these codes are ``too acute,'' meaning
that this condition could not be appropriately cared for in a HH
setting (Category 1) or would not impact the HH POC or result in
additional resource use (Category 2). Therefore, the inclusion of these
diagnosis codes in the grouper was producing inaccurate overpayments.
B. International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) Conversion and Diagnosis Reporting on Home
Health Claims
1. International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) Conversion
The Compliance date for adoption of the ICD-10-CM and ICD-10-PCS
Medical Data Code Set is October 1, 2014, as announced in September 5,
2012 final rule, ``Administrative Simplification: Adoption of a
Standard for a Unique Health Plan Identifier; Addition to the National
Provider Identifier Requirements; and a Change to the Compliance Date
for the International Classification of Diseases, 10th Edition (ICD-10-
CM and ICD-10-PCS) Medical Data Code Sets'' (77 FR 54664). Under that
final rule, the transition to ICD-10-CM is required for entities
covered by the Health Insurance Portability and Accountability Act of
1996 (HIPAA) (Pub. L. 104-191, enacted on August 21, 1996). CMS, along
with our support contractors, Abt Associates and 3M, spent the last 2
years implementing a process for the transition from the use of ICD-9-
CM diagnosis codes to ICD-10-CM diagnosis codes within the HH PPS
Grouper. As we outlined in the section above, we began this process
with a review of the ICD-9-CM codes included in our HH PPS Grouper and
identified certain codes that should be removed, and thus will not be
included in our translation list of ICD-9-CM to ICD-10-CM codes.
3M produced a translation list using the General Equivalency
Mappings (GEMs) tool. That translation list, produced by the GEMs tool,
was then reviewed and revised to ensure the included codes are
appropriate for use in the HH setting, based upon ICD-10-CM coding
guidance. Modifications included:
Elimination of codes with ``initial encounter'' extensions
listed in the GEMs translation. ICD-10-CM codes that begin with S and T
are used for reporting traumatic injuries, such as fractures and burns.
These codes have a 7th character that indicates whether the treatment
is for an initial encounter, subsequent encounter or a sequela (a
residual effect (condition produced) after the acute phase of an
illness or injury has terminated). The GEMs translation mapped ICD-9-CM
traumatic injury codes to ICD-10-CM codes with the 7th character for an
initial encounter. This extension is intended to be used when the
patient is receiving active treatment such as
[[Page 40280]]
surgical treatment, an emergency department encounter, or evaluation
and treatment by a new physician. These initial encounter extension
codes are not appropriate for care in the HH setting and were deleted.
Code extensions D, E, F, G, H, J, K, M, N, P, Q and R indicate the
patient is being treated for a subsequent encounter (care for the
injury during the healing or recovery phase) were included in the
translation list in place of the initial encounter extensions. For
example, S72.024A ``Nondisplaced fracture of epiphysis (separation)
(upper) of right femur, initial encounter for closed fracture'' was
deleted and S72.024D, S72.024E, S72.024F, S72.024G, S72.024H, S72.024J,
S72.024K, S72.024M, S72.024N, S72.024P, S27.024Q, and S72.024R were
retained for the reporting of aftercare provided by the HHA.
Elimination of codes for non-specific conditions when the
clinician should be able to identify a more specific diagnosis based on
clinical assessment. The initial GEMs translation included non-specific
codes, for example, ICD-10-CM code L02.519 ``cutaneous abscess of
unspecified hand''. These have been deleted from the translation list
whenever a more specific diagnosis could be identified by the clinician
performing the initial assessment. The example code above (L02.519) was
deleted because the clinician should be able to identify which hand had
the abscess, and therefore, would report the injury using the code that
specifies the right or left hand.
The diagnostic group (DG) assignment of ICD-10-CM codes in
the translation replicates the ICD-9-CM assignment whenever possible.
Since ICD-9-CM to ICD-10-CM translation is not a 1-to-1 mapping
process, there were cases where the DG assignment was ambiguous. When
there was a conflict (such as 2 ICD-9-CM codes being translated to a
single ICD-10-CM code that covered both conditions), DG assignment was
based on clinical appropriateness and comparisons of relative resource
use data (when available), such that the code was assigned to single DG
that included other codes with similar resource use.
A draft list of ICD-10-CM codes to be included in the HH PPS
Grouper has been developed based upon the process outlined above and
3M, our HH PPS Grouper maintenance contractor, has begun building and
testing a Grouper version for use starting October 1, 2014, when OASIS-
C1, the new version of the OASIS assessment which will use ICD-10-CM
diagnosis codes, will be implemented. The draft translation list is
available on the CMS HHA Center Web site at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html. We plan to
participate in any ICD-10-CM provider outreach sessions that are
scheduled and to provide updates, such as notifying HHAs of the draft
translation list's availability during the HH, Hospice, and DME Open
Door Forums and through list-serve announcements.
We plan to post a draft ICD-10-CM HH PPS Grouper via the CMS Web
site on or before July 1, 2014. We also plan to share the draft ICD-10-
CM HH PPS Grouper with those vendors that have registered as beta-
testers in advance of posting the draft ICD-10 HH PPS Grouper on the
CMS Web site. The purpose of early release to the beta testers is to
identify any significant issues early in the process. Providers who are
interested in enrolling as a beta site can obtain more information on
the HH PPS Grouper Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/CaseMixGrouperSoftware.html.
2. Diagnosis Reporting on Home Health Claims
Adherence to coding guidelines when assigning diagnosis codes is
required under HIPAA. 3M conducted analysis of OASIS records and claims
from CY 2011 and found that some HHAs were not complying with coding
guidelines. Section 1.A.6 in the 2012 ICD-9-CM Coding Guidelines
require that the underlying condition be sequenced first followed by
the manifestation. Wherever such a combination exists, there is a ``use
additional code'' note at the etiology code, and a ``code first'' note
at the manifestation code. These instructional notes indicate the
proper sequencing order of the codes, etiology followed by
manifestation. In most cases, the title of these manifestation codes
will include ``in diseases classified elsewhere'' or ``in conditions
classified elsewhere.'' Codes with these phrases in the title are
generally manifestation codes. ``In diseases classified elsewhere'' or
``in conditions classified elsewhere'' codes are never permitted to be
used as first listed or principal diagnosis codes and they must be
listed following the underlying condition. In ICD-10-CM, the same
coding convention applies and can be found in section 1.A.13 of the
ICD-10-CM guidance. Note, however, that there are also other
manifestation codes that do not have ``in diseases classified
elsewhere'' or ``in conditions classified elsewhere'' in their title.
For such codes a ``use additional code'' note would still be present,
and the rules for coding sequencing still apply. It should be noted
that several dementia codes, which are not allowable as principal
diagnoses per ICD-9-CM coding guidelines, are under the classification
of ``Mental, Behavioral and Neurodevelopmental Disorders''. According
to section 1.A6 of the ICD-9-CM coding guidelines for ``Mental,
Behavioral and Neurodevelopmental Disorders'', dementias that fall
under this category are ``most commonly a secondary manifestation of an
underlying causal condition.'' To ensure additional compliance with
ICD-10-CM Coding Guidelines, we will be adopting additional claims
processing edits for all HH claims effective October 1, 2014. HH claims
containing inappropriate principal or secondary diagnosis codes will be
returned to the provider and will have to be corrected and resubmitted
to be processed and paid. Additional details describing the specific
edits that will be applied will be announced through a change request,
an accompanying Medicare Learning Network article, and other CMS
communication channels, such as the HH, Hospice, and DME Open Door
Forum.
Finally, effective October 1, 2014, with the implementation of ICD-
10-CM diagnosis code reporting, we anticipate that HHAs will be able to
report all of the conditions included in the HH PPS Grouper as a
primary or secondary diagnosis. There will no longer be a need for any
conditions to be reported in the payment diagnosis field because all of
the ICD-10-CM codes included in our HH PPS Grouper will be appropriate
for reporting as a primary or secondary condition. As such, we are
retiring Appendix D of OASIS (also referred to as Attachment D),
effective October 1, 2014. All necessary guidance for providers is
provided in the ICD-10-CM Coding Guidelines.
C. Proposed Adjustment to the HH PPS Case-Mix Weights
In the November 4, 2011 CY 2012 HH PPS final rule (76 FR 68543), we
recalibrated the HH PPS case-mix weights to address incentives that
existed in the HH PPS to provide unnecessary therapy services. In that
final rule, we described that our review of HH PPS utilization data
showed an increase in the share of episodes with very high numbers of
therapy visits. This shift was first observed in 2008 and it continued
in 2009. As described in the CY 2012 HH PPS final rule, we observed an
increase of 25 percent in the share of episodes with 14 or more therapy
visits from 2007 to 2008. In the
[[Page 40281]]
2009 sample, the share with 14 or more therapy visits continued to
increase while the share of episodes with no therapy visits continued
to decrease. The frequencies also indicated that the share of episodes
with 20 or more therapy visits was 6 percent in 2009. This was a 50
percent increase from the share of episodes in 2007, when episodes with
at least 20 therapy visits accounted for only 4 percent of episodes (76
FR 41003). Furthermore, in the CY 2012 HH PPS final rule, we described
that in their 2010 and 2011 Reports to Congress, the Medicare Payment
Advisory Commission (MedPAC) suggested that the HH PPS contains
incentives which likely result in agencies providing more therapy than
is needed. Moreover, in its 2011 Report to Congress, MedPAC suggested
that the HH PPS may ``overvalue therapy services and undervalue
nontherapy services.'' Our analysis of cost report data showed that in
2009, the average amount that payment exceeded cost for a normal (non-
LUPA, non-PEP, non-outlier) episode with 14-19 therapy visits was more
than $1,100 and the average amount that payment exceeded costs for a
normal episode with 20 or more therapy visits was more than $1,500. In
contrast, we noted that the average amount that payment exceeded costs
for a normal episode with 1 to 5 therapy visits was around $300 (76 FR
68556). Therefore, we lowered the case-mix weights for high therapy
episodes and increased the weights for episodes with little or no
therapy. We then increased the average case-mix weights to 1.3440 to
achieve budget neutrality to the most current, complete data available
at the time, which was 2009. We stated that we believed the revision to
the payment weights would result in more accurate HH PPS payments for
targeted case-mix groups while addressing MedPAC's concerns that our
reimbursement for therapy episodes was too high and our reimbursement
for non-therapy episodes was too low. Also, we stated that we believed
our revision of the payment weights will discourage the provision of
unnecessary therapy services and will slow the growth of nominal case-
mix (76 FR 68545).
As described in section III.D. of this proposed rule, we are
proposing to rebase the national, standardized 60-day episode payment
rate. One view of the goal for rebasing is to reset the payments under
the HH PPS. When the HH PPS was created, we expected that the average
case-mix weight would be around 1.00, but analysis has shown that it
has consistently been above 1.00 since the start of the HH PPS.
Therefore, as part of rebasing, for CY 2014, we propose to reset the
average case-mix weight to 1.00. Specifically, we propose to use the
2012 revised case-mix weights, but lower them to an average case-mix
weight of 1.00. We plan to implement the weight reduction by applying
the same reduction factor to each weight, thereby maintaining the
relative values in the weight set. Preliminary CY 2012 claims data
shows that the average case-mix weight for non-LUPA episodes in 2012 is
1.3517. For CY 2014, we propose to reduce the average case-mix weight
for 2012 from 1.3517 to 1.0000. We obtain the CY 2014 proposed weights
shown in Table 3 by dividing the CY 2013 weights (which are the same
weights as those finalized in CY 2012 rulemaking) by 1.3517. To offset
the effect of resetting the case-mix weights such that the average is
1.00, we inflate the national, standardized 60-day episode payment rate
by the same factor (1.3517) used to decrease the weights. The result
will be the starting point from which rebasing adjustments are
implemented. We note that the average case-mix weight for 2012 of
1.3517 is based on non-LUPA episodes starting from January 1, 2012 to
May 31, 2012. As more 2012 data become available, we plan to update the
estimated average case-mix weight for CY 2012 and adjust the case-mix
weights and budget neutrality factor accordingly. Therefore, the weight
reduction factor in the CY 2014 HH PPS final rule may be different from
the one used to produce the proposed weights in this proposed rule.
Please see the proposed weights in the Table 3.
Table 3--Proposed CY 2014 Case-Mix Weights
----------------------------------------------------------------------------------------------------------------
Clinical,
functional, 2013 HH PPS 2014 Proposed
Payment group Description and service case-mix HH PPS case-
levels weights mix weights
----------------------------------------------------------------------------------------------------------------
10111........................... 1st and 2nd Episodes, 0 to 5 C1F1S1 0.8186 0.6056
Therapy Visits.
10112........................... 1st and 2nd Episodes, 6 C1F1S2 0.9793 0.7245
Therapy Visits.
10113........................... 1st and 2nd Episodes, 7 to 9 C1F1S3 1.1401 0.8435
Therapy Visits.
10114........................... 1st and 2nd Episodes, 10 C1F1S4 1.3008 0.9623
Therapy Visits.
10115........................... 1st and 2nd Episodes, 11 to 13 C1F1S5 1.4616 1.0813
Therapy Visits.
10121........................... 1st and 2nd Episodes, 0 to 5 C1F2S1 1.0275 0.7602
Therapy Visits.
10122........................... 1st and 2nd Episodes, 6 C1F2S2 1.1657 0.8624
Therapy Visits.
10123........................... 1st and 2nd Episodes, 7 to 9 C1F2S3 1.3039 0.9646
Therapy Visits.
10124........................... 1st and 2nd Episodes, 10 C1F2S4 1.4421 1.0669
Therapy Visits.
10125........................... 1st and 2nd Episodes, 11 to 13 C1F2S5 1.5804 1.1692
Therapy Visits.
10131........................... 1st and 2nd Episodes, 0 to 5 C1F3S1 1.1233 0.8310
Therapy Visits.
10132........................... 1st and 2nd Episodes, 6 C1F3S2 1.2520 0.9262
Therapy Visits.
10133........................... 1st and 2nd Episodes, 7 to 9 C1F3S3 1.3807 1.0215
Therapy Visits.
10134........................... 1st and 2nd Episodes, 10 C1F3S4 1.5094 1.1167
Therapy Visits.
10135........................... 1st and 2nd Episodes, 11 to 13 C1F3S5 1.6381 1.2119
Therapy Visits.
10211........................... 1st and 2nd Episodes, 0 to 5 C2F1S1 0.8340 0.6170
Therapy Visits.
10212........................... 1st and 2nd Episodes, 6 C2F1S2 1.0302 0.7622
Therapy Visits.
10213........................... 1st and 2nd Episodes, 7 to 9 C2F1S3 1.2265 0.9074
Therapy Visits.
10214........................... 1st and 2nd Episodes, 10 C2F1S4 1.4228 1.0526
Therapy Visits.
10215........................... 1st and 2nd Episodes, 11 to 13 C2F1S5 1.6190 1.1978
Therapy Visits.
10221........................... 1st and 2nd Episodes, 0 to 5 C2F2S1 1.0429 0.7715
Therapy Visits.
10222........................... 1st and 2nd Episodes, 6 C2F2S2 1.2166 0.9001
Therapy Visits.
10223........................... 1st and 2nd Episodes, 7 to 9 C2F2S3 1.3903 1.0286
Therapy Visits.
10224........................... 1st and 2nd Episodes, 10 C2F2S4 1.5641 1.1571
Therapy Visits.
10225........................... 1st and 2nd Episodes, 11 to 13 C2F2S5 1.7378 1.2856
Therapy Visits.
10231........................... 1st and 2nd Episodes, 0 to 5 C2F3S1 1.1387 0.8424
Therapy Visits.
10232........................... 1st and 2nd Episodes, 6 C2F3S2 1.3029 0.9639
Therapy Visits.
[[Page 40282]]
10233........................... 1st and 2nd Episodes, 7 to 9 C2F3S3 1.4671 1.0854
Therapy Visits.
10234........................... 1st and 2nd Episodes, 10 C2F3S4 1.6313 1.2069
Therapy Visits.
10235........................... 1st and 2nd Episodes, 11 to 13 C2F3S5 1.7956 1.3284
Therapy Visits.
10311........................... 1st and 2nd Episodes, 0 to 5 C3F1S1 0.9071 0.6711
Therapy Visits.
10312........................... 1st and 2nd Episodes, 6 C3F1S2 1.1348 0.8395
Therapy Visits.
10313........................... 1st and 2nd Episodes, 7 to 9 C3F1S3 1.3624 1.0079
Therapy Visits.
10314........................... 1st and 2nd Episodes, 10 C3F1S4 1.5900 1.1763
Therapy Visits.
10315........................... 1st and 2nd Episodes, 11 to 13 C3F1S5 1.8177 1.3448
Therapy Visits.
10321........................... 1st and 2nd Episodes, 0 to 5 C3F2S1 1.1160 0.8256
Therapy Visits.
10322........................... 1st and 2nd Episodes, 6 C3F2S2 1.3211 0.9774
Therapy Visits.
10323........................... 1st and 2nd Episodes, 7 to 9 C3F2S3 1.5262 1.1291
Therapy Visits.
10324........................... 1st and 2nd Episodes, 10 C3F2S4 1.7313 1.2808
Therapy Visits.
10325........................... 1st and 2nd Episodes, 11 to 13 C3F2S5 1.9364 1.4326
Therapy Visits.
10331........................... 1st and 2nd Episodes, 0 to 5 C3F3S1 1.2118 0.8965
Therapy Visits.
10332........................... 1st and 2nd Episodes, 6 C3F3S2 1.4074 1.0412
Therapy Visits.
10333........................... 1st and 2nd Episodes, 7 to 9 C3F3S3 1.6030 1.1859
Therapy Visits.
10334........................... 1st and 2nd Episodes, 10 C3F3S4 1.7986 1.3306
Therapy Visits.
10335........................... 1st and 2nd Episodes, 11 to 13 C3F3S5 1.9942 1.4753
Therapy Visits.
21111........................... 1st and 2nd Episodes, 14 to 15 C1F1S1 1.6223 1.2002
Therapy Visits.
21112........................... 1st and 2nd Episodes, 16 to 17 C1F1S2 1.8331 1.3561
Therapy Visits.
21113........................... 1st and 2nd Episodes, 18 to 19 C1F1S3 2.0438 1.5120
Therapy Visits.
21121........................... 1st and 2nd Episodes, 14 to 15 C1F2S1 1.7186 1.2714
Therapy Visits.
21122........................... 1st and 2nd Episodes, 16 to 17 C1F2S2 1.9496 1.4423
Therapy Visits.
21123........................... 1st and 2nd Episodes, 18 to 19 C1F2S3 2.1807 1.6133
Therapy Visits.
21131........................... 1st and 2nd Episodes, 14 to 15 C1F3S1 1.7668 1.3071
Therapy Visits.
21132........................... 1st and 2nd Episodes, 16 to 17 C1F3S2 2.0252 1.4983
Therapy Visits.
21133........................... 1st and 2nd Episodes, 18 to 19 C1F3S3 2.2836 1.6894
Therapy Visits.
21211........................... 1st and 2nd Episodes, 14 to 15 C2F1S1 1.8153 1.3430
Therapy Visits.
21212........................... 1st and 2nd Episodes, 16 to 17 C2F1S2 2.0224 1.4962
Therapy Visits.
21213........................... 1st and 2nd Episodes, 18 to 19 C2F1S3 2.2294 1.6493
Therapy Visits.
21221........................... 1st and 2nd Episodes, 14 to 15 C2F2S1 1.9116 1.4142
Therapy Visits.
21222........................... 1st and 2nd Episodes, 16 to 17 C2F2S2 2.1389 1.5824
Therapy Visits.
21223........................... 1st and 2nd Episodes, 18 to 19 C2F2S3 2.3663 1.7506
Therapy Visits.
21231........................... 1st and 2nd Episodes, 14 to 15 C2F3S1 1.9598 1.4499
Therapy Visits.
21232........................... 1st and 2nd Episodes, 16 to 17 C2F3S2 2.2145 1.6383
Therapy Visits.
21233........................... 1st and 2nd Episodes, 18 to 19 C2F3S3 2.4691 1.8267
Therapy Visits.
21311........................... 1st and 2nd Episodes, 14 to 15 C3F1S1 2.0453 1.5131
Therapy Visits.
21312........................... 1st and 2nd Episodes, 16 to 17 C3F1S2 2.2682 1.6780
Therapy Visits.
21313........................... 1st and 2nd Episodes, 18 to 19 C3F1S3 2.4911 1.8429
Therapy Visits.
21321........................... 1st and 2nd Episodes, 14 to 15 C3F2S1 2.1415 1.5843
Therapy Visits.
21322........................... 1st and 2nd Episodes, 16 to 17 C3F2S2 2.3848 1.7643
Therapy Visits.
21323........................... 1st and 2nd Episodes, 18 to 19 C3F2S3 2.6280 1.9442
Therapy Visits.
21331........................... 1st and 2nd Episodes, 14 to 15 C3F3S1 2.1897 1.6200
Therapy Visits.
21332........................... 1st and 2nd Episodes, 16 to 17 C3F3S2 2.4603 1.8202
Therapy Visits.
21333........................... 1st and 2nd Episodes, 18 to 19 C3F3S3 2.7309 2.0203
Therapy Visits.
22111........................... 3rd+ Episodes, 14 to 15 C1F1S1 1.6822 1.2445
Therapy Visits.
22112........................... 3rd+ Episodes, 16 to 17 C1F1S2 1.8730 1.3857
Therapy Visits.
22113........................... 3rd+ Episodes, 18 to 19 C1F1S3 2.0638 1.5268
Therapy Visits.
22121........................... 3rd+ Episodes, 14 to 15 C1F2S1 1.7628 1.3041
Therapy Visits.
22122........................... 3rd+ Episodes, 16 to 17 C1F2S2 1.9791 1.4642
Therapy Visits.
22123........................... 3rd+ Episodes, 18 to 19 C1F2S3 2.1954 1.6242
Therapy Visits.
22131........................... 3rd+ Episodes, 14 to 15 C1F3S1 1.9247 1.4239
Therapy Visits.
22132........................... 3rd+ Episodes, 16 to 17 C1F3S2 2.1305 1.5762
Therapy Visits.
22133........................... 3rd+ Episodes, 18 to 19 C1F3S3 2.3362 1.7283
Therapy Visits.
22211........................... 3rd+ Episodes, 14 to 15 C2F1S1 1.8508 1.3692
Therapy Visits.
22212........................... 3rd+ Episodes, 16 to 17 C2F1S2 2.0460 1.5136
Therapy Visits.
22213........................... 3rd+ Episodes, 18 to 19 C2F1S3 2.2412 1.6581
Therapy Visits.
22221........................... 3rd+ Episodes, 14 to 15 C2F2S1 1.9314 1.4289
Therapy Visits.
22222........................... 3rd+ Episodes, 16 to 17 C2F2S2 2.1521 1.5921
Therapy Visits.
22223........................... 3rd+ Episodes, 18 to 19 C2F2S3 2.3729 1.7555
Therapy Visits.
22231........................... 3rd+ Episodes, 14 to 15 C2F3S1 2.0933 1.5486
Therapy Visits.
22232........................... 3rd+ Episodes, 16 to 17 C2F3S2 2.3035 1.7042
Therapy Visits.
22233........................... 3rd+ Episodes, 18 to 19 C2F3S3 2.5136 1.8596
Therapy Visits.
22311........................... 3rd+ Episodes, 14 to 15 C3F1S1 2.0747 1.5349
Therapy Visits.
22312........................... 3rd+ Episodes, 16 to 17 C3F1S2 2.2878 1.6925
Therapy Visits.
22313........................... 3rd+ Episodes, 18 to 19 C3F1S3 2.5009 1.8502
Therapy Visits.
22321........................... 3rd+ Episodes, 14 to 15 C3F2S1 2.1553 1.5945
Therapy Visits.
22322........................... 3rd+ Episodes, 16 to 17 C3F2S2 2.3940 1.7711
Therapy Visits.
[[Page 40283]]
22323........................... 3rd+ Episodes, 18 to 19 C3F2S3 2.6326 1.9476
Therapy Visits.
22331........................... 3rd+ Episodes, 14 to 15 C3F3S1 2.3172 1.7143
Therapy Visits.
22332........................... 3rd+ Episodes, 16 to 17 C3F3S2 2.5453 1.8830
Therapy Visits.
22333........................... 3rd+ Episodes, 18 to 19 C3F3S3 2.7734 2.0518
Therapy Visits.
30111........................... 3rd+ Episodes, 0 to 5 Therapy C1F1S1 0.6692 0.4951
Visits.
30112........................... 3rd+ Episodes, 6 Therapy C1F1S2 0.8718 0.6450
Visits.
30113........................... 3rd+ Episodes, 7 to 9 Therapy C1F1S3 1.0744 0.7949
Visits.
30114........................... 3rd+ Episodes, 10 Therapy C1F1S4 1.2770 0.9447
Visits.
30115........................... 3rd+ Episodes, 11 to 13 C1F1S5 1.4796 1.0946
Therapy Visits.
30121........................... 3rd+ Episodes, 0 to 5 Therapy C1F2S1 0.8421 0.6230
Visits.
30122........................... 3rd+ Episodes, 6 Therapy C1F2S2 1.0263 0.7593
Visits.
30123........................... 3rd+ Episodes, 7 to 9 Therapy C1F2S3 1.2104 0.8955
Visits.
30124........................... 3rd+ Episodes, 10 Therapy C1F2S4 1.3945 1.0317
Visits.
30125........................... 3rd+ Episodes, 11 to 13 C1F2S5 1.5787 1.1679
Therapy Visits.
30131........................... 3rd+ Episodes, 0 to 5 Therapy C1F3S1 0.9352 0.6919
Visits.
30132........................... 3rd+ Episodes, 6 Therapy C1F3S2 1.1331 0.8383
Visits.
30133........................... 3rd+ Episodes, 7 to 9 Therapy C1F3S3 1.3310 0.9847
Visits.
30134........................... 3rd+ Episodes, 10 Therapy C1F3S4 1.5289 1.1311
Visits.
30135........................... 3rd+ Episodes, 11 to 13 C1F3S5 1.7268 1.2775
Therapy Visits.
30211........................... 3rd+ Episodes, 0 to 5 Therapy C2F1S1 0.7361 0.5446
Visits.
30212........................... 3rd+ Episodes, 6 Therapy C2F1S2 0.9591 0.7096
Visits.
30213........................... 3rd+ Episodes, 7 to 9 Therapy C2F1S3 1.1820 0.8745
Visits.
30214........................... 3rd+ Episodes, 10 Therapy C2F1S4 1.4049 1.0394
Visits.
30215........................... 3rd+ Episodes, 11 to 13 C2F1S5 1.6278 1.2043
Therapy Visits.
30221........................... 3rd+ Episodes, 0 to 5 Therapy C2F2S1 0.9091 0.6726
Visits.
30222........................... 3rd+ Episodes, 6 Therapy C2F2S2 1.1136 0.8239
Visits.
30223........................... 3rd+ Episodes, 7 to 9 Therapy C2F2S3 1.3180 0.9751
Visits.
30224........................... 3rd+ Episodes, 10 Therapy C2F2S4 1.5225 1.1264
Visits.
30225........................... 3rd+ Episodes, 11 to 13 C2F2S5 1.7269 1.2776
Therapy Visits.
30231........................... 3rd+ Episodes, 0 to 5 Therapy C2F3S1 1.0022 0.7414
Visits.
30232........................... 3rd+ Episodes, 6 Therapy C2F3S2 1.2204 0.9029
Visits.
30233........................... 3rd+ Episodes, 7 to 9 Therapy C2F3S3 1.4386 1.0643
Visits.
30234........................... 3rd+ Episodes, 10 Therapy C2F3S4 1.6568 1.2257
Visits.
30235........................... 3rd+ Episodes, 11 to 13 C2F3S5 1.8751 1.3872
Therapy Visits.
30311........................... 3rd+ Episodes, 0 to 5 Therapy C3F1S1 0.9324 0.6898
Visits.
30312........................... 3rd+ Episodes, 6 Therapy C3F1S2 1.1609 0.8588
Visits.
30313........................... 3rd+ Episodes, 7 to 9 Therapy C3F1S3 1.3893 1.0278
Visits.
30314........................... 3rd+ Episodes, 10 Therapy C3F1S4 1.6178 1.1969
Visits.
30315........................... 3rd+ Episodes, 11 to 13 C3F1S5 1.8463 1.3659
Therapy Visits.
30321........................... 3rd+ Episodes, 0 to 5 Therapy C3F2S1 1.1054 0.8178
Visits.
30322........................... 3rd+ Episodes, 6 Therapy C3F2S2 1.3154 0.9731
Visits.
30323........................... 3rd+ Episodes, 7 to 9 Therapy C3F2S3 1.5254 1.1285
Visits.
30324........................... 3rd+ Episodes, 10 Therapy C3F2S4 1.7353 1.2838
Visits.
30325........................... 3rd+ Episodes, 11 to 13 C3F2S5 1.9453 1.4392
Therapy Visits.
30331........................... 3rd+ Episodes, 0 to 5 Therapy C3F3S1 1.1985 0.8867
Visits.
30332........................... 3rd+ Episodes, 6 Therapy C3F3S2 1.4222 1.0522
Visits.
30333........................... 3rd+ Episodes, 7 to 9 Therapy C3F3S3 1.6460 1.2177
Visits.
30334........................... 3rd+ Episodes, 10 Therapy C3F3S4 1.8697 1.3832
Visits.
30335........................... 3rd+ Episodes, 11 to 13 C3F3S5 2.0935 1.5488
Therapy Visits.
40111........................... All Episodes, 20+ Therapy C1F1S1 2.2546 1.6680
Visits.
40121........................... All Episodes, 20+ Therapy C1F2S1 2.4117 1.7842
Visits.
40131........................... All Episodes, 20+ Therapy C1F3S1 2.5419 1.8805
Visits.
40211........................... All Episodes, 20+ Therapy C2F1S1 2.4364 1.8025
Visits.
40221........................... All Episodes, 20+ Therapy C2F2S1 2.5936 1.9188
Visits.
40231........................... All Episodes, 20+ Therapy C2F3S1 2.7238 2.0151
Visits.
40311........................... All Episodes, 20+ Therapy C3F1S1 2.7140 2.0078
Visits.
40321........................... All Episodes, 20+ Therapy C3F2S1 2.8712 2.1241
Visits.
40331........................... All Episodes, 20+ Therapy C3F3S1 3.0014 2.2205
Visits.
----------------------------------------------------------------------------------------------------------------
We also note that we plan to continue to evaluate and potentially
revise the case-mix weights relative to one another as more recent
utilization and cost report data become available. Fully addressing
MedPAC's concerns with the way the HH PPS factors therapy visits into
the case-mix system is a complex process which will require more
comprehensive analysis and potentially additional structural changes to
the HH PPS. While we plan to address MedPAC's concerns in a more
comprehensive way in future years, we propose that for the short term,
we use the CY 2012 case-mix weights reset to an average case-mix of
1.0. We plan to continue to monitor case-mix growth
[[Page 40284]]
(both real and nominal case-mix growth), and address it accordingly in
the future.
D. Rebasing the National, Standardized 60-day Episode Payment Rate,
LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS)
Conversion Factor
1. Rebasing the National, Standardized 60-Day Episode Payment Rate
Section 3131(a) of the Affordable Care Act mandates that starting
in CY 2014, the Secretary must apply an adjustment to the national,
standardized 60-day episode payment rate and other amounts applicable
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such
as changes in the number of visits in an episode, the mix of services
in an episode, the level of intensity of services in an episode, the
average cost of providing care per episode, and other relevant factors.
In addition, section 3131(a) of the Affordable Care Act mandates that
this rebasing must be phased-in over a 4-year period in equal
increments, not to exceed 3.5 percent of the amount (or amounts) in any
given year applicable under section 1895(b)(3)(A)(i)(III) of the Act,
and be fully implemented by CY 2017. To fulfill this mandate, we have
performed extensive analysis of cost report and claims data. We used FY
2011 cost report data as of December 31, 2012; which was the latest,
complete cost report data available at the time of the analysis.
a. Trimming Methodology
When examining data from all 10,327 Medicare cost reports from FY
2011, we found that a number of the cost reports had missing or
questionable data and extreme values. These cost reports were often
missing necessary information for calculating episode costs, reported
significantly different data than data from prior cost reports for the
same provider, or were markedly different than cost reports from the
majority of HHAs during the same time period. Since these extreme
values can significantly affect average estimated costs and are more
indicative of misreporting rather than actual costs, we developed a
trimming methodology to obtain a more robust estimate of costs.
The trimming methodology applied to the cost reports consisted of a
two-tier process. First, providers' cost reports were compared
longitudinally to identify large year-to-year discrepancies. Second,
cost reports were compared cross-sectionally to cost reports from the
same fiscal year. It should be noted that the trimming methodology was
developed using FY 2000 through FY 2010 cost reports and then applied
to the FY 2011 cost reports. The first step in the trimming methodology
excluded all cost reports with missing provider numbers. In FY 2011,
zero providers were excluded by this exclusion criterion. Next, cost
reports that did not report the number of episodes were excluded from
the FY 2011 sample. This restriction eliminated 2,348 of the FY 2011
cost reports. Of these 2,348 cost reports, 1,629 were also missing data
on total costs or payments. The next step in the trimming methodology
excluded cost reports that were significantly different from prior cost
reports from the same provider. Specifically, we sorted the FY 2000 to
FY 2011 cost reports by fiscal year for each provider and excluded a
cost report if the number of episodes reported increased from the
provider's previous cost report to the current cost report by: (1) More
than a factor of ten and the new report of episodes is greater than
1,000; or (2) more than a factor of five and the new report of episodes
is greater than or equal to 5,000. After dropping cost reports which
met these exclusion criteria, the process was repeated for two
additional iterations. This exclusion criterion resulted in the
exclusion of 171 cost reports from the FY 2011 sample. The goal of this
longitudinal exclusion criterion was to systematically eliminate
misreporting of episodes.
Initially, we did not apply longitudinal trims; however, when
looking at the cost reports from FY 2000 through FY 2011, we identified
large drops in the average number of visits per episode across the
years, which then resulted in a lower average cost per episode. Further
examination of the cause of the drops in average visits per episode led
to the identification of a number of providers who seemingly
misreported the number of episodes on the cost report. The data showed
that the number of episodes on the cost reports often outnumbered the
number of episodes from the claims by factors of 10 or 20. Therefore,
we developed the longitudinal trim to increase the accuracy of the data
from the cost reports. After the longitudinal restriction was applied,
there were 7,808 cost reports in the FY 2011 cost report sample.
After the longitudinal trims, we applied cross sectional trims to
the sample, consisting of basic exclusions, some of which are similar
to MedPAC's exclusion criteria. Specifically, cost reports were
excluded if they met any of the following criteria:
Cost report was not settled or tentatively settled (for
freestanding facilities only).
Time covered by the cost report was less than 10 months or
greater than 14 months.
The cost report was missing total payment or total cost
information.
Costs per episode were in the highest and lowest 1 percent
across providers in the given year.
The cost report had a negative value for the number of
visits per episode for any discipline, as reported directly in the
visit information.\1\
---------------------------------------------------------------------------
\1\ Visit information was taken from worksheet S3, column 5,
rows 1-6 for freestanding providers and worksheet H6, column 4, rows
1-6 for hospital-based providers.
---------------------------------------------------------------------------
The cost report showed an unreasonably high visit count
(greater than 500,000,000) in any discipline. (Note: There were no cost
reports with unreasonable high visit counts in FY 2011.)
The cost report had negative average costs per visit in
any discipline, derived from reported costs and visits on the cost
report.
The cost report had negative total costs.
The provider reported fewer than 10 Medicare non-LUPA
episodes on the FY cost report.
The cost report was missing discipline-specific cost
information where there was information on visits or vice versa.
In Table 4, we list information on the number of cost reports
trimmed for each criterion. After applying the cross sectional trims,
6,252 cost reports were left in the 2011 sample. These cost reports
were then used to estimate the average cost per visit and average cost
per episode for 2011. We note that using the trimmed sample results in
an estimated average cost per episode that was $1,000 more than the
estimated cost per episode using the untrimmed, complete cost report
sample.
[[Page 40285]]
Table 4--Counts for Exclusion Criteria Used To Develop the Trimmed Cost
Report Sample
------------------------------------------------------------------------
Number of cost
Restrictions in cost report sample reports
------------------------------------------------------------------------
Untrimmed sample size................................ 10,327
Longitudinal restrictions:
Missing Provider Number.......................... 0
Missing Episode Count............................ 2348
Significant Episode Change from year to year..... 92
2nd iteration................................ 54
3rd iteration................................ 25
Sample Size after Longitudinal Restrictions.......... 7808
Cross Sectional Restrictions:
Not Settled (freestanding only).................. 874
<10 or >14 months in report...................... 210
Missing Payments or Costs........................ 11
Top and Bottom 1% of costs/episode............... 163
Greater than 500,000,000 visits.................. 0
Negative costs per visit......................... 5
Negative visits per episode...................... 0
Negative total costs............................. 0
Less than ten episodes........................... 60
Missing visits when costs are reported or vice 375
versa...........................................
Number of Cost Reports excluded by Cross 1,556
Sectional Restrictions..........................
------------------
Trimmed Cost Report sample................... 6,252
------------------------------------------------------------------------
Note(s): The cross sectional restrictions are implemented simultaneously
so cost reports may be counted in a number of the cross sectional
restrictions (the numbers describing the cost reports for each of the
cross sectional restrictions are not mutually exclusive). There were
1,556 cost reports excluded from the sample as a result of the cross
sectional restrictions.
b. Cost Report Audits
To verify the integrity of the cost report data and to assess the
validity of the trimming methodology, one of our Medicare
Administrative Contractors (MAC) was tasked with performing audits of
100 HH cost reports. The cost reports were selected from a trimmed
sample of FY 2010 cost reports, which was the latest data available at
the time, and the audit sample was stratified across provider
characteristics (such as agency size and ownership status) to ensure
representation across provider types. Cost reports with 95 or fewer
episodes were excluded from the audit sample so that we could focus the
audits on providers that have a significant weight in the sample and
that may have a substantial influence on the average costs per visit
and the cost per episode estimates. In addition, we note that the audit
sample was selected from a trimmed sample that had additionally been
cross-referenced with claims data for accuracy.
The MAC conducted 98 audits. Two providers did not provide the
information needed to complete the audit. The audit results showed that
the majority of providers in the audit sample overstated their costs on
the cost report by an average of about 8 percent. Commonly, providers
reported non-allowable costs or lacked sufficient documentation to
justify the allowable costs, which led to a decrease in the costs per
visit. There were a small number of cases where the costs per visit
either increased or were unchanged as a result of the audit. Of the 98
providers audited, eight providers were referred to the Zone Program
Integrity Contractors for further fraud investigation as a result of
the findings in their audits.
After obtaining the audit results, we applied weights to the data
in the audit sample so that it would be representative of the trimmed
sample and we could compare the costs per visit per discipline in the
trimmed sample to the pre-audit sample and the post audit sample. The
trimmed sample resulted in a slightly higher average cost per episode
when compared to data in the pre-audit sample. When comparing the pre-
audit sample data to the post-audit sample data, we observed an average
reduction of 8 to 9 percent in the costs per visit across all
disciplines, except medical social services which averaged a 5 percent
reduction in the allowable costs per visit. These audited costs per
visit across the disciplines reduced the average cost per episode by
7.8 percent when comparing the pre-audit data to the post-audit
adjusted data. The results of the audits indicate that the trimmed
sample used for this proposed rule likely over-estimates the average
cost per visit and average cost per episode for providers.
c. Weighting the 2011 Trimmed Medicare Cost Report Sample and
Computation of the 2011 Estimated Cost per Episode
After applying the trimming methodology to the 2011 Medicare cost
reports, we computed the estimated mean cost per visit per discipline
by dividing the total costs for a discipline by the total number of
visits in our sample. We then applied weights to the sample to ensure
that the costs per visit, per discipline used to calculate the average
costs per episode were nationally representative. We calculated and
applied weights based on three characteristics: provider type, provider
size, and the providers' urban/rural status. We determined provider
size by examining the number of episodes by provider on the 2011 claim.
We determined provider type and urban/rural status by matching the
trimmed cost report sample to the Provider of Services file. The
Provider of Service file is data collected through the survey and
certification process conducted for any institutional provider seeking
inclusion in the Medicare and Medicaid programs. It contains
information such as provider name, address, staffing, number of beds,
ownership, and is used internally and by researchers to obtain
certification information about the provider.
To weight the costs per visit per discipline in our sample to be
nationally representative, we compared the number of visits in our
sample in each
[[Page 40286]]
provider type-size-urban/rural combination to the number of visits in
the provider type-size-urban/rural combination as taken from the
national 2011 claims. The visits for a particular provider were
weighted by the ratio of the number of visits in the type-size-urban/
rural combination in the national claims over the number of visits in
the type-size-urban/rural combination in our sample. That is, the total
number of visits in the sample were weighted such that the total
weights (weighted visits) in each of the type-size-urban/rural
combination equaled the number of visits in the type-size-urban/rural
combination as recorded on the claims, and the sum of weighted visits
across all type-size-urban/rural combinations equals the total number
of visits recorded on the claims. After reweighting the visits, the
average costs per visit for each discipline for a provider was
recalculated. We note that the weight each provider contributes to the
average costs per visit is equal to the number of visits the provider
reported on the cost report times the total number of visits for the
provider's type-size-urban/rural combination in the national claims
divided by the number of visits in the provider's type-size-urban/rural
combination in our sample. As such, providers with a higher number of
visits still receive more weight in calculating the mean, aside from
the type-size-urban/rural representativeness adjustment. The estimated
costs per visit per episode before and after weighting are shown in
Table 5. The weighting results in higher average costs per visit for
all disciplines as compared to the un-weighted average costs per visit.
The CMS Home Health Agency (HHA) Center Web site (https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html?redirect=/
center/hha.asp) provides a file with the resulting weights, the
provider number, provider type, provider size, and urban/rural status
and average costs per visit by discipline that can be used to produce
the weighted average costs per visit for all disciplines as presented
in Table 5. Documentation describing the fields on the cost report we
used in our calculations is also available at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html?redirect=/
center/hha.asp.
Table 5--2011 Estimated Costs per Visit, Un-Weighted and Weighted
------------------------------------------------------------------------
2011 Per-visit
Discipline costs, 2011 Per-visit
unweighted costs, weighted
------------------------------------------------------------------------
Skilled Nursing..................... $129.56 $131.51
Home Health Aide.................... 65.07 65.22
Physical Therapy.................... 159.99 160.69
Occupational Therapy................ 158.96 159.55
Speech-Language Pathology........... 169.28 170.80
Medical Social Services............. 217.63 218.91
------------------------------------------------------------------------
Source: CY 2011 Medicare claims data and FY 2011 Medicare cost report
data as of December 31, 2012.
Notes(s): The costs per visit, per discipline for providers were
weighted by provider type, provider size and urban/rural status to be
nationally representative.
Using the nationally-weighted average costs per visit from the
trimmed FY 2011 HH Medicare cost report sample and the visits per
episode estimates for each discipline from 2011 national claims data,
we estimated the 2011 average cost per episode. As shown in Table 6, we
multiplied the average cost per visit by the average number of visits
for each of the six disciplines and summed the results to generate an
estimated 60-day episode cost for 2011 of $2,453.71. This methodology
used to calculate the episode cost is consistent with the methodology
used in setting the 60-day episode base rate for the HH PPS in 2000. We
note that the 2011 estimated cost per episode includes normal, PEP, and
outlier episodes.
Table 6--2011 Average Costs per Visit and Average Number of Visits for a 60-Day Episode
----------------------------------------------------------------------------------------------------------------
2011 Average
Discipline 2011 Average number of 2011 60-Day
costs per visit visits episode costs
----------------------------------------------------------------------------------------------------------------
Skilled Nursing.............................................. $131.51 9.43 $1,240.14
Home Health Aide............................................. 65.22 2.80 182.62
Physical Therapy............................................. 160.69 4.86 780.95
Occupational Therapy......................................... 159.55 1.15 183.48
Speech- Language Pathology................................... 170.80 0.21 35.87
Medical Social Services...................................... 218.91 0.14 30.65
--------------------------------------------------
Total.................................................... ............... ............... $2,453.71
----------------------------------------------------------------------------------------------------------------
Source: CY 2011 Medicare claims data and 2011 Medicare cost report data as of December 31, 2012.
d. Calculating the Estimated Average Cost per Episode
To determine the rebasing adjustment to the 60-day national,
standardized episode payment rate, we compared the 2013 estimated
average payment per episode to the 2013 estimated average cost per
episode. To calculate the 2013 estimated average cost per episode, we
first applied an adjustment to account for the visit distribution
change observed in claims data from 2011 to 2012 (Table 7). We compared
the 2011 estimated cost per episode using the 2011 visit distribution
to the 2011 estimated cost per episode using the 2012 visit
distribution. The 2011 estimated cost per episode is $2,453.71 when
using the 2011 visit profile and the 2011 estimated cost per episode is
$2,443.34 when using the 2012 visit profile. Using the two 2011
estimated costs per episode, we calculated an adjustment factor to
account for the visit
[[Page 40287]]
difference between 2011 and 2012 claims (1 + (2443.34-2453.71)/2453.71
= 0.9958). We plan to update the 2012 visit distribution as more data
become available, and therefore, the estimated cost per episode may
change slightly for the final rule.
Table 7--Comparison of the 2011 and 2012 Visit Distribution From Claims
Data
------------------------------------------------------------------------
2011 Average 2012 Average
Discipline number of visits number of visits
per episode per episode
------------------------------------------------------------------------
Skilled Nursing..................... 9.43 9.39
Home Health Aide.................... 2.80 2.62
Physical Therapy.................... 4.86 4.88
Occupational Therapy................ 1.15 1.15
Speech- Language Pathology.......... 0.21 0.23
Medical Social Services............. 0.14 0.14
-----------------------------------
Total Number of Visits per 18.59 18.41
Episode........................
------------------------------------------------------------------------
Source: CY 2011 Medicare claims data and CY 2012 Medicare claims data
for episodes starting between January 1, 2012, and May 31, 2012.
After applying the adjustment to account for the visit distribution
change between 2011 and 2012, we multiplied the estimated, average cost
per episode by the HH market basket update for 2012 and by the HH
market basket update for 2013. We note that when setting the 60-day
episode base rate for the HH PPS in 2000, we also updated costs from
cost reports by the market basket updates to reflect expected cost
increases. This gives us an estimated, average cost per episode for CY
2013.
Table 8--2013 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
Factor for
2011-2012 2013 Estimated
2011 Estimated cost per episode visit 2012 Market 2013 Market cost per
distribution basket update basket update episode
difference
----------------------------------------------------------------------------------------------------------------
$2,453.71....................................... x 0.9958 x 1.024 x 1.023 = $2,559.59
----------------------------------------------------------------------------------------------------------------
e. Calculating the Estimated Average Payment per Episode
To develop the 2013 estimated average payment per episode, we
started with the CY 2012 national, standardized 60-day episode payment
rate and applied a number of factors. Since we are proposing to reset
the average case-mix weight from 1.3517 to 1.0000 (see section III.C.
of this proposed rule), we first increased the CY 2012 60-day episode
payment rate by 1.3517. The 60-day episode payment rate in CY 2012 was
$2,138.52. By inflating the CY 2012 60-day episode payment rate by the
budget neutrality factor to account for the downward adjustment of the
weights to an average case-mix of 1.0000, we obtain the average CY 2012
payment per episode. Then by applying the CY 2013 payment policy
updates (1.3 percent HH payment update percentage and the 1.32 percent
payment reduction for nominal case-mix growth), we obtain the estimated
average CY 2013 payment per episode. We note that the Medicare cost
reports do not differentiate between normal, PEP, and outlier episodes
in the reporting of costs per discipline. Therefore, the CY 2013
estimated average cost per episode includes costs for normal, PEP, and
outlier episodes. To compare the episode payment to the average cost of
an episode, we add the dollars from the 2.5 percent outlier pool back
into the payment per episode (Table 9). In our calculation of the
proposed CY 2014 national, standardized 60-day episode payment rate, we
remove the outlier dollars (see Tables 16 and 17 in section III.E.4.b.
of this proposed rule).
Table 9--2013 Estimated Average Payment per Episode
----------------------------------------------------------------------------------------------------------------
Budget
neutrality
factor to 2013 Payment 2013 Estimated
2012 National, standardized 60- account for reduction for 2013 HH Outlier average
day episode payment rate case-mix nominal case- Payment update adjustment payment per
weight mix growth percentage episode
adjustment to
1.00
----------------------------------------------------------------------------------------------------------------
$2,138.52....................... x 1.3517 x 0.9868 x 1.013 / 0.975 = $2,963.65
----------------------------------------------------------------------------------------------------------------
f. Calculating the Rebasing Adjustment to the National, Standardized
60-day Episode Payment Rate
Comparing the 2013 estimated average payment per episode to the
2013 estimated average cost per episode; we obtain a difference of -
13.63 percent (($2,559.59-$2,963.65)/$2,963.65) (see Table 10).
[[Page 40288]]
Table 10--Comparison of the Average Payment per Episode to the Average
Cost per Episode
------------------------------------------------------------------------
2013 Estimated Percent
2013 Payment per episode cost per episode difference
------------------------------------------------------------------------
$2,963.65........................... $2,559.59 -13.63
------------------------------------------------------------------------
Phasing-in the -13.63 percent reduction over 4 years in equal
increments would result in an annual reduction of 3.60 percent. Since
the Affordable Care Act states that the reduction may be no more than
3.5 percent, we propose to reduce payments in each year from CY 2014 to
CY 2017 by 3.5 percent.
2. Rebasing the Low Utilization Payment Adjustment (LUPA) Per-Visit
Payment Amounts
For episodes with four or fewer visits, Medicare pays on the basis
of a national per-visit amount by discipline, referred to as a LUPA.
a. Calculating the Rebasing Adjustment to the LUPA Per-Visit Amounts
To determine the rebasing adjustment for the per-visit payment
rates, we compare the current per-visit, per-discipline payment rates
to the estimated cost per visit, per discipline. The 2013 estimated
per-visit costs per discipline are shown in Table 11. The 2011 per-
visit costs per discipline are the same as those derived for the
rebasing of the national, standardized 60-day episode payment rate (see
Table 6). The average cost per-visit for NRS from the cost report
sample is added to the 2011 estimated per-visit costs per discipline
(see section III.D.3. of this proposed rule for more information on the
calculation of the average NRS cost per visit). The per-visit costs are
then increased by the HH market basket in 2012 and 2013 to obtain an
estimate of the 2013 costs per visit, per discipline.
Table 11--2013 Estimated Average Cost per-Visit, per-Discipline
----------------------------------------------------------------------------------------------------------------
2011 Estimated 2013 Estimated
Discipline average costs Average NRS 2012 Market 2013 Market average cost
per visit cost per visit basket update basket update per visit
----------------------------------------------------------------------------------------------------------------
Skilled Nursing................. $131.51 + $2.26 x 1.024 x 1.023 = $140.13
Home Health Aide................ 65.22 + 2.26 x1.024 x 1.023 = 70.69
Physical Therapy................ 160.69 + 2.26 x1.024 x 1.023 = 170.70
Occupational Therapy............ 159.55 + 2.26 x 1.024 x 1.023 = 169.50
Speech-Language Pathology....... 170.80 + 2.26 x 1.024 x 1.023 = 181.29
Medical Social Services......... 218.91 + 2.26 x 1.024 x 1.023 = 231.69
----------------------------------------------------------------------------------------------------------------
Similar to the methodology used to determine the rebasing
adjustment to the national, standardized 60-day episode payment rate,
we took the current 2013 per-visit payment rates and, for comparison
purposes only, put the dollars from the 2.5 percent outlier pool back
into the payment rates (see Table 12). This allows us to compare the CY
2013 cost per-visit, per-discipline on the Medicare cost reports (which
includes normal and outlier episodes) to the CY 2013 payment per-visit,
per discipline.
Table 12--2013 per-Visit Payment Rates
----------------------------------------------------------------------------------------------------------------
2013 Per-visit 2013 Per-visit
payment rates Outlier payment rates
Discipline (excluding adjustment (including
outliers) outliers)
----------------------------------------------------------------------------------------------------------------
Skilled Nursing................................................. $114.35 / 0.975 = 117.28
Home Health Aide................................................ 51.79 / 0.975 = 53.12
Physical Therapy................................................ 125.03 / 0.975 = 128.24
Occupational Therapy............................................ 125.88 / 0.975 = 129.11
Speech-Language Pathology....................................... 135.86 / 0.975 = 139.34
Medical Social Services......................................... 183.31 / 0.975 = 188.01
----------------------------------------------------------------------------------------------------------------
When comparing the payment per-visit, per discipline for LUPA
episodes to the estimated average cost per-visit, per-discipline, we
observe that costs per visit are higher than the 2013 per-visit payment
rates (see Table 13) in the range of 19.5 percent to 33.1 percent.
However, section 3131(a) of the Affordable Care Act mandates that we
can only adjust the per-visit payment rates by 3.5 percent each year.
Therefore, in this CY 2014 HH PPS propose rule, we propose to increase
the per-visit payment rates by 3.5 percent every year from 2014 to
2017.
[[Page 40289]]
Table 13--Differences Between the CY 2013 per Visit Payment Rates and the CY 2013 Estimated Average Cost per
Visit
----------------------------------------------------------------------------------------------------------------
2013 Estimated
Discipline 2013 Per-visit average cost Difference
payment rates per visit
----------------------------------------------------------------------------------------------------------------
Skilled Nursing................................................. $117.28 $140.13 +19.48%
Home Health Aide................................................ 53.12 70.69 +33.08%
Physical Therapy................................................ 128.24 170.70 +33.11%
Occupational Therapy............................................ 129.11 169.50 +31.28%
Speech- Language Pathology...................................... 139.34 181.29 +30.11%
Medical Social Services......................................... 188.01 231.69 +23.23%
----------------------------------------------------------------------------------------------------------------
3. Rebasing the Nonroutine Medical Supply (NRS) Conversion Factor
Payments for NRS are currently paid for by multiplying one of six
severity levels by the NRS conversion factor. When the HH PPS was
implemented on October 1, 2000, the national, standardized 60-day
episode payment rate included an amount for NRS that was calculated
based on costs from audited FY 1997 cost reports and the average cost
of NRS unbundled and billed through Medicare part B (65 FR 41180). The
NRS costs for all the providers in the audited cost report sample were
weighted to represent the national population. That weighted total was
divided by the number episodes for the providers in the audited cost
report sample, to obtain an average cost per episode for NRS of $43.54.
Added to this amount was $6.08 to account for the average cost of
unbundled NRS billed through Medicare Part B, resulting in a total of
$49.62 included in the national, standardized 60-day episode payment
rate to account for NRS.
As stated in our CY 2008 HH PPS proposed rule, after the HH PPS
went into effect, we received comments and correspondence expressing
concern about the cost of supplies for certain patients with ``high''
supply costs (72 FR 25427, May 4, 2007). We acknowledged that, in
general, NRS use is unevenly distributed across episodes of care.
Therefore, we created an NRS conversion factor of $52.35 (the amount
CMS originally included in the national, standardized 60-day episode
payment rate of $49.62, updated by the market basket, and after an
adjustment to account for nominal change in case-mix) that is further
adjusted by one of six severity levels to ensure that the variation in
NRS usage is more appropriately reflected in the HH PPS (72 FR 49852,
August 29, 2007). Using additional variables from OASIS items and
targeting certain conditions expected to be predictors of NRS use based
on clinical considerations, a classification algorithm puts cases into
one of the six severity levels and a regression model was used to
develop the payment weights associated with each severity level. For
more detail on how the final six NRS severity levels and associated
payment weights were developed please see the CY 2008 HH PPS final rule
(72 FR 49850, August 29, 2007). The 2008 NRS conversion factor has been
updated by HH payment update percentages in years 2009 through 2013.
The CY 2013 NRS conversion factor is $53.97 and CY 2013 NRS payments
range from $14.56 for severity level 1 to $568.06 for severity level 6
(77 FR 67102).
a. Calculating the Rebasing Adjustment to the NRS Conversion Factor
In rebasing the NRS conversion factor, we used the trimmed sample
of 6,252 cost reports from FY 2011, as described in section III.D.1. of
this proposed rule, to calculate a visit-weighted estimate of NRS costs
per visit. We additionally weight these estimates to be nationally
representative based on the same factors described in section III.D.1.
of this proposed rule (that is, facility type, urban/rural status, and
facility size). The 2011 average NRS cost per visit was calculated to
be $2.26.
To calculate, a 2011 estimated average NRS cost per episode we
multiplied the average NRS costs per visit of $2.26 by the average
number of visits per episode of 18.59 from 2011 claims data for a 2011
estimated average NRS cost per episode of $42.01. This amount was then
adjusted to reflect the change in the average number of visits from
18.59, using 2011 claims data, to 18.41, using preliminary 2012 claims
data ((1+((18.41-18.59)/18.59))= 0.9903). We inflated the result by the
2012 and 2013 HH market basket updates for a 2013 estimated average NRS
cost per episode of $43.59 as shown in Table 14.
Table 14--2013 Estimated Average NRS Cost Per Episode
----------------------------------------------------------------------------------------------------------------
Adjustment for
change in 2012 Market 2013 Market 2013 Estimated
2011 Estimated average NRS cost per episode average episode basket update basket update average NRS
visits (2011 to (2.4%) (2.3%) cost per
2012) episode
----------------------------------------------------------------------------------------------------------------
$42.01...................................... x 0.9903 x1.024 x 1.023 $43.58
----------------------------------------------------------------------------------------------------------------
To compare the 2013 estimated average NRS cost per episode to 2013
estimated average NRS payment per episode; we used preliminary 2012
claims data for non-LUPA episodes and the CY 2013 NRS conversion factor
of $53.97 to determine the estimated 2013 average NRS payment per
episode. The preliminary 2012 claims data shows that the distribution
of episodes amongst the six severity levels differs from the
distribution used when the NRS conversion factor and relative weights
were established in CY 2008 as shown in Table 15.
[[Page 40290]]
Table 15--Percentage of Episodes by NRS Severity Level
------------------------------------------------------------------------
Percent of
Relative Percent of episodes,
Severity level weight episodes, CY 2012
CY 2008 (percent)
------------------------------------------------------------------------
1................................ 0.2698 63.7 69.5
2................................ 0.9742 20.6 16.8
3................................ 2.6712 6.7 6.2
4................................ 3.9686 5.4 4.3
5................................ 6.1198 3.2 2.9
6................................ 10.5254 0.3 0.3
------------------------------------------------------------------------
Source: The CY 2008 HH PPS Final Rule (72 FR 49852, August 29, 2007) and
CY 2012 Medicare claims data for non-LUPA HH episodes beginning on or
before May, 31, 2012, as of December 31, 2012.
Note(s): The distribution of episodes used to establish the CY 2008
relative weights was based on CY 2004 and CY 2005 claims data and a
sample consisting of all agencies whose total charges reported on
their 2001 claims matched their total charges reported in their 2001
cost reports (72 FR 49852).
Using the distribution of 2012 claims by severity level (Table 15),
the relative weights, and the CY 2013 conversion factor of $53.97, the
CY 2013 estimated average NRS payment per episode is $48.38. Comparing
the 2013 estimated average NRS cost per episode to the 2013 estimated
average NRS payment per episode, we obtain a difference of -9.92
percent (($43.58-$48.38)/$48.38). Phasing-in the -9.92 percent
reduction over 4 years in equal increments would result in an annual
reduction of 2.58 percent. Therefore, we propose to reduce the NRS
conversion factor in each year from 2014 to 2017 by 2.58 percent. We
note that during our analysis of NRS costs and payments, we found that
a significant number of providers listed charges for NRS on the home
health claim, but those same providers did not list any NRS costs on
their cost reports. Specifically, out of the 6,252 cost reports from FY
2011, as described in section III.D.1. of this proposed rule, 1,756
cost reports (28.1 percent) reported NRS charges in their claims, but
listed $0 NRS costs on their cost reports. Given the need for extensive
trimming of the cost reports as well as the findings from the audits
and our analysis of NRS payments and costs, we are exploring possible
additional edits to the cost report and quality checks at the time of
submission to improve future cost reporting accuracy. We plan to update
the 2012 distribution of episodes amongst the six severity levels as
more data become available, and therefore, the estimated NRS cost per
episode may change slightly for the final rule. For more information on
the rebasing analyses performed, refer to the technical report titled
``Analyses in Support of Rebasing & Updating the Medicare Home Health
Payment Rates'' available on the CMS Home Health Agency (HHA) Center
Web site at: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html?redirect=/center/hha.asp.
E. Proposed CY 2014 Rate Update
1. Proposed CY 2014 Home Health Market Basket Update
Section 1895(b)(3)(B) of the Act, as amended by section 3401(e) of
the Affordable Care Act, adds new clause (vi) which states, ``After
determining the home health market basket percentage increase . . . the
Secretary shall reduce such percentage . . . for each of 2011, 2012,
and 2013, by 1 percentage point. The application of this clause may
result in the home health market basket percentage increase under
clause (iii) being less than 0.0 for a year, and may result in payment
rates under the system under this subsection for a year being less than
such payment rates for the preceding year.'' Therefore, as mandated by
the Affordable Care Act, for CYs 2011, 2012, and 2013, the HH market
basket update was reduced by 1 percentage point. For CY 2014, there is
no such percentage reduction. Therefore, the CY 2014 payment rates will
be increased by the full HH market basket update.
Section 1895(b)(3)(B) of the Act requires that the standard
prospective payment amounts for CY 2014 be increased by a factor equal
to the applicable HH market basket update for those HHAs that submit
quality data as required by the Secretary. The proposed HH PPS market
basket update for CY 2014 is 2.4 percent. This is based on Global
Insight Inc.'s second quarter 2013 forecast, utilizing historical data
through the first quarter of 2013. The HH market basket was rebased and
revised in CY 2013. A detailed description of how we derive the HHA
market basket is available in the CY 2013 HH PPS final rule (77 FR
67080, 67090).
2. Home Health Quality Reporting Program (HHQRP)
a. General Considerations Used for Selection of Quality Measures for
the HHQRP
The successful development of the HH Quality Reporting Program
(HHQRP) that promotes the delivery of high quality healthcare services
is our paramount concern. We seek to adopt measures for the HHQRP that
promote efficient and safer care. Our measure selection activities for
the HHQRP takes into consideration input we receive from the Measure
Applications Partnership (MAP), convened by the National Quality Forum
(NQF), as part of a pre-rulemaking process that we have established and
are required to follow under section 1890A of the Act. The MAP is a
public-private partnership comprised of multi-stakeholder groups
convened by the NQF for the primary purpose of providing input to CMS
on the selection of certain categories of quality and efficiency
measures, as required by section 1890A(a)(3) of the Act. By February
1st of each year, the NQF must provide that input to CMS. Input from
the MAP is located at https://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx. For more details
about the pre-rulemaking process, see the FY 2013 IPPS/LTCH PPS final
rule at 77 FR 53376 (August 31, 2012).
We also take into account national priorities, such as those
established by the National Priorities Partnership at https://www.qualityforum.org/npp/, the HHS Strategic Plan https://www.hhs.gov/secretary/about/priorities/priorities.html, and the National Strategy
for Quality Improvement in Healthcare located at https://www.healthcare.gov/news/reports/nationalqualitystrategy032011.pdf.
To the extent practicable, we have sought to adopt measures that
have been
[[Page 40291]]
endorsed by the national consensus organization, under contract to
endorse standardized healthcare quality measures pursuant to section
1890 of the Act, recommended by multi-stakeholder organizations, and
developed with the input of providers, purchasers/payers, and other
stakeholders.
b. Background and Quality Reporting Requirements
Section 1895(b)(3)(B)(v)(II) of the Act states that ``each home
health agency shall submit to the Secretary such data that the
Secretary determines are appropriate for the measurement of health care
quality. Such data shall be submitted in a form and manner, and at a
time, specified by the Secretary for purposes of this clause.''
In addition, section 1895(b)(3)(B)(v)(I) of the Act states that
``for 2007 and each subsequent year, in the case of a HHA that does not
submit data to the Secretary in accordance with subclause (II) with
respect to such a year, the HH market basket percentage increase
applicable under such clause for such year shall be reduced by 2
percentage points.'' This requirement has been codified in regulations
at Sec. 484.225(i). HHAs that meet the quality data reporting
requirements are eligible for the full HH market basket percentage
increase. HHAs that do not meet the reporting requirements are subject
to a 2 percentage point reduction to the HH market basket increase.
Section 1895(b)(3)(B)(v)(III) of the Act further states that
``[t]he Secretary shall establish procedures for making data submitted
under sub clause (II) available to the public. Such procedures shall
ensure that a HHA has the opportunity to review the data that is to be
made public with respect to the agency prior to such data being made
public.''
As codified at Sec. 484.250(a), we established that the quality
reporting requirements could be met by the submission of OASIS
assessments and HH Care Consumer Assessment of Healthcare Providers and
Systems Survey (HHCAHPS[supreg]). CMS has provided quality measures to
HHAs via the Certification and Survey Provider Enhanced Reports
(CASPER) reports available on the CMS Health Care Quality Improvement
System (QIES) since 2002. A subset of the HH quality measures has been
publicly reported on the HH Compare Web site since 2003. The CY 2012 HH
PPS final rule (76 FR 68576), identifies the current HH QRP measures.
The selected measures that are made available to the public can be
viewed on the HH Compare Web site located at https://www.medicare.gov/HHCompare/Home.asp.
As stated in the CY 2012 and CY 2013 HH PPS final rules (76 FR68575
and 77 FR67093, respectively), we finalized that we would also use
measures derived from Medicare claims data to measure HH quality.
c. OASIS Data Submission and OASIS Data for Annual Payment Update
The HH conditions of participation (CoPs) at Sec. 484.55(d)
require that the comprehensive assessment must be updated and revised
(including the administration of the OASIS) no less frequently than:
(1) The last 5 days of every 60 days beginning with the start-of-care
date, unless there is a beneficiary elected transfer, significant
change in condition, or discharge and return to the same HHA during the
60-day episode; (2) within 48 hours of the patient's return to the home
from a hospital admission of 24 hours or more for any reason other than
diagnostic tests; and (3) at discharge.
It is important to note that to calculate quality measures from
OASIS data, there must be a complete quality episode, which requires
both a Start of Care (initial assessment) or Resumption of Care OASIS
assessment and a Transfer or Discharge OASIS assessment. Failure to
submit sufficient OASIS assessments to allow calculation of quality
measures, including transfer and discharge assessments, is failure to
comply with the CoPs.
HHAs do not need to submit OASIS data for those patients who are
excluded from the OASIS submission requirements under the HH CoPs Sec.
484.1 through Sec. 484.265. As described in the December 23, 2005
Medicare and Medicaid Programs: Reporting Outcome and Assessment
Information Set Data as Part of the Conditions of Participation for
Home Health Agencies final rule (70 FR 76202), we define the exclusion
as those patients:
Receiving only nonskilled services;
For whom neither Medicare nor Medicaid is paying for HH
care (patients receiving care under a Medicare or Medicaid Managed Care
Plan are not excluded from the OASIS reporting requirement);
Receiving pre- or post-partum services; or
Under the age of 18 years.
As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs
that become Medicare-certified on or after May 31 of the preceding year
are not subject to the OASIS quality reporting requirement nor any
payment penalty for quality reporting purposes for the following year.
For example, HHAs certified on or after May 31, 2013 are not subject to
the 2 percentage point reduction to their market basket update for CY
2014. These exclusions only affect quality reporting requirements and
do not affect the HHA's reporting responsibilities as announced in the
December 23,2005 final rule, ``Medicare and Medicaid Programs;
Reporting Outcome and Assessment Information Set Data as Part of the
Conditions of Participation for Home Health Agencies'' (70 FR 76202).
d. Home Health Care Quality Reporting Program Requirements for CY 2014
Payment and Subsequent Years
(1) Submission of OASIS Data
For CY 2014, we propose to consider OASIS assessments submitted by
HHAs to CMS in compliance with HH CoPs and Conditions for Payment for
episodes beginning on or after July 1, 2012, and before July 1, 2013 as
fulfilling one portion of the quality reporting requirement for CY
2014. This time period would allow for 12 full months of data
collection and would provide us with the time necessary to analyze and
make any necessary payment adjustments to the payment rates for CY
2014. We propose to continue this pattern for each subsequent year
beyond CY 2014, considering OASIS assessments submitted in the time
frame between July 1 of the calendar year 2 years prior to the calendar
year of the Annual Payment Update (APU) effective date and July 1 of
the calendar year 1 year prior to the calendar year of the APU
effective date as fulfilling the OASIS portion of the quality reporting
requirement for the subsequent APU.
(2) Home Health Rehospitalization and Emergency Department Use Without
Readmission Claims-Based Measures
We propose to adopt two claims-based measures: (1)
Rehospitalization during the first 30 days of HH; and (2) Emergency
Department Use without Hospital Readmission during the first 30 days of
HH. These measures were included on the Measures Under Consideration
list reviewed by the MAP in December 2012 and the MAP supported the
direction of both measures. The Rehospitalization during the first 30
days of HH measure estimates the risk-standardized rate of unplanned,
all-cause hospital readmissions for cases in which patients who had an
acute inpatient hospitalization in the 5 days before the start of their
HH stay were admitted to an acute care hospital during the 30 days
following the start of the HH stay.
[[Page 40292]]
The Emergency Department Use without Readmission measure estimates the
risk-standardized rate of unplanned, all-cause hospital readmissions
for cases in which patients who had an acute inpatient hospitalization
in the 5 days before the start of a HH stay used an emergency
department but were not admitted to an acute care hospital during the
30 days following the start of a HH stay.
We seek to develop a set of quality measures to report on HH
patients who are recently hospitalized as these patients are at an
increased risk of acute care hospital use, either through inpatient
admission or emergency department use without inpatient admission.
Addressing unplanned hospital readmissions is a high priority for HHS
as our focus continues on promoting patient safety, eliminating
healthcare associated infections, improving care transitions, and
reducing the cost of healthcare. Readmissions are costly to the
Medicare program and have been cited as sensitive to improvements in
coordination of care and discharge planning for patients. Rates of
rehospitalization remain substantial with 14.4 percent of HH patients
experiencing an unplanned rehospitalization in the first 30 days of
care. Currently, HHAs focus on measures of acute care hospitalization
(applied to all HH patients) as a measure of their effectiveness. We
will continue to publicly report the Acute Care Hospitalization and
Emergency Department Use without Hospitalization measures, as these
measures apply to all home health patients and will continue to be
useful in selecting a home health agency. The proposed
rehospitalization measures will allow HHAs to further target patients
who entered HH after a hospitalization.
The proposed measures of acute care utilization by previously
hospitalized patients are developed out of the NQF endorsed claims-
based measures: (1) Acute Care Hospitalization (NQF 0171); and
(2) Emergency Department Use without Hospitalization (NQF
0173) to better capture acute care hospitalizations and use of
an emergency department for patients who are recently discharged from
the hospital. These rehospitalization measures are harmonized with NQF-
endorsed Hospital-Wide Risk-Adjusted All-Cause Unplanned Readmission
Measure (NQF 1789) (see https://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_All-Cause_Readmissions_Expedited_Review_2011.aspx) finalized for the Hospital IQR Program in
the FY 2013 IPPS/LTCH PPS Final Rule (77 FR 53521 through 53528).
Further, to the extent appropriate, the proposed HH rehospitalization
measures are being harmonized with this measure and other measures of
readmission rates developed for post-acute care (PAC) settings.
We intend to seek NQF endorsement of the: (1) Rehospitalization
during the first 30 days of HH; and (2) Emergency Department Use
without Readmission during the first 30 days of HH measures. We are
proposing to begin reporting feedback to HHAs on performance on these
measures in CY 2014. These measures will be added to Home Health
Compare for public reporting in CY2015. Additional details pertaining
to these measures, including technical specifications, can be found at
the HH Quality Initiative Web page located at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
We seek public comment on our proposed quality measures: (1)
Rehospitalization during the first 30 days of HH; and (2) Emergency
Department Use without Hospital Readmission during the first 30 days of
HH.
(3) Elimination of Stratification by Episode Length Process Measures
We are exploring ways to reduce the number of HH quality measures
reported to HHAs on confidential CASPER reports. We propose to reduce
the total number of measures on the CASPER reports by beginning to
report only all-episodes measures for 9 process measures currently also
stratified by episode length. We seek comments on this proposal to
simplify reporting of process measures, which is based on the
recommendation from the MAP to seek greater parsimony in these
measures. Currently there are 97 quality measures included on the
CASPER reports, of which 45 are process measures. This proposed
reduction would decrease the total number of HH quality measures to 79
and reduce the number of process measures from 45 to 27. This change
will enable HHAs to obtain the information they require for quality
improvement activities related to the process measures in a less
burdensome manner. Reducing the number of measures also facilitates the
future development and implementation of other superior HH measures.
Nine measures currently stratified by episode length on CASPER
reports include:
Depression Interventions Implemented.
Diabetic Foot Care and Patient/Caregiver Education
Implemented.
Heart Failure Symptoms Addressed.
Pain Interventions Implemented.
Treatment of Pressure Ulcers Based on Principles of Moist
Wound Healing Implemented.
Pressure Ulcer Prevention Implemented.
Drug Education on All Medications Provided to Patient/
Caregiver.
Potential Medication Issues Identified and Timely
Physician Contact.
Falls Prevention Steps Implemented.
For each of these nine measures, three versions of each measure are
currently included on CASPER reports. The three versions are: (1) Short
term episodes of care; (2) long term episodes of care; and (3) all
episodes of care. We propose to eliminate the stratification by episode
length, so that these measures are reported only for ``all episodes of
care''. Thus, we propose to eliminate the ``short term'' and ``long
term episodes of care'' measures from CASPER reports. This would remove
18 process measures from the current CASPER reports. Of note, only the
``short term episodes of care'' measures are currently reported on HH
Compare. These would be replaced with the analogous ``all episodes of
care'' measures.
No data will be lost in the elimination of the ``short and long
term episodes of care'' measures as the ``all episodes of care''
measures capture all care interventions, regardless of episode length.
Using only the ``all episodes of care'' measures would substantially
increase the number of HHAs eligible for public reporting of these
measures.
To summarize, for the CY 2014 payment update and for subsequent
annual payment updates, we propose to continue to use a HHA's
submission of OASIS assessments between July 1, and June 30 as
fulfilling one portion of the quality reporting requirement for each
payment year. Medicare claims data and HHCAHPS[supreg] data will also
be used to measure HH care quality. We propose to adopt two claims-
based measures: (1) rehospitalization during the first 30 days of HH;
and (2) Emergency Department Use without Hospital Readmission during
the first 30 days of HH. We propose to reduce the number of process
measures by eliminating the stratification by episode length, only
reporting on the ``all episodes of care'' measures. By eliminating the
stratification of the short and long term episodes of care measures,
there will be a reduction in the number of HH quality measures reported
to HHAs on confidential CASPER reports.
[[Page 40293]]
e. Home Health Care CAHPS[supreg] Survey (HHCAHPS) [supreg]
In the CY 2013 HH PPS final rule (77 FR 67094), we stated that the
HH quality measures reporting requirements for Medicare-certified
agencies includes the CAHPS[supreg] HH Care (HHCAHPS[supreg]) Survey
for the CY 2013 APU. In CY 2012, we moved forward with the
HHCAHPS[supreg] linkage to the pay-for-reporting (P4R) requirements
affecting the HH PPS rate update for CY 2012. We maintained the stated
HHCAHPS data requirements for CY 2013 that were set out in the CY 2012
HH PPS final rule, and in the CY 2013 HH PPS final rule, for the
continuous monthly data collection and quarterly data submission of
HHCAHPS[supreg] data.
(1) Background and Description of HHCAHPS[supreg]
As part of the HHS' Transparency Initiative, we have implemented a
process to measure and publicly report patient experiences with HH
care, using a survey developed by the Agency for Healthcare Research
and Quality's (AHRQ's) Consumer Assessment of Healthcare Providers and
Systems (CAHPS[supreg]) program and endorsed by the NQF in March 2009
(NQF Number 0517). The HHCAHPS[supreg] survey is part of a family of
CAHPS[supreg] surveys that asks patients to report on and rate their
experiences with health care. The HH Care CAHPS[supreg]
(HHCAHPS[supreg]) survey presents HH patients with a set of
standardized questions about their HH care providers and about the
quality of their HH care.
Prior to this survey, there was no national standard for collecting
information about patient experiences that would enable valid
comparisons across all HHAs. The history and development process for
HHCAHPS[supreg] has been described in previous rules and it also
available on the official HHCAHPS[supreg] Web site at https://homehealthcahps.org and in the annually-updated HHCAHPS[supreg]
Protocols and Guidelines Manual, which is downloadable from https://homehealthcahps.org.
For public reporting purposes, we required HHAs to report five
measures--three composite measures and two global ratings of care that
are derived from the questions on the HHCAHPS[supreg] survey. The
publicly reported data are adjusted for differences in patient mix
across HHAs. We update the HHCAHPS[supreg] data on HH Compare on
www.medicare.gov quarterly. Each HHCAHPS[supreg] composite measure
consists of four or more individual survey items regarding one of the
following related topics:
Patient care (Q9, Q16, Q19, and Q24);
Communications between providers and patients (Q2, Q15,
Q17, Q18, Q22, and Q23); and
Specific care issues on medications, home safety, and pain
(Q3, Q4, Q5, Q10, Q12, Q13, and Q14).
The two global ratings are the overall rating of care given by the
HHA's care providers (Q20), and the patient's willingness to recommend
the HHA to family and friends (Q25).
The HHCAHPS[supreg] survey focuses on areas where the HH patient is
the best or only source for the information. The developmental work for
the HHCAHPS[supreg] survey began in mid-2006, and the first
HHCAHPS[supreg] survey was field-tested (to validate the length and
content of the survey) in 2008 by the AHRQ and the CAHPS[supreg]
grantees, and the final HHCAHPS[supreg] survey was used in a national
randomized mode experiment in 2009 through 2010.
The HHCAHPS[supreg] survey is currently available in English,
Spanish, Chinese, Russian, and Vietnamese. The OMB Number on these
surveys is the same (0938-1066). All of these surveys are on the Home
Health Care CAHPS[supreg] Web site, https://homehealthcahps.org. We
will continue to consider additional language translations of the
HHCAHPS[supreg] in response to the needs of the HH patient population.
All of the requirements about HH patient eligibility for the
HHCAHPS[supreg] survey and conversely, which HH patients are ineligible
for the HHCAHPS[supreg] survey are delineated and detailed in the
HHCAHPS[supreg] Protocols and Guidelines Manual, which is downloadable
at https://homehealthcahps.org. HH patients are eligible for
HHCAHPS[supreg] if they received at least two skilled HH visits in the
past 2 months, which are paid for by Medicare or Medicaid.
HH patients are ineligible for inclusion in HHCAHPS[supreg] surveys
if one of these conditions pertains to them:
Are under the age of 18;
Are deceased prior to the date the sample is pulled;
Receive hospice care;
Receive routine maternity care only;
Are not considered survey eligible because the state in
which the patient lives restricts release of patient information for a
specific condition or illness that the patient has; or
No Publicity patients, defined as patients who on their
own initiative at their first encounter with the HHAs make it very
clear that no one outside of the agencies can be advised of their
patient status, and no one outside of the HHAs can contact them for any
reason.
We stated in previous rules that Medicare-certified HHAs are
required to contract with an approved HHCAHPS[supreg] survey vendor.
Medicare-certified agencies also must provide on a monthly basis a list
of their patients served to their respective HHCAHPS[supreg] survey
vendors. Agencies are not allowed to influence at all how their
patients respond to the HHCAHPS[supreg] survey.
HHCAHPS[supreg] survey vendors are required to attend introductory
and all update trainings conducted by CMS and the HHCAHPS[supreg]
Survey Coordination Team, as well as to pass a post-training
certification test. We now have approximately 30 approved
HHCAHPS[supreg] survey vendors. The list of approved HHCAHPS[supreg]
survey vendors is available at https://homehealthcahps.org.
(2) HHCAHPS[supreg] Oversight Activities
We stated in prior final rules that all approved HHCAHPS survey
vendors are required to participate in HHCAHPS[supreg] oversight
activities to ensure compliance with HHCAHPS[supreg] protocols,
guidelines, and survey requirements. The purpose of the oversight
activities is to ensure that approved HHCAHPS[supreg] survey vendors
follow the HHCAHPS[supreg] Protocols and Guidelines Manual. As stated
previously in the CY 2010, CY 2011, CY 2012, and CY 2013 final rules,
all approved survey vendors must develop a Quality Assurance Plan (QAP)
for survey administration in accordance with the HHCAHPS[supreg]
Protocols and Guidelines Manual. An HHCAHPS[supreg] survey vendor's
first QAP must be submitted within 6 weeks of the data submission
deadline date after the vendor's first quarterly data submission. The
QAP must be updated and submitted annually thereafter and at any time
that changes occur in staff or vendor capabilities or systems. A model
QAP is included in the HHCAHPS[supreg] Protocols and Guidelines Manual.
The QAP must include the following:
Organizational Background and Staff Experience
Work Plan
Sampling Plan
Survey Implementation Plan
Data Security, Confidentiality and Privacy Plan
Questionnaire Attachments
As part of the oversight activities, the HHCAHPS[supreg] Survey
Coordination Team conducts on-site visits to all approved
HHCAHPS[supreg] survey vendors. The purpose of the site visits is to
allow the HHCAHPS[supreg] Coordination Team to observe the entire HH
Care CAHPS[supreg] Survey implementation process, from
[[Page 40294]]
the sampling stage through file preparation and submission, as well as
to assess data security and storage. The HHCAHPS[supreg] Survey
Coordination Team reviews the HHCAHPS[supreg] survey vendor's survey
systems, and assesses administration protocols based on the
HHCAHPS[supreg] Protocols and Guidelines Manual posted at https://homehealthcahps.org. The systems and program site visit review
includes, but is not limited to the following:
Survey management and data systems;
Printing and mailing materials and facilities;
Telephone call center facilities;
Data receipt, entry and storage facilities; and
Written documentation of survey processes.
After the site visits, HHCAHPS[supreg] survey vendors are given a
defined time period in which to correct any identified issues and
provide follow-up documentation of corrections for review.
HHCAHPS[supreg] survey vendors are subject to follow-up site visits on
an as-needed basis.
In the CY 2013 HH PPS final rule (77 FR 67094), we codified the
current guideline that all approved HHCAHPS[supreg] survey vendors
fully comply with all HHCAHPS[supreg] oversight activities. We included
this survey requirement at Sec. 484.250(c).
(3) HHCAHPS[supreg] Requirements for the CY 2014 APU
In the CY 2013 HH PPS final rule (77 FR 67094), we stated that we
would require continued monthly HHCAHPS[supreg] data collection and
reporting for 4 quarters for the HHCAHPS[supreg] requirements for CY
2014 APU. The data collection period for the CY 2014 APU includes the
second quarter 2012 through first quarter 2013 (the months of April
2012 through March 2013). HHAs were required to submit their
HHCAHPS[supreg] data files to the HH CAHPS[supreg] Data Center for the
second quarter 2012 by 11:59 p.m., Eastern daylight time (e.d.t.) on
October 18, 2012; for the third quarter 2012 by 11:59 p.m., Eastern
standard time (e.s.t.) on January 17, 2013; for the fourth quarter 2012
by 11:59 p.m., e.d.t. on April 18, 2013; and for the first quarter 2013
by 11:59 p.m., e.d.t. on July 18, 2013. These deadlines are firm; no
exceptions are permitted.
We stated that we exempt HHAs receiving Medicare certification on
or after April 1, 2012, from the full HHCAHPS[supreg] reporting
requirement for the CY 2014 APU, because these HHAs were not Medicare-
certified in the period of April 1, 2011, through March 31, 2012. These
HHAs would not need to complete a HHCAHPS[supreg] Participation
Exemption Request form for the CY 2014 APU. The Participation Exemption
Form is discussed in the Collection of Information section of this
rule. The form was used since CY 2012, and it was cited in the PRA
package in 2010, but it did not have its own OMB number. We have
submitted a revised PRA package about the HHCAHPS[supreg] survey (the
package expires in March 2014) that also includes more information
regarding the Participation Exemption Form.
As noted in the CY 2013 HH PPS final rule (77 FR 67094), HHAs that
had fewer than 60 HHCAHPS[supreg]-eligible unduplicated or unique
patients in the period of April 1, 2011, through March 31, 2012, are
exempt from the HHCAHPS[supreg] data collection and submission
requirements for the CY 2014 APU. Such HHAs were required to submit
their patient counts for the period of April 1, 2011, through March 31,
2012, on the HHCAHPS[supreg] Participation Exemption Request form for
the CY 2014 APU posted on https://homehealthcahps.org beginning April
1, 2012, by 11:59 p.m., e.d.t. on January 17, 2013. This deadline is
firm, as are all of the quarterly data submission deadlines.
(4) HHCAHPS[supreg] Requirements for the CY 2015 APU
In the CY 2013 HH PPS final rule (77 FR 67094), we stated that for
the CY 2015 APU, we would require continued monthly HHCAHPS[supreg]
data collection and reporting for 4 quarters. The data collection
period for CY 2015 APU includes the second quarter 2013 through the
first quarter 2014 (the months of April 2013, through March 2014). HHAs
are required to submit their HHCAHPS[supreg] data files to the HH
CAHPS[supreg] Data Center for the second quarter 2013 by 11:59 p.m.,
e.d.t. on October 17, 2013; for the third quarter 2013 by 11:59 p.m.,
e.s.t. on January 16, 2014; for the fourth quarter 2013 by 11:59 p.m.,
e.d.t. on April 17, 2014; and for the first quarter 2014 by 11:59 p.m.,
e.d.t. on July 17, 2014. These deadlines are firm; no exceptions are
permitted.
We will continue to exempt HHAs receiving Medicare certification on
or after April 1, 2013, from the full HHCAHPS[supreg] reporting
requirement for the CY 2015 APU because these HHAs would not have been
Medicare-certified throughout the period of April 1, 2012 through March
31, 2013. These HHAs do not need to complete a HHCAHPS[supreg]
Participation Exemption Request form for the CY 2015 APU.
We require that all HHAs that had fewer than 60 HHCAHPS[supreg]-
eligible unduplicated or unique patients in the period of April 1,
2012, through March 31, 2013 are exempt from the HHCAHPS[supreg] data
collection and submission requirements for the CY 2015 APU. Agencies
with fewer than 60 HHCAHPS[supreg]-eligible, unduplicated or unique
patients in the period of April 1, 2012, through March 31, 2013 are
required to submit their patient counts on the HHCAHPS[supreg]
Participation Exemption Request form for the CY 2015 APU, posted on
https://homehealthcahps.org on April 1, 2013, by 11:59 p.m., e.d.t. on
January 16, 2014. This deadline is firm, as is true of all quarterly
data submission deadlines.
(5) HHCAHPS[supreg] Requirements for the CY 2016 APU
For the CY 2016 APU, we propose to require continued monthly
HHCAHPS[supreg] data collection and reporting for 4 quarters. The data
collection period for the CY 2016 APU is proposed to include the second
quarter 2014 through the first quarter 2015 (the months of April 2014
through March 2015). We propose that HHAs would be required to submit
their HHCAHPS[supreg] data files to the HH CAHPS[supreg] Data Center
for the second quarter 2014 by 11:59 p.m., e.d.t. on October 16, 2014;
for the third quarter 2014 by 11:59 p.m., e.s.t. on January 15, 2015;
for the fourth quarter 2014 by 11:59 p.m., e.d.t. on April 16, 2015;
and for the first quarter 2015 by 11:59 p.m., e.d.t. on July 16, 2015.
We propose that these deadlines be firm; no exceptions would be
permitted.
We propose to continue to exempt HHAs receiving Medicare
certification after the period in which HHAs do their patient count
(April 1, 2013 through March 31, 2014) on or after April 1, 2014, from
the full HHCAHPS[supreg] reporting requirement for the CY 2016 APU,
because these HHAs would not have been Medicare-certified throughout
the period of April 1, 2013, through March 31, 2014. These HHAs would
not need to complete a HHCAHPS[supreg] Participation Exemption Request
form for the CY 2016 APU.
We propose to state that all HHAs that had fewer than 60
HHCAHPS[supreg]-eligible unduplicated or unique patients in the period
of April 1, 2013, through March 31, 2014 would be exempt from the
HHCAHPS[supreg] data collection and submission requirements for the CY
2016 APU. Agencies with fewer than 60 HHCAHPS-eligible, unduplicated or
unique patients in the period of April 1, 2013, through March 31, 2014,
would be required to submit their patient counts on the HHCAHPS[supreg]
Participation
[[Page 40295]]
Exemption Request form for the CY 2016 APU posted on https://homehealthcahps.org on April 1, 2014, by 11:59 p.m., e.s.t. on January
15, 2015. This deadline would be firm, as would be all of the quarterly
data submission deadlines.
(6) HHCAHPS[supreg] Reconsiderations and Appeals Process
HHAs should monitor their respective HHCAHPS[supreg] survey vendors
to ensure that vendors submit their HHCAHPS data on time, by accessing
their HHCAHPS[supreg] Data Submission Reports on https://homehealthcahps.org. This will help HHAs ensure that their data are
submitted in the proper format for data processing to the
HHCAHPS[supreg] Data Center.
We propose to continue the HHCAHPS[supreg] reconsiderations and
appeals process that we have finalized and that we have used for the CY
2012 APU and for the CY 2013 APU. We have described the HHCAHPS[supreg]
reconsiderations process requirements in the notification memorandum
that the Regional Home Health Intermediaries (RHHI)/MACs send to the
affected HHAs, on behalf of CMS. HHAs have 30 days to send their
documentation to support their request for reconsideration to CMS. It
is important that the affected HHAs send in comprehensive information
in their reconsideration letter/package because CMS will not contact
the affected HHAs to request additional information or to clarify
incomplete or inconclusive information. If clear evidence to support a
finding of compliance is not present, the 2 percent reduction in the
APU will be upheld. If clear evidence of compliance is present, the 2
percent reduction for the APU will be reversed. We will notify affected
HHAS by about mid-December. If we determine to uphold the 2 percent
reduction, the HHA may further appeal the 2 percent reduction via the
Provider Reimbursement Review Board (PRRB) appeals process.
f. Summary of Proposed Changes in CY 2014
We are not proposing any changes to the HHCAHPS[supreg] Survey in
CY 2014.
g. For Further Information on the HHCAHPS[supreg] Survey
We strongly encourage HHAs to learn about the survey and view the
HHCAHPS[supreg] Survey Web site at the official Web site for the
HHCAHPS[supreg] at https://homehealthcahps.org. HHAs can also send an
email to the HHCAHPS[supreg] Survey Coordination Team at
HHCAHPS@rti.org, or telephone toll-free (1-866-354-0985) for more
information about HHCAHPS[supreg].
3. Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS that account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of HH services. For CY
2014, as in previous years, we are proposing to base the wage index
adjustment to the labor portion of the HH PPS rates on the most recent
pre-floor and pre-reclassified hospital wage index. We would apply the
appropriate wage index value to the labor portion of the HH PPS rates
based on the site of service for the beneficiary (defined by section
1861(m) of the Act as the beneficiary's place of residence).
Previously, we determined each HHA's labor market area based on
definitions of metropolitan statistical areas (MSAs) issued by the OMB.
We have consistently used the pre-floor, pre-reclassified hospital wage
index data to adjust the labor portion of the HH PPS rates. We believe
the use of the pre-floor, pre-reclassified hospital wage index data
results in an appropriate adjustment to the labor portion of the costs,
as required by statute.
In the CY 2006 HH PPS final rule for (70 FR 68132), we began
adopting revised labor market area definitions as discussed in the OMB
Bulletin No. 03-04 (June 6, 2003). This bulletin announced revised
definitions for MSAs and the creation of micropolitan statistical areas
and core-based statistical areas (CBSAs). The bulletin is available
online at www.whitehouse.gov/omb/bulletins/b03-04.html. In addition,
OMB published subsequent bulletins regarding CBSA changes, including
changes in CBSA numbers and titles. The OMB bulletins are available at
https://www.whitehouse.gov/omb/bulletins/.
For CY 2014, as in previous years, we are proposing to use the most
recent pre-floor, pre-reclassified hospital wage index as the base for
the wage index adjustment to the labor portion of the HH PPS rates.
However, the FY 2014 pre-floor, pre-reclassified hospital wage index
does not reflect OMB's new area delineations, based on the 2010 Census
(outlined in OMB Bulletin 13-01, released on February 28, 2013), as
those changes were not published until the Hospital Inpatient
Prospective Payment System (IPPS) proposed rule (78 FR 27553) was in
advanced stages of development. We intend to propose changes to the FY
2015 hospital wage index based on the newest CBSA changes in the FY
2015 IPPS proposed rule. Therefore, if CMS incorporates OMB's new area
delineations, based on the 2010 Census, in the FY 2015 hospital wage
index, those changes would also be reflected in the FY 2015 HH wage
index.
Finally, we would continue to use the methodology discussed in the
CY 2007 HH PPS final rule (71 FR 65884) to address those geographic
areas in which there were no IPPS hospitals, and thus, no hospital wage
data on which to base the calculation of the HH PPS wage index. For
rural areas that do not have IPPS hospitals, and therefore, lack
hospital wage data on which to base a wage index, we would use the
average wage index from all contiguous CBSAs as a reasonable proxy. For
rural Puerto Rico, we do not apply this methodology due to the distinct
economic circumstances that exist there, but instead continue using the
most recent wage index previously available for that area (from CY
2005).
For urban areas without IPPS hospitals, we use the average wage
index of all urban areas within the State as a reasonable proxy for the
wage index for that CBSA. For CY 2012, the only urban area without IPPS
hospital wage data is Hinesville-Fort Stewart, Georgia (CBSA 25980).
The wage index values are available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html.
4. Proposed CY 2014 Payment Update
a. National, Standardized 60-Day Episode Payment Rate
The Medicare HH PPS has been in effect since October 1, 2000. As
set forth in the July 3, 2000 final rule (65 FR 41128), the base unit
of payment under the Medicare HH PPS is a national, standardized 60-day
episode payment rate. As set forth in Sec. 484.220, we adjust the
national, standardized 60-day episode payment rate by a case-mix
relative weight and a wage index value based on the site of service for
the beneficiary.
To provide appropriate adjustments to the proportion of the payment
amount under the HH PPS to account for area wage difference, we apply
the appropriate wage index value to the labor portion of the HH PPS
rates. The labor-related share of the case-mix adjusted 60-day episode
rate would continue to be 78.535 percent and the
[[Page 40296]]
non-labor-related share would continue to be 21.465 percent as set out
in the CY 2013 HH PPS final rule (77 FR 67068). The proposed CY 2014 HH
PPS rates use the same case-mix methodology as set forth in the CY 2008
HH PPS final rule with comment period (72 FR 49762) and adjusted as
described in section III.C. of this proposed rule. The following are
the steps we take to compute the case-mix and wage-adjusted 60-day
episode rate:
(1) Multiply the national 60-day episode rate by the patient's
applicable case-mix weight.
(2) Divide the case-mix adjusted amount into a labor (78.535
percent) and a non-labor portion (21.465 percent).
(3) Multiply the labor portion by the applicable wage index based
on the site of service of the beneficiary.
(4) Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 60-day episode rate, subject to
any additional applicable adjustments.
In accordance with section 1895(b)(3)(B) of the Act, this document
constitutes the annual update of the HH PPS rates. Section 484.225 sets
forth the specific annual percentage update methodology. In accordance
with Sec. 484.225(i), for a HHA that does not submit HH quality data,
as specified by the Secretary, the unadjusted national prospective 60-
day episode rate is equal to the rate for the previous calendar year
increased by the applicable HH market basket index amount minus two
percentage points. Any reduction of the percentage change will apply
only to the calendar year involved and will not be considered in
computing the prospective payment amount for a subsequent calendar
year.
Medicare pays the national, standardized 60-day case-mix and wage-
adjusted episode payment on a split percentage payment approach. The
split percentage payment approach includes an initial percentage
payment and a final percentage payment as set forth in Sec.
484.205(b)(1) and Sec. 484.205(b)(2). We may base the initial
percentage payment on the submission of a request for anticipated
payment (RAP) and the final percentage payment on the submission of the
claim for the episode, as discussed in Sec. 409.43. The claim for the
episode that the HHA submits for the final percentage payment
determines the total payment amount for the episode and whether we make
an applicable adjustment to the 60-day case-mix and wage-adjusted
episode payment. The end date of the 60-day episode as reported on the
claim determines which calendar year rates Medicare would use to pay
the claim.
We may also adjust the 60-day case-mix and wage-adjusted episode
payment based on the information submitted on the claim to reflect the
following:
A low utilization payment provided on a per-visit basis as
set forth in Sec. 484.205(c) and Sec. 484.230.
A partial episode payment adjustment as set forth in Sec.
484.205(d) and Sec. 484.235.
An outlier payment as set forth in Sec. 484.205(e) and
Sec. 484.240.
b. Proposed CY 2014 National, Standardized 60-Day Episode Payment Rate
The proposed CY 2014 national, standardized 60-day episode payment
rate would be $2,862.99 as calculated in Table 16. To determine the CY
2014 proposed national, standardized 60-day episode payment rate, we
start with the 2013 average payment per episode ($2,963.65) calculated
in section III.D.1. of this proposed rule. We then apply the 3.50
percent rebasing reduction (1-0.0350 = 0.9650) and remove the 2.5
percent for outlier payments that we put back in the rates as described
in section III.D.1. of this proposed rule. We subsequently apply a
standardization factor (1.0017) to ensure budget neutrality in episode
payments using the 2014 wage index. The application of a
standardization factor was also done when setting the original
national, standardized 60-day episode payment rate for the HH PPS in
2000 per section 1895(3)(A)(i) of the Act. The Act required that the
60-day episode base rate and other applicable amounts be standardized
in a manner that eliminates the effects of variations in relative case
mix and area wage adjustments among different home health agencies in a
budget neutral manner. To calculate the standardization factor, we
simulated total payments for non-LUPA episodes using the 2014 wage
index and compared it to our simulation of total payments for non-LUPA
episodes using the 2013 wage index. By dividing the total payments
using the 2014 wage index by the total payments using the 2013 wage
index, we obtain a standardization factor of 1.0017. We note that since
we are implementing the adjustment to the case-mix weights in a budget
neutral manner, there is no standardization factor needed to ensure
budget neutrality in episode payments using the 2014 case-mix relative
values. Lastly, we update payments by the CY 2014 market basket update
(2.4 percent).
Table 16--CY 2014 Proposed 60-Day National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2014 proposed
Outlier national,
2013 Estimated average payment per episode 2014rebasing adjustment Standardization 2014 HH market standardized 60-
adjustment factor factor basket day episode
payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,963.65................................................... x 0.9650 x 0.975 x 1.0017 x 1.024 = $2,860.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
The proposed CY 2014 national, standardized 60-day episode payment
rate for an HHA that does not submit the required quality data is
updated by the proposed CY 2014 HH market basket update (2.4 percent)
minus 2 percentage points and is shown in Table 17.
[[Page 40297]]
Table 17--For HHAs That Do Not Submit the Quality Data--Proposed CY 2014 National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2014 proposed
Outlier 2014 HH market national,
2013 estimated average payment per episode 2014 rebasing adjustment Standardization basket minus 2 standardized 60-
adjustment factor factor percentage points day episode
payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,963.65................................................... x 0.9650 x 0.975 x 1.0017 x 1.004 = $2,804.34
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. National Per-Visit Rates
The national per-visit rates are used to pay LUPAs and are also
used to compute imputed costs in outlier calculations. The per-visit
rates are paid by type of visit or HH discipline. The six HH
disciplines are as follows:
Home health aide (HH aide);
Medical Social Services (MSS);
Occupational therapy (OT);
Physical therapy (PT);
Skilled nursing (SN); and
Speech-language pathology (SLP).
To calculate the CY 2014 national per-visit rates, we used the 2013
national per-visit rates adjusted to include the dollars from the 2.5
percent outlier pool as described in section III.D.2. of this proposed
rule. We then apply the 3.5 percent rebasing increase to the 2013
outlier adjusted per-visit rates (1 + 0.035 = 1.035), remove the
outlier payment adjustment that we used to inflate the rates for
comparison purposes (to compare the rates to the estimated per visit
costs) in section III.D.2. of this proposed rule, and apply a wage
index budget neutrality factor of 1.0003 to ensure budget neutrality
for LUPA per-visit payments after applying the 2014 wage index. We
calculated the wage index budget neutrality factor by simulating total
payments for LUPA episodes using the 2014 wage index and comparing it
to simulated total payments for LUPA episodes using the 2013 wage
index. We note that the LUPA per-visit payments are not calculated
using case-mix weights and therefore, there is no case-mix
standardization factor needed to ensure budget neutrality in LUPA
payments. The per-visit rates for each discipline are then updated by
the proposed CY 2014 HH market basket update of 2.4 percent. The
national per-visit rates are adjusted by the wage index based on the
site of service of the beneficiary. The per-visit payment amounts for
LUPAs are separate from the LUPA add-on payment amount, which is paid
for episodes that occur as the only episode or initial episode in a
sequence of adjacent episodes. The proposed CY 2014 national per-visit
rates are shown in Tables 18 and 19.
Table 18--Proposed CY 2014 National Per-Visit Payment Amounts
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2013 per- Wage index
visit rates CY 2014 Outlier budget 2014 HH market Proposed CY
HH discipline type including rebasing adjustment neutrality basket 2014 per-visit
outliers adjustment factor rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide........................................ $53.12 x 1.035 x 0.975 x 1.0003 x 1.024 $54.91
Medical Social Services................................. 188.01 x 1.035 x 0.975 x 1.0003 x 1.024 194.34
Occupational Therapy.................................... 129.11 x 1.035 x 0.975 x 1.0003 x 1.024 133.46
Physical Therapy........................................ 128.24 x 1.035 x 0.975 x 1.0003 x 1.024 132.56
Skilled Nursing......................................... 117.28 x 1.035 x 0.975 x 1.0003 x 1.024 121.23
Speech-Language Pathology............................... 139.34 x 1.035 x 0.975 x 1.0003 x 1.024 144.03
--------------------------------------------------------------------------------------------------------------------------------------------------------
The proposed CY 2014 per-visit payment rates for an HHA that does
not submit the required quality data is updated by the proposed CY 2014
HH market basket update (2.4 percent) minus 2 percentage points and is
shown in Table 19.
Table 19--Proposed CY 2014 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2013 per- Wage index 2014 HH market
visit rates CY 2014 Outlier budget basket minus 2 Proposed CY
HH discipline type including rebasing adjustment neutrality percentage 2014 per-visit
outliers adjustment factor points rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide........................................ $53.12 x 1.035 x 0.975 x 1.0003 x 1.004 $53.84
Medical Social Services................................. 188.01 x 1.035 x 0.975 x 1.0003 x 1.004 190.54
Occupational Therapy.................................... 129.11 x 1.035 x 0.975 x 1.0003 x 1.004 130.85
Physical Therapy........................................ 128.24 x 1.035 x 0.975 x 1.0003 x 1.004 129.97
Skilled Nursing......................................... 117.28 x 1.035 x 0.975 x 1.0003 x 1.004 118.86
Speech-Language Pathology............................... 139.34 x 1.035 x 0.975 x 1.0003 x 1.004 141.22
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 40298]]
d. Proposed Low-Utilization Payment Adjustment (LUPA) Add-On Factor
For episodes with four or fewer visits, Medicare pays on the basis
of a national per-visit amount by discipline, referred to as a LUPA. As
stated in our CY 2008 HH PPS proposed rule, after the HH PPS went into
effect we received comments and correspondence suggesting that the LUPA
payment rates do not adequately account for the front-loading of costs
in an episode. Commenters suggested that because of the small number of
visits in a LUPA episode, HHAs have little opportunity to spread the
costs of lengthy initial visits over a full episode (72 FR 25424). In
response to comments received, we conducted an initial descriptive
analysis of visit log data from prior to the establishment of the HH
PPS, showing that initial visits were 25 to 50 percent longer than
subsequent visits in LUPA episodes that occur as the only or initial
episode. These results indicated that payment for LUPA episodes may not
offset the full cost of initial visits. Therefore, as specified in the
CY 2008 HH PPS final rule, LUPA episodes that occur as the only episode
or an initial episode in a sequence of adjacent episodes are adjusted
by applying an additional amount to the LUPA payment before adjusting
for area wage differences (72 FR 49849).
The CY 2008 LUPA add-on amount was calculated using a large
representative sample of claims from 2005 (72 FR 49848). The analysis
examined minute data for skilled nursing, physical therapy, and speech-
language pathology (SLP) as, per the Medicare CoPs at Sec.
484.55(a)(1) and (a)(2), only these three disciplines are allowed to
conduct the initial assessment visit. The analysis showed that the
average excess of minutes for the first visit in LUPA episodes that
were the only episode or an initial LUPA in a sequence of adjacent
episodes was 38.5 minutes for the first visit if SN, 25.1 minutes for
the first visit if PT, and 22.6 minutes for the first visit if SLP.
Those excess minutes were then expressed as a proportion of the average
number of minutes for all non-first visits in non-LUPA episodes (42.5
minutes, 45.6 minutes, and 48.6 minutes for SN, PT, and SLP,
respectively). These proportions (90.6 percent, 55.0 percent, and 46.5
percent for SN, PT, and SLP, respectively) were used to inflate the
LUPA per-visit payment rates. Finally, using an appropriate set of
weights representing the share of LUPA first visits for SN (77.8
percent), PT (21.7 percent) and SLP (0.5 percent), we calculated a LUPA
add-on payment amount of $87.93 for LUPA episodes that occur as the
only episode or an initial episode in a sequence of adjacent episodes
(Table 20). When the LUPA add-on payment amount was implemented in CY
2008, to account for the additional payment to LUPA episodes and
maintain budget neutrality, a reduction was made to the national,
standardized 60-day episode payment rate (72 FR 49849).
Table 20--Calculation of the LUPA Add-on Amount, CY 2008
----------------------------------------------------------------------------------------------------------------
Speech-
Skilled Physical language
nursing therapy pathology
----------------------------------------------------------------------------------------------------------------
(1) Proportional increase in minutes for an initial visit over 90.59% 55.04% 46.50%
non-initial visits.............................................
(2) CY 2008 Per-Visit Amounts................................... $104.91 $114.71 $124.54
(3) Excess cost for initial visits (1*2)........................ $95.04 $63.14 $57.91
(4) Percent of initial assessment visits provided by this 77.8% 21.7% 0.5%
discipline.....................................................
(5) Add-on amount per discipline (3*4).......................... $73.94 $13.70 $0.29
-----------------------------------------------
(6) Total LUPA add-on Amount (Sum of row 5)..................... $87.93
----------------------------------------------------------------------------------------------------------------
For this proposed rule we are using the same methodology used to
establish the LUPA add-on amount for CY 2008. Specifically, we updated
the analysis using 100 percent of LUPA episodes and a 20 percent sample
of non-LUPA first episodes from preliminary CY 2012 claims data for
episodes starting on or before May 31, 2012. The analysis showed that
the average excess of minutes for the first visit in LUPA episodes that
were the only episode or an initial LUPA in a sequence of adjacent
episodes was 38.88 minutes for the first visit if SN, 32.75 minutes for
the first visit if PT, and 32.28 minutes for the first visit if SLP.
The average minutes for all non-first visits in non-LUPA episodes was
44.62 minutes for SN, 47.88 minutes for PT, and 51.31 minutes for SLP.
Those excess minutes expressed as a proportion of the average minutes
for all non-first visits in non-LUPA episodes are 87.14 percent for SN,
68.40 percent for PT, and 62.91 percent for SLP. We used these
proportions to inflate the proposed LUPA per-visit payment rates in
Table 18 of $121.23 for SN, $132.56 for PT, and $144.03 for SLP. We
then calculated a set of weights representing the share of LUPA first
visits for SN (81.74 percent), PT (17.87 percent) and SLP (0.39
percent) and using these weights, we calculated a LUPA add-on payment
amount of $102.91 for LUPA episodes that occur as the only episode or
an initial episode in a sequence of adjacent episodes.
In lieu of a single LUPA add-on payment amount of $102.91, to
ensure that the LUPA add-on amount equitably reflects the excess cost
for an initial visit for each of the three disciplines (SN, PT, and
SLP), we propose to multiply the per-visit payment amount for the first
SN, PT, or SLP visit in LUPA episodes that occur as the only episode or
an initial episode in a sequence of adjacent episodes by 1 + the
proportional increase in minutes for an initial visit over non-initial
visits. The proposed LUPA add-on factors are: 1.8714 for SN; 1.6841 for
PT; and 1.6293 for SLP. For example, for LUPA episodes that occur as
the only episode or an initial episode in a sequence of adjacent
episodes, if the first skilled visit is SN, the payment for that visit
would be $ $226.87 (1.8714 multiplied by $121.23). For more information
on the analyses performed to update the LUPA add-on amount, please
refer to the technical report titled ``Analyses in Support of Rebasing
& Updating the Medicare Home Health Payment Rates'' available on the
CMS Home Health Agency (HHA) Center Web site at: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html?redirect=/
center/hha.asp.
e. Nonroutine Medical Supply Conversion Factor Update
Payments for NRS are computed by multiplying the relative weight
for a particular severity level by the NRS conversion factor. To
determine the CY 2014 proposed NRS conversion factor, we start with the
2013 NRS conversion factor ($53.97) and apply the 2.58
[[Page 40299]]
percent rebasing adjustment calculated in section II.D.3. of this
proposed rule (1-0.0258 = 0.9742). We then update the conversion factor
by the proposed CY 2014 HH market basket update (2.4 percent). We do
not apply a standardization factor as the NRS payment amount calculated
from the conversion factor is not wage or case-mix adjusted when the
final claim payment amount is computed. The proposed NRS conversion
factor for CY 2014 is $53.84, as shown in Table 21.
Table 21--Proposed CY 2014 NRS Conversion Factor
----------------------------------------------------------------------------------------------------------------
Proposed CY
2014 rebasing 2014 HH market 2014 NRS
CY 2013 NRS conversion factor adjustment basket conversion
factor
----------------------------------------------------------------------------------------------------------------
$53.97....................................................... x 0.9742 x 1.024 = $53.84
----------------------------------------------------------------------------------------------------------------
Using the proposed CY 2014 NRS conversion factor ($53.84), the
payment amounts for the six severity levels are shown in Table 22.
Table 22--Proposed CY 2014 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Points Relative Proposed NRS
Severity level (scoring) weight payment amount
----------------------------------------------------------------------------------------------------------------
1............................................................... 0 0.2698 $14.53
2............................................................... 1 to 14 0.9742 52.45
3............................................................... 15 to 27 2.6712 143.82
4............................................................... 28 to 48 3.9686 213.67
5............................................................... 49 to 98 6.1198 329.49
6............................................................... 99+ 10.5254 566.69
----------------------------------------------------------------------------------------------------------------
For HHAs that do not submit the required quality data, we again
begin with the CY 2013 NRS conversion factor ($53.97) and apply the
2.58 percent rebasing adjustment calculated in section II.D.3. of this
proposed rule (1 - 0.0258 = 0.9742). We then update the NRS conversion
factor by the proposed CY 2014 HH market basket update of 2.4 percent,
minus 2 percentage points. The CY 2014 NRS conversion factor for HHAs
that do not submit quality data is shown in Table 23.
Table 23--Proposed CY 2014 NRS Conversion Factor for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
CY 2014 HH
market basket Proposed CY
CY 2013 NRS conversion factor 2014 rebasing minus 2 2014 NRS
adjustment percentage conversion
points factor
----------------------------------------------------------------------------------------------------------------
$53.97....................................................... x 0.9742 x 1.004 $52.79
----------------------------------------------------------------------------------------------------------------
The payment amounts for the various severity levels based on the
updated conversion factor for HHAs that do not submit quality data are
calculated in Table 24.
Table 24--Proposed CY 2014 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Points Relative Proposed NRS
Severity level (scoring) weight payment amount
----------------------------------------------------------------------------------------------------------------
1............................................................... 0 0.2698 $14.24
2............................................................... 1 to 14 0.9742 51.43
3............................................................... 15 to 27 2.6712 141.01
4............................................................... 28 to 48 3.9686 209.50
5............................................................... 49 to 98 6.1198 323.06
6............................................................... 99+ 10.5254 555.64
----------------------------------------------------------------------------------------------------------------
[[Page 40300]]
5. Rural Add-On
Section 421(a) of the MMA required, for HH services furnished in a
rural areas (as defined in section 1886(d)(2)(D) of the Act), for
episodes or visits ending on or after April 1, 2004, and before April
1, 2005, that the Secretary increase the payment amount that otherwise
would have been made under section 1895 of the Act for the services by
5 percent.
Section 5201 of the DRA amended section 421(a) of the MMA. The
amended section 421(a) of the MMA required, for HH services furnished
in a rural area (as defined in section 1886(d)(2)(D) of the Act), on or
after January 1, 2006 and before January 1, 2007, that the Secretary
increase the payment amount otherwise made under section 1895 of the
Act for those services by 5 percent.
Section 3131(c) of the Affordable Care Act amended section 421(a)
of the MMA to provide an increase of 3 percent of the payment amount
otherwise made under section 1895 of the Act for HH services furnished
in a rural area (as defined in section 1886(d)(2)(D) of the Act), for
episodes and visits ending on or after April 1, 2010, and before
January 1, 2016.
Section 421 of the MMA, as amended, waives budget neutrality
related to this provision, as the statute specifically states that the
Secretary shall not reduce the standard prospective payment amount (or
amounts) under section 1895 of the Act applicable to HH services
furnished during a period to offset the increase in payments resulting
in the application of this section of the statute.
The 3 percent rural add-on is applied to the national, standardized
60-day episode payment rate, national per-visit rates, LUPA add-on
payment, and NRS conversion factor when HH services are provided in
rural (non-CBSA) areas. Refer to Tables 25 through 28 for these payment
rates.
Table 25--Proposed CY 2014 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
For HHAs that DO submit quality data For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed rural Proposed rural
Multiply by the national Multiply by the national
Proposed national standardized 60-day episode 3 percent rural standardized 60- Proposed national standardized 60- 3 percent rural standardized 60-
payment rate add-on day episode day episode payment rate add-on day episode
payment rate payment Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,860.20....................................... x 1.03 $2,946.01 $2,804.34......................... x 1.03 $2,888.47
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 26--Proposed CY 2014 per-Visit Amounts for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
For HHAs that DO submit quality data For HHAs that DO NOT submit quality data
-----------------------------------------------------------------------------------------------------
HH discipline type Multiply by the Multiply by the
Proposed per- 3 percent rural Proposed rural Proposed per- 3 percent rural Proposed rural
visit rate add-on per-visit rate visit rate add-on per-visit rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide........................................... $54.91 x 1.03 $56.56 $53.84 x 1.03 $55.46
MSS............................................... 194.34 x 1.03 200.17 190.54 x 1.03 196.26
OT................................................ 133.46 x 1.03 137.46 130.85 x 1.03 134.78
PT................................................ 132.56 x 1.03 136.54 129.97 x 1.03 133.87
SN................................................ 121.23 x 1.03 124.87 118.86 x 1.03 122.43
SLP............................................... 144.03 x 1.03 148.35 141.22 x 1.03 145.46
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 27--Proposed CY 2014 NRS Conversion Factor for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
For HHAs that DO submit quality data For HHAs that DO NOT submit quality data
----------------------------------------------------------------------------------------------------------------
Multiply by Proposed rural Proposed Multiply by Proposed rural
Proposed conversion factor the 3 percent conversion conversion the 3 percent conversion
rural add-on factor factor rural add-on factor
----------------------------------------------------------------------------------------------------------------
$53.84........................ x 1.03 $55.46 $52.79.......... x 1.03 $54.37
----------------------------------------------------------------------------------------------------------------
Table 28--Proposed CY 2014 NRS Payment Amounts for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
For HHAs that DO submit For HHAs that DO NOT submit
quality data (NRS conversion quality data (NRS conversion
factor = $55.46) factor = $54.37)
Points ---------------------------------------------------------------
Severity level (scoring) Total NRS Total NRS
Relative payment amount Relative payment amount
weight for rural weight for rural
areas areas
----------------------------------------------------------------------------------------------------------------
1............................... 0 0.2698 $14.96 0.2698 $14.67
2............................... 1 to 14 0.9742 54.03 0.9742 52.97
3............................... 15 to 27 2.6712 148.14 2.6712 145.23
4............................... 28 to 48 3.9686 220.10 3.9686 215.77
5............................... 49 to 98 6.1198 339.40 6.1198 332.73
6............................... 99+ 10.5254 583.74 10.5254 572.27
----------------------------------------------------------------------------------------------------------------
[[Page 40301]]
F. Outlier Policy
1. Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the national, standardized 60-day case-mix
and wage-adjusted episode payment amounts in the case of episodes that
incur unusually high costs due to patient care needs. Prior to the
enactment of the Affordable Care Act, section 1895(b)(5)of the Act
stipulated that projected total outlier payments could not exceed 5
percent of total projected or estimated HH payments in a given year. In
the Medicare Program; Prospective Payment System for Home Health
Agencies final rule (65 FR 41188 through 41190), we described the
method for determining outlier payments. Under this system, outlier
payments are made for episodes whose estimated costs exceed a threshold
amount for each HH Resource Group (HHRG). The episode's estimated cost
is the sum of the national wage-adjusted per-visit payment amounts for
all visits delivered during the episode. The outlier threshold for each
case-mix group or PEP adjustment is defined as the 60-day episode
payment or PEP adjustment for that group plus a fixed-dollar loss (FDL)
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost beyond the wage-adjusted threshold. The
threshold amount is the sum of the wage and case-mix adjusted PPS
episode amount and wage-adjusted FDL amount. The proportion of
additional costs over the outlier threshold amount paid as outlier
payments is referred to as the loss-sharing ratio.
2. Regulatory Update
In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we
discussed excessive growth in outlier payments, primarily the result of
unusually high outlier payments in a few areas of the country. Despite
program integrity efforts associated with excessive outlier payments in
targeted areas of the country, we discovered that outlier expenditures
still exceeded the 5 percent, target and, in the absence of corrective
measures, would continue do to so. Consequently, we assessed the
appropriateness of taking action to curb outlier abuse. To mitigate
possible billing vulnerabilities associated with excessive outlier
payments and adhere to our statutory limit on outlier payments, we
adopted an outlier policy that included a 10 percent agency-level cap
on outlier payments. This cap was implemented in concert with a reduced
FDL ratio of 0.67. These policies resulted in a projected target
outlier pool of approximately 2.5 percent. (The previous outlier pool
was 5 percent of total HH expenditures.)
For CY 2010, we first returned 5 percent of these dollars back into
the national, standardized 60-day episode payment rates, the national
per-visit rates, the LUPA add-on payment amount, and the NRS conversion
factor. Then, we reduced the CY 2010 rates by 2.5 percent to account
for the new outlier pool of 2.5 percent. This outlier policy was
adopted for CY 2010 only.
3. Statutory Update
As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act. As amended, ``Adjustment for outliers,''
states that ``The Secretary shall reduce the standard prospective
payment amount (or amounts) under this paragraph applicable to HH
services furnished during a period by such proportion as will result in
an aggregate reduction in payments for the period equal to 5 percent of
the total payments estimated to be made based on the prospective
payment system under this subsection for the period.'' In addition,
section 3131(b)(2) of the Affordable Care Act amended section
1895(b)(5) of the Act by re-designating the existing language as
section 1895(b)(5)(A) of the Act, and revising it to state that the
Secretary, ``subject to [a 10 percent program-specific outlier cap],
may provide for an addition or adjustment to the payment amount
otherwise made in the case of outliers because of unusual variations in
the type or amount of medically necessary care. The total amount of the
additional payments or payment adjustments made under this paragraph
with respect to a fiscal year or year may not exceed 2.5 percent of the
total payments projected or estimated to be made based on the
prospective payment system under this subsection in that year.''
As such, beginning in CY 2011, our HH PPS outlier policy is that we
reduce payment rates by 5 percent and target up to 2.5 percent of total
estimated HH PPS payments to be paid as outliers. To do so, we first
returned the 2.5 percent held for the target CY 2010 outlier pool to
the national, standardized 60-day episode payment rates, the national
per visit rates, the LUPA add-on payment amount, and the NRS conversion
factor for CY 2010. We then reduced the rates by 5 percent as required
by section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1)
of the Affordable Care Act. For CY 2011 and subsequent calendar years
we target up to 2.5 percent of estimated total payments to be paid as
outlier payments, and apply a 10 percent agency-level outlier cap.
4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of episodes that can receive outlier
payments, but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for outlier episodes.
Alternatively, a lower FDL ratio means that more episodes can qualify
for outlier payments, but outlier payments per episode must then be
lower.
The FDL ratio and the loss-sharing ratio must be selected so that
the estimated total outlier payments do not exceed the 2.5 percent
aggregate level (as required by section 1895(b)(5)(A) of the Act).
Historically, we have used a value of 0.80 for the loss-sharing ratio
which, we believe, preserves incentives for agencies to attempt to
provide care efficiently for outlier cases. With a loss-sharing ratio
of 0.80, Medicare pays 80 percent of the additional estimated costs
above the outlier threshold amount. We are not proposing a change to
the loss-sharing ratio in this proposed rule. In the CY 2011 HH PPS
final rule (75 FR 70398), in targeting total outlier payments as 2.5
percent of total HH PPS payments, we implemented an FDL ratio of 0.67,
and we maintained that ratio in CY 2012. Simulations based on CY 2010
claims data completed for the CY 2013 HH PPS final rule showed that
outlier payments were estimated to comprise approximately 2.18 percent
of total HH PPS payments in CY 2013, and as such, we lowered the FDL
ratio from 0.67 to 0.45. We stated that lowering the FDL ratio to 0.45,
while maintaining a loss-sharing ratio of 0.80, struck an effective
balance of compensating for high-cost episodes while allowing more
episodes to qualify as outlier payments (77 FR 67080). The national,
standardized 60-day episode payment amount is multiplied by the FDL
ratio. That amount is wage-adjusted to derive the wage-adjusted FDL
amount, which is added to the case-mix and wage-adjusted 60-day episode
payment amount to determine the outlier threshold amount that costs
have to exceed before Medicare will pay 80 percent of the additional
estimated costs.
Based on simulations using preliminary CY 2012 claims data, the
proposed CY 2014 payments rates in section III.E. in this proposed
rule, and the FDL ratio of 0.45; we estimate that outlier payments
would comprise
[[Page 40302]]
approximately 1.82 percent of total HH PPS payments in CY 2014.
Simulating payments using preliminary CY 2012 claims data and the CY
2013 payment rates (77 FR 67100 through 67105); we estimate that
outlier payments would comprise 1.78 percent of total payments. Given
the proposed increases to the CY 2014 national per-visit payment rates,
our analysis estimates a 0.04 percentage point increase in estimated
outlier payments as a percent of total HH PPS payment. We further
estimate that by the end of the 4-year phase-in period required by the
Affordable Care Act, estimated outlier payments as a percent of total
HH PPS payments would be approximately 1.94 percent. We note, however,
that these estimates do not take in to account any changes in
utilization that may have occurred in CY 2013, and would continue to
occur in CY 2014, due to decreasing the FDL ratio from 0.67 percent to
0.45 percent. Therefore, we not proposing a change to the FDL ratio for
CY 2014 as the claims data showing any utilization changes that may
have resulted from an FDL of 0.45 will not be available for analysis
until next year. In the final rule, we will update our estimate of
outlier payments as a percent of total HH PPS payments using the best
analysis the most current and complete year of HH PPS data and will
continue to monitor the percent of total HH PPS payments paid as
outlier payments.
5. Outlier Relationship to the HH Payment Study
As we discuss in section III.G. of this proposed rule, section
3131(d) of the Affordable Care Act requires CMS to conduct a study and
report on developing HH PPS payment revisions that will ensure access
to care and payment for patients with high severity of illness. Our
Report to Congress containing this study's recommendations is due no
later than March 1, 2014. Section 3131(d)(1)(A)(iii) of the Affordable
Care Act, in particular, states that this study may include analysis of
potential revisions to outlier payments to better reflect costs of
treating Medicare beneficiaries with high levels of severity of
illness.
G. Payment Reform: Home Health Study and Report
To address concerns that some beneficiaries are at risk of not
having access to Medicare HH services, and that the current HH PPS may
encourage providers to adopt selective admission patterns, section
3131(d) of the Affordable Care Act requires the Secretary to conduct a
study on HHA costs involved with providing ongoing access to care to
low-income Medicare beneficiaries or beneficiaries in medically
underserved areas, and in treating beneficiaries with varying levels of
severity of illness (specifically, beneficiaries with ``high levels of
severity of illness''). Section 3131(d) of the Affordable Care Act also
gives the Secretary the authority to explore methods to revise the HH
PPS to account for costs related to patient severity of illness or to
improving beneficiary access to care and examine the potential impacts
of any potential revisions to the payment system.
As we stated in the CY 2013 HH PPS proposed rule (77 FR 41572), we
awarded a contract to L&M Policy Research in the fall of 2010 to
perform exploratory work for the study on the vulnerable patient
populations (that is, low-income Medicare beneficiaries, beneficiaries
in medically underserved areas, and beneficiaries with high levels of
severity of illness). The contractor performed a literature review of
potential HH PPS payment vulnerabilities and access issues, established
and convened technical expert panel (TEP) meetings and open door forums
to help define the vulnerable patient populations and to gain insight
on access issues these populations may face, and performed preliminary
analysis looking at resource costs versus Medicare reimbursement.
In September 2011, we awarded a study contract to L&M Policy
Research, along with subcontractors Avalere Health, Mathematica Policy
Research, and Social & Scientific Systems, to develop an analytic plan,
perform detailed analysis, and if necessary, develop recommendations
for changes to the HH PPS. In 2012, we completed preliminary analyses
on HHA costs associated with providing care for vulnerable patient
populations. We presented our findings at a TEP meeting in December
2012 and received extensive feedback on our analyses. We refined our
analytic approach based on feedback from the TEP meeting and we are in
the process of performing the refined analyses. In addition to
examining the costs of providing care to vulnerable patient
populations, we are assessing whether the vulnerable patient
populations experience access issues and potential factors that may
prevent access to care. To do so, we mailed out HHA and physician
surveys on access to care for vulnerable populations in February 2013.
We are in the process of collecting and analyzing the data from the
surveys.
The findings from our analysis of HHA costs and the survey on
access to care for vulnerable patient populations may be used to
develop recommendations on how to revise the current HH PPS to better
account for costs and ensure access to care for these beneficiaries.
Methods to revise the current HH PPS could include payment adjustments
for services that involve either more or fewer resources, changes to
reflect resources involved with providing HH services to low-income
Medicare beneficiaries or Medicare beneficiaries residing in medically
underserved area, and ways outlier payments could be revised to reflect
costs of treating Medicare beneficiaries with high severity of illness.
In addition, as part of the study, we may analyze operational issues
involved with potential implementation of potential revisions to the HH
payment system.
The Affordable Care Act requires that the Secretary submit a Report
to Congress regarding the study no later than March 1, 2014. The report
may contain recommendations for revisions to the HH PPS,
recommendations for legislation and administrative action, and
recommendations for whether further research is needed. The Congress
also provided CMS with the authority to conduct a separate
demonstration project to perform additional research and further
explore recommendations from the study. We plan to provide updates
regarding our progress on the HH study in future rulemaking and open
door forums.
H. Cost Allocation of Survey Expenses
In the CY 2013 HH PPS proposed rule (77 FR 41548), we proposed to
amend Sec. 431.610(g), Relations with standard-setting and survey
agencies, to require that Medicaid state plans explicitly include
Medicaid's appropriate contribution to the cost of HH surveys. We
proposed to add a reference to HHAs, along with NFs and ICFs/IIDs at
Sec. 431.610(g).
Surveys are required for determining a provider's or supplier's
compliance with program participation requirements and the HHA surveys
benefit both Medicare and Medicaid programs where the HHAs seek such
dual certification. Thus, in accordance with OMB Circular A-87, the
costs for surveys of HHAs that are certified for both Medicare and
Medicaid should be shared between Medicare, Medicaid and state-only
programs in proportion to the benefits received. However, to provide
more time for dialogue with states and for any necessary adjustments to
state Medicaid Plans, we removed the proposed provision at Sec.
431.610(g) in the for CY 2013 HH PPS final rule (77 FR 67068). We are
now proposing to
[[Page 40303]]
proceed to amend Sec. 431.610(g) with additional explanation of our
proposal, updated cost information, and request for comment on our
proposed methodologies.
This proposed rule would clarify that a state Medicaid program must
provide that, in certifying HHAs, the state's designated survey agency
must carry out certain other responsibilities that already apply to
surveys of nursing facilities and Intermediate Care Facilities for
Individuals with Intellectual Disabilities (ICF-IID), including sharing
in the cost of HHA surveys. Section 431.610(g) provides for the
availability of federal financial participation (FFP) in the cost of
such surveys, except for expenditures that the survey agency makes that
are attributable to the state's overall responsibilities under state
law and regulations. We believe that the principles articulated in OMB
Circular A-87 require that HHA survey costs be allocated to Medicaid,
Medicare and state-only programs in proportion to the benefits
received. However, we also believe that the proposed amendment to Sec.
431.610(g) would add clarity, and that a proposed rule will offer
states and the public additional opportunity to comment or pose
questions that will further aid adherence to the appropriate cost
allocation principles. We further invite public comment on our proposed
methods to ensure compliance with these requirements. Specifically, we
propose to review each state's allocation of costs for HHA surveys for
adherence to OMB Circular A-87 principles and the statutes with the
goal of ensuring full adherence by each state no later than July 2014.
For that portion of costs attributable to Medicare and Medicaid, we
would assign 50 percent to Medicare and 50 percent to Medicaid. This is
the standard 50/50 method that CMS and states have used effectively for
many years in the allocation of expenses related to surveys of SNF/NF
nursing homes, an approach we consider to be more straight-forward and
economical compared with calculation of unique percentages that vary
state-to-state and year-by-year. Most importantly, a 50/50 method best
reflects the reality that Medicare and Medicaid requirements for home
health agencies are generally the same and each program benefits from
the regulations.
An alternative to the proposed 50/50 method for allocating each
state's Medicare/Medicaid HHS survey costs would be to fix each state's
Medicaid share each year based on the proportion of Medicaid funding
for HH services in the state compared to the combined Medicare and
Medicaid total funding in the most recent years for which the data are
reasonably complete. This is the method adopted for the disbursement of
civil monetary penalties (CMPs) in the CY 2013 HH PPS proposed rule (77
FR 41548). However, the effective date of HHA CMPs is not until July 1,
2014. Our preparations for imposing such CMPs in 2014 indicate that the
annual data collection and calculations necessary for that methodology
are (a) More complicated and burdensome than necessary, (b) involve an
inherent data lag that could create uncertainty for states and CMS in
preparing state survey agency budgets, (c) sufficiently variable from
year to year to create further uncertainty for states, (d) unable to
anticipate the effects of substantial expansion of Medicaid under the
Affordable Care Act (which could increasingly enlarge the state
Medicaid share) and (e) would not recognize that both Medicare and
Medicaid programs benefit from the regulations. Therefore, we believe
that the more efficient and advantageous method, for both CMS and
states, would be the 50/50 allocation method that has been used
successfully for many years in the allocation of survey costs for SNF/
NF nursing homes. We invite comment not only on the 50/50 allocation
method for the costs of HHA survey expenses, but on whether the method
of distribution for CMP receipts back to states and to the U.S.
Treasury should be changed to the same 50/50 methodology. Based on such
a 50/50 ratio for each state, and based upon the projected national HHA
survey budget for FY 2014 of $37.2 million, if implemented in the
beginning of FY 2014, the anticipated aggregate share for Medicaid
would amount to $18.6 million. The cost of surveys is treated as a
Medicaid administrative cost, reimbursable at the professional staff
rate of 75 percent. Therefore, the state Medicaid share will be
approximately $4.65 million on an annualized basis. The $4.65 million
cost is spread out over the 53 states/jurisdictions that currently
conduct surveys under section 1864 of the Act. However, the proposed
adherence date of July FY 2014 would reduce the Medicaid aggregate
share to approximately $4.65 million (for 3 months of the annual $18.6
million aggregate cost) and the state Medicaid share to approximately
$1.16 million (25 percent of expenses for the last quarter of FY 2014).
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Unless otherwise noted, to derive average costs we used data from
the U.S. Bureau of Labor Statistics for all salary estimates. The
salary estimates include the cost of fringe benefits, calculated at 35
percent of salary, which is based on the March 2011 Employer Costs for
Employee Compensation report by the Bureau.
We are soliciting public comment on each of the section
3506(c)(2)(A)-required issues for the following information collection
requirements (ICRs):
A. ICRs Regarding OASIS
The information collection requirements and burden estimates
associated with OASIS have been approved by OMB under OCN 0938-0760.
While OASIS is discussed in preamble section III E.2a, this proposed
rule does not revise any of its information collection requirements or
burden estimates and, therefore, does not require additional OMB review
under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.).
B. ICRs Regarding Cost Allocation of Home Health Agency (HHA) Survey
Expenses (Sec. 431.610)
In Sec. 431.610, HHAs would be added to the survey agency
provision concerning Medicaid state plans. Since CMS already requires
the state survey agencies to have qualified personnel perform onsite
inspections as appropriate, we believe that the requirement to use
qualified staff is met in the current state Medicaid plans. As
explained in the preamble (section H, Cost Allocation of Survey
Expenses), we also expect that the state Medicaid plans will provide
for the appropriate Medicaid share of expenses for the conduct of HHA
surveys. This is a budgeting task for which there may be
[[Page 40304]]
some incidental information collection burden. For some states we
believe the information collection responsibility may be met within the
context of their current state plan, while other states may need to
make a simple amendment to their state Medicaid plan via use of the
existing CMS-179 form (OCN 0938-0193). While CMS-179 would be the
vehicle for transmitting the amendment to CMS, the amendment will be
submitted to OMB for their review/approval under CMS-10489 (OCN 0938-
NEW).
Consistent with time estimates for similar tasks, the time required
to complete this information collection is estimated to average 15
minutes per response, including the time to review instructions, search
existing data resources, gather the data needed, and complete and
review the information collection. If all states, DC, and 2 territories
needed to make such a state plan amendment, the aggregate hours would
be 13.25 non-recurring hours (15/60 * 53). Applying a national average
professional surveyor cost per hour of approximately $50.23 (inclusive
of salary and fringe benefits), we estimate that the maximum
information collection cost would be approximately $667 ($50.23 *
13.25) if all states needed to file a state plan amendment.
Apart from the SPA-related requirements, this proposed rule would
not revise any budget-related recordkeeping or reporting requirements
or estimates and, therefore, does not require additional OMB review
under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.).
C. ICRs Regarding Home Health Care CAHPS[supreg] (HHCAHPS[supreg])
Survey (Sec. 484.250)
As part of the DHHS Transparency Initiative on Quality Reporting,
CMS implements the HHCAHPS[supreg] Survey to measure and to publicly
report patients' experiences with home health care they receive from
Medicare-certified agencies. Section 484.250, Patient Assessment Data,
requires that HHAs submit to CMS, HHCAHPS[supreg] data in order to
administer the payment rate methodologies described in Sec. Sec.
484.215, 484.230, and 484.235. The burden associated with this is the
time and effort put forth by the HHAs to submit the HHCAHPS[supreg]
data, the patients' burden to respond to the HHCAHPS[supreg] survey,
and the cost to the HHAs to pay for the HHCAHPS[supreg] survey vendors
to collect the data on their behalf. This burden is currently accounted
for under OCN 0938-1066 (CMS-10275).
CMS allows Medicare-certified home health agencies that serve 59 or
fewer HHCAHPS[supreg] eligible patients, to request an exemption from
participating in the HHCAHPS[supreg] survey. Currently, we have posted
the HHCAHPS[supreg] Participation Exemption Request (PER) Form for the
CY 2015 Annual Payment Update on https://homehealthcahps.org. This form
is in use without an OMB control number (OCN). The form is only to be
used if home health agencies have 59 or fewer HHCAHPS[supreg] eligible
patients in the count period that is referenced for a given calendar
year. For the CY 2015 annual payment update, home health agencies with
59 or fewer HHCAHPS[supreg] patients in the period of April 2012
through March 2013 are exempt from participation in the HHCAHPS[supreg]
Survey from April 2013 through March 2014, if they complete the HHCAHPS
Participation Exemption Request Form for the CY 2015 Annual Payment
Update, and the counts are verified in the CMS database for the same
period. We are revising OCN 0938-1066 by adding the HHCAHPS[supreg]
Participation Exemption Request Form for the CY Annual Payment Update
and by adding our estimated burden that the form presents to Medicare-
certified home health agencies.
The HHCAHPS[supreg] PER Form for the CY 2015 Annual Payment Update
is a one-page form. We estimate that it would take 15 minutes to
complete the form since it only has a few items to complete including
one item concerning the count of HHCAHPS[supreg] eligible patients in
an annual period. We believe that it would take an additional 20
minutes to count the patients and to verify the count. The annualized
aggregated total burden to completion of the form would be 1,160 hr
((15 min + 20 min)/60 x 2,000 Medicare-certified home health agencies)
at a total estimated cost of $36,400 for 2,000 home health agencies.
In deriving these figures, we used the following hourly labor rates
and time to complete each task: $36.27/hr and 20 min (.33 hr) for a
home health care agency director to check the work on the Participation
Exemption Request Form and $24.92/hr and 15 min (.25 hr) for an
executive assistant to perform the patient count and to complete the
form. This amounts to $18.20 per respondent ($11.97 + $6.23) or $36,400
($18.20 x 2,000) total.
D. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access CMS'
Web site at www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/, or call the Reports Clearance Office at
410-786-1326.
We invite public comments on these potential information collection
requirements. If you comment on these information collection and
recordkeeping requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
(CMS-1450-P) Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L.
104-4), Executive Order 13132 on Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563
[[Page 40305]]
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This notice has been designated as economically significant rule, under
section 3(f)(1)of Executive Order 12866. Accordingly, we have prepared
a regulatory impact analysis (RIA) that to the best of our ability
presents the costs and benefits of the rulemaking. Also, the rule has
been reviewed by OMB.
B. Statement of Need
Section 1895(b)(1) of the Act requires the Secretary to establish a
HH PPS for all costs of HH services paid under Medicare. In addition,
section 1895(b)(3)(A) of the Act requires (1) the computation of a
standard prospective payment amount include all costs for HH services
covered and paid for on a reasonable cost basis and that such amounts
be initially based on the most recent audited cost report data
available to the Secretary, and (2) the standardized prospective
payment amount be adjusted to account for the effects of case-mix and
wage levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the
annual update to the standard prospective payment amounts by the HH
applicable percentage increase. Section 1895(b)(4) of the Act governs
the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of
the Act require the standard prospective payment amount to be adjusted
for case-mix and geographic differences in wage levels. Section
1895(b)(4)(B) of the Act requires the establishment of appropriate
case-mix adjustment factors for significant variation in costs among
different units of services. Lastly, section 1895(b)(4)(C) of the Act
requires the establishment of wage adjustment factors that reflect the
relative level of wages, and wage-related costs applicable to HH
services furnished in a geographic area compared to the applicable
national average level.
Section 1895(b)(5) of the Act gives the Secretary the option to
make changes to the payment amount otherwise paid in the case of
outliers because of unusual variations in the type or amount of
medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires
HHAs to submit data for purposes of measuring health care quality, and
links the quality data submission to the annual applicable percentage
increase. Also, section 1886(d)(2)(D) of the Act requires that HH
services furnished in a rural area for episodes and visits ending on or
after April 1, 2010, and before January 1, 2016, receive an increase of
3 percent the payment amount otherwise made under section 1895 of the
Act.
Section 3131(a) of the Affordable Care Act mandates that starting
in CY 2014, the Secretary must apply an adjustment to the national,
standardized 60-day episode payment rate and other amounts applicable
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such
as changes in the number of visits in an episode, the mix of services
in an episode, the level of intensity of services in an episode, the
average cost of providing care per episode, and other relevant factors.
In addition, section 3131(a) of the Affordable Care Act mandates that
rebasing must be phased-in over a 4-year period in equal increments,
not to exceed 3.5 percent of the amount (or amounts) in any given year,
applicable under section 1895(b)(3)(A)(i)(III) of the Act and be fully
implemented in CY 2017.
C. Overall Impact
The update set forth in this proposed rule applies to Medicare
payments under HH PPS in CY 2014. Accordingly, the following analysis
describes the impact in CY 2014 only. We estimate that the net impact
of the proposals in this rule is approximately $290 million in
decreased payments to HHAs in CY 2014. The impact of the wage index
would be a decrease of $40 million. However, we applied a
standardization factor to the rates as discussed earlier. Therefore,
the net effect of the wage index impact is zero dollars. The $290
million impact reflects the distributional effects of the 2.4 percent
HH payment update percentage ($460 million increase), the effects of
the rebasing adjustments to the national, standardized 60-day episode
payment rate, the national per-visit payment rates, and the NRS
conversion factor ($650 million decrease), and the effects of ICD-9
coding adjustments ($100 million decrease). The $290 million in savings
is reflected in the last column of the first row in Table 29 as a 1.5
percent decrease in expenditures when comparing the CY 2013 HH PPS to
the proposed CY 2014 HH PPS.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of less than $7.0 million to $34.5 million in any 1 year. For
the purposes of the RFA, we estimate that almost all HHAs are small
entities as that term is used in the RFA. Individuals and states are
not included in the definition of a small entity. The Secretary has
determined that this proposed rule would not have a significant
economic impact on a substantial number of small entities.
A discussion on the alternatives considered is presented in section
VI.E. of this proposed rule. The following analysis, with the rest of
the preamble, constitutes our initial RFA analysis. We solicit comment
on the RFA analysis provided.
In addition, section 1102(b) of the Act requires us to prepare a
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a metropolitan statistical area and has fewer
than 100 beds. This proposed rule applies to HHAs. Therefore, the
Secretary has determined that this proposed rule would not have a
significant economic impact on the operations of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2013, that
threshold is approximately $141 million. This proposed rule is not
anticipated to have an effect on state, local, or tribal governments in
the aggregate, or by the private sector, of $141 million or more.
D. Detailed Economic Analysis
This proposed rule sets forth updates to the HH PPS rates contained
in the CY 2013 HH PPS final rule. The impact analysis of this proposed
rule presents the estimated expenditure effects of policy changes
proposed in this rule. We use the latest data and best analysis
available, but we do not make adjustments for future changes in such
variables as number of visits or case-mix.
This analysis incorporates the latest estimates of growth in
service use and payments under the Medicare HH benefit, based primarily
on preliminary Medicare claims from 2012. We note that certain events
may combine to limit the scope or accuracy of our impact analysis,
because such an analysis is future-oriented and, thus, susceptible to
errors resulting from other changes in
[[Page 40306]]
the impact time period assessed. Some examples of such possible events
are newly-legislated general Medicare program funding changes made by
the Congress, or changes specifically related to HHAs. In addition,
changes to the Medicare program may continue to be made as a result of
the Affordable Care Act, or new statutory provisions. Although these
changes may not be specific to the HH PPS, the nature of the Medicare
program is such that the changes may interact, and the complexity of
the interaction of these changes could make it difficult to predict
accurately the full scope of the impact upon HHAs.
Table 29 represents how HHA revenues are likely to be affected by
the policy changes proposed in this rule. For this analysis, we used
linked CY 2012 HH claims and OASIS assessments; the claims are for
dates of service that started on or before May 31, 2012. The first
column of Table 29 classifies HHAs according to a number of
characteristics including provider type, geographic region, and urban
and rural locations. The third column shows the payment effects of the
wage index only. The fourth column shows the effects of the
standardization factor only. The fifth column shows the effects of the
rebasing adjustments to the national, standardized 60-day episode
payment rate, the national per-visit payment rates, and NRS conversion
factor; the 2014 wage index; and standardization. The sixth column
displays the effects of ICD-9 coding changes and the seventh column
shows the effects of the market basket increase. The last column shows
the payment effects of all the proposed policies. For CY 2014, the
average impact for all HHAs due to the effects of rebasing is a 3.4
percent decrease in payments. The overall impact for all HHAs, in
estimated total payments from CY 2013 to CY 2014, is a decrease of
approximately 1.5 percent.
Table 29--Proposed Home Health Agency Policy Impacts for CY 2014, by Facility Type and Area of the Country
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Proposed CY rebasing, 2014 ICD-9 CY 2014 HH Impact of
Number of 2014 wage Standardization wage index, and coding market all CY 2014
agencies index (percent) standardization changes basket policies
(percent) \1\ (percent) (percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Agencies......................................... 11,152 -0.2 0.2 -3.4 -0.5 2.4 -1.5
Facility Type and Control:
Free-Standing/Other Vol/NP....................... 1,042 0.2 0.3 -2.9 -0.3 2.4 -0.8
Free-Standing/Other Proprietary.................. 8,511 -0.3 0.2 -3.5 -0.6 2.4 -1.7
Free-Standing/Other Government................... 420 -0.3 0.1 -3.6 -0.4 2.4 -1.6
Facility-Based Vol/NP............................ 810 0.0 0.2 -3.1 -0.3 2.4 -1.0
Facility-Based Proprietary....................... 122 -0.1 0.1 -3.4 -0.4 2.4 -1.4
Facility-Based Government........................ 247 -0.2 0.1 -3.5 -0.4 2.4 -1.5
Subtotal: Freestanding........................... 9,973 -0.2 0.2 -3.4 -0.5 2.4 -1.5
Subtotal: Facility-based......................... 1,179 0.0 0.2 -3.2 -0.3 2.4 -1.1
Subtotal: Vol/NP................................. 1,852 0.1 0.2 -3.0 -0.3 2.4 -0.9
Subtotal: Proprietary............................ 8,633 -0.3 0.2 -3.5 -0.6 2.4 -1.7
Subtotal: Government............................. 667 -0.3 0.1 -3.5 -0.4 2.4 -1.5
Facility Type and Control: Rural:
Free-Standing/Other Vol/NP....................... 222 0.2 0.1 -3.0 -0.3 2.4 -0.9
Free-Standing/Other Proprietary.................. 159 -0.3 0.1 -3.6 -0.4 2.4 -1.6
Free-Standing/Other Government................... 513 -0.3 0.1 -3.6 -0.5 2.4 -1.7
Facility-Based Vol/NP............................ 279 0.1 0.1 -3.2 -0.3 2.4 -1.1
Facility-Based Proprietary....................... 43 0.2 0.1 -3.1 -0.4 2.4 -1.1
Facility-Based Government........................ 159 0.1 0.1 -3.2 -0.3 2.4 -1.1
Facility Type and Control: Urban:
Free-Standing/Other Vol/NP....................... 882 0.2 0.3 -2.9 -0.3 2.4 -0.8
Free-Standing/Other Proprietary.................. 8,148 -0.3 0.2 -3.5 -0.6 2.4 -1.7
Free-Standing/Other Government................... 159 -0.4 0.1 -3.6 -0.4 2.4 -1.6
Facility-Based Vol/NP............................ 531 0.0 0.2 -3.1 -0.3 2.4 -1.0
Facility-Based Proprietary....................... 79 -0.2 0.1 -3.5 -0.4 2.4 -1.5
Facility-Based Government........................ 88 -0.5 0.2 -3.6 -0.4 2.4 -1.6
Facility Location: Urban or Rural.................... ........... ........... ............... ............... ........... ........... 0.0
Rural............................................ 1,265 -0.1 0.1 -3.4 -0.4 2.4 -1.4
Urban............................................ 9,887 -0.2 0.2 -3.4 -0.5 2.4 -1.5
Facility Location: Region of the Country:
North............................................ 837 0.6 0.4 -2.4 -0.3 2.4 -0.3
Midwest.......................................... 2,950 -0.5 0.1 -3.7 -0.4 2.4 -1.7
South............................................ 5,544 -0.5 0.1 -3.7 -0.6 2.4 -1.9
West............................................. 1,772 0.4 0.3 -2.7 -0.4 2.4 -0.7
Other............................................ 49 0.8 0.1 -2.4 -0.2 2.4 -0.2
Facility Location: Region of the Country (Census
Region):
New England...................................... 320 0.4 0.3 -2.7 -0.3 2.4 -0.6
Mid Atlantic..................................... 517 0.8 0.4 -2.3 -0.3 2.4 -0.2
East North Central............................... 2,210 -0.6 0.1 -3.8 -0.4 2.4 -1.8
West North Central............................... 740 -0.2 0.1 -3.4 -0.4 2.4 -1.4
South Atlantic................................... 2,046 -0.6 0.1 -3.8 -0.5 2.4 -1.9
East South Central............................... 436 -0.4 0.1 -3.7 -0.4 2.4 -1.7
West South Central............................... 3,062 -0.3 0.1 -3.6 -0.9 2.4 -2.1
Mountain......................................... 638 0.0 0.2 -3.2 -0.4 2.4 -1.2
Pacific.......................................... 1,134 0.6 0.3 -2.5 -0.4 2.4 -0.5
Facility Size (Number of 1st Episodes):
< 100 episodes................................... 3,385 -0.2 0.2 -3.5 -0.6 2.4 -1.7
100 to 249....................................... 2,971 -0.4 0.2 -3.6 -0.6 2.4 -1.8
250 to 499....................................... 2,237 -0.4 0.2 -3.6 -0.6 2.4 -1.8
500 to 999....................................... 1,477 -0.2 0.2 -3.4 -0.5 2.4 -1.5
[[Page 40307]]
1,000 or More.................................... 1,082 -0.1 0.2 -3.2 -0.4 2.4 -1.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit rates, and
the NRS conversion factor and also includes the impact of the proposed LUPA add-on factors. The estimated impact of the NRS conversion factor rebasing
adjustment, of -2.58 percent, is an overall -0.043 percent decrease in estimated payments to HHAs. The estimated impact of the proposed LUPA add-on
factors is an overall 0.007 percent increase in payments to HHAs.
REGION KEY: New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic=Pennsylvania, New Jersey, New York;
South Atlantic=Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North
Central=Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North Central=Iowa, Kansas,
Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas, Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho,
Montana, Nevada, New Mexico, Utah, Wyoming; Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands.
E. Alternatives Considered
As described in section III.D. of this proposed rule, ``Rebasing
the National, Standardized 60-day Episode Payment Rate, LUPA Per-Visit
Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion
Factor,'' the Affordable Care Act mandates that we rebase payments
starting in CY 2014. In that section, we described our methodology for
calculating the adjustments to the national, standardized 60-day
episode payment rate and per-visit rates. We note that additional
factors were considered but not incorporated into the methodology for
calculating the rebasing adjustments. One such factor is a downward
adjustment to the costs per-visit as a result of the findings from the
audits of 98 Medicare HH cost reports. The results of the audits showed
that agencies over-reported costs by an average of about 8 percent.
Given this finding, we considered downward adjusting the costs on the
cost report in order to better align payment with the agencies' true
costs. We also considered updating costs by the HH payment update
percentage (adjusted market basket) rather than the full HH market
basket. In 2012 and 2013, HH payments were increased by the HH market
basket minus one percentage point, as mandated by the Affordable Care
Act. Furthermore, the Affordable Care Act mandates that CMS remove 5
percent of the national, standardized 60-day episode payment rate to
fund the 2.5 percent outlier pool. Given this mandate, we considered
setting our target national, standardized 60-day episode payment rate
for rebasing at 5 percent below the estimated cost per episode that we
derived from the 2011 cost reports. We plan to continue to evaluate
these alternative factors for rebasing and may consider incorporating
these factors into the CY 2014 HH PPS final rule.
In addition to the rebasing adjustments, we considered implementing
a prospective reduction for nominal case-mix growth for CY 2014. In the
past, various sources have suggested implementing a prospective nominal
case-mix growth adjustment, which would attempt to predict the amount
of nominal case-mix growth in future years and implement a reduction to
prevent possible overpayments due to nominal case-mix growth. To date,
we have implemented nominal case-mix growth adjustments
retrospectively. That is, we use the most recent, complete data
available--typically two to three years prior to the payment year--to
identify nominal case-mix growth, and implement a payment reduction to
account for the observed growth. The payment reductions for nominal
case-mix growth do not attempt to re-coup overpayments made in previous
years due to nominal case-mix growth. We plan to continue to monitor
case-mix growth (both real and nominal case-mix growth) as more data
become available and will consider implementing prospective reductions,
as well as other possible approaches, to address nominal case-mix
growth in future rulemaking.
F. Cost Allocation of Survey Expenses
We project that aggregate Medicare and Medicaid HH survey costs in
FY 2014 will be approximately $37.2 million. As these costs would be
assigned 50 percent to Medicare and 50 percent to Medicaid for each
state, the anticipated national Medicaid share would amount to $18.6
million, if implemented at the beginning of FY 2014. However, the
proposed adherence date of July FY 2014 would reduce the Medicaid
aggregate share to approximately $4.65 million. The cost of surveys is
treated as a Medicaid administrative cost, reimbursable at the
professional staff rate of 75 percent. State costs for Medicaid HH
surveys incurred in FY 2014, with an adherence date of July FY 2014,
would be approximately $1.16 million (25 percent of the aggregate $4.65
million Medicaid cost for the last quarter of the FY), spread out
across all states and two territories. While we regard Medicaid fair
share of costs to reflect an existing cost allocation principle, the
methods for making the appropriate determinations have not been clear.
Therefore, in this rule we delineate those methods and provide that the
Medicaid responsibility be reflected in the state Medicaid Plan.
G. Accounting Statement and Table
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4), in Tables 30 and 31, we
have prepared an accounting statement showing the classification of the
transfers associated with the provisions of this proposed rule. Table
30 provides our best estimate of the decrease in Medicare payments
under the HH PPS as a result of the changes presented in this proposed
rule.
[[Page 40308]]
Table 30--Accounting Statement: Classification of Estimated Transfers, From the CY 2013 HH PPS to the CY 2014 HH
PPS
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers....... -$290 million.
From Whom to Whom?................... Federal Government to HH providers.
----------------------------------------------------------------------------------------------------------------
Table 31 provides our best estimate of the proposed changes in the
classification of the cost allocation of survey expenses.
Table 31--Accounting Statement: Classification of Estimated Transfers Relating to the Medicare and Medicaid Home
Health Survey and Certification Costs, FYs 2013 to 2014
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Federal Medicaid HH survey &
certification costs:
Annualized Monetized Transfers....... $17.44 Million.
From Whom to Whom?................... Federal Government to Medicaid HH Survey Agencies.
State Medicaid HH survey &
certification costs:
Annualized Monetized Transfers....... $1.16 Million.
From Whom to Whom?................... State Governments to Medicaid HH Survey Agencies.
Medicare HH survey & certification
costs:
Annualized Monetized Transfers....... -$18.6 Million.
From Whom to Whom?................... Federal Government to Medicare HH Survey Agencies.
----------------------------------------------------------------------------------------------------------------
H. Conclusion
In conclusion, we estimate that the net impact of the proposals in
this rule is approximately $290 million in CY 2014 savings. The $290
million reflects the distributional effects of an updated wage index
($40 million decrease), a standardization factor to ensure budget
neutrality in episode payments using the 2014 wage index ($40 million
increase), the 2.4 percent HH payment update percentage ($460 million
increase), the ICD-9 grouper refinement ($100 million decrease), and
the rebasing adjustments required by section 3131(a) of the Affordable
Care Act ($650 million decrease). This analysis, together with the
remainder of this preamble, provides a RIA.
VII. Federalism Analysis
Executive Order 13132 on Federalism (August 4, 1999) establishes
certain requirements that an agency must meet when it promulgates a
final rule that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. This rule would have no substantial direct effect on
state and local governments, preempt state law, or otherwise have
Federalism implications.
List of Subjects in 42 CFR Part 431
Grant programs--health, Health facilities, Medicaid, Privacy, and
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services would amend 42 CFR chapter IV as set forth below:
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
0
1. The authority citation for part 431 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C.
1302).
0
2. Section 431.610 is amended by revising paragraph (g) introductory
text to read as follows:
Sec. 431.610 Relations with standard-setting and survey agencies.
* * * * *
(g) Responsibilities of survey agency. The plan must provide that,
in certifying NFs, HHAs, and ICF-IIDs, the survey agency designated
under paragraph (e) of this section will--
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program).
Dated: June 10, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 14, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-15766 Filed 6-27-13; 1:37 pm]
BILLING CODE 4120-01-P
