Justia Department Of Health And Human Services Centers For Medicare & Medicaid Services Medicare and Medicaid Programs; CY 2019 Home Health Prospective Payment System Rate Update and CY 2020 Case-Mix Adjustment Methodology Refinements; Home Health Value-Based Purchasing Model; Home Health Quality Reporting Requirements; Home Infusion Therapy Requirements; and Training Requirements for Surveyors of National Accrediting Organizations, 32340-32440 [X18-10712]

Medicare and Medicaid Programs; CY 2019 Home Health Prospective Payment System Rate Update and CY 2020 Case-Mix Adjustment Methodology Refinements; Home Health Value-Based Purchasing Model; Home Health Quality Reporting Requirements; Home Infusion Therapy Requirements; and Training Requirements for Surveyors of National Accrediting Organizations, 32340-32440 [X18-10712]

Download as PDF 32340 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 409, 424, 484, 486, and 488 [CMS–1689–P] RIN 0938–AT29 Medicare and Medicaid Programs; CY 2019 Home Health Prospective Payment System Rate Update and CY 2020 Case-Mix Adjustment Methodology Refinements; Home Health Value-Based Purchasing Model; Home Health Quality Reporting Requirements; Home Infusion Therapy Requirements; and Training Requirements for Surveyors of National Accrediting Organizations Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. AGENCY: This proposed rule would update the home health prospective payment system (HH PPS) payment rates, including the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supply (NRS) conversion factor, effective for home health episodes of care ending on or after January 1, 2019. It also proposes updates to the HH PPS case-mix weights for calendar year (CY) 2019 using the most current, complete data available at the time of rulemaking; discusses our efforts to monitor the potential impacts of the rebasing adjustments that were implemented in CYs 2014 through 2017; proposes a rebasing of the HH market basket (which includes a decrease in the labor-related share); proposes the methodology used to determine rural add-on payments for CYs 2019 through 2022, as required by section 50208 of the Bipartisan Budget Act of 2018 hereinafter referred to as the ‘‘BBA of 2018’’; proposes regulations text changes regarding certifying and recertifying patient eligibility for Medicare home health services; and proposes to define ‘‘remote patient monitoring’’ and recognize the cost associated as an allowable administrative cost. Additionally, it proposes case-mix methodology refinements to be implemented for home health services beginning on or after January 1, 2020, including a change in the unit of payment from 60day episodes of care to 30-day periods of care, as required by section 51001 of the BBA of 2018; includes information amozie on DSK3GDR082PROD with PROPOSALS2 SUMMARY: VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 on the implementation of temporary transitional payments for home infusion therapy services for CYs 2019 and 2020, as required by section 50401 of the BBA of 2018; solicits comments regarding payment for home infusion therapy services for CY 2021 and subsequent years; proposes health and safety standards for home infusion therapy; and proposes an accreditation and oversight process for home infusion therapy suppliers. This rule proposes changes to the Home Health ValueBased Purchasing (HHVBP) Model to remove two OASIS-based measures, replace three OASIS-based measures with two new proposed composite measures, rescore the maximum number of improvement points, and reweight the measures in the applicable measures set. Also, the Home Health Quality Reporting Program provisions include a discussion of the Meaningful Measures Initiative and propose the removal of seven measures to further the priorities of this initiative. In addition, the HH QRP offers a discussion on social risk factors and an update on implementation efforts for certain provisions of the IMPACT Act. This proposed rule clarifies the regulatory text to note that not all OASIS data is required for the HH QRP. Finally, it would require that accrediting organization surveyors take CMSprovided training. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on August 31, 2018. ADDRESSES: In commenting, please refer to file code CMS–1689–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three 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–1689–P, P.O. Box 8013, Baltimore, MD 21244–8013. 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 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 Services, Attention: CMS–1689–P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: For general information about the Home Health Prospective Payment System (HH PPS), send your inquiry via email to: HomehealthPolicy@cms.hhs.gov. For general information about home infusion payment, send your inquiry via email to: HomeInfusionPolicy@ cms.hhs.gov. For information about the Home Health Value-Based Purchasing (HHVBP) Model, send your inquiry via email to: HHVBPquestions@ cms.hhs.gov. For information about the Home Health Quality Reporting Program (HH QRP) contact: Joan Proctor, (410) 786– 0949. For information about home infusion therapy health and safety standards, contact: Sonia Swancy, (410) 786–8445 or CAPT Jacqueline Leach, (410) 786– 4282. For information about health infusion therapy accreditation and oversight, contact: Caroline Gallaher (410) 786– 8705. 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 website as soon as possible after they have been received: https:// www.regulations.gov. Follow the search instructions on that website to view public comments. Table of Contents I. Executive Summary A. Purpose B. Summary of the Major Provisions C. Summary of Costs and Benefits D. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures II. Background A. Statutory Background B. Current System for Payment of Home Health Services C. Updates to the Home Health Prospective Payment System D. Advancing Health Information Exchange III. Payment Under the Home Health Prospective Payment System (HH PPS) A. Monitoring for Potential Impacts— Affordable Care Act Rebasing Adjustments B. Proposed CY 2019 HH PPS Case-Mix Weights E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules C. Proposed CY 2019 Home Health Payment Rate Update D. Proposed Rural Add-On Payments for CYs 2019 Through 2022 E. Proposed Payments for High-Cost Outliers Under the HH PPS F. Proposed Implementation of the PatientDriven Groupings Model (PDGM) for CY 2020 G. Proposed Regulations Text Changes Regarding Certifying and Recertifying Patient Eligibility for Medicare Home Health Services H. The Role of Remote Patient Monitoring Under the Medicare Home Health Benefit IV. Home Health Value-Based Purchasing (HHVBP) Model A. Background B. Quality Measures C. Performance Scoring Methodology D. Update on the Public Display of Total Performance Scores V. Home Health Quality Reporting Program (HH QRP) A. Background and Statutory Authority B. General Considerations Used for the Selection of Quality Measures for the HH QRP C. Proposed Removal Factors for Previously Adopted HH QRP Measures D. Quality Measures Currently Adopted for the HH QRP E. Proposed Removal of HH QRP Measures Beginning With the CY 2021 HH QRP F. IMPACT Act Implementation Update G. Form, Manner, and Timing of OASIS Data Submission H. Proposed Policies Regarding Public Display for the HH QRP I. HHCAHPS VI. Medicare Coverage of Home Infusion Therapy Services A. General Background B. Proposed Health and Safety Standards for Home Infusion Therapy C. Payment for Home Infusion Therapy Services D. Approval and Oversight of Accrediting Organizations for Home Infusion Therapy (HIT) Suppliers VII. Changes to the Accreditation Requirements for Certain Medicare Certified Providers and Suppliers A. Background B. Proposed Changes to Certain Requirements for Medicare-Certified Providers and Suppliers at Part 488 VIII. Requests for Information A. Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange Through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare- and Medicaid-Participating Providers and Suppliers B. Request for Information on Price Transparency: Improving Beneficiary Access to Home Health Agency Charge Information IX. Collection of Information Requirements A. Wage Estimates B. ICRs Regarding the OASIS C. ICRs Regarding Home Infusion Therapy VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 D. ICRs Regarding the Approval and Oversight of Accrediting Organizations for Home Infusion Therapy X. Regulatory Impact Analysis A. Statement of Need B. Overall Impact C. Anticipated Effects D. Detailed Economic Analysis E. Alternatives Considered F. Accounting Statement and Tables G. Regulatory Reform Analysis Under E.O. 13771 H. Conclusion Regulation Text I. Executive Summary A. Purpose 1. Home Health Prospective Payment System (HH PPS) This proposed rule would update the payment rates for home health agencies (HHAs) for calendar year (CY) 2019, as required under section 1895(b) of the Social Security Act (the Act). This proposed rule would also update the case-mix weights under section 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for CY 2019. For home health services beginning on or after January 1, 2020, this rule proposes case-mix methodology refinements, which eliminate the use of therapy thresholds for case-mix adjustment purposes; and proposes to change the unit of payment from a 60-day episode of care to a 30day period of care, as mandated by section 51001 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123) (hereinafter referred to as the ‘‘BBA of 2018’’). This proposed rule also: Proposes the methodology used to determine rural add-on payments for CYs 2019 through 2022, as required by section 50208 of the BBA of 2018; proposes regulations text changes regarding certifying and recertifying patient eligibility for Medicare home health services under sections 1814(a) and 1835(a) of the Act; and proposes to define ‘‘remote patient monitoring’’ under the Medicare home health benefit and to include the costs of such monitoring as an allowable administrative cost. Lastly, this rule proposes changes to the Home Health Value Based Purchasing (HHVBP) Model under the authority of section 1115A of the Act, and the Home Health Quality Reporting Program (HH QRP) requirements under the authority of section 1895(b)(3)(B)(v) of the Act. 2. Home Infusion Therapy Services This proposed rule would establish a transitional payment for home infusion therapy services for CYs 2019 and 2020, as required by section 50401 of the BBA of 2018. In addition, this rule proposes health and safety standards for home PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 32341 infusion therapy, proposes an accreditation and oversight process for qualified home infusion therapy suppliers, and solicits comments regarding payment for the home infusion therapy services benefit for CY 2021 and subsequent years, as required by section 5012 of the 21st Century Cures Act (Pub. L. 114–255). 3. Safety Standards for Home Infusion Therapy Services This proposed rule would establish health and safety standards for qualified home infusion therapy suppliers as required by Section 5012 of the 21st Century Cures Act. These proposed standards would establish a foundation for ensuring patient safety and quality care by establishing requirements for the plan of care to be initiated and updated by a physician; 7-day-a-week, 24-houra-day access to services and remote monitoring; and patient education and training regarding their home infusion therapy care. B. Summary of the Major Provisions 1. Home Health Prospective Payment System (HH PPS) Section III.A. of this rule discusses our efforts to monitor for potential impacts due to the rebasing adjustments implemented in CY 2014 through CY 2017, as mandated by section 3131(a) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111–148, enacted March 23, 2010) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111– 152, enacted March 30, 2010), collectively referred to as the ‘‘Affordable Care Act’’. In the CY 2015 HH PPS final rule (79 FR 66072), we finalized our proposal to recalibrate the case-mix weights every year with the most current and complete data available at the time of rulemaking. In section III.B of this rule, we are recalibrating the HH PPS case-mix weights, using the most current cost and utilization data available, in a budgetneutral manner. In section III.C., we propose to rebase the home health market basket and update the payment rates under the HH PPS by the home health payment update percentage of 2.1 percent (using the proposed 2016-based Home Health Agency (HHA) market basket update of 2.8 percent, minus 0.7 percentage point for multifactor productivity) as required by section 1895(b)(3)(B)(vi)(I) of the Act. Also in section III.C. of this proposed rule, we propose to decrease the labor-related share from 78.5 to 76.1 percent of total costs on account of the rebasing of the home health market basket. Lastly, in E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32342 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules section III.C. of this rule, we propose to update the CY 2019 home health wage index using FY 2015 hospital cost report data. In section III.D. of this proposed rule, we are proposing a new methodology for applying rural add-on payments for CYs 2019 through 2022, as required by section 50208 of the BBA of 2018. In section III.E. of this rule, we are proposing to reduce the fixed-dollar loss ratio from 0.55 to 0.51 for CY 2019 in order to increase outlier payments as a percentage of total payments so that this percentage is closer to, but no more than, 2.5 percent. In the CY 2018 HH PPS proposed rule, CMS proposed an alternative casemix model, called the Home Health Groupings Model (HHGM). Ultimately the HHGM, including a proposed change in the unit of payment from 60 days to 30 days, was not finalized in the CY 2018 HH PPS final rule in order to allow CMS additional time to consider public comments for potential refinements to the model and other alternative case-mix models (82 FR 51676). In section III.F. of this proposed rule, we are again proposing to implement case-mix methodology refinements and a change in the unit of payment from a 60-day episode of care to a 30-day period of care; however, these changes would be effective January 1, 2020 and would be implemented in a budget neutral manner, as required by section 51001 of the BBA of 2018. Since the proposed case-mix methodology refinements represent a more patient-driven approach to payment we are renaming the proposed case-mix adjustment methodology refinements, formerly known as the Home Health Groupings Model or ‘‘HHGM’’, as the ‘‘PatientDriven Groupings Model’’ or PDGM. The proposed PDGM relies more heavily on clinical characteristics and other patient information to place patients into meaningful payment categories and eliminates the use of therapy service thresholds, as required by section 51001(a)(3) of the BBA of 2018, that are currently used to case-mix adjust payments under the HH PPS. There is also a proposal regarding how CMS would determine whether 30-day periods of care are subject to a LowUtilization Payment Adjustment (LUPA). The LUPA add-on policy, the partial episode payment adjustment policy, and the methodology used to calculate payments for high-cost outliers would remain unchanged except for occurring on a 30-day basis rather than a 60-day basis. In section III.G. of this proposed rule, we are proposing regulation text changes at 42 CFR 424.22(b)(2) to VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 eliminate the requirement that the certifying physician must estimate how much longer skilled services will be needed as part of the recertification statement. In addition, in section III.G of this rule, consistent with section 51002 of the BBA of 2018, we are proposing to align the regulations text at 42 CFR 424.22(c) with current subregulatory guidance to allow medical record documentation from the HHA to be used to support the basis for certification and/or recertification of home health eligibility, if certain requirements are met. In section III.H. of this proposed rule, we propose to define ‘‘remote patient monitoring’’ under the Medicare home health benefit as the collection of physiologic data (for example, ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the HHA. Additionally in this section of the rule, we propose changes to the regulations at 42 CFR 409.46 to include costs of remote patient monitoring as allowable administrative costs. 2. Home Health Value Based Purchasing In section IV of this proposed rule, we are proposing changes to the Home Health Value Based Purchasing (HHVBP) Model implemented January 1, 2016. We are proposing, beginning with performance year (PY) 4, to: Remove two Outcome and Assessment Information Set (OASIS) based measures, Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received, from the set of applicable measures; replace three OASIS-based measures (Improvement in Ambulation-Locomotion, Improvement in Bed Transferring, and Improvement in Bathing) with two proposed composite measures on total normalized composite change in self-care and mobility; change how we calculate the Total Performance Scores by changing the weighting methodology for the OASIS-based, claims-based, and HHCAHPS measures; and change the scoring methodology by reducing the maximum amount of improvement points an HHA could earn, from 10 points to 9 points. While we are not making a specific proposal at this time, we are also providing an update on the progress towards developing public reporting of performance under the HHVBP Model and seeking comment on what information should be made publicly available. PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 3. Home Health Quality Reporting Program In section V. of this proposed rule, we are proposing to update our policy for removing previously adopted Home Health (HH) Quality Reporting Program (QRP) measures and to adopt eight measure removal factors to align with other QRPs, to remove seven measures beginning with the CY 2021 HH QRP, and to update our regulations to clarify that not all OASIS data is required for the HH QRP. We are also providing an update on the implementation of certain provisions of the IMPACT Act, and a discussion of accounting for social risk factors in the HH QRP. Finally, we are proposing to increase the number of years of data used to calculate the Medicare Spending per Beneficiary measure for purposes of display from 1 year to 2 years. 4. Home Infusion Therapy In section VI.A. of this proposed rule, we discuss general background of home infusion therapy services and how that will relate to the implementation of the new home infusion benefit. In section VI.B. of this proposed rule, we are proposing to add a new subpart I under the regulations at 42 CFR part 486 to incorporate health and safety requirements for home infusion therapy suppliers. The proposed regulations would provide a framework for CMS to approve home infusion therapy accreditation organizations. Proposed subpart I would include General Provisions (Scope and Purpose, and Definitions) and Standards for Home Infusion Therapy (Plan of Care and Required Services). In section VI.C. of this proposed rule, we include information on temporary transitional payments for home infusion therapy services for CYs 2019 and 2020 as mandated by section 50401 of the BBA of 2018, and solicits comments on the proposed regulatory definition of ‘‘Infusion Drug Administration Calendar Day’’. Also in section VI.C. of this proposed rule, we solicit comments regarding payment for home infusion therapy services for CY 2021 and subsequent years as required by section 5012(d) of the 21st Century Cures Act. In section VI.D. of this proposed rule, we discuss the requirements set forth in section 1861(iii)(3)(D)(III) of the Act, which mandates that suppliers of home infusion therapy receive accreditation from a CMS-approved Accrediting Organization (AO) in order to receive Medicare payment. The Secretary must designate AOs to accredit suppliers furnishing Home Infusion therapy (HIT) not later than January 1, 2021. Qualified E:\FR\FM\12JYP2.SGM 12JYP2 32343 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules HIT suppliers are required to receive accreditation before receiving Medicare payment for services provided to Medicare beneficiaries. At this time, no regulations exist to address the following elements of CMS’ approval and oversight of the AOs that accredit suppliers of Home Infusion Therapy: (1) The required components to be included in a Home Infusion Therapy AO’s initial or renewal accreditation program application; (2) regulations related to CMS’ review and approval of the Home Infusion Therapy AOs application for approval of its accreditation program; and (3) the ongoing monitoring and oversight of CMS-approved Home Infusion Therapy AOs. Therefore in this rule, we propose to establish a set of regulations that will govern the CMS approval and oversight process for all HIT AOs. We also propose to modify the regulations for oversight for AOs that accredit any Medicare-certified providers and suppliers at 42 CFR 488.5 by adding a requirement that the AOs must include a statement with their application acknowledging that all AO surveyors are required to complete the relevant program specific CMS online trainings initially, and thereafter, consistent with requirements established by CMS for state and federal surveyors. We would also add another requirement at § 488.5 that would require the AOs for Medicare certified providers and suppliers to provide a written statement with their application stating that if a fully accredited and facility deemed to be in good-standing provides written notification that they wish to voluntarily withdraw from the AO’s CMS-approved accreditation program, the AO must continue the facility’s current accreditation until the effective date of withdrawal identified by the facility or the expiration date of the term of accreditation, whichever comes first. C. Summary of Costs, Transfers, and Benefits TABLE 1—SUMMARY OF COSTS, TRANSFERS, AND BENEFITS Provision description Costs and cost savings Transfers Benefits CY 2019 HH PPS Payment Rate Update. ....................................................... To ensure home health payments are consistent with statutory payment authority for CY 2019. CY 2019 Temporary Transitional Payments for Home Infusion Therapy Services. ....................................................... CY 2019 HHVBP Model ................ ....................................................... CY 2020 OASIS Changes ............. The overall economic impact of the HH QRP and the case-mix adjustment methodology changes is annual savings to HHAs of an estimated $60 million. ....................................................... The overall economic impact of the HH PPS payment rate update is an estimated $400 million (2.1 percent) in increased payments to HHAs in CY 2019. The overall economic impact of the temporary transitional payment for home infusion therapy services is an estimated $60 million in increased payments to home infusion therapy suppliers in CY 2019. The overall economic impact of the HHVBP Model provision for CY 2018 through 2022 is an estimated $378 million in total savings from a reduction in unnecessary hospitalizations and SNF usage as a result of greater quality improvements in the HH industry (none of which is attributable to the changes proposed in this proposed rule). As for payments to HHAs, there are no aggregate increases or decreases expected to be applied to the HHAs competing in the model. ....................................................... The overall economic impact of the proposed case-mix adjustment methodology changes, including a change in the unit of service from 60 to 30 days, for CY 2020 results in no estimated dollar impact to HHAs, as section 51001(a) of the BBA of 2018 requires such change to be implemented in a budgetneutral manner. To ensure home health payments are consistent with statutory payment authority for CY 2020. amozie on DSK3GDR082PROD with PROPOSALS2 CY 2020 Case-Mix Adjustment Methodology Changes, Including a Change in the Unit of Service from 60 to 30 days. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM To ensure temporary transitional payments for home infusion therapy are consistent with statutory authority for CY 2019. A reduction in burden to HHAs of approximately 73 hours annually for a savings of approximately $5,150 annually per HHA. 12JYP2 32344 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 1—SUMMARY OF COSTS, TRANSFERS, AND BENEFITS—Continued Provision description Costs and cost savings Transfers Accreditation for Home Infusion Therapy suppliers. ....................................................... The cost related to an AO obtaining CMS approval of a home infusion therapy accreditation program is estimated to be $8,014.50 per each AO, for AOs that have previously submitted an accreditation application to CMS. The cost across the potential 6 home infusion therapy AOs would be $48,087. The cost related to each home infusion therapy AO for obtaining CMS approval of a home infusion therapy accreditation program is estimated to be $12,453 per each AO, for AOs that have not previously submitted an accreditation application to CMS. The cost across the potential 6 home infusion therapy AOs would be $74,718. We further estimate that each home infusion therapy AO would incur an estimated cost burden in the amount of $23,258 for compliance with the proposed home infusion therapy AO approval and oversight regulations at §§ 488.1010 through 488.1050 (including the filing of an application). The cost across the 6 potential home infusion therapy AOs would be $139,548. D. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures Regulatory reform and reducing regulatory burden are high priorities for us. To reduce the regulatory burden on the healthcare industry, lower health care costs, and enhance patient care, in October 2017, we launched the Meaningful Measures Initiative.1 This initiative is one component of our agency-wide Patients Over Paperwork Initiative 2 which is aimed at evaluating and streamlining regulations with a goal to reduce unnecessary cost and burden, increase efficiencies, and improve beneficiary experience. The Meaningful Measures Initiative is aimed at identifying the highest priority areas for quality measurement and quality improvement in order to assess the core quality of care issues that are most vital to advancing our work to improve patient outcomes. The Meaningful Measures Initiative represents a new approach to quality measures that fosters operational efficiencies, and will reduce costs including, the collection and reporting burden while producing quality measurement that is more focused on meaningful outcomes. The Meaningful Measures Framework has the following objectives: • Address high-impact measure areas that safeguard public health; • Patient-centered and meaningful to patients; • Outcome-based where possible; Benefits • Fulfill each program’s statutory requirements; • Minimize the level of burden for health care providers (for example, through a preference for EHR-based measures where possible, such as electronic clinical quality measures); • Provide significant opportunity for improvement; • Address measure needs for population based payment through alternative payment models; and • Align across programs and/or with other payers. In order to achieve these objectives, we have identified 19 Meaningful Measures areas and mapped them to six overarching quality priorities as shown in Table 2: amozie on DSK3GDR082PROD with PROPOSALS2 TABLE 2—MEANINGFUL MEASURES FRAMEWORK DOMAINS AND MEASURE AREAS Quality priority Meaningful measure area Making Care Safer by Reducing Harm Caused in the Delivery of Care 1 Meaningful Measures web page: https:// www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ MMF/General-info-Sub-Page.html. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Healthcare-Associated Infections. Preventable Healthcare Harm. 2 See Remarks by Administrator Seema Verma at the Health Care Payment Learning and Action Network (LAN) Fall Summit, as prepared for delivery on October 30, 2017 https://www.cms.gov/ PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 Newsroom/MediaReleaseDatabase/Fact-sheets/ 2017-Fact-Sheet-items/2017-10-30.html. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32345 TABLE 2—MEANINGFUL MEASURES FRAMEWORK DOMAINS AND MEASURE AREAS—Continued Quality priority Meaningful measure area Strengthen Person and Family Engagement as Partners in Their Care Promote Effective Communication and Coordination of Care ................. Promote Effective Prevention and Treatment of Chronic Disease .......... Work with Communities to Promote Best Practices of Healthy Living .... Make Care Affordable .............................................................................. By including Meaningful Measures in our programs, we believe that we can also address the following cross-cutting measure criteria: • Eliminating disparities; • Tracking measurable outcomes and impact; • Safeguarding public health; • Achieving cost savings; • Improving access for rural communities; and • Reducing burden. We believe that the Meaningful Measures Initiative will improve outcomes for patients, their families, and health care providers while reducing burden and costs for clinicians and providers and promoting operational efficiencies. II. Background A. Statutory Background 1. Home Health Prospective Payment System amozie on DSK3GDR082PROD with PROPOSALS2 a. Background The Balanced Budget Act of 1997 (BBA) (Pub. L. 105–33, enacted August 5, 1997), significantly changed the way Medicare pays for Medicare home health services. Section 4603 of the BBA mandated the development of the HH PPS. Until the implementation of the HH PPS on October 1, 2000, HHAs received payment under a retrospective reimbursement system. Section 4603(a) of the BBA mandated the development of a HH PPS for all Medicare-covered home health 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 home health services paid under Medicare. Section 1895(b)(2) VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Care is Personalized and Aligned with Patient’s Goals. End of Life Care according to Preferences. Patient’s Experience of Care. Patient Reported Functional Outcomes. Medication Management. Admissions and Readmissions to Hospitals. Transfer of Health Information and Interoperability. Preventive Care. Management of Chronic Conditions. Prevention, Treatment, and Management of Mental Health. Prevention and Treatment of Opioid and Substance Use Disorders. Risk Adjusted Mortality. Equity of Care. Community Engagement. Appropriate Use of Healthcare. Patient-focused Episode of Care. Risk Adjusted Total Cost of Care. of the Act requires that, in defining a prospective payment amount, the Secretary will consider an appropriate unit of service and the number, type, and duration of visits provided within that unit, potential changes in the mix of services provided within that unit and their cost, and a general system design that provides for continued access to quality services. 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 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 (as of the effective date of the 2000 final rule), 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 requires the standard prospective payment amounts be annually updated by the home health applicable percentage increase. Section 1895(b)(4) of the Act governs the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the standard prospective payment amount to be adjusted for case-mix and geographic differences in wage levels. Section 1895(b)(4)(B) of the Act requires the establishment of an appropriate case-mix change adjustment factor for significant variation in costs among different units of services. Similarly, section 1895(b)(4)(C) of the Act requires the establishment of wage adjustment factors that reflect the relative level of wages, and wage-related costs applicable to home health services furnished in a geographic area compared to the applicable national PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 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. 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 home health services as required by section 4603 of the BBA, as subsequently amended by section 5101 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999 (OCESAA), (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 of 1999, (BBRA) (Pub. L. 106–113, enacted November 29, 1999). The requirements include the implementation of a HH PPS for home health services, consolidated billing requirements, and a number of other related changes. The HH PPS described in that rule replaced the retrospective reasonable cost-based system that was used by Medicare for the payment of home health services under Part A and Part B. For a complete and full E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32346 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 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 linking the quality data submission to the annual applicable payment percentage increase. This data submission requirement is applicable for CY 2007 and each subsequent year. If an HHA does not submit quality data, the home health market basket percentage increase is reduced by 2 percentage points. In the November 9, 2006 Federal Register (71 FR 65884, 65935), we published a final rule to implement the pay-for-reporting requirement of the DRA, which was codified at § 484.225(h) and (i) in accordance with the statute. The payfor-reporting requirement was implemented on January 1, 2007. The Affordable Care Act made additional changes to the HH PPS. One of the changes in section 3131 of the Affordable Care Act is the amendment to section 421(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173, enacted on December 8, 2003) as amended by section 5201(b) of the DRA. Section 421(a) of the MMA, as amended by section 3131 of the Affordable Care Act, requires that the Secretary increase, by 3 percent, the payment amount otherwise made under section 1895 of the Act, for HH services furnished in a rural area (as defined in section 1886(d)(2)(D) of the Act) with respect to episodes and visits ending on or after April 1, 2010, and before January 1, 2016. Section 210 of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114–10) (MACRA) amended section 421(a) of the MMA to extend the 3 percent rural add-on payment for home health services provided in a rural area (as defined in section 1886(d)(2)(D) of the Act) through January 1, 2018. In addition, section 411(d) of MACRA amended section 1895(b)(3)(B) of the Act such that CY 2018 home health payments be updated by a 1 percent market basket increase. This year, section 50208(a)(1) of the BBA of 2018 again extended the rural add-on through the end of 2018. In addition, this section of the BBA of 2018 made some important changes to the rural add-on for CYs 2019 through 2022, to be discussed below. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 b. Current System for Payment of Home Health Services Generally, Medicare currently makes payment under the HH PPS on the basis of a national, standardized 60-day episode payment rate that is adjusted for the applicable case-mix and wage index. The national, standardized 60-day episode rate includes the six home health disciplines (skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services). Payment for nonroutine supplies (NRS) is not part of the national, standardized 60-day episode rate, but is computed by multiplying the relative weight for a particular NRS severity level by the NRS conversion factor. Payment for durable medical equipment covered under the HH benefit is made outside the HH PPS payment system. To adjust for case-mix, the HH PPS uses a 153-category casemix classification system to assign patients to a home health resource group (HHRG). The clinical severity level, functional severity level, and service utilization are computed from responses to selected data elements in the OASIS assessment instrument and are used to place the patient in a particular HHRG. Each HHRG has an associated case-mix weight which is used in calculating the payment for an episode. Therapy service use is measured by the number of therapy visits provided during the episode and can be categorized into nine visit level categories (or thresholds): 0 to 5; 6; 7 to 9; 10; 11 to 13; 14 to 15; 16 to 17; 18 to 19; and 20 or more visits. 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 lowutilization payment adjustment (LUPA). Medicare also adjusts the national standardized 60-day episode payment rate for certain intervening events that are subject to a partial episode payment adjustment (PEP adjustment). For certain cases that exceed a specific cost threshold, an outlier adjustment may also be available. c. Updates to the Home Health Prospective Payment System As required by section 1895(b)(3)(B) of the Act, we have historically updated the HH PPS rates annually in the Federal Register. The August 29, 2007 final rule with comment period set forth an update to the 60-day national episode rates and the national per-visit rates under the HH PPS for CY 2008. PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 The CY 2008 HH PPS final rule included an analysis performed on CY 2005 home health 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 home health patients. 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, to the national, standardized 60-day episode payment rates. That reduction was to be 2.75 percent per year for 3 years beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011. In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses of case-mix change and finalized a reduction of 3.79 percent, instead of 2.71 percent, for CY 2011 and deferred finalizing a payment reduction for CY 2012 until further study of the case-mix change data and methodology was completed. In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-day national episode rates and the national per-visit rates. In addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528), our analysis indicated that there was a 22.59 percent increase in overall case-mix from 2000 to 2009 and that only 15.76 percent of that overall observed case-mix percentage increase was due to real case-mix change. As a result of our analysis, we identified a 19.03 percent nominal increase in casemix. At that time, to fully account for the 19.03 percent nominal case-mix growth identified from 2000 to 2009, we finalized a 3.79 percent payment reduction in CY 2012 and a 1.32 percent payment reduction for CY 2013. In the CY 2013 HH PPS final rule (77 FR 67078), we implemented the 1.32 percent reduction to the payment rates for CY 2013 finalized the previous year, to account for nominal case-mix growth from 2000 through 2010. When taking into account the total measure of casemix 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 E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 2000 to 2010 (0.2390 * (1 ¥ 0.1597) = 0.2008). To fully account for the remainder of the 20.08 percent increase in nominal case-mix beyond that which was accounted for in previous payment reductions, we estimated that the percentage reduction to the national, standardized 60-day episode rates for nominal case-mix change would be 2.18 percent. Although we considered proposing a 2.18 percent reduction to account for the remaining increase in measured nominal case-mix, we finalized the 1.32 percent payment reduction to the national, standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 FR 68532). Section 3131(a) of the Affordable Care Act added new section 1895(b)(3)(A)(iii) to the Act, which required that, beginning in CY 2014, we apply an adjustment to the national, standardized 60-day episode rate and other amounts that reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. Additionally, we were required to phase in any adjustment over a 4-year period in equal increments, not to exceed 3.5 percent of the payment amount (or amounts) as of the date of enactment of the Affordable Care Act in 2010, and fully implement the rebasing adjustments by CY 2017. Therefore, in the CY 2014 HH PPS final rule (78 FR 72256) for each year, CY 2014 through CY 2017, we finalized a fixed-dollar reduction to the national, standardized 60-day episode payment rate of $80.95 per year, increases to the national pervisit payment rates per year, and a decrease to the NRS conversion factor of 2.82 percent per year. We also finalized three separate LUPA add-on factors for skilled nursing, physical therapy, and speech-language pathology and removed 170 diagnosis codes from assignment to diagnosis groups in the HH PPS Grouper. In the CY 2015 HH PPS final rule (79 FR 66032), we implemented the second year of the 4-year phase-in of the rebasing adjustments to the HH PPS payment rates and made changes to the HH PPS case-mix weights. In addition, we simplified the face-to-face encounter regulatory requirements and the therapy reassessment timeframes. In the CY 2016 HH PPS final rule (80 FR 68624), we implemented the third year of the 4-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment amount, the national per-visit rates and the NRS conversion factor (as discussed previously). In the CY 2016 HH PPS VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 final rule, we also recalibrated the HH PPS case-mix weights, using the most current cost and utilization data available, in a budget-neutral manner and finalized reductions to the national, standardized 60-day episode payment rate in CY 2016, CY 2017, and CY 2018 of 0.97 percent in each year to account for estimated case-mix growth unrelated to increases in patient acuity (that is, nominal case-mix growth) between CY 2012 and CY 2014. Finally, section 421(a) of the MMA, as amended by section 210 of the MACRA, extended the payment increase of 3 percent for HH services provided in rural areas (as defined in section 1886(d)(2)(D) of the Act) to episodes or visits ending before January 1, 2018. In the CY 2017 HH PPS final rule (81 FR 76702), we implemented the last year of the 4-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment amount, the national per-visit rates and the NRS conversion factor (as outlined previously). We also finalized changes to the methodology used to calculate outlier payments under the authority of section 1895(b)(5) of the Act. Lastly, in accordance with section 1834(s) of the Act, as added by section 504(a) of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113, enacted December 18, 2015), we implemented changes in payment for furnishing Negative Pressure Wound Therapy (NPWT) using a disposable device for patients under a home health plan of care for which payment would otherwise be made under section 1895(b) of the Act. 2. Home Infusion Therapy Section 5012 of the 21st Century Cures Act (‘‘the Cures Act’’) (Pub. L. 114–255), which amended sections 1861(s)(2) and 1861(iii) of the Act, established a new Medicare home infusion therapy benefit. The Medicare home infusion therapy benefit covers the professional services including nursing services furnished in accordance with the plan of care, patient training and education (not otherwise covered under the durable medical equipment benefit), remote monitoring, and monitoring services for the provision of home infusion therapy and home infusion drugs furnished by a qualified home infusion therapy supplier. This benefit will ensure consistency in coverage for home infusion benefits for all Medicare beneficiaries. Section 50401 of the BBA of 2018 amended section 1834(u) of the Act by adding a new paragraph (7) that establishes a home infusion therapy services temporary transitional payment for eligible home infusion suppliers for PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 32347 certain items and services furnished in coordination with the furnishing of transitional home infusion drugs beginning January 1, 2019. This temporary payment covers the cost of the same items and services, as defined in section 1861(iii)(2)(A) and (B) of the Act, related to the administration of home infusion drugs. The temporary transitional payment would begin on January 1, 2019 and end the day before the full implementation of the home infusion therapy benefit on January 1, 2021, as required by section 5012 of the 21st Century Cures Act. Home infusion therapy is a treatment option for patients with a wide range of acute and chronic conditions, ranging from bacterial infections to more complex conditions such as late-stage heart failure and immune deficiencies. Home infusion therapy affords a patient independence and better quality of life, because it is provided in the comfort of the patient’s home at a time that best fits his or her needs. This is significant, because generally patients can return to their daily activities after they receive their infusion treatments and, in many cases, they can continue their activities while receiving their treatments. In addition, home infusion therapy can provide improved safety and better outcomes. The home has been shown to be a safe setting for patients to receive infusion therapy.3 Additionally, patients receiving treatment outside of the hospital setting may be at lower risk of hospital-acquired infections, which can be more difficult to treat because of multi-drug resistance than those that are community-acquired. This is particularly important for vulnerable patients such as those who are immunocompromised, as hospitalacquired infections are increasingly caused by antibiotic-resistant pathogens. Infusion therapy typically means that a drug is administered intravenously, but the term may also refer to situations where drugs are provided through other non-oral routes, such as intramuscular injections and epidural routes (into the membranes surrounding the spinal cord). Diseases that may require infusion therapy include infections that are unresponsive to oral antibiotics, cancer and cancer-related pain, 3 Bhole, M.V., Burton, J., & Chapel, H.M., (2008). Self-infusion programs for immunoglobulin replacement at home: Feasibility, safety and efficacy. Immunology and Allergy Clinics of North America, 28(4), 821–832. doi:10.1016/j.iac.2008.06. 005. Souayah, N., Hasan, A., Khan, H., et al. (2011). The safety profile of home infusion of intravenous immunoglobulin in patients with neuroimmunologic disorders. Journal of Clinical Neuromuscular Disease, 12(supp 4), S1–10. doi: 10.1097/CND.0b013e3182212589. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32348 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules dehydration, and gastrointestinal diseases or disorders which prevent normal functioning of the gastrointestinal system. Other conditions treated with specialty infusion therapies may include some forms of cancers, congestive heart failure, Crohn’s Disease, hemophilia, hepatitis, immune deficiencies, multiple sclerosis and rheumatoid arthritis. Infusion therapy originates with a prescription order from a physician or another qualified prescriber who is overseeing the care of the patient. The prescription order is sent to a home infusion therapy supplier, which is a state-licensed pharmacy, physician, or other provider of services or suppliers licensed by the state. A 2010 Government Accountability Office (GAO) report (10–426) found that most health insurers rely on credentialing, accreditation, or both to help ensure that plan members receive quality home infusion services from their network suppliers.4 Home infusion AOs conduct on-site surveys to evaluate all components of the service, including medical equipment, nursing, and pharmacy. Accreditation standards can include such requirements as the CMS Conditions of Participation for home health services, other Federal government regulations, and industry best practices. All of the accreditation standards evaluate a range of provider competencies, such as having a complete plan of care, response to adverse events, and implementation of a quality improvement plan. Sections 1861(iii)(3)(D)(III) and 1834(u)(5) of the Act, as amended by section 5012 of the Cures Act requires that, in order to participate in Medicare, home infusion therapy suppliers must select a CMS-approved AO and undergo an accreditation review process to demonstrate that the home infusion therapy program meets the accreditation organization’s standards. Section 1861(iii) of the Act, as amended by section 5012 of the Cures Act, sets forth standards in three areas: (1) Ensuring that all patients have a plan of care established and updated by a physician that sets out the care and prescribed infusion therapy necessary to meet the patient-specific needs, (2) having procedures to ensure that remote monitoring services associated with administering infusion drugs in a 4 https://www.gao.gov/assets/310/305261.pdf. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 patient’s home are provided, and (3) having procedures to ensure that patients receive education and training on the effective use of medications and equipment in the home. D. Advancing Health Information Exchange The Department of Health and Human Services (HHS) has a number of initiatives designed to encourage and support the adoption of interoperable health information technology and to promote nationwide health information exchange to improve health care. The Office of the National Coordinator for Health Information Technology (ONC) and CMS work collaboratively to advance interoperability across settings of care, including post-acute care. The Improving Medicare Post-Acute Care Transformation Act of 2014 (Pub. L. 113–185) (IMPACT Act) requires assessment data to be standardized and interoperable to allow for exchange of the data among post-acute providers and other providers. To further interoperability in post-acute care, CMS is developing a Data Element Library to serve as a publically available centralized, authoritative resource for standardized data elements and their associated mappings to health IT standards. These interoperable data elements can reduce provider burden by allowing the use and reuse of healthcare data, support provider exchange of electronic health information for care coordination, person-centered care, and support real-time, data driven, clinical decision making. Once available, standards in the Data Element Library can be referenced on the CMS website and in the ONC Interoperability Standards Advisory (ISA). The 2018 Interoperability Standards Advisory (ISA) is available at: https:// www.healthit.gov/standards-advisory. Most recently, the 21st Century Cures Act (Pub. L. 114–255), enacted in 2016, requires HHS to take new steps to enable the electronic sharing of health information ensuring interoperability for providers and settings across the care continuum. Specifically, Congress directed ONC to ‘‘develop or support a trusted exchange framework, including a common agreement among health information networks nationally.’’ This framework (https://beta.healthit.gov/ topic/interoperability/trusted-exchangeframework-and-common-agreement) outlines a common set of principles for PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 trusted exchange and minimum terms and conditions for trusted exchange in order to enable interoperability across disparate health information networks. In another important provision, Congress defined ‘‘information blocking’’ as practices likely to interfere with, prevent, or materially discourage access, exchange, or use of electronic health information, and established new authority for HHS to discourage these practices. We invite providers to learn more about these important developments and how they are likely to affect HHAs. III. Proposed Provisions for Payment Under the Home Health Prospective Payment System (HH PPS) A. Monitoring for Potential Impacts— Affordable Care Act Rebasing Adjustments 1. Analysis of FY 2016 HHA Cost Report Data As part of our efforts in monitoring the potential impacts of the rebasing adjustments finalized in the CY 2014 HH PPS final rule (78 FR 72293), we continue to update our analysis of home health cost report and claims data. Previous years’ cost report and claims data analyses and results can be found in the CY 2018 HH PPS proposed rule (82 FR 35277–35278). For this proposed rule, we analyzed the 2016 HHA cost report data (the most recent, complete data available at the time of this proposed rule) and 2016 HHA claims data to obtain the average number of visits per episode that match to the year of cost report data analyzed. To determine the 2016 average cost per visit per discipline, we applied the same trimming methodology outlined in the CY 2014 HH PPS proposed rule (78 FR 40284) and weighted the costs per visit from the 2016 cost reports by size, facility type, and urban/rural location so the costs per visit were nationally representative according to 2016 claims data. The 2016 average number of visits was taken from 2016 claims data. We estimated the cost of a 60-day episode in CY 2016 to be $2,538.54 using 2016 cost report data (Table 2). However, the national, standardized 60-day episode payment amount in CY 2016 was $2,965.12. The difference between the 60-day episode payment rate and average cost per episode of care for CY 2016 was 16.8 percent. E:\FR\FM\12JYP2.SGM 12JYP2 32349 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 2—2016 ESTIMATED COST PER EPISODE 2016 Average costs per visit 2016 Average NRS costs per visit 2016 Average cost + NRS per visit 2016 Average number of visits 2016 60-Day episode costs Skilled Nursing ..................................................................... Physical Therapy ................................................................. Occupational Therapy .......................................................... Speech Pathology ................................................................ Medical Social Services ....................................................... Home Health Aides .............................................................. $132.83 156.04 153.53 170.06 219.73 60.50 $3.41 3.41 3.41 3.41 3.41 3.41 $136.24 159.45 156.94 173.47 223.14 63.91 8.81 5.58 1.56 0.32 0.14 1.83 $1,200.27 889.73 244.83 55.51 31.24 116.96 Total .............................................................................. ........................ ........................ ........................ 18.24 2,538.54 Discipline Source: Medicare cost reports pulled in March 2018 and Medicare claims data from 2015 and 2016 for episodes (excluding low-utilization payment adjusted episodes and partial-episode-payment adjusted episodes), linked to OASIS assessments for episodes ending in CY 2016. 2. Analysis of CY 2017 HHA Claims Data In the CY 2014 HH PPS final rule (78 FR 72256), some commenters expressed concern that the rebasing of the HH PPS payment rates would result in HHA closures and would therefore diminish access to home health services. In addition to examining more recent cost report data, for this proposed rule we examined home health claims data from all four years during which rebasing adjustments were made (CY 2014, CY 2015, CY 2016, and CY 2017), the first calendar year of the HH PPS (CY 2001), and claims data for the year prior to the implementation of the rebasing adjustments (CY 2013). Preliminary analysis of CY 2017 home health claims data indicates that the number of episodes decreased by 5.3 percent and the number of home health users that received at least one episode of care decreased by 3.2 percent from 2016 to 2017, while the number of FFS beneficiaries decreased 0.1 percent from 2016 to 2017. Between 2013 and 2014 there appears to be a net decrease in the number of HHAs billing Medicare for home health services of 1.6 percent, a continued decrease of 1.7 percent from 2014 to 2015, a decrease of 3.4 percent from 2015 to 2016, and a decrease of 4.4 percent from 2016 to 2017. We note that in CY 2016 there were 2.9 HHAs per 10,000 FFS beneficiaries and 2.8 HHAs per 10,000 FFS beneficiaries in CY 2017, which remains markedly higher than the 1.9 HHAs per 10,000 FFS beneficiaries close to the inception of the HH PPS in 2001 (the HH PPS was implemented on October 1, 2000). The number of home health users, as a percentage of FFS beneficiaries, has decreased from 9.0 percent in 2013 to 8.4 percent in 2017. TABLE 3—HOME HEALTH STATISTICS, CY 2001 AND CY 2013 THROUGH CY 2017 2001 2014 2015 2016 2017 3,896,502 6,708,923 6,451,283 6,340,932 6,294,234 5,963,780 2,412,318 34,899,167 3,484,579 38,505,609 3,381,635 38,506,534 3,365,512 38,506,534 3,350,174 38,555,150 3,242,346 38,509,031 0.11 0.17 0.17 0.17 0.16 0.15 6.9% 6,511 9.0% 11,889 8.8% 11,693 8.8% 11,381 8.7% 11,102 8.4% 10,612 1.9 Number of episodes ................................. Beneficiaries receiving at least 1 episode (Home Health Users) ........................... Part A and/or B FFS beneficiaries ........... Episodes per Part A and/or B FFS beneficiaries ................................................. Home health users as a percentage of Part A and/or B FFS beneficiaries ....... HHAs providing at least 1 episode .......... HHAs per 10,000 Part A and/or B FFS beneficiaries ......................................... 2013 3.1 3.0 3.0 2.9 2.8 amozie on DSK3GDR082PROD with PROPOSALS2 Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014 and August 19, 2014 for CY 2013 data; accessed on May 7, 2015 for CY 2001 and CY 2014 data; accessed on April 7, 2016 for CY 2015 data; accessed on March 20, 2017 for CY 2016 data; accessed on March 8, 2018 for CY 2017 data; and Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage. Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ‘‘0’’ (‘‘Non-payment/zero claims’’) and ‘‘2’’ (‘‘Interim—first claim’’) are excluded. If a beneficiary is treated by providers from multiple states within a year the beneficiary is counted within each state’s unique number of beneficiaries served. In addition to examining home health claims data from all four years of the implementation of rebasing adjustments required by the Affordable Care Act, we examined trends in home health utilization for all years starting in CY 2001 and up through CY 2017. Figure 1, displays the average number of visits per 60-day episode of care and the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 average payment per visit. While the average payment per visit has steadily increased from approximately $116 in CY 2001 to $170 for CY 2017, the average total number of visits per 60-day episode of care has declined, most notably between CY 2009 (21.7 visits per episode) and CY 2010 (19.8 visits per episode), which was the first year PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 that the 10 percent agency-level cap on HHA outlier payments was implemented. The average of total visits per episode has steadily decreased from 21.7 in 2009 to 17.9 in 2017. BILLING CODE 4120–01–P E:\FR\FM\12JYP2.SGM 12JYP2 32350 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules Figure 2 displays the average number of visits by discipline type for a 60-day episode of care and shows that while the number of therapy visits per 60-day episode of care has increased steadily, the number of skilled nursing and home health aide visits have decreased between CY 2009 and CY 2017. The results of the Report to Congress, ‘‘Medicare Home Health Study: An Investigation on Access to Care and VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Payment for Vulnerable Patient Populations’’, required by section 3131(d) of the Affordable Care Act, suggests that the current home health payment system may discourage HHAs from serving patients with clinically complex and/or poorly controlled chronic conditions who do not qualify for therapy but require a large number of skilled nursing visits.5 The home 5 Report to Congress Medicare Home Health Study: An Investigation on Access to Care and PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 health study results seem to be consistent with the recent trend in the decreased number of visits per episode of care driven by decreases in skilled nursing and home health aide services evident in Figures 1 and 2. Payment for Vulnerable Patient Populations (2014). Available at: https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ HomeHealthPPS/Downloads/HH-Report-toCongress.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.000</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 BILLING CODE 4120–01–C As part of our monitoring efforts, we also examined the trends in episode timing and service use over time. Specifically, we examined the percentage of early episodes with 0 to 19 therapy visits, late episodes with 0 to 19 therapy visits, and episodes with 20+ therapy visits from CY 2008 to CY 2017. In CY 2008, we implemented refinements to the HH PPS case-mix system. As part of those refinements, we added additional therapy thresholds and differentiated between early and late episodes for those episodes with less than 20+ therapy visits. Early episodes are defined as the 1st or 2nd episode in a sequence of adjacent VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 covered episodes. Late episodes are defined as the 3rd and subsequent episodes in a sequence of adjacent covered episodes. Table 4 shows that the percentage of early and late episodes from CY 2008 to CY 2017 has remained relatively stable over time. There has been a decrease in the percentage of early episodes with 0 to 19 therapy visits from 65.9 percent in CY 2008 to 61.3 percent in CY 2017 and a slight increase in the percentage of late episodes with 0 to 19 therapy visits from 29.5 percent in CY 2008 to 31.2 percent in CY 2017. In 2015, the casemix weights for the third and later episodes of care with 0 to 19 therapy PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 32351 visits decreased as a result of the CY 2015 recalibration of the case-mix weights. Despite the decreases in the case-mix weights for the later episodes, the percentage of late episodes with 0 to 19 therapy visits did not change substantially. However, episode timing is not a variable in the determination of the case-mix weights for those episodes with 20+ therapy visits and the percentage of episodes with 20+ therapy visits has increased from 4.6 percent in CY 2008 to 7.6 percent in CY 2017. E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.001</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32352 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 4—HOME HEALTH EPISODES BY EPISODE TIMING, CY 2008 THROUGH CY 2017 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 All episodes ............................. ............................. ............................. ............................. ............................. ............................. ............................. ............................. ............................. ............................. Number of early episodes (excluding episodes with 20+ visits) 5,423,037 6,530,200 6,877,598 6,857,885 6,767,576 6,733,146 6,616,875 6,644,922 6,294,232 5,963,778 % of early episodes (excluding episodes with 20+ visits) 3,571,619 3,701,652 3,872,504 3,912,982 3,955,207 4,023,486 3,980,151 4,008,279 3,802,254 3,655,636 Number of late episodes (excluding episodes with 20+ visits) 65.9 56.7 56.3 57.1 58.4 59.8 60.2 60.3 60.4 61.3 % of late episodes (excluding episodes with 20+ visits) 1,600,587 2,456,308 2,586,493 2,564,859 2,458,734 2,347,420 2,263,638 2,205,052 2,053,972 1,857,840 29.5 37.6 37.6 37.4 36.3 34.9 34.2 33.2 32.6 31.2 Number of episodes with 20+ visits 250,831 372,240 418,601 380,044 353,635 362,240 373,086 431,591 438,006 450,302 % of episodes with 20+ visits 4.6 5.7 6.1 5.5 5.2 5.4 5.6 6.5 7.0 7.6 Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on March 6, 2018. Note(s): Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ‘‘0’’ (‘‘Non-payment/zero claims’’) and ‘‘2’’ (‘‘Interim—first claim’’) are excluded. amozie on DSK3GDR082PROD with PROPOSALS2 We also examined trends in admission source for home health episodes over time. Specifically, we examined the admission source for the ‘‘first or only’’ episodes of care (first episodes in a sequence of adjacent episodes of care or the only episode of care) from CY 2008 through CY 2017 (Figure 3). The percentage of first or only episodes with an acute admission source, defined as episodes with an inpatient hospital stay within the 14 days prior to a home health episode, has decreased from 38.6 percent in CY 2008 to 34.8 percent in CY 2017. The percentage of first or only episodes with a post-acute admission source, defined as episodes which had a stay at a skilled nursing facility (SNF), inpatient rehabilitation facility (IRF), or long term care hospital (LTCH) within 14 days VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 prior to the home health episode, has slightly increased from 16.4 percent in CY 2008 to 17.6 percent in CY 2017. The percentage of first or only episodes with a community admission source, defined as episodes which did not have an acute or post-acute stay in the 14 days prior to the home health episode, increased from 37.4 percent in CY 2008 to 41.5 percent in CY 2017. Our findings on the trends in admission source show a similar pattern with MedPAC’s as outlined in their 2015 Report to the Congress.6 MedPAC concluded that 6 Medicare Payment Advisory Commission (MedPAC). ‘‘Home Health Care Services.’’ Report to the Congress: Medicare Payment Policy. Washington, DC, March 2015. P. 214. Accessed on 3/28/2017 at: https://www.medpac.gov/docs/defaultsource/reports/chapter-9-home-health-careservices-march-2015-report-.pdf?sfvrsn=0. PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 there has been tremendous growth in the use of home health for patients residing in the community (that is, episodes not preceded by a prior hospitalization) and that these episodes have more than doubled since 2001. However, MedPAC examined admission source trends from 2002 up through 2013 and included first and subsequent episodes of care, whereas CMS analysis, as described above, included ‘‘first or only’’ episodes of care. Nonetheless, both analyses show a trend of increasing episodes of care without a preceding inpatient stay. MedPAC suggests there is significant potential for overuse, particularly since Medicare does not currently require any cost sharing for home health care. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 B. Proposed CY 2019 HH PPS Case-Mix Weights In the CY 2015 HH PPS final rule (79 FR 66072), we finalized a policy to annually recalibrate the HH PPS casemix weights—adjusting the weights relative to one another—using the most current, complete data available. To recalibrate the HH PPS case-mix weights for CY 2018, we will use the same methodology finalized in the CY 2008 HH PPS final rule (72 FR 49762), the CY VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 2012 HH PPS final rule (76 FR 68526), and the CY 2015 HH PPS final rule (79 FR 66032). Annual recalibration of the HH PPS case-mix weights ensures that the case-mix weights reflect, as accurately as possible, current home health resource use and changes in utilization patterns. To generate the proposed CY 2019 HH PPS case-mix weights, we used CY 2017 home health claims data (as of March 2, 2018) with linked OASIS data. These data are the most current and complete data available at this time. We will use CY 2017 home health claims data (as of June 30, 2018 or later) with linked OASIS data to generate the CY 2019 HH PPS case-mix weights in the CY 2019 HH PPS final rule. The process we used to calculate the HH PPS case-mix weights are outlined below. PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 Step 1: Re-estimate the four-equation model to determine the clinical and functional points for an episode using wage-weighted minutes of care as our dependent variable for resource use. The wage-weighted minutes of care are determined using the CY 2016 Bureau of Labor Statistics national hourly wage plus fringe rates for the six home health disciplines and the minutes per visit from the claim. The points for each of the variables for each leg of the model, updated with CY 2017 home health claims data, are shown in Table 5. The points for the clinical variables are added together to determine an episode’s clinical score. The points for the functional variables are added together to determine an episode’s functional score. BILLING CODE 4120–01–P E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.002</GPH> We will continue to monitor for potential impacts due to the rebasing adjustments required by section 3131(a) of the Affordable Care Act and other policy changes in the future. Independent effects of any one policy may be difficult to discern in years where multiple policy changes occur in any given year. 32353 32354 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 5: CASE-MIX ADJUSTMENT VARIABLES AND SCORES EQUATION: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 amozie on DSK3GDR082PROD with PROPOSALS2 17 18 CLINICAL DIMENSION Primary or Other Diagnosis = Blindness/Low Vision Primary or Other Diagnosis = Blood disorders Primary or Other Diagnosis = Cancer, selected benign neoplasms Primary Diagnosis = Diabetes Other Diagnosis = Diabetes Primary or Other Diagnosis = Dysphagia AND Primary or Other Diagnosis= Neuro 3- Stroke Primary or Other Diagnosis = Dysphagia AND M1030 (Therapy at home)= 3 (Enteral) Primary or Other Diagnosis = Gastrointestinal disorders Primary or Other Diagnosis = Gastrointestinal disorders AND M1630 (ostomy)= 1 or 2 Primary or Other Diagnosis = Gastrointestinal disorders AND Primary or Other Diagnosis = Neuro 1 -Brain disorders and paralysis, OR Neuro 2 - Peripheral neurological disorders, OR Neuro 3 - Stroke, OR Neuro 4- Multiple Sclerosis Primary or Other Diagnosis= Heart Disease OR Hypertension Primary Diagnosis = Neuro 1 -Brain disorders and paralysis Primary or Other Diagnosis = Neuro 1 -Brain disorders and paralysis AND M1840 (Toilet transfer)= 2 or more Primary or Other Diagnosis = Neuro 1 -Brain disorders and paralysis OR Neuro 2 - Peripheral neurological disorders AND M1810 or M1820 (Dressing upper or lower body)= 1, 2, or 3 Primary or Other Diagnosis= Neuro 3- Stroke Primary or Other Diagnosis= Neuro 3- Stroke AND Ml810 or Ml820 (Dressing upper or lower body)= 1, 2, or 3 Primary or Other Diagnosis= Neuro 3- Stroke AND M1860 (Ambulation) = 4 or more Primary or Other Diagnosis= Neuro 4 -Multiple Sclerosis AND AT LEAST ONE OF THE FOLLOWING: M1830 (Bathing)= 2 or more OR M1840 (Toilet transfer)= 2 or more OR M1850 (Transferring) = 2 or more VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4725 E:\FR\FM\12JYP2.SGM 1 or 2 0-13 1 or 2 14+ 3+ 0-13 3+ 14+ 1 2 3 4 2 4 2 15 15 5 5 1 2 4 2 2 5 2 2 3 7 4 2 7 3 2 3 5 2 3 6 2 3 2 12JYP2 7 3 7 EP12JY18.014</GPH> Episode number within sequence of adjacent episodes Therapy visits 32355 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 20 21 22 23 24 25 26 27 amozie on DSK3GDR082PROD with PROPOSALS2 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4725 E:\FR\FM\12JYP2.SGM 7 2 7 2 3 1 2 14 6 14 5 11 7 11 1 1 14 10 17 10 13 7 14 10 10 10 7 1 3 2 3 5 3 5 2 1 2 1 6 1 2 12JYP2 4 16 27 12 15 6 5 1 4 9 1 2 2 6 8 5 7 4 4 15 22 12 15 11 8 2 3 7 2 4 5 1 2 EP12JY18.015</GPH> 19 OR Ml860 (Ambulation) = 4 or more Primary or Other Diagnosis = Ortho 1 - Leg Disorders or Gait Disorders AND Ml324 (most problematic pressure ulcer stage)= 1, 2, 3 or 4 Primary or Other Diagnosis= Ortho 1 -Leg OR Ortho 2- Other orthopedic disorders AND Ml 030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) Primary or Other Diagnosis = Psych 1 - Affective and other psychoses, depression Primary or Other Diagnosis = Psych 2 - Degenerative and other organic psychiatric disorders Primary or Other Diagnosis = Pulmonary disorders Primary or Other Diagnosis = Pulmonary disorders AND Ml860 (Ambulation) = 1 or more Primary Diagnosis= Skin 1 -Traumatic wounds, bums, and postoperative complications Other Diagnosis= Skin 1 -Traumatic wounds, bums, post-operative complications Primary or Other Diagnosis = Skin 1 -Traumatic wounds, bums, and post-operative complications OR Skin 2 - Ulcers and other skin conditions AND Ml 030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) Primary or Other Diagnosis = Skin 2 - Ulcers and other skin conditions Primary or Other Diagnosis = Tracheostomy Primary or Other Diagnosis= Urostomy/Cystostomy Ml 030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) Ml030 (Therapy at home)= 3 (Enteral) Ml200 (Vision)= 1 or more Ml242 (Pain)= 3 or 4 Ml308 = Two or more pressure ulcers at stage 3 or 4 Ml324 (Most problematic pressure ulcer stage)= 1 or 2 Ml324 (Most problematic pressure ulcer stage)= 3 or 4 Ml334 (Stasis ulcer status)= 2 Ml334 (Stasis ulcer status)= 3 Ml342 (Surgical wound status)= 2 Ml342 (Surgical wound status)= 3 Ml400 (Dyspnea)= 2, 3, or 4 Ml620 (Bowel Incontinence)= 2 to 5 Ml630 (Ostomy)= 1 or 2 M2030 (Injectable Drug Use)= 0, 1, 2, or 3 FUNCTIONAL DIMENSION Ml810 or Ml820 (Dressing upper orlower body)= 1, 2, or 3 Ml830 (Bathing)= 2 or more Ml840 (Toilet transferring)= 2 or more Ml850 (Transferring)= 2 or more 32356 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules BILLING CODE 4120–01–C In updating the four-equation model for CY 2019, using 2017 home health claims data (the last update to the fourequation model for CY 2018 used CY 2016 home health claims data), there were few changes to the point values for the variables in the four-equation model. These relatively minor changes reflect the change in the relationship between the grouper variables and resource use between CY 2016 and CY 2017. The CY 2019 four-equation model resulted in 113 point-giving variables being used in the model (as compared to the 119 variables for the CY 2018 recalibration, which can be found in Table 2 of the CY 2018 HH PPS final rule (82 FR 51684)). There were 7 variables that were added to the model and 13 variables that were dropped from the model due to the absence of additional resources associated with the variable. Of the variables that were in both the four-equation model for CY 2019 and the four-equation model for CY 2018, the points for 10 variables increased in the CY 2019 four-equation model and the points for 67 variables decreased in the CY 2019 4-equation model. There were 29 variables with the same point values. Step 2: Re-defining the clinical and functional thresholds so they are reflective of the new points associated with the CY 2019 four-equation model. After estimating the points for each of the variables and summing the clinical and functional points for each episode, we look at the distribution of the clinical score and functional score, breaking the episodes into different steps. The categorizations for the steps are as follows: • Step 1: First and second episodes, 0–13 therapy visits. • Step 2.1: First and second episodes, 14–19 therapy visits. • Step 2.2: Third episodes and beyond, 14–19 therapy visits. • Step 3: Third episodes and beyond, 0–13 therapy visits. • Step 4: Episodes with 20+ therapy visits. We then divide the distribution of the clinical score for episodes within a step such that a third of episodes are classified as low clinical score, a third of episodes are classified as medium clinical score, and a third of episodes are classified as high clinical score. The same approach is then done looking at the functional score. It was not always possible to evenly divide the episodes within each step into thirds due to many episodes being clustered around one particular score.7 Also, we looked at the average resource use associated with each clinical and functional score and used that as a guide for setting our thresholds. We grouped scores with similar average resource use within the same level (even if it meant that more or less than a third of episodes were placed within a level). The new thresholds, based off the CY 2019 fourequation model points are shown in Table 6. TABLE 6—PROPOSED CY 2019 CLINICAL AND FUNCTIONAL THRESHOLDS 1st and 2nd Episodes 3rd+ Episodes All Episodes 0 to 13 therapy visits 14 to 19 therapy visits 0 to 13 therapy visits 14 to 19 therapy visits 20+ therapy visits Grouping Step 1 2 3 4 5 Equations used to calculate points (see Table 2) 1 2 3 4 (2&4) ........................... ........................... ........................... ........................... ........................... 0 to 1 ................ 2 to 3 ................ 4+ ..................... 0 to 12 .............. 13 ..................... 14+ ................... 0 to 1 ................ 2 to 7 ................ 8+ ..................... 0 to 7 ................ 8 to 12 .............. 13+ ................... 0 to 1 ................ 2 ....................... 3+ ..................... 0 to 6 ................ 7 to 10 .............. 11+ ................... 0 to 1 ................ 2 to 9 ................ 10+ ................... 0 to 2 ................ 3 to 7 ................ 8+ ..................... 0 to 3. 4 to 16. 17+. 0 to 2. 3 to 6. 7+. Dimension Severity Level Clinical ............................................. ............ ............ ............ ............ ............ ............ Step 3: Once the clinical and functional thresholds are determined and each episode is assigned a clinical and functional level, the payment regression is estimated with an episode’s wage-weighted minutes of care as the dependent variable. Independent variables in the model are indicators for the step of the episode as well as the clinical and functional levels within each step of the episode. Like the four-equation model, the payment regression model is also estimated with robust standard errors that are clustered at the beneficiary level. Table 7 shows the regression coefficients for the variables in the payment regression model updated with CY 2017 home 7 For Step 1, 41% of episodes were in the medium functional level (All with score 13). For Step 2.1, 86.7% of episodes were in the low functional level (Most with scores 6 to 7). For Step 2.2, 81.5% of episodes were in the low functional level (Most with score 0). For Step 3, 46.7% of episodes were in the medium functional level (Most with score 9). For Step 4, 29.9% of episodes were in the medium functional level (Most with score 6). VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.016</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 Functional ........................................ C1 C2 C3 F1 F2 F3 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules health claims data. The R-squared value for the payment regression model is 32357 0.5508 (an increase from 0.5095 for the CY 2018 recalibration). TABLE 7—PAYMENT REGRESSION MODEL Payment regression from 4-equation model for CY 2019 Step 1, Clinical Score Medium ............................................................................................................................................................ Step 1, Clinical Score High ................................................................................................................................................................. Step 1, Functional Score Medium ....................................................................................................................................................... Step 1, Functional Score High ............................................................................................................................................................ Step 2.1, Clinical Score Medium ......................................................................................................................................................... Step 2.1, Clinical Score High .............................................................................................................................................................. Step 2.1, Functional Score Medium .................................................................................................................................................... Step 2.1, Functional Score High ......................................................................................................................................................... Step 2.2, Clinical Score Medium ......................................................................................................................................................... Step 2.2, Clinical Score High .............................................................................................................................................................. Step 2.2, Functional Score Medium .................................................................................................................................................... Step 2.2, Functional Score High ......................................................................................................................................................... Step 3, Clinical Score Medium ............................................................................................................................................................ Step 3, Clinical Score High ................................................................................................................................................................. Step 3, Functional Score Medium ....................................................................................................................................................... Step 3, Functional Score High ............................................................................................................................................................ Step 4, Clinical Score Medium ............................................................................................................................................................ Step 4, Clinical Score High ................................................................................................................................................................. Step 4, Functional Score Medium ....................................................................................................................................................... Step 4, Functional Score High ............................................................................................................................................................ Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits .................................................................................................................. Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits .............................................................................................................................. Step 3, 3rd+ Episodes, 0–13 Therapy Visits ...................................................................................................................................... Step 4, All Episodes, 20+ Therapy Visits ............................................................................................................................................ Intercept ............................................................................................................................................................................................... $21.81 54.06 70.54 99.78 50.90 118.77 25.36 31.96 48.03 187.73 50.06 0.00 18.05 83.67 56.10 81.90 70.97 245.97 4.60 17.77 515.04 510.26 ¥60.34 895.79 375.32 amozie on DSK3GDR082PROD with PROPOSALS2 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018) for which we had a linked OASIS assessment. Step 4: We use the coefficients from the payment regression model to predict each episode’s wage-weighted minutes of care (resource use). We then divide these predicted values by the mean of the dependent variable (that is, the average wage-weighted minutes of care across all episodes used in the payment regression). This division constructs the weight for each episode, which is simply the ratio of the episode’s predicted wage-weighted minutes of care divided by the average wageweighted minutes of care in the sample. Each episode is then aggregated into one of the 153 home health resource groups (HHRGs) and the ‘‘raw’’ weight for each HHRG was calculated as the average of the episode weights within the HHRG. Step 5: The raw weights associated with 0 to 5 therapy visits are then increased by 3.75 percent, the weights associated with 14–15 therapy visits are decreased by 2.5 percent, and the weights associated with 20+ therapy VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 visits are decreased by 5 percent. These adjustments to the case-mix weights were finalized in the CY 2012 HH PPS final rule (76 FR 68557) and were done to address MedPAC’s concerns that the HH PPS overvalues therapy episodes and undervalues non-therapy episodes and to better align the case-mix weights with episode costs estimated from cost report data.8 Step 6: After the adjustments in step 5 are applied to the raw weights, the weights are further adjusted to create an increase in the payment weights for the therapy visit steps between the therapy thresholds. Weights with the same clinical severity level, functional severity level, and early/later episode status were grouped together. Then within those groups, the weights for each therapy step between thresholds are gradually increased. We do this by Payment Advisory Commission (MedPAC), Report to the Congress: Medicare Payment Policy. March 2011, P. 176. PO 00000 8 Medicare Frm 00019 Fmt 4701 Sfmt 4702 interpolating between the main thresholds on the model (from 0–5 to 14–15 therapy visits, and from 14–15 to 20+ therapy visits). We use a linear model to implement the interpolation so the payment weight increase for each step between the thresholds (such as the increase between 0–5 therapy visits and 6 therapy visits and the increase between 6 therapy visits and 7–9 therapy visits) are constant. This interpolation is identical to the process finalized in the CY 2012 HH PPS final rule (76 FR 68555). Step 7: The interpolated weights are then adjusted so that the average casemix for the weights is equal to 1.0000.9 This last step creates the proposed CY 2019 case-mix weights shown in Table 8. 9 When computing the average, we compute a weighted average, assigning a value of one to each normal episode and a value equal to the episode length divided by 60 for PEPs. E:\FR\FM\12JYP2.SGM 12JYP2 32358 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 8—PROPOSED CY 2019 CASE-MIX PAYMENT WEIGHTS amozie on DSK3GDR082PROD with PROPOSALS2 Pay 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 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 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ VerDate Sep<11>2014 Clinical and functional levels (1 = low; 2 = medium; 3 = high) 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 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 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 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 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 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 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, 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, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, Episodes, 17:39 Jul 11, 2018 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 ...................................................................................... 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 ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... 18 to 19 Therapy Visits ........................................................................... 14 to 15 Therapy Visits ........................................................................... 16 to 17 Therapy Visits ........................................................................... Jkt 244001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 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 C1F1S2 C1F1S3 C1F2S1 C1F2S2 C1F2S3 C1F3S1 C1F3S2 C1F3S3 C2F1S1 C2F1S2 C2F1S3 C2F2S1 C2F2S2 C2F2S3 C2F3S1 C2F3S2 C2F3S3 C3F1S1 C3F1S2 C3F1S3 C3F2S1 C3F2S2 Proposed weights for CY 2019 0.5459 0.6801 0.8143 0.9485 1.0828 0.6485 0.7691 0.8897 1.0104 1.1310 0.6910 0.8049 0.9189 1.0328 1.1467 0.5776 0.7194 0.8612 1.0030 1.1448 0.6802 0.8084 0.9366 1.0648 1.1930 0.7227 0.8442 0.9657 1.0872 1.2087 0.6245 0.7755 0.9264 1.0774 1.2284 0.7271 0.8645 1.0019 1.1392 1.2766 0.7696 0.9003 1.0310 1.1617 1.2923 1.2170 1.3756 1.5342 1.2516 1.4008 1.5499 1.2607 1.4126 1.5646 1.2866 1.4535 1.6204 1.3212 1.4786 1.6361 1.3302 1.4905 1.6508 1.3793 1.5930 1.8067 1.4140 1.6182 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32359 TABLE 8—PROPOSED CY 2019 CASE-MIX PAYMENT WEIGHTS—Continued amozie on DSK3GDR082PROD with PROPOSALS2 Pay group 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 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 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ VerDate Sep<11>2014 Clinical and functional levels (1 = low; 2 = medium; 3 = high) Description 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 ....................................................................................... 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 .................................................................................................. 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 C3F2S3 C3F3S1 C3F3S2 C3F3S3 C1F1S1 C1F1S2 C1F1S3 C1F2S1 C1F2S2 C1F2S3 C1F3S1 C1F3S2 C1F3S3 C2F1S1 C2F1S2 C2F1S3 C2F2S1 C2F2S2 C2F2S3 C2F3S1 C2F3S2 C2F3S3 C3F1S1 C3F1S2 C3F1S3 C3F2S1 C3F2S2 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 Proposed weights for CY 2019 1.8224 1.4230 1.6300 1.8371 1.2104 1.3713 1.5321 1.2789 1.4189 1.5589 1.2789 1.4248 1.5706 1.2761 1.4465 1.6169 1.3445 1.4942 1.6438 1.3445 1.5000 1.6555 1.4670 1.6515 1.8360 1.5355 1.6992 1.8629 1.5355 1.7050 1.8746 0.4581 0.6086 0.7591 0.9095 1.0600 0.5397 0.6876 0.8354 0.9832 1.1310 0.5772 0.7176 0.8579 0.9982 1.1385 0.4844 0.6427 0.8011 0.9594 1.1178 0.5660 0.7217 0.8774 1.0331 1.1888 0.6035 0.7517 0.8999 1.0481 1.1963 0.5798 0.7573 0.9347 1.1122 1.2896 0.6614 0.8362 32360 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 8—PROPOSED CY 2019 CASE-MIX PAYMENT WEIGHTS—Continued Pay group 30323 30324 30325 30331 30332 30333 30334 30335 40111 40121 40131 40211 40221 40231 40311 40321 40331 Description ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 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 ................................................................................................. To ensure the changes to the HH PPS case-mix weights are implemented in a budget neutral manner, we then apply a case-mix budget neutrality factor to the proposed CY 2019 national, standardized 60-day episode payment rate (see section III.C.3. of this proposed rule). The case-mix budget neutrality factor is calculated as the ratio of total payments when the CY 2019 HH PPS case-mix weights (developed using CY 2017 home health claims data) are applied to CY 2017 utilization (claims) data to total payments when CY 2018 HH PPS case-mix weights (developed using CY 2016 home health claims data) are applied to CY 2017 utilization data. This produces a case-mix budget neutrality factor for CY 2019 of 1.0163. C. CY 2019 Home Health Payment Rate Update 1. Rebasing and Revising of the Home Health Market Basket amozie on DSK3GDR082PROD with PROPOSALS2 a. Background Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts for CY 2019 be increased by a factor equal to the applicable home health market basket update for those HHAs that submit quality data as required by the Secretary. Effective for cost reporting periods beginning on or after July 1, 1980, we developed and adopted an HHA input price index (that is, the home health ‘‘market basket’’). Although ‘‘market basket’’ technically describes the mix of goods and services used to produce home health care, this term is also commonly used to denote the input price index derived from that market VerDate Sep<11>2014 Clinical and functional levels (1 = low; 2 = medium; 3 = high) 17:39 Jul 11, 2018 Jkt 244001 basket. Accordingly, the term ‘‘home health market basket’’ used in this document refers to the HHA input price index. The percentage change in the home health market basket reflects the average change in the price of goods and services purchased by HHAs in providing an efficient level of home health care services. We first used the home health market basket to adjust HHA cost limits by an amount that reflected the average increase in the prices of the goods and services used to furnish reasonable cost home health care. This approach linked the increase in the cost limits to the efficient utilization of resources. For a greater discussion on the home health market basket, see the notice with comment period published in the February 15, 1980 Federal Register (45 FR 10450, 10451), the notice with comment period published in the February 14, 1995 Federal Register (60 FR 8389, 8392), and the notice with comment period published in the July 1, 1996 Federal Register (61 FR 34344, 34347). Beginning with the FY 2002 HHA PPS payments, we used the home health market basket to update payments under the HHA PPS. We last rebased the home health market basket effective with the CY 2013 update (77 FR 67081). The home health market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres-type price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix of goods and services (that is, intensity) purchased over time are not measured. PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 C3F2S3 C3F2S4 C3F2S5 C3F3S1 C3F3S2 C3F3S3 C3F3S4 C3F3S5 C1F1S1 C1F2S1 C1F3S1 C2F1S1 C2F2S1 C2F3S1 C3F1S1 C3F2S1 C3F3S1 Proposed weights for CY 2019 1.0110 1.1858 1.3607 0.6989 0.8662 1.0336 1.2009 1.3682 1.6929 1.6990 1.7165 1.7874 1.7935 1.8110 2.0204 2.0266 2.0441 The index itself is constructed in three steps. First, a base period is selected (in this proposed rule, we are proposing to use 2016 as the base period) and total base period expenditures are estimated for a set of mutually exclusive and exhaustive spending categories, with the proportion of total costs that each category represents being calculated. These proportions are called ‘‘cost weights’’ or ‘‘expenditure weights.’’ Second, each expenditure category is matched to an appropriate price or wage variable, referred to as a ‘‘price proxy.’’ In almost every instance, these price proxies are derived from publicly available statistical series that are published on a consistent schedule (preferably at least on a quarterly basis). Finally, the expenditure weight for each cost category is multiplied by the level of its respective price proxy. The sum of these products (that is, the expenditure weights multiplied by their price index levels) for all cost categories yields the composite index level of the market basket in a given period. Repeating this step for other periods produces a series of market basket levels over time. Dividing an index level for a given period by an index level for an earlier period produces a rate of growth in the input price index over that timeframe. As noted previously, the market basket is described as a fixed-weight index because it represents the change in price over time of a constant mix (quantity and intensity) of goods and services needed to provide HHA services. The effects on total expenditures resulting from changes in the mix of goods and services purchased E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 subsequent to the base period are not measured. For example, a HHA hiring more nurses to accommodate the needs of patients would increase the volume of goods and services purchased by the HHA, but would not be factored into the price change measured by a fixedweight home health market basket. Only when the index is rebased would changes in the quantity and intensity be captured, with those changes being reflected in the cost weights. Therefore, we rebase the market basket periodically so that the cost weights reflect recent changes in the mix of goods and services that HHAs purchase (HHA inputs) to furnish inpatient care between base periods. b. Rebasing and Revising the Home Health Market Basket We believe that it is desirable to rebase the home health market basket periodically so that the cost category weights reflect changes in the mix of goods and services that HHAs purchase in furnishing home health care. We based the cost category weights in the current home health market basket on CY 2010 data. We are proposing to rebase and revise the home health market basket to reflect 2016 Medicare cost report (MCR) data, the latest available and most complete data on the actual structure of HHA costs. The terms ‘‘rebasing’’ and ‘‘revising,’’ while often used interchangeably, denote different activities. The term ‘‘rebasing’’ means moving the base year for the structure of costs of an input price index (that is, in this exercise, we are proposing to move the base year cost structure from CY 2010 to CY 2016) without making any other major changes to the methodology. The term ‘‘revising’’ means changing data sources, cost categories, and/or price proxies used in the input price index. For this proposed rebasing and revising, we are rebasing the detailed wages and salaries and benefits cost weights to reflect 2016 BLS Occupational Employment Statistics (OES) data on HHAs. The 2010-based home health market basket used 2010 BLS OES data on HHAs. We are also proposing to break out the All Other (residual) cost category weight into more detailed cost categories, based on the 2007 Benchmark U.S. Department of Commerce, Bureau of Economic Analysis (BEA) Input-Output (I–O) Table for HHAs. The 2010-based home health market basket used the 2002 I–O data. Finally, due to its small weight, we are proposing to eliminate the cost category ‘Postage’ and include these expenses in the ‘All Other Services’ cost weight. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 c. Derivation of the Proposed 2016Based Home Health Market Basket Cost Weights The major cost weights for this proposed revised and rebased home health market basket are derived from the Medicare Cost Reports (MCR; CMS Form 1728–94) data for freestanding HHAs whose cost reporting period began on or after October 1, 2015 and before October 1, 2016. Of the 2016 Medicare cost reports for freestanding HHAs, approximately 84 percent of the reports had a begin date on January 1, 2016, approximately 6 percent had a begin date on July 1, 2016, and approximately 4 percent had a begin date on October 1, 2015. Using this methodology allowed our sample to include HHAs with varying cost report years including, but not limited to, the Federal fiscal or calendar year. We refer to the market basket as a calendar year market basket because the base period for all price proxies and weights are set to CY 2016. We propose to maintain our policy of using data from freestanding HHAs, which account for over 90 percent of HHAs (82 FR 35383), because we have determined that they better reflect HHAs’ actual cost structure. Expense data for hospital-based HHAs can be affected by the allocation of overhead costs over the entire institution. We are proposing to derive eight major expense categories (Wages and Salaries, Benefits, Contract Labor, Transportation, Professional Liability Insurance (PLI), Fixed Capital, Movable Capital, and a residual ‘‘All Other’’) from the 2016 Medicare HHA cost reports. Due to its small weight, we are proposing to eliminate the cost category ‘Postage’ and include these expenses in the ‘‘All Other (residual)’’ cost weight. These major expense categories are based on those cost centers that are reimbursable under the HHA PPS, specifically Skilled Nursing Care, Physical Therapy, Occupational Therapy, Speech Pathology, Medical Social Services, Home Health Aide, and Supplies. These are the same cost centers that were used in the 2014 base payment rebasing (78 FR 72276), which are described in the Abt Associates Inc. June 2013, Technical Paper, ‘‘Analyses In Support of Rebasing and Updating Medicare Home Health Payment Rates’’ (https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ HomeHealthPPS/Downloads/Analysesin-Support-of-Rebasing-and-Updatingthe-Medicare-Home-Health-PaymentRates-Technical-Report.pdf). Total costs for the HHA PPS reimbursable services reflect overhead allocation. We provide PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 32361 detail on the calculations for each major expense category. (1) Wages and Salaries: Wages and Salaries costs reflect direct patient care wages and salaries costs as well as wages and salaries costs associated with Plant Operations and Maintenance, Transportation, and Administrative and General. Specifically, we are proposing to calculate Wages and Salaries by summing costs from Worksheet A, column 1, lines 3 through 12 and subtracting line 5.03 (A&G Nonreimbursable costs). (2) Benefits: Benefits costs reflect direct patient care benefit costs as well as benefit costs associated with Plant Operations and Maintenance, Transportation, and Administrative and General. Specifically, we are proposing to calculate Benefits by summing costs from Worksheet A, column 2, lines 3 through 12 and subtracting line 5.03 (A&G Nonreimbursable costs). (3) Direct Patient Care Contract Labor: Contract Labor costs reflect direct patient care contract labor. Specifically, we are proposing to calculate Contract Labor by summing costs from Worksheet A, column 4, lines 6 through 11. (4) Transportation: Transportation costs reflect direct patient care costs as well as transportation costs associated with Capital Expenses, Plant Operations and Maintenance, and Administrative and General. Specifically, we are proposing to calculate Transportation by summing costs from Worksheet A, column 3, lines 1 through 12 and subtracting line 5.03 (A&G Nonreimbursable costs). (5) Professional Liability Insurance: Professional Liability Insurance reflects premiums, paid losses, and selfinsurance costs. Specifically we are proposing to calculate Professional Liability Insurance by summing costs from Worksheet S2, lines 27.01, 27.02 and 27.03. (6) Fixed Capital: Fixed Capitalrelated costs reflect the portion of Medicare-allowable costs reported in ‘‘Capital Related Buildings and Fixtures’’ (Worksheet A, column 5, line 1). We calculate this Medicare allowable portion by first calculating a ratio for each provider that reflects fixed capital costs as a percentage of HHA reimbursable services. Specifically this ratio is calculated as the sum of costs from Worksheet B, column 1, lines 6 through 12 divided by the sum of costs from Worksheet B, column 1, line 1 minus lines 3 through 5. This percentage is then applied to the sum of the costs from Worksheet A, column 5, line 1. E:\FR\FM\12JYP2.SGM 12JYP2 32362 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules (7) Movable Capital: Movable Capitalrelated costs reflect the portion of Medicare-allowable costs reported in ‘‘Capital Related Moveable Equipment’’ (Worksheet A, column 5, line 2). We calculate this Medicare allowable portion by first calculating a ratio for each provider that reflects movable capital costs as a percentage of HHA reimbursable services. Specifically this ratio is calculated as the sum of costs from Worksheet B, column 2, lines 6 through 12 divided by the sum of costs from Worksheet B, column 2, line 2 minus lines 3 through 5. This percentage is then applied to the sum of the costs from Worksheet A, column 5, line 2. (8) All Other (residual): The ‘‘All Other’’ cost weight is a residual, calculated by subtracting the major cost weight percentages (Wages and Salaries, Benefits, Direct Patient Care Contract Labor, Transportation, Professional Liability Insurance, Fixed Capital, and Movable Capital) from 1. As prescription drugs and DME are not payable under the HH PPS, we continue to exclude those items from the home health market basket. Totals within each of the major cost categories were edited to remove reports where the data were deemed unreasonable (for example, when total costs were not greater than zero). We then determined the proportion of total Medicare allowable costs that each category represents. For all of the major cost categories except the ‘‘residual’’ All Other cost weight, we then removed those providers whose derived cost weights fall in the top and bottom five percent of provider-specific cost weights to ensure the removal of outliers. After the outliers were removed, we summed the costs for each category across all remaining providers. We then divided this by the sum of total Medicare allowable costs across all remaining providers to obtain a cost weight for the proposed 2016-based home health market basket for the given category. Table 9 shows the major cost categories and their respective cost weights as derived from the Medicare cost reports for this proposed rule. TABLE 9—MAJOR COST CATEGORIES AS DERIVED FROM THE MEDICARE COST REPORTS Major cost categories 2010 based Wages and Salaries (including allocated direct patient care contract labor) .......................................................... Benefits (including allocated direct patient care contract labor) ............................................................................. Transportation .......................................................................................................................................................... Professional Liability Insurance (Malpractice) ......................................................................................................... Fixed Capital ............................................................................................................................................................ Moveable Capital ..................................................................................................................................................... ‘‘All Other’’ residual .................................................................................................................................................. 66.3 12.2 2.5 0.4 1.5 0.6 16.5 Proposed 2016 based 65.1 10.9 2.6 0.3 1.4 0.6 19.0 amozie on DSK3GDR082PROD with PROPOSALS2 * Figures may not sum to 100.0 due to rounding. The decrease in the wages and salaries cost weight of 1.2 percentage points and the decrease in the benefits cost weight of 1.3 percentage points is attributable to both employed compensation and direct patient care contract labor costs as reported on the MCR data. Our analysis of the MCR data shows that the decrease in the compensation cost weight of 2.4 percentage points (calculated by combining wages and salaries and benefits) from 2010 to 2016 occurred among for-profit, nonprofit, and government providers and among providers serving only rural beneficiaries, only urban beneficiaries, or both rural and urban beneficiaries. Over the 2010 to 2016 time period, the average number of FTEs per provider decreased considerably. This corresponds with the HHA claims analysis published on page 35279 of the CY 2018 proposed rule (https:// www.gpo.gov/fdsys/pkg/FR-2017-07-28/ pdf/2017-15825.pdf), which shows that the number of visits per 60-day episode has decreased from 19.8 visits in 2010 to 17.9 visits in 2016 for Medicare PPS. Medicare visits account for approximately 60 percent of total visits. The direct patient care contract labor costs are contract labor costs for skilled nursing, physical therapy, occupational VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 therapy, speech therapy, and home health aide cost centers. We allocated these direct patient care contract labor costs to the Wages and Salaries and Benefits cost categories based on each provider’s relative proportions of both employee wages and salaries and employee benefits costs. For example, the direct patient care contract labor costs that are allocated to wages and salaries is equal to: (A) The employee wages and salaries costs as a percent of the sum of employee wages and salaries costs and employee benefits costs times; and (B) direct patient care contract labor costs. Nondirect patient care contract labor costs (such as contract labor costs reported in the Administrative and General cost center of the MCR) are captured in the ‘‘All Other’’ residual cost weight and later disaggregated into more detail as described below. This is a similar methodology that was implemented for the 2010-based home health market basket. We further divide the ‘‘All Other’’ residual cost weight estimated from the 2016 Medicare cost report data into more detailed cost categories. To divide this cost weight we are proposing to use the 2007 Benchmark I–O ‘‘Use Tables/ Before Redefinitions/Purchaser Value’’ for NAICS 621600, Home Health Agencies, published by the BEA. These PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 data are publicly available at https:// www.bea.gov/industry/io_annual.htm. The BEA Benchmark I–O data are generally scheduled for publication every five years. The most recent data available at the time of rebasing was for 2007. The 2007 Benchmark I–O data are derived from the 2007 Economic Census and are the building blocks for BEA’s economic accounts. Therefore, they represent the most comprehensive and complete set of data on the economic processes or mechanisms by which output is produced and distributed.10 Besides Benchmark I–O estimates, BEA also produces Annual I–O estimates. While based on a similar methodology, the Annual I–O estimates reflect less comprehensive and less detailed data sources and are subject to revision when benchmark data become available. Instead of using the less detailed Annual I–O data, we are proposing to inflate the detailed 2007 Benchmark I– O data forward to 2016 by applying the annual price changes from the respective price proxies to the appropriate market basket cost categories that are obtained from the 2007 Benchmark I–O data. We repeated this practice for each year. We then calculated the cost shares that each cost 10 https://www.bea.gov/papers/pdf/IOmanual_ 092906.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules category represents of the 2007 data inflated to 2016. These resulting 2016 cost shares were applied to the ‘‘All Other’’ residual cost weight to obtain the detailed cost weights for the proposed 2016-based home health market basket. For example, the cost for Operations and Maintenance represents 8.0 percent of the sum of the ‘‘All Other’’ 2007 Benchmark I–O HHA Expenditures inflated to 2016. Therefore, the Operations and Maintenance cost weight represents 8.0 percent of the proposed 2016-based home health market basket’s ‘‘All Other’’ cost category (19.0 percent), yielding an Operations and Maintenance proposed cost weight of 1.5 percent in the proposed 2016-based home health market basket (0.080 × 19.0 percent = 1.5 percent). For the 2010based home health market basket, we used the same methodology utilizing the 2002 Benchmark I–O data (aged to 2010). Using this methodology, we are proposing to derive nine detailed cost categories from the proposed 2016based home health market basket ‘‘All Other’’ residual cost weight (19.0 percent). These categories are: (1) Operations and Maintenance; (2) Administrative Support; (3) Financial 32363 Services; (4) Medical Supplies; (5) Rubber and Plastics; (6) Telephone; (7) Professional Fees; (8) Other Products; and (9) Other Services. The 2010-based home health market basket included a separate cost category for Postage; however, due to its small weight for the 2016-based home health market basket, we propose to eliminate the stand-alone cost category for Postage and include these expenses in the Other Services cost category. Table 10 lists the proposed 2016based home health market basket cost categories, cost weights, and price proxies. TABLE 10—COST CATEGORIES, WEIGHTS, AND PRICE PROXIES IN PROPOSED 2016-BASED HOME HEALTH MARKET BASKET Cost categories Weight Price proxy Compensation, including allocated contract services’ labor. Wages and Salaries, including allocated contract services’ labor. Benefits, including allocated contract services’ labor. Operations & Maintenance .............................................. Professional Liability Insurance ....................................... Administrative & General & Other Expenses including allocated contract services’ labor. Administrative Support ............................................. 76.1 Financial Services .................................................... 1.9 Medical Supplies ...................................................... Rubber & Plastics .................................................... Telephone ................................................................ Professional Fees .................................................... 0.9 1.6 0.7 5.3 Other Products ......................................................... Other Services ......................................................... 2.8 3.2 Transportation ................................................................. Capital-Related ................................................................ Fixed Capital ............................................................ Movable Capital ....................................................... 2.6 2.1 1.4 0.6 Total ......................................................................... * 100.0 65.1 Proposed Home Health Blended Wages and Salaries Index (2016). 10.9 Proposed Home Health Blended Benefits Index (2016). 1.5 0.3 17.4 CPI–U for Fuel and utilities. CMS Physician Professional Liability Insurance Index. 1.0 ECI for Total compensation for Private industry workers in Office and administrative support. ECI for Total compensation for Private industry workers in Financial activities. PPI Commodity data for Medical, surgical & personal aid devices. PPI Commodity data for Rubber and plastic products. CPI–U for Telephone services. ECI for Total compensation for Private industry workers in Professional and related. PPI Commodity data for Finished goods less foods and energy. ECI for Total compensation for Private industry workers in Service occupations. CPI–U for Transportation. CPI–U for Owners’ equivalent rent of residences. PPI Commodity data for Machinery and equipment. * Figures may not sum due to rounding. amozie on DSK3GDR082PROD with PROPOSALS2 d. Proposed 2016-Based Home Health Market Basket Price Proxies After we computed the CY 2016 cost category weights for the proposed rebased home health market basket, we selected the most appropriate wage and price indexes to proxy the rate of change for each expenditure category. With the exception of the price index for Professional Liability Insurance costs, the proposed price proxies are based on Bureau of Labor Statistics (BLS) data and are grouped into one of the following BLS categories: • Employment Cost Indexes— Employment Cost Indexes (ECIs) measure the rate of change in employee VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 wage rates and employer costs for employee benefits per hour worked. These indexes are fixed-weight indexes and strictly measure the change in wage rates and employee benefits per hour. They are not affected by shifts in skill mix. ECIs are superior to average hourly earnings as price proxies for input price indexes for two reasons: (a) They measure pure price change; and (b) they are available by occupational groups, not just by industry. • Consumer Price Indexes— Consumer Price Indexes (CPIs) measure change in the prices of final goods and services bought by the typical consumer. Consumer price indexes are PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 used when the expenditure is more similar to that of a purchase at the retail level rather than at the wholesale level, or if no appropriate Producer Price Indexes (PPIs) were available. • Producer Price Indexes—PPIs measures average changes in prices received by domestic producers for their goods and services. PPIs are used to measure price changes for goods sold in other than retail markets. For example, a PPI for movable equipment is used rather than a CPI for equipment. PPIs in some cases are preferable price proxies for goods that HHAs purchase at wholesale levels. These fixed-weight indexes are a measure of price change E:\FR\FM\12JYP2.SGM 12JYP2 32364 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules at the producer or at the intermediate stage of production. We evaluated the price proxies using the criteria of reliability, timeliness, availability, and relevance. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Widely accepted statistical methods ensure that the data were collected and aggregated in way that can be replicated. Low sampling variability is desirable because it indicates that sample reflects the typical members of the population. (Sampling variability is variation that occurs by chance because a sample was surveyed rather than the entire population.) Timeliness implies that the proxy is published regularly, preferably at least once a quarter. The market baskets are updated quarterly and therefore it is important the underlying price proxies be up-to-date, reflecting the most recent data available. We believe that using proxies that are published regularly helps ensure that we are using the most recent data available to update the market basket. We strive to use publications that are disseminated frequently because we believe that this is an optimal way to stay abreast of the most current data available. Availability means that the proxy is publicly available. We prefer that our proxies are publicly available because this will help ensure that our market basket updates are as transparent to the public as possible. In addition, this enables the public to be able to obtain the price proxy data on a regular basis. Finally, relevance means that the proxy is applicable and representative of the cost category weight to which it is applied. The CPIs, PPIs, and ECIs selected by us to be proposed in this regulation meet these criteria. Therefore, we believe that they continue to be the best measure of price changes for the cost categories to which they would be applied. As part of the revising and rebasing of the home health market basket, we are proposing to rebase the home health blended Wages and Salaries index and the home health blended Benefits index. We propose to use these blended indexes as price proxies for the Wages and Salaries and the Benefits portions of the proposed 2016-based home health market basket, as we did in the 2010based home health market basket. A more detailed discussion is provided below. • Wages and Salaries: For measuring price growth in the 2016-based home health market basket, we are proposing to apply six price proxies to six occupational subcategories within the Wages and Salaries component, which would reflect the HHA occupational mix. This is the same approach used for the 2010-based index. We use a blended wage proxy because there is not a published wage proxy specific to the home health industry. We are proposing to continue to use the National Industry-Specific Occupational Employment and Wage estimates for North American Industrial Classification System (NAICS) 621600, Home Health Care Services, published by the BLS Office of Occupational Employment Statistics (OES) as the data source for the cost shares of the home health blended wage and benefits proxy. This is the same data source that was used for the 2010-based HHA blended wage and benefit proxies; however, we are proposing to use the May 2016 estimates in place of the May 2010 estimates. Detailed information on the methodology for the national industryspecific occupational employment and wage estimates survey can be found at https://www.bls.gov/oes/current/oes_ tec.htm. The needed data on HHA expenditures for the six occupational subcategories (Health-Related Professional and Technical, Non HealthRelated Professional and Technical, Management, Administrative, Health and Social Assistance Service, and Other Service Workers) for the wages and salaries component were tabulated from the May 2016 OES data for NAICS 621600, Home Health Care Services. Table 11 compares the proposed 2016 occupational assignments to the 2010 occupational assignments of the six CMS designated subcategories. If an OES occupational classification does not exist in the 2010 or 2016 data we use ‘‘n/a.’’ TABLE 11—PROPOSED 2016 OCCUPATIONAL ASSIGNMENTS COMPARED TO 2010 OCCUPATIONAL ASSIGNMENTS FOR CMS HOME HEALTH WAGES AND SALARIES BLEND 2016 proposed occupational groupings 2010 occupational groupings amozie on DSK3GDR082PROD with PROPOSALS2 Group 1 Health-related professional and technical Group 1 Health-related professional and technical n/a .................. 29–1031 ......... 29–1051 ......... 29–1062 ......... 29–1063 ......... 29–1065 ......... 29–1066 ......... 29–1069 ......... 29–1071 ......... n/a .................. 29–1122 ......... 29–1123 ......... 29–1125 ......... 29–1126 ......... 29–1127 ......... 29–1129 ......... 29–1141 ......... 29–1171 ......... 29–1199 ......... n/a ................................................................................ Dietitians and Nutritionists ........................................... Pharmacists .................................................................. Family and General Practitioners ................................ Internists, General ........................................................ Pediatricians, General .................................................. Psychiatrists ................................................................. Physicians and Surgeons, All Other ............................ Physician Assistants .................................................... n/a ................................................................................ Occupational Therapists .............................................. Physical Therapists ...................................................... Recreational Therapists ............................................... Respiratory Therapists ................................................. Speech-Language Pathologists ................................... Therapists, All Other .................................................... Registered Nurses ....................................................... Nurse Practitioners ....................................................... Health Diagnosing and Treating Practitioners, All Other. 29–1021 ......... 29–1031 ......... 29–1051 ......... 29–1062 ......... 29–1063 ......... n/a .................. n/a .................. 29–1069 ......... 29–1071 ......... 29–1111 ......... 29–1122 ......... 29–1123 ......... 29–1125 ......... 29–1126 ......... 29–1127 ......... 29–1129 ......... n/a .................. n/a .................. 29–1199 ......... Dentists, General. Dietitians and Nutritionists. Pharmacists. Family and General Practitioners. Internists, General. n/a. n/a. Physicians and Surgeons, All Other. Physician Assistants. Registered Nurses. Occupational Therapists. Physical Therapists. Recreational Therapists. Respiratory Therapists. Speech-Language Pathologists. Therapists, All Other. n/a. n/a. Health Diagnosing and Treating Practitioners, All Other. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32365 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 2016 proposed occupational groups 2010 occupational groupings Group 2 Non health related professional & technical 13–0000 ......... 15–0000 ......... n/a .................. 19–0000 ......... n/a .................. 25–0000 ......... 27–0000 ......... Business and Financial Operations Occupations ........ Computer and Mathematical Occupations ................... n/a ................................................................................ Life, Physical, and Social Science Occupations .......... n/a ................................................................................ Education, Training, and Library Occupations ............. Arts, Design, Entertainment, Sports, and Media Occupations. Group 3 Management Group 3 11–0000 ......... Management Occupations ........................................... 11–0000 ......... Group 4 Administrative Group 4 43–0000 ......... Office and Administrative Support Occupations .......... 43–0000 ......... Group 5 Health and social assistance services Group 5 Health and social assistance services 21–0000 ......... 29–2011 ......... 29–2012 ......... 29–2021 ......... 29–2032 ......... 29–2034 ......... 29–2041 ......... 29–2051 ......... 29–2052 ......... 29–2053 ......... 29–2054 ......... 29–2055 ......... 29–2061 ......... 29–2071 ......... 29–2099 ......... n/a .................. 29–9099 ......... 21–0000 ......... 29–2011 ......... 29–2012 ......... 29–2021 ......... 29–2032 ......... 29–2034 ......... 29–2041 ......... 29–2051 ......... 29–2052 ......... n/a .................. 29–2054 ......... n/a .................. 29–2061 ......... 29–2071 ......... 29–2099 ......... 29–9012 ......... 29–9099 ......... 31–0000 ......... Community and Social Service Occupations ............... Medical and Clinical Laboratory Technologists ........... Medical and Clinical Laboratory Technicians .............. Dental Hygienists ......................................................... Diagnostic Medical Sonographers ............................... Radiologic Technologists ............................................. Emergency Medical Technicians and Paramedics ...... Dietetic Technicians ..................................................... Pharmacy Technicians ................................................. Psychiatric Technicians ................................................ Respiratory Therapy Technicians ................................ Surgical Technologists ................................................. Licensed Practical and Licensed Vocational Nurses ... Medical Records and Health Information Technicians Health Technologists and Technicians, All Other ........ n/a ................................................................................ Healthcare Practitioners and Technical Workers, All Other. Healthcare Support Occupations ................................. 31–0000 ......... Community and Social Services Occupations. Medical and Clinical Laboratory Technologists. Medical and Clinical Laboratory Technicians. Dental Hygienists. Diagnostic Medical Sonographers. Radiologic Technologists and Technicians. Emergency Medical Technicians and Paramedics. Dietetic Technicians. Pharmacy Technicians. n/a. Respiratory Therapy Technicians. n/a. Licensed Practical and Licensed Vocational Nurses. Medical Records and Health Information Technicians. Health Technologists and Technicians, All Other. Occupational Health and Safety Technicians. Healthcare Practitioner and Technical Workers, All Other. Healthcare Support Occupations. Group 6 Other service workers Group 6 Other service workers 33–0000 ......... 35–0000 ......... 37–0000 ......... Protective Service Occupations ................................... Food Preparation and Serving Related Occupations .. Building and Grounds Cleaning and Maintenance Occupations. Personal Care and Service Occupations ..................... Sales and Related Occupations .................................. Construction and Extraction Occupations .................... Installation, Maintenance, and Repair Occupations .... Production Occupations ............................................... Transportation and Material Moving Occupations ....... 33–0000 ......... 35–0000 ......... 37–0000 ......... Protective Service Occupations. Food Preparation and Serving Related Occupations. Building and Grounds Cleaning and Maintenance Occupations. Personal Care and Service Occupations. Sales and Related Occupations. n/a. Installation, Maintenance, and Repair Occupations. Production Occupations. Transportation and Material Moving Occupations. 39–0000 41–0000 47–0000 49–0000 51–0000 53–0000 ......... ......... ......... ......... ......... ......... Total expenditures by occupation were calculated by taking the OES number of employees multiplied by the Group 2 13–0000 15–0000 17–0000 19–0000 23–0000 25–0000 27–0000 ......... ......... ......... ......... ......... ......... ......... 39–0000 ......... 41–0000 ......... n/a .................. 49–0000 ......... 51–0000 ......... 53–0000 ......... Non health related professional & technical Business and Financial Operations Occupations. Computer and Mathematical Science Occupations. Architecture and Engineering Occupations. Life, Physical, and Social Science Occupations. Legal Occupations. Education, Training, and Library Occupations. Arts, Design, Entertainment, Sports, and Media Occupations. Management Management Occupations. Administrative Office and Administrative Support Occupations. OES annual average salary for each subcategory, and then calculating the proportion of total wage costs that each subcategory represents. The proportions listed in Table 12 represent the Wages and Salaries blend weights. TABLE 12—COMPARISON OF THE PROPOSED 2016-BASED HOME HEALTH WAGES AND SALARIES BLEND AND THE 2010BASED HOME HEALTH WAGES AND SALARIES BLEND Proposed 2016 weight amozie on DSK3GDR082PROD with PROPOSALS2 Cost subcategory 2010 weight Health-Related Professional and Technical. Non Health-Related Professional and Technical. 33.7 33.4 2.3 2.3 Management ................................ 7.6 8.3 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00027 Price proxy BLS series ID ECI for Wages and salaries for All Civilian workers in Hospitals. ECI for Wages and salaries for Private industry workers in Professional, scientific, and technical services. ECI for Wages and salaries for Private industry workers in Management, business, and financial. CIU1026220000000I. Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 CIU2025400000000I. CIU2020000110000I. 32366 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 12—COMPARISON OF THE PROPOSED 2016-BASED HOME HEALTH WAGES AND SALARIES BLEND AND THE 2010BASED HOME HEALTH WAGES AND SALARIES BLEND—Continued Proposed 2016 weight Cost subcategory 2010 weight Administrative .............................. 6.7 7.7 Health and Social Assistance Services. Other Service Occupations ......... 35.3 35.8 14.4 12.6 Total * .................................... 100.0 Price proxy BLS series ID ECI for Wages and salaries for Private industry workers in Office and administrative support. ECI for Wages and salaries for All Civilian workers in Health care and social assistance. ECI for Wages and salaries for Private industry workers in Service occupations. CIU2020000220000I. 100.0 CIU1026200000000I. CIU2020000300000I. * Totals may not sum due to rounding. A comparison of the yearly changes from CY 2016 to CY 2019 for the 2010based home health Wages and Salaries blend and the proposed 2016-based home health Wages and Salaries blend is shown in Table 13. The annual increases in the two price proxies are the same when rounded to one decimal place. TABLE 13—ANNUAL GROWTH IN PROPOSED 2016 AND 2010 HOME HEALTH WAGES AND SALARIES BLEND 2016 Wage Blend 2016 ............................................................................................ Wage Blend 2010 ............................................................................................ 2017 2.3 2.3 2018 2.5 2.5 2019 2.6 2.6 3.0 3.0 Source: IHS Global Insight Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017. • Benefits: For measuring Benefits price growth in the proposed 2016based home health market basket, we are proposing to apply applicable price proxies to the six occupational subcategories that are used for the Wages and Salaries blend. The proposed six categories in Table 14 are the same as those in the 2010-based home health market basket and include the same occupational mix as listed in Table 14. TABLE 14—COMPARISON OF THE PROPOSED 2016-BASED HOME HEALTH BENEFITS BLEND AND 2010-BASED HOME HEALTH BENEFITS BLEND Proposed 2016 weight Cost category 2010 weight Health-Related Professional and Technical Non Health-Related Professional and Technical. Management ............................................... 33.9 2.3 33.5 2.2 7.3 8.0 Administrative .............................................. 6.7 7.8 Health and Social Assistance Services ...... 35.5 35.9 Other Service Workers ................................ 14.2 12.5 Total * ................................................... 100.0 Price proxy ECI for Benefits for All Civilian workers in Hospitals. ECI for Benefits for Private industry workers in Professional, scientific, and technical services. ECI for Benefits for Private industry workers in Management, business, and financial. ECI for Benefits for Private industry workers in Office and administrative support. ECI for Benefits for All Civilian workers in Health care and social assistance. ECI for Benefits for Private industry workers in Service occupations. 100.0 amozie on DSK3GDR082PROD with PROPOSALS2 * Totals may not sum due to rounding. There is no available data source that exists for benefit expenditures by occupation for the home health industry. Thus, to construct weights for the home health benefits blend we calculated the ratio of benefits to wages and salaries for CY 2016 for the six ECI series we are proposing to use in the blended ‘wages and salaries’ and ‘benefits’ indexes. To derive the relevant benefits weight, we applied the benefitto-wage ratios to each of the six occupational subcategories from the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 2016 OES wage and salary weights, and normalized. For example, the ratio of benefits to wages from the 2016 home health wages and salaries blend and the benefits blend for the management category is 0.984. We apply this ratio to the 2016 OES weight for wages and salaries for management, 7.6 percent, and then normalize those weights relative to the other five benefit occupational categories to obtain a benefit weight for management of 7.3 percent. PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 A comparison of the yearly changes from CY 2016 to CY 2019 for the 2010based home health Benefits blend and the proposed 2016-based home health Benefits blend is shown in Table 15. With the exception of a 0.1 percentage point difference in 2019, the annual increases in the two price proxies are the same when rounded to one decimal place. E:\FR\FM\12JYP2.SGM 12JYP2 32367 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 15—ANNUAL GROWTH IN THE PROPOSED 2016 HOME HEALTH BENEFITS BLEND AND THE 2010 HOME HEALTH BENEFITS BLEND 2016 Benefits Blend 2016 ........................................................................................ Benefits Blend 2010 ........................................................................................ 2017 1.7 1.7 2018 1.9 1.9 2019 2.4 2.4 3.0 2.9 Source: IHS Global Insight Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017. • Operations and Maintenance: We are proposing to use CPI U.S. city average for Fuel and utilities (BLS series code #CUUR0000SAH2) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Professional Liability Insurance: We are proposing to use the CMS Physician Professional Liability Insurance price index to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. To accurately reflect the price changes associated with physician PLI, each year we collect PLI premium data for physicians from a representative sample of commercial carriers and publically available rate filings as maintained by each State’s Association of Insurance Commissioners. As we require for our other price proxies, the PLI price proxy is intended to reflect the pure price change associated with this particular cost category. Thus, the level of liability coverage is held constant from year to year. To accomplish this, we obtain premium information from a sample of commercial carriers for a fixed level of coverage, currently $1 million per occurrence and a $3 million annual limit. This information is collected for every State by physician specialty and risk class. Finally, the State-level, physician-specialty data are aggregated to compute a national total, using counts of physicians by State and specialty as provided in the AMA publication, Physician Characteristics and Distribution in the U.S. • Administrative and Support: We are proposing to use the ECI for Total compensation for Private industry workers in Office and administrative support (BLS series code #CIU2010000220000I) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Financial Services: We are proposing to use the ECI for Total compensation for Private industry workers in Financial activities (BLS series code #CIU201520A000000I) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Medical Supplies: We are proposing to use the PPI Commodity data for Miscellaneous products-Medical, surgical & personal aid devices (BLS series code #WPU156) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Rubber and Plastics: We are proposing to use the PPI Commodity data for Rubber and plastic products (BLS series code #WPU07) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Telephone: We are proposing to use CPI U.S. city average for Telephone services (BLS series code #CUUR0000SEED) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Professional Fees: We are proposing to use the ECI for Total compensation for Private industry workers in Professional and related (BLS series code #CIS2010000120000I) to measure price growth of this category. The same proxy was used for the 2010-based home health market basket. • Other Products: We are proposing to use the PPI Commodity data for Final demand-Finished goods less foods and energy (BLS series code #WPUFD4131) to measure price growth of this category. The same proxy was used for the 2010based home health market basket. • Other Services: We are proposing to use the ECI for Total compensation for Private industry workers in Service occupations (BLS series code #CIU2010000300000I) to measure price growth of this category. The same proxy was used for the 2010-based home health market basket. • Transportation: We are proposing to use the CPI U.S. city average for Transportation (BLS series code #CUUR0000SAT) to measure price growth of this category. The same proxy was used for the 2010-based home health market basket. • Fixed capital: We are proposing to use the CPI U.S. city average for Owners’ equivalent rent of residences (BLS series code #CUUS0000SEHC) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. • Movable Capital: We are proposing to use the PPI Commodity data for Machinery and equipment (BLS series code #WPU11) to measure price growth of this cost category. The same proxy was used for the 2010-based home health market basket. e. Rebasing Results A comparison of the yearly changes from CY 2014 to CY 2021 for the 2010based home health market basket and the proposed 2016-based home health market basket is shown in Table 16. amozie on DSK3GDR082PROD with PROPOSALS2 TABLE 16—COMPARISON OF THE 2010-BASED HOME HEALTH MARKET BASKET AND THE PROPOSED 2016-BASED HOME HEALTH MARKET BASKET, PERCENT CHANGE, 2014–2021 Home health market basket, 2010-based Historical data: CY 2014 ................................................................................................................................ CY 2015 ................................................................................................................................ CY 2016 ................................................................................................................................ CY 2017 ................................................................................................................................ VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 1.6 1.6 2.0 2.3 12JYP2 Proposed home health market basket, 2016-based 1.6 1.5 2.0 2.3 Difference (proposed 2016-based less 2010-based) 0.0 ¥0.1 0.0 0.0 32368 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 16—COMPARISON OF THE 2010-BASED HOME HEALTH MARKET BASKET AND THE PROPOSED 2016-BASED HOME HEALTH MARKET BASKET, PERCENT CHANGE, 2014–2021—Continued Home health market basket, 2010-based Average CYs 2014–2017 .............................................................................................. Forecast: CY 2018 ................................................................................................................................ CY 2019 ................................................................................................................................ CY 2020 ................................................................................................................................ CY 2021 ................................................................................................................................ Average CYs 2018–2021 .............................................................................................. Proposed home health market basket, 2016-based Difference (proposed 2016-based less 2010-based) 1.9 1.9 0.0 2.5 2.8 3.0 3.0 2.8 2.5 2.8 3.0 3.0 2.8 0.0 0.0 0.0 0.0 0.0 Source: IHS Global Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017. Table 16 shows that the forecasted rate of growth for CY 2019 for the proposed 2016-based home health market basket is 2.8 percent, the same rate of growth as estimated using the 2010-based home health market basket; other forecasted years also show a similar increase. Similarly, the historical estimates of the growth in the 2016-based and 2010-based home health market basket are the same except for CY 2015 where the 2010-based home health market basket is 0.1 percentage point higher. We note that if more recent data are subsequently available (for example, a more recent estimate of the market basket), we would use such data to determine the market basket increases in the final rule. f. Labor-Related Share Effective for CY 2019, we are proposing to revise the labor-related share to reflect the proposed 2016-based home health market basket Compensation (Wages and Salaries plus Benefits) cost weight. The current laborrelated share is based on the Compensation cost weight of the 2010based home health market basket. Based on the proposed 2016-based home health market basket, the labor-related share would be 76.1 percent and the proposed non-labor-related share would be 23.9 percent. The labor-related share for the 2010-based home health market basket was 78.5 percent and the nonlabor-related share was 21.5 percent. As explained earlier, the decrease in the compensation cost weight of 2.4 percentage points is attributable to both employed compensation (wages and salaries and benefits for employees) and direct patient care contract labor costs as reported in the MCR data. Table 17 details the components of the laborrelated share for the 2010-based and proposed 2016-based home health market baskets. TABLE 17—LABOR–RELATED SHARE OF CURRENT AND PROPOSED HOME HEALTH MARKET BASKETS 2010-based market basket weight Cost category Wages and Salaries ................................................................................................................................................ Employee Benefits ................................................................................................................................................... Total Labor-Related ................................................................................................................................................. Total Non Labor-Related ......................................................................................................................................... We propose to implement the proposed revision to the labor-related share of 76.1 percent in a budget neutral manner. This proposal would be consistent with our policy of implementing the annual recalibration of the case-mix weights and update of the home health wage index in a budget neutral manner. amozie on DSK3GDR082PROD with PROPOSALS2 g. Multifactor Productivity In the CY 2015 HHA PPS final rule (79 FR 38384 through 38384), we finalized our methodology for calculating and applying the MFP adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of the Act, requires that, in CY 2015 (and in subsequent calendar years, except CY 2018 (under section 411(c) of the Medicare Access and CHIP VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted April 16, 2015)), the market basket percentage under the HHA prospective payment system as described in section 1895(b)(3)(B) of the Act be annually adjusted by changes in economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment to be equal to the 10-year moving average of change in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period) (the ‘‘MFP adjustment’’). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm business PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 Proposed 2016-based market basket weight 66.3 12.2 78.5 21.5 65.1 11.0 76.1 23.9 MFP. Please see https://www.bls.gov/ mfp, to obtain the BLS historical published MFP data. Based on IHS Global Inc.’s (IGI’s) first quarter 2018 forecast with history through the fourth quarter of 2017, the projected MFP adjustment (the 10-year moving average of MFP for the period ending December 31, 2019) for CY 2019 is 0.7 percent. IGI is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of the market baskets. We note that if more recent data are subsequently available (for example, a more recent estimate of the MFP adjustment), we would use such data to determine the MFP adjustment in the final rule. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 2. Proposed CY 2019 Market Basket Update for HHAs Using IGI’s first quarter 2018 forecast, the MFP adjustment for CY 2019 is projected to be 0.7 percent. In accordance with section 1895(b)(3)(B)(iii) of the Act, we propose to base the CY 2019 market basket update, which is used to determine the applicable percentage increase for HHA payments, on the most recent estimate of the proposed 2016-based home health market basket. Based on IGI’s first quarter 2018 forecast with history through the fourth quarter of 2017, the projected increase of the proposed 2016based home health market basket for CY 2019 is 2.8 percent. We propose to then reduce this percentage increase by the current estimate of the MFP adjustment for CY 2019 of 0.7 percentage point in accordance with 1895(b)(3)(B)(vi) of the Act. Therefore, the current estimate of the CY 2019 HHA payment update is 2.1 percent (2.8 percent market basket update, less 0.7 percentage point MFP adjustment). Furthermore, we note that if more recent data are subsequently available (for example, a more recent estimate of the market basket and MFP adjustment), we would use such data to determine the CY 2019 market basket update and MFP adjustment in the final rule. Section 1895(b)(3)(B)(v) of the Act requires that the home health update be decreased by 2 percentage points for those HHAs that do not submit quality data as required by the Secretary. For HHAs that do not submit the required quality data for CY 2019, the home health payment update will be 0.1 percent (2.1 percent minus 2 percentage points). amozie on DSK3GDR082PROD with PROPOSALS2 3. CY 2019 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. Since the inception of the HH PPS, we have used inpatient hospital wage data in developing a wage index to be applied to HH payments. We propose to continue this practice for CY 2019, as we continue to believe that, in the absence of HH-specific wage data that accounts for area differences, using inpatient hospital wage data is appropriate and reasonable for the HH PPS. Specifically, we propose to continue to use the pre-floor, prereclassified hospital wage index as the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 wage adjustment to the labor portion of the HH PPS rates. For CY 2019, the updated wage data are for hospital cost reporting periods beginning on or after October 1, 2014, and before October 1, 2015 (FY 2015 cost report data). We apply the appropriate wage index value to the labor portion of the HH PPS rates based on the site of service for the beneficiary (defined by section 1861(m) of the Act as the beneficiary’s place of residence). To address those geographic areas in which there are no inpatient hospitals, and thus, no hospital wage data on which to base the calculation of the CY 2019 HH PPS wage index, we propose to continue to use the same methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to address those geographic areas in which there are no inpatient hospitals. For rural areas that do not have inpatient hospitals, we propose to use the average wage index from all contiguous Core Based Statistical Areas (CBSAs) as a reasonable proxy. Currently, the only rural area without a hospital from which hospital wage data could be derived is Puerto Rico. However, for rural Puerto Rico, we do not apply this methodology due to the distinct economic circumstances that exist there (for example, due to the close proximity to one another of almost all of Puerto Rico’s various urban and non-urban areas, this methodology would produce a wage index for rural Puerto Rico that is higher than that in half of its urban areas). Instead, we propose to continue to use the most recent wage index previously available for that area. For urban areas without inpatient 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 2019, the only urban area without inpatient hospital wage data is Hinesville, GA (CBSA 25980). On February 28, 2013, OMB issued Bulletin No. 13–01, announcing revisions to the delineations of MSAs, Micropolitan Statistical Areas, and CBSAs, and guidance on uses of the delineation of these areas. In the CY 2015 HH PPS final rule (79 FR 66085 through 66087), we adopted the OMB’s new area delineations using a 1-year transition. On August 15, 2017, OMB issued Bulletin No. 17–01 in which it announced that one Micropolitan Statistical Area, Twin Falls, Idaho, now qualifies as a Metropolitan Statistical Area. The new CBSA (46300) comprises the principal city of Twin Falls, Idaho in Jerome County, Idaho and Twin Falls County, Idaho. The CY 2019 HH PPS wage index value for CBSA 46300, Twin PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 32369 Falls, Idaho, will be 0.8335. Bulletin No. 17–01 is available at https:// www.whitehouse.gov/sites/ whitehouse.gov/files/omb/bulletins/ 2017/b-17-01.pdf.11 The most recent OMB Bulletin (No. 18–03) was published on April 10, 2018 and is available at https:// www.whitehouse.gov/wp-content/ uploads/2018/04/OMB-BULLETIN-NO.18-03-Final.pdf.12 The revisions contained in OMB Bulletin No. 18–03 have no impact on the geographic area delineations that are used to wage adjust HH PPS payments. The CY 2019 wage index is available on the CMS website at https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/ Home-Health-Prospective-PaymentSystem-Regulations-and-Notices.html. 4. CY 2019 Annual Payment Update a. Background The Medicare HH PPS has been in effect since October 1, 2000. As set forth in the July 3, 2000 final rule (65 FR 41128), the base unit of payment under the Medicare HH PPS is a national, standardized 60-day episode payment rate. As set forth in § 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 differences, we apply the appropriate wage index value to the labor portion of the HH PPS rates. As discussed in section III.C.1 of this proposed rule, based on the proposed 2016-based home health market basket, the proposed labor-related share would be 76.1 percent and the proposed nonlabor-related share would be 23.9 percent for CY 2019. The CY 2019 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 will be adjusted as described in section III.B of this proposed rule. The following are the steps we take to compute the case-mix 11 ‘‘Revised Delineations of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and Guidance on Uses of the Delineations of These Areas’’. OMB BULLETIN NO. 17–01. August 15, 2017. https:// www.whitehouse.gov/sites/whitehouse.gov/files/ omb/bulletins/2017/b-17-01.pdf. 12 ‘‘Revised Delineations of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and Guidance on Uses of the Delineations of These Areas’’. OMB BULLETIN NO. 18–03. April 10, 2018. https:// www.whitehouse.gov/wp-content/uploads/2018/04/ OMB-BULLETIN-NO.-18-03-Final.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 32370 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules and wage-adjusted 60-day episode rate for CY 2019: • Multiply the national 60-day episode rate by the patient’s applicable case-mix weight. • Divide the case-mix adjusted amount into a labor (76.1 percent) and a non-labor portion (23.9 percent). • Multiply the labor portion by the applicable wage index based on the site of service of the beneficiary. • 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, we propose 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 2 percentage points. Any reduction of the percentage change would apply only to the calendar year involved and would not be considered in computing the prospective payment amount for a subsequent calendar year. Medicare pays the national, standardized 60-day case-mix and 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 (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 will 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 adjustment (LUPA) is provided on a pervisit basis as set forth in §§ 484.205(c) and 484.230. • A partial episode payment (PEP) 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. CY 2019 National, Standardized 60Day Episode Payment Rate Section 1895(b)(3)(A)(i) of the Act requires that the 60-day episode base rate and other applicable amounts be standardized in a manner that eliminates the effects of variations in relative case-mix and area wage adjustments among different home health agencies in a budget neutral manner. To determine the CY 2019 national, standardized 60-day episode payment rate, we apply a wage index budget neutrality factor and a case-mix budget neutrality factor described in section III.B of this proposed rule; and the home health payment update percentage discussed in section III.C.2 of this proposed rule. To calculate the wage index budget neutrality factor, we simulated total payments for non-LUPA episodes using the CY 2019 wage index (including the application of the proposed laborrelated share of 76.1 percent and the proposed non-labor-related share of 23.9 percent) and compared it to our simulation of total payments for nonLUPA episodes using the CY 2018 wage index and CY 2018 (including the application of the current labor-related share of 78.535 percent and the nonlabor-related of 21.465). By dividing the total payments for non-LUPA episodes using the CY 2019 wage index by the total payments for non-LUPA episodes using the CY 2018 wage index, we obtain a wage index budget neutrality factor of 0.9991. We would apply the wage index budget neutrality factor of 0.9991 to the calculation of the CY 2019 national, standardized 60-day episode payment rate. As discussed in section III.B of this proposed rule, to ensure the changes to the case-mix weights are implemented in a budget neutral manner, we propose to apply a case-mix weight budget neutrality factor to the CY 2019 national, standardized 60-day episode payment rate. The case-mix weight budget neutrality factor is calculated as the ratio of total payments when CY 2019 case-mix weights are applied to CY 2017 utilization (claims) data to total payments when CY 2018 case-mix weights are applied to CY 2017 utilization data. The case-mix budget neutrality factor for CY 2019 is 1.0163 as described in section III.B of this proposed rule. Next, we would update the payment rates by the CY 2019 home health payment update percentage of 2.1 percent as described in section III.C.2 of this proposed rule. The CY 2019 national, standardized 60-day episode payment rate is calculated in Table 18. TABLE 18—CY 2019 60-DAY NATIONAL, STANDARDIZED 60-DAY EPISODE PAYMENT AMOUNT Case-mix weights budget neutrality factor CY 2019 HH payment update CY 2019 National, standardized 60-day episode payment $3,039.64 .......................................................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 CY 2018 national, standardized 60-day episode payment Wage index budget neutrality factor × 0.9991 × 1.0163 × 1.021 $3,151.22 The CY 2019 national, standardized 60-day episode payment rate for an HHA that does not submit the required VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 quality data is updated by the CY 2019 home health payment update of 2.1 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 percent minus 2 percentage points and is shown in Table 19. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32371 TABLE 19—CY 2019 NATIONAL, STANDARDIZED 60-DAY EPISODE PAYMENT AMOUNT FOR HHAS THAT DO NOT SUBMIT THE QUALITY DATA CY 2018 national, standardized 60-day episode payment Wage index budget neutrality factor Case-mix weights budget neutrality factor CY 2019 HH payment update minus 2 percentage points CY 2019 National, standardized 60-day episode payment $3,039.64 .......................................................................................................... × 0.9991 × 1.0163 × 1.001 $3,089.49 c. CY 2019 National Per-Visit Rates The national per-visit rates are used to pay LUPAs (episodes with four or fewer visits) and are also used to compute imputed costs in outlier calculations. The per-visit rates are paid by type of visit or HH discipline. The six HH disciplines are as follows: • Home health aide (HH aide). • Medical Social Services (MSS). • Occupational therapy (OT). • Physical therapy (PT). • Skilled nursing (SN). • Speech-language pathology (SLP). To calculate the CY 2019 national pervisit rates, we started with the CY 2018 national per-visit rates. Then we applied a wage index budget neutrality factor to ensure budget neutrality for LUPA per- visit payments. We calculated the wage index budget neutrality factor by simulating total payments for LUPA episodes using the CY 2019 wage index and comparing it to simulated total payments for LUPA episodes using the CY 2018 wage index. By dividing the total payments for LUPA episodes using the CY 2019 wage index by the total payments for LUPA episodes using the CY 2018 wage index, we obtained a wage index budget neutrality factor of 1.0000. We apply the wage index budget neutrality factor of 1.0000 in order to calculate the CY 2019 national per-visit rates. The LUPA per-visit rates are not calculated using case-mix weights. Therefore, no case-mix weights budget neutrality factor is needed to ensure budget neutrality for LUPA payments. Lastly, the per-visit rates for each discipline are updated by the CY 2019 home health payment update percentage of 2.1 percent. The national per-visit rates are adjusted by the wage index based on the site of service of the beneficiary. The per-visit payments for LUPAs are separate from the LUPA addon payment amount, which is paid for episodes that occur as the only episode or initial episode in a sequence of adjacent episodes. The CY 2019 national per-visit rates for HHAs that submit the required quality data are updated by the CY 2019 HH payment update percentage of 2.1 percent and are shown in Table 20. TABLE 20—CY 2019 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA HH Discipline CY 2018 per-visit payment Home Health Aide ............................................................................................ Medical Social Services ................................................................................... Occupational Therapy ...................................................................................... Physical Therapy .............................................................................................. Skilled Nursing ................................................................................................. Speech-Language Pathology ........................................................................... $64.94 229.86 157.83 156.76 143.40 170.38 The CY 2019 per-visit payment rates for HHAs that do not submit the required quality data are updated by the CY 2019 HH payment update percentage Wage index budget neutrality factor × × × × × × 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 CY 2019 HH payment update × × × × × × 1.021 1.021 1.021 1.021 1.021 1.021 CY 2019 per-visit payment $66.30 234.69 161.14 160.05 146.41 173.96 of 2.1 percent minus 2 percentage points and are shown in Table 21. TABLE 21—CY 2019 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA amozie on DSK3GDR082PROD with PROPOSALS2 HH Discipline CY 2018 per-visit rates Home Health Aide ............................................................................................ Medical Social Services ................................................................................... Occupational Therapy ...................................................................................... Physical Therapy .............................................................................................. Skilled Nursing ................................................................................................. Speech-Language Pathology ........................................................................... $64.94 229.86 157.83 156.76 143.40 170.38 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 Wage index budget neutrality factor × × × × × × 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 E:\FR\FM\12JYP2.SGM 12JYP2 CY 2019 HH payment update minus 2 percentage points × × × × × × 1.001 1.001 1.001 1.001 1.001 1.001 CY 2019 per-visit rates $65.00 230.09 157.99 156.92 143.54 170.55 32372 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors LUPA episodes that occur as the only episode or as an initial episode in a sequence of adjacent episodes are adjusted by applying an additional amount to the LUPA payment before adjusting for area wage differences. In the CY 2014 HH PPS final rule (78 FR 72305), we changed the methodology for calculating the LUPA add-on amount by finalizing the use of three LUPA add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. We multiply the per-visit payment amount for the first SN, PT, or SLP visit in LUPA episodes that occur as the only episode or an initial episode in a sequence of adjacent episodes by the appropriate factor to determine the LUPA add-on payment amount. For example, in the case of HHAs that do submit the required quality data, 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 will be $270.14 (1.8451 multiplied by $146.41), subject to area wage adjustment. e. CY 2019 Non-Routine Medical Supply (NRS) Payment Rates All medical supplies (routine and nonroutine) must be provided by the HHA while the patient is under a home health plan of care. Examples of supplies that can be considered non- routine include dressings for wound care, I.V. supplies, ostomy supplies, catheters, and catheter supplies. Payments for NRS are computed by multiplying the relative weight for a particular severity level by the NRS conversion factor. To determine the CY 2019 NRS conversion factor, we updated the CY 2018 NRS conversion factor ($53.03) by the CY 2019 home health payment update percentage of 2.1 percent. We did 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 payment amount is computed. The proposed NRS conversion factor for CY 2019 is shown in Table 22. TABLE 22—CY 2019 NRS CONVERSION FACTOR FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA CY 2018 NRS conversion factor CY 2019 HH payment update CY 2019 NRS conversion factor $53.03 ...................................................................................................................................................................... × 1.021 $54.14 Using the CY 2019 NRS conversion factor, the payment amounts for the six severity levels are shown in Table 23. TABLE 23—CY 2019 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 updated the CY 2018 NRS conversion factor ($53.03) by the CY 2019 home health payment update percentage of 2.1 percent minus 2 percentage points. The proposed CY Relative weight CY 2019 NRS payment amounts 0 1 to 14 15 to 27 28 to 48 49 to 98 99+ 0.2698 0.9742 2.6712 3.9686 6.1198 10.5254 $ 14.61 52.74 144.62 214.86 331.33 569.85 2019 NRS conversion factor for HHAs that do not submit quality data is shown in Table 24. TABLE 24—CY 2019 NRS CONVERSION FACTOR FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA amozie on DSK3GDR082PROD with PROPOSALS2 CY 2018 NRS conversion factor CY 2019 HH payment update percentage minus 2 percentage points CY 2019 NRS conversion factor $53.03 ...................................................................................................................................................................... × 1.001 $53.08 The payment amounts for the various severity levels based on the updated VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 conversion factor for HHAs that do not PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 submit quality data are calculated in Table 25. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32373 TABLE 25—CY 2019 NRS PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA Points (scoring) Severity level 1 2 3 4 5 6 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 D. Proposed Rural Add-On Payments for CYs 2019 Through 2022 described in CMS Transmittal 2047 published on March 20, 2018. 1. Background 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 210 of the MACRA amended section 421(a) of the MMA to extend the rural add-on by providing an increase of 3 percent of the payment amount otherwise made under section 1895 of the Act for HH services provided in a rural area (as defined in section 1886(d)(2)(D) of the Act), for episodes and visits ending before January 1, 2018. Section 50208(a) of the Bipartisan Budget Act of 2018 amended section 421(a) of the MMA to extend the rural add-on by providing an increase of 3 percent of the payment amount otherwise made under section 1895 of the Act for HH services provided in a rural area (as defined in section 1886(d)(2)(D) of the Act), for episodes and visits ending before January 1, 2019. This extension of the rural add-on payments was implemented as 2. Proposed Rural Add-On Payments for CYs 2019 Through 2022 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Section 50208(a)(1)(D) of the BBA of 2018 adds a new subsection (b) to section 421 of the MMA to provide rural add-on payments for episodes and visits ending during CYs 2019 through 2022 . It also mandates implementation of a new methodology for applying those payments. Unlike previous rural addons, which were applied to all rural areas uniformly, the extension provides varying add-on amounts depending on the rural county (or equivalent area) classification by classifying each rural county (or equivalent area) into one of three distinct categories. Specifically, section 421(b)(1) of the MMA, as amended by section 50208 of the BBA of 2018, provides that rural counties (or equivalent areas) would be placed into one of three categories for purposes of HH rural add-on payments: (1) Rural counties and equivalent areas in the highest quartile of all counties and equivalent areas based on the number of Medicare home health episodes furnished per 100 individuals who are entitled to, or enrolled for, benefits under part A of Medicare or enrolled for benefits under part B of Medicare only, but not enrolled in a Medicare Advantage plan under part C of Medicare, as provided in section 421(b)(1)(A) of the MMA (the ‘‘High utilization’’ category); (2) rural counties and equivalent areas with a population density of 6 individuals or fewer per square mile of land area and are not included in the category provided in section 421(b)(1)(A) of the MMA, as provided in section 421(b)(1)(B) of the MMA (the Low population density’’ category); and (3) rural counties and equivalent areas not in the categories provided in either sections 421(b)(1)(A) or 421(b)(1)(B) of the MMA, as provided in section 421(b)(1)(C) of the MMA (the ‘‘All other’’ category). The list of counties and equivalent areas used in our analysis is based on the CY 2015 HH PPS wage index file, which includes the PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 Relative weight CY 2019 NRS payment amounts 0 1 to 14 15 to 27 28 to 48 49 to 98 99+ 0.2698 0.9742 2.6712 3.9686 6.1198 10.5254 $ 14.32 51.71 141.79 210.65 324.84 558.69 names of the constituent counties for each rural and urban area designation. We used the 2015 HH PPS wage index file as the basis for our analysis because the 2015 HH PPS wage index file already included SSA state and county codes not normally included on the HH PPS wage index files, but were included in the 2015 HH PPS wage index file due to the transition to new OMB geographic area delineations that year. The CY 2015 HH PPS wage index file is available for download at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/HomeHealthPPS/HomeHealth-Prospective-Payment-SystemRegulations-and-Notices-Items/CMS1611-F.html. This file includes 3,246 counties and equivalent areas and their urban and rural status and uses the OMB’s geographic area delineations, as described in section III.C.3 of this proposed rule. We updated the information contained in this file to include any revisions to the geographic area delineations as published by the OMB in their publicly available bulletins that would reflect a change in urban and rural status. The states, the District of Columbia, and the U.S. territories of Guam, Puerto Rico, and the U.S. Virgin Islands are included in the analysis file containing 3,246 counties and equivalent areas. Of the 3,246 total counties and equivalent areas that were used in our analysis, 2,006 of these are considered rural for purposes of determining HH rural add-on payments. We identify equivalent areas based on the definition of equivalent entities as defined by the OMB in their most recent bulletin (No. 18–03) available at https:// www.whitehouse.gov/wp-content/ uploads/2018/04/OMB-BULLETIN-NO.18-03-Final.pdf.13 We consider boroughs and a municipality in Alaska, parishes in Louisiana, municipios in Puerto Rico, and independent cities in 13 ‘‘Revised Delineations of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and Guidance on Uses of the Delineations of These Areas’’. OMB BULLETIN NO. 18–03. April 10, 2018. https:// www.whitehouse.gov/wp-content/uploads/2018/04/ OMB-BULLETIN-NO.-18-03-Final.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32374 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules Maryland, Missouri, Nevada, and Virginia as equivalent areas. Under section 421(b)(1)(A) of the MMA, one category of rural counties and equivalent areas for purposes of the HH rural add-on payment is a category comprised of rural counties or equivalent areas that are in the highest quartile of all counties or equivalent areas based on the number of Medicare home health episodes furnished per 100 Medicare beneficiaries. Section 421(b)(2)(B)(i) of the MMA requires the use of data from 2015 to determine which counties or equivalent areas are in the highest quartile of home health utilization for the category described under section 421(b)(1)(A) of the MMA, that is, the ‘‘High utilization’’ category. Section 421(b)(2)(B)(ii) of the MMA requires that data from the territories are to be excluded in determining which counties or equivalent areas are in the highest quartile of home health utilization and requires that the territories be excluded from the category described by section 421(b)(1)(A) of the MMA. Under section 421(b)(2)(B)(iii) of the MMA, the Secretary may exclude data from counties or equivalent areas in rural areas with a low volume of home health episodes in determining which counties or equivalent areas are in the highest quartile of home health utilization. If data is excluded for a county or equivalent area, section 421(b)(2)(B)(iii) of the MMA requires that the county or equivalent area be excluded from the category described by section 421(b)(1)(A) of the MMA (the ‘‘High utilization’’ category). We used CY 2015 claims data and 2015 data from the Medicare Beneficiary Summary File to classify rural counties and equivalent areas into the ‘‘High utilization’’ category. We propose to classify a rural county or equivalent area into this category if the county or equivalent area is in the highest quartile (top 25th percentile) of all (urban and rural) counties and equivalent areas based on the ratio of Medicare home health episodes furnished per 100 Medicare enrollees. The Medicare Beneficiary Summary File contained information on the Social Security Administration (SSA) state and county code of the beneficiary’s mailing address and information on enrollment in Medicare Part A, B, and C during 2015. The claims data and information from the Medicare Beneficiary Summary File were pulled from the Chronic Condition Warehouse Virtual Research Data Center during December 2017. We used the claims data to determine how many home health episodes (excluding Requests for Anticipated Payments (RAPs) and zero payment episodes) VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 occurred in each state and county or equivalent area. We assigned each home health episode to the state and county code of the beneficiary’s mailing address. As stipulated by section 421(b)(2)(B)(ii) of the MMA, we excluded any data from the territories of Guam, Puerto Rico, and the U.S. Virgin Islands for determining which rural counties and equivalent areas belong in the ‘‘High utilization’’ category. We note that the territories of American Samoa and the Northern Mariana Islands were not included in the CY 2015 HH PPS wage index file to identify counties or equivalent areas for these territories so no data from these territories were included in determining the ‘‘High utilization’’ category. As we are not aware of any Medicare home health services being furnished in these two territories in recent years, we will address any application of home health rural add-on payments for these territories in the future should Medicare home health services be furnished in them. Therefore, counties and equivalent areas in the territories of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands are not included in the ‘‘High utilization’’ category, as required by section 421(b)(2)(B)(ii) of the MMA. In addition, under the authority granted to the Secretary (by section 421(b)(2)(B)(iii) of the MMA) to exclude data from counties or equivalent areas in rural areas with a low volume of home health episodes, we excluded data from rural counties and equivalent areas that had 10 or fewer episodes during 2015 for determining which counties and equivalent areas belong in the ‘‘High utilization’’ category. We believe that using a threshold of 10 or fewer episodes is a reasonable threshold for defining low volume, in accordance with section 421(b)(2)(B)(iii) of the MMA. After excluding data from (1) the territories of Guam, Puerto Rico, and the U.S. Virgin Islands and (2) counties and equivalent areas that had 10 or fewer episodes during 2015, we determined the number of home health episodes furnished per 100 enrollees for the remaining counties and equivalent areas. We determined that the counties or equivalent areas in the highest quartile have a ratio of episodes to beneficiaries that is at or above 17.72487. The highest quartile consisted of 778 counties or equivalent areas. Of those 778 counties or equivalent areas, 510 are rural and, therefore, we propose to classify these 510 rural counties or equivalent areas into the ‘‘High utilization’’ category. PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 Under section 421(b)(1)(B) of the MMA, another category of rural counties and equivalent areas for purposes of the HH rural add-on payment is a category comprised of rural counties or equivalent areas with a population density of 6 individuals or fewer per square mile of land area and that are not included in the ‘‘High utilization’’ category. Section 421(b)(2)(C) of the MMA requires that data from the 2010 decennial Census be used for purposes of determining population density with respect to the category provided under section 421(b)(1)(B) of the MMA, that is, the ‘‘Low population density’’ category. We used 2010 Census data gathered from the tables provided at: https:// factfinder.census.gov/bkmk/table/1.0/ en/DEC/10_SF1/GCTPH1.US05PR and https://www.census.gov/data/tables/ time-series/dec/cph-series/cph-t/cph-t8.html to determine which counties and equivalent areas have a population density of six individuals or fewer per square mile of land area.14 15 In examining the rural counties and equivalent areas that were not already classified into the ‘‘High utilization’’ category, we identified each rural county or equivalent area that had a population density of six individuals or fewer per square mile of land area. As a result of that analysis, we determined there are 334 rural counties or equivalent areas that have a population density of six individuals or fewer per square mile of land area and that are not already classified into the ‘‘High utilization’’ category. We propose to classify 334 rural counties or equivalent areas into the ‘‘Low population density’’ category. Lastly, section 421(b)(1)(C) of the MMA provides for a category comprised of rural counties or equivalent areas that are not included in either the ‘‘High utilization’’ or the ‘‘Low population density’’ category. After determining which rural counties and equivalent areas should be classified into the ‘‘High utilization’’ and ‘‘Low population density’’ categories, we have determined that there are 1,162 remaining rural counties and equivalent areas that do not meet the criteria for inclusion in the ‘‘High utilization’’ or ‘‘Low population density’’ categories. We propose to classify these 1,162 rural counties and 14 ‘‘Population, Housing Units, Area, and Density: 2010—United States—County by State; and for Puerto Rico 2010 Census Summary File 1’’. https:// factfinder.census.gov/bkmk/table/1.0/en/DEC/10_ SF1/GCTPH1.US05PR. 15 ‘‘Population, Housing Units, Land Area, and Density for U.S. Island Areas: 2010 (CPH–T–8)’’. 10/ 28/2013. https://www.census.gov/data/tables/timeseries/dec/cph-series/cph-t/cph-t-8.html. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules equivalent areas into the ‘‘All other’’ category. Section 421(b)(1) of the MMA specifies varying rural add-on payment percentages and varying durations of rural add-on payments for home health services furnished in a rural county or equivalent area according to which category described in section 421(b)(1)(A), 421(b)(1)(B), or 421(b)(1)(C) of the MMA that the rural county or equivalent area is classified into. The rural add-on payment percentages and duration of rural addon payments are shown in Table 26. The national standardized 60-day episode payment rate, the national per-visit rates, and the NRS conversion factor will be increased by the rural add-on 32375 payment percentages as noted in Table 26 when services are provided in rural areas. The HH Pricer module, located within CMS’ claims processing system, will increase the base payment rates provided in Tables 18 through 25 by the appropriate rural add-on percentage prior to applying any case-mix and wage index adjustments. TABLE 26—HH PPS RURAL ADD-ON PERCENTAGES, CYS 2019–2022 CY 2019 (%) Category amozie on DSK3GDR082PROD with PROPOSALS2 High utilization ................................................................................................. Low population density .................................................................................... All other ............................................................................................................ Section 421(b)(2)(A) of the MMA provides that the Secretary shall make a determination only for a single time as to which category under sections 421(b)(1)(A), 421(b)(1)(B), or 421(b)(1)(C) of the MMA that a rural county or equivalent area is classified into, and that the determination applies for the entire duration of the period for which rural add-on payments are in place under section 421(b) of the MMA. We propose that our proposed classifications of rural counties and equivalent areas in the ‘‘High utilization’’, ‘‘Low population density’’, and ‘‘All other’’ categories would be applicable throughout the period of rural add-on payments established under section 421(b) of the MMA and there would be no changes in classifications. This would mean that a rural county or equivalent area classified into the ‘‘High utilization’’ category would remain in that category through CY 2022 even after rural addon payments for that category ends after CY 2020. Similarly, a rural county or equivalent area classified into the ‘‘All other’’ category would remain in that category through CY 2022 even after rural add-on payments for that category ends after CY 2021. A rural county or equivalent area classified into the ‘‘Low population density’’ category would remain in that category through CY 2022. Section 421(b)(3) of the MMA provides that there shall be no administrative or judicial review of the classification determinations made for the rural add-on payments under section 421(b)(1) of the MMA. Section 50208(a)(2) of the Bipartisan Budget Act of 2018 amended section 1895(c) of the Act by adding a new requirement set out at section 1895(c)(3) of the Act. This requirement states that no claim for home health services may VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 CY 2020 (%) 1.5 4.0 3.0 be paid unless ‘‘in the case of home health services furnished on or after January 1, 2019, the claim contains the code for the county (or equivalent area) in which the home health service was furnished.’’ This information will be necessary in order to calculate the rural add-on payments. We are proposing that HHAs enter the FIPS state and county code, rather than the SSA state and county code, on the claim. Many HHAs are more familiar with using FIPS state and county codes since HHAs in a number of States are already using FIPS state and county codes for Statemandated reporting programs. Our analysis is based entirely on the SSA state and county codes as these are the codes that are included in the Medicare Beneficiary Summary File. We crosswalked the SSA state and county codes used in our analysis to the FIPS state and county codes in order to provide HHAs with the corresponding FIPS state and county codes that should be reported on their claims. The data used to categorize each county or equivalent area is available in the Downloads section associated with the publication of this proposed rule at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ HomeHealthPPS/Home-HealthProspective-Payment-SystemRegulations-and-Notices-Items/CMS1689-P.html. In addition, an Excel file containing the rural county or equivalent area names, their FIPS state and county codes, and their designation into one of the three rural add-on categories is available for download. We are soliciting comments regarding our application of the methodology specified by section 50208 of the Bipartisan Budget Act of 2018. PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 CY 2021 (%) 0.5 3.0 2.0 CY 2022 (%) ........................ 2.0 1.0 ........................ 1.0 ........................ E. Proposed Payments for High-Cost Outliers Under the HH PPS 1. Background Section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the home health payment amount otherwise made in the case of outliers because of unusual variations in the type or amount of medically necessary care. Under the HH PPS, outlier payments are made for episodes whose estimated costs exceed a threshold amount for each Home Health Resource Group (HHRG). The episode’s estimated cost was established as the sum of the national wage-adjusted pervisit payment amounts delivered during the episode. The outlier threshold for each case-mix group or Partial Episode Payment (PEP) adjustment is defined as the 60-day episode payment or PEP adjustment for that group plus a fixeddollar loss (FDL) amount. For the purposes of the HH PPS, the FDL amount is calculated by multiplying the HH FDL ratio by a case’s wage-adjusted national, standardized 60-day episode payment rate, which yields an FDL dollar amount for the case. The outlier threshold amount is the sum of the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL amount. The outlier payment is defined to be a proportion of the wage-adjusted estimated cost beyond the wageadjusted threshold. The proportion of additional costs over the outlier threshold amount paid as outlier payments is referred to as the losssharing ratio. As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 70399), section 3131(b)(1) of the Affordable Care Act amended section 1895(b)(3)(C) of the Act, and required the Secretary to reduce the HH PPS payment rates such that aggregate HH PPS payments were E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32376 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules reduced by 5 percent. In addition, section 3131(b)(2) of the Affordable Care Act amended section 1895(b)(5) of the Act by redesignating the existing language as section 1895(b)(5)(A) of the Act, and revising the language to state that the total amount of the additional payments or payment adjustments for outlier episodes could not exceed 2.5 percent of the estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of the Affordable Care Act also added section 1895(b)(5)(B) of the Act which capped outlier payments as a percent of total payments for each HHA at 10 percent. As such, beginning in CY 2011, 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 rates, the national per visit rates, the LUPA addon 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. In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through 43742 and 81 FR 76702), we described our concerns regarding patterns observed in home health outlier episodes. Specifically, we noted that the methodology for calculating home health outlier payments may have created a financial incentive for providers to increase the number of visits during an episode of care in order to surpass the outlier threshold; and simultaneously created a disincentive for providers to treat medically complex beneficiaries who require fewer but longer visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR 76702), we finalized changes to the methodology used to calculate outlier payments, using a cost-per-unit approach rather than a cost-per-visit approach. This change in methodology allows for more accurate payment for outlier episodes, accounting for both the number of visits during an episode of care and also the length of the visits provided. Using this approach, we now convert the national per-visit rates into per 15-minute unit rates. These per 15minute unit rates are used to calculate the estimated cost of an episode to determine whether the claim will receive an outlier payment and the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 amount of payment for an episode of care. In conjunction with our finalized policy to change to a cost-per-unit approach to estimate episode costs and determine whether an outlier episode should receive outlier payments, in the CY 2017 HH PPS final rule we also finalized the implementation of a cap on the amount of time per day that would be counted toward the estimation of an episode’s costs for outlier calculation purposes (81 FR 76725). Specifically, we limit the amount of time per day (summed across the six disciplines of care) to 8 hours (32 units) per day when estimating the cost of an episode for outlier calculation purposes. We plan to publish the cost-per-unit amounts for CY 2019 in the rate update change request, which is issued after the publication of the CY 2019 HH PPS final rule. We note that in the CY 2017 HH PPS final rule (81 FR 76724), we stated that we did not plan to re-estimate the average minutes per visit by discipline every year. Additionally, we noted that the per-unit rates used to estimate an episode’s cost will be updated by the home health update percentage each year, meaning we would start with the national per-visit amounts for the same calendar year when calculating the costper-unit used to determine the cost of an episode of care (81 FR 76727). We note that we will continue to monitor the visit length by discipline as more recent data become available, and we may propose to update the rates as needed in the future. 2. Proposed Fixed Dollar Loss (FDL) Ratio For a given level of outlier payments, there is a trade-off between the values selected for the FDL ratio and the 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 qualifying outlier episodes. Alternatively, a lower FDL ratio means that more episodes can qualify for outlier payments, but outlier payments per episode must then be lower. The FDL ratio and the loss-sharing ratio must be selected so that 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. PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 Simulations based on CY 2015 claims data (as of June 30, 2016) completed for the CY 2017 HH PPS final rule showed that outlier payments were estimated to represent approximately 2.84 percent of total HH PPS payments in CY 2017, and as such, we raised the FDL ratio from 0.45 to 0.55. We stated that raising the FDL ratio to 0.55, while maintaining a loss-sharing ratio of 0.80, struck an effective balance of compensating for high-cost episodes while still meeting the statutory requirement to target up to, but no more than, 2.5 percent of total payments as outlier payments (81 FR 76726). The national, standardized 60day 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 would pay 80 percent of the additional estimated costs. For this proposed rule, simulating payments using preliminary CY 2017 claims data (as of March 2, 2018) and the CY 2018 HH PPS payment rates (82 FR 51676), we estimate that outlier payments in CY 2018 would comprise 2.30 percent of total payments. Based on simulations using CY 2017 claims data (as of March 2, 2018) and the proposed CY 2019 payment rates presented in section III.C.4 of this proposed rule, we estimate that outlier payments would constitute approximately 2.32 percent of total HH PPS payments in CY 2019. Our simulations show that the FDL ratio would need to be changed from 0.55 to 0.51 to pay up to, but no more than, 2.5 percent of total payments as outlier payments in CY 2019. Given the statutory requirement that total outlier payments not exceed 2.5 percent of the total payments estimated to be made based under the HH PPS, we are proposing to lower the FDL ratio for CY 2019 from 0.55 to 0.51 to better approximate the 2.5 percent statutory maximum. However, we note that we are not proposing a change to the losssharing ratio (0.80) for the HH PPS to remain consistent with payment for high-cost outliers in other Medicare payment systems (for example, IRF PPS, IPPS, etc.). We note that in the final rule, we will update our estimate of outlier payments as a percent of total HH PPS payments using the most current and complete year of HH PPS data (CY 2017 claims data as of June 30, 2018 or later) and therefore, we may adjust the final FDL ratio accordingly. We invite public comments on the E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules proposed change to the FDL ratio for CY 2019. 3. Home Health Outlier Payments: Clinical Example In recent months, concerns regarding the provision of home health care for Medicare patients with chronic, complex conditions have been raised by stakeholders as well as the press.16 17 18 19 News stories and anecdotal reports indicate that Medicare patients with chronic conditions may be encountering difficulty in accessing home health care if the goal of home health care is to maintain or prevent further decline of the patient’s condition rather than improvement of the patient’s condition. While patients must require skilled care to be eligible to receive services under the Medicare home health benefit, as outlined in regulation at 42 CFR 409.42(c), we note that coverage does not turn on the presence or absence of an individual’s potential for improvement, but rather on the beneficiary’s need for skilled care. Skilled care is covered where such services are necessary to maintain the patient’s current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided. Additionally, there appears to be confusion among the HHA provider community regarding possible Medicare payment through the HH PPS, as it appears that some perceive that payment is somewhat fixed and not able to account for home health stays with higher costs. The news stories referenced an individual with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease, and the difficulties encountered in finding Medicare home health care. Below we describe a clinical example of how care for a patient with ALS could qualify for an additional outlier payment, which would serve to offset unusually high costs associated with providing home health to a patient with unusual variations in the amount of medically necessary care. This example, using payment policies in place for CY 2018, is provided for illustrative purposes only. We hope that in providing the example below, which illustrates how HHAs could be paid by Medicare for providing care to patients with higher resource use in their homes, and by reiterating that the patient’s condition does not need to improve for home health services to be covered by Medicare, that there will be a better understanding of Medicare coverage policies and how outlier payments promote access to home health services for such patients under the HH PPS. a. Clinical Scenario Amyotrophic Lateral Sclerosis (ALS) is a progressive neuromuscular degenerative disease. The incidence rates of ALS have been increasing over the last few decades, and the peak incidence rate occurs at age 75.20 The prevalence rate of ALS in the United States is 4.3 per 100,000 population.21 Half of all people affected with ALS live at least 3 or more years after diagnosis. Twenty percent live 5 years or more; up to 10 percent will live more than 10 years.22 Because of the progressive nature of this disease, care needs change and generally intensify as different body systems are affected. As such, patients with ALS often require a multidisciplinary approach to meet their care needs. The clinical care of a beneficiary with ALS typically includes the ongoing assessment of and treatment for many impacts to the body systems. As a part of a home health episode, a skilled nurse could assess the patient for shortness of breath, mucus secretions, sialorrhea, pressure sores, and pain. From these assessments, the nurse could speak with the doctor about changes to the care plan. A nurse’s aide could provide assistance with bathing, dressing, toileting, and transferring. Physical therapy services could also help the patient with range of motion exercises, adaptive transfer techniques, and assistive devices in order to maintain a level of function. The following is a description of how the provision of services per the home 32377 health plan of care could emerge for a beneficiary with ALS who qualifies for the Medicare home health benefit. We note that this example is provided for illustrative purposes only and does not constitute a specific Medicare payment scenario. b. Example One: Home Health Episodes 1 and 2 A beneficiary with ALS may be assessed by a physician in the community and subsequently be deemed to require home health services for skilled nursing, physical therapy, occupational therapy, and a home health aide. The beneficiary could receive skilled nursing twice a week for 45 minutes to assess dyspnea when transferring to a bedside commode, stage two pressure ulcer at the sacrum, and pain status. In addition, a home health aide could provide services for three hours in the morning and three hours in the afternoon on Monday, Wednesday, and Friday and two and a half hours in the morning and 2.5 hours in the afternoon on Tuesday and Thursdays to assist with bathing, dressing, and transferring. Physical therapy services twice a week for 45 minutes could be provided for adaptive transfer techniques, and occupational therapy services could be supplied twice a week for 45 minutes for assessment and teaching of assistive devices for activities of daily living to prevent or slow deterioration of the patient’s condition. Given the patient’s clinical presentation, for the purpose of this specific example, we will assign the patient payment group 40331 (C3F3S1 with 20+ therapy visits). For the purposes of this example, we assume that services are rendered per week for a total of 8 weeks per home health episode. For both the first and second home health episodes of care, the calculation to determine outlier payment utilizing payment amounts and case mix weights for CY 2018, as described in the CY 2018 HH PPS final rule (82 FR 51676), would be as follows, per 60-day episode: TABLE 27—CLINICAL SCENARIO CALCULATION TABLE: EPISODES 1 AND 2 amozie on DSK3GDR082PROD with PROPOSALS2 HH outlier—CY 2018 illustrative values Value National, Standardized 60-day Episode Payment Rate .................................... 16 https://www.npr.org/sections/health-shots/ 2018/01/17/578423012/home-care-agencies-oftenwrongly-deny-medicare-help-to-the-chronically-ill. 17 https://www.alsa.org/als-care/resources/fyi/ medicare-and-home-health-care.html. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 $3,039.64 Operation Adjuster Equals Output .................. .................. .................. .................. 18 https://patientworthy.com/2018/01/31/ chronically-ill-are-being-denied-medicare-coverageby-home-care-agencies/. 19 https://alsnewstoday.com/2018/05/09/alsmedicare-cover-home-healthcare/. PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 20 Worms PM, The epidemiology of motor neuron diseases: A review of recent studies. J Neurol Sci. 2001;191(1–2):3. 21 Mehta P, Prevalence of Amyotrophic Lateral Sclerosis—United States, 2012–2013. MMWR Surveill Summ. 2016;65(8):1. Epub 2016 Aug 5. 22 https://www.alsa.org. E:\FR\FM\12JYP2.SGM 12JYP2 32378 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 27—CLINICAL SCENARIO CALCULATION TABLE: EPISODES 1 AND 2—Continued HH outlier—CY 2018 illustrative values Value Operation Adjuster Equals Output 2.1359 3,039.64 6,492.37 6,492.37 .................. * * * .................. 2.1359 0.78535 0.21465 .................. = ¥ = .................. 6,492.37 5,098.78 1,393.59 1.2781 .................. .................. .................. .................. 5,098.78 51.66 * .................. 1.2781 .................. = = 6,516.75 51.66 .................. .................. .................. = 7,962.00 Case-Mix Weight for Payment Group 4.0331 (for C3F3S1 for 20+ therapy ) .. Case-Mix Adjusted Episode Payment Amount .................................................. Labor Portion of the Case-Mix Adjusted Episode Payment Amount ................ Non-Labor Portion of the Case-Mix Adjusted Episode Payment Amount ........ Wage Index Value (Beneficiary resides in 31084, Los Angeles-Long BeachGlendale, CA) ................................................................................................. Wage-Adjusted Labor Portion of the Case-Mix Adjusted Episode Payment Amount ........................................................................................................... NRS Payment Amount (Severity Level 2) ......................................................... Total Case-Mix and Wage-Adjusted Episode Payment Amount (WageAdjusted Labor Portion plus Non-Labor Portion of the Case-Mix Adjusted Episode Payment Amount plus the NRS Amount) ...................... Total Wage-Adjusted Fixed Dollar Loss Amount: Fixed Dollar Loss Amount (National, Standardized 60-day Episode Payment Rate * FDL Ratio) .......................................................................... Labor Portion of the Fixed Dollar Loss Amount ......................................... Non-Labor Amount of the Fixed Dollar Loss Amount ................................ Wage-Adjusted Fixed Dollar Loss Amount ................................................ 3,039.64 1,671.80 1,671.80 1,312.95 amozie on DSK3GDR082PROD with PROPOSALS2 Total Imputed Cost Amount for all Disciplines .................................... Labor Portion of the Imputed Costs for All Disciplines .............................. Non-Labor Portion of Imputed Cost Amount for All Disciplines ................. CBSA Wage Index (Beneficiary resides in 31084, Los Angeles-Long Beach-Glendale, CA) .............................................................................. Wage-Adjusted Labor Portion of the Imputed Cost Amount for All Disciplines .................................................................................................... Total Wage-Adjusted Imputed Cost Amount (Wage-Adjusted Labor Portion of the Imputed Cost Amount plus Non-Labor Portion of the Imputed Cost Amount) ............................................................... Total Payment Per 60-Day Episode: Outlier Threshold Amount (Total Wage-Adjusted Fixed Dollar Loss Amount + Total Case-Mix and Wage-Adjusted Episode Payment Amount) ................................................................................................... Total Wage-Adjusted Imputed Cost Amount—Outlier Threshold Amount (Total Wage-Adjusted Fixed Dollar Loss Amount + Total Case-Mix and Wage-Adjusted Episode Payment Amount) ........................................... Outlier Payment = Imputed Costs Greater Than the Outlier Threshold * Loss-Sharing Ratio (0.80) ....................................................................... 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00040 Fmt 4701 = = = = 1,671.80 1,312.95 358.85 1,678.08 + 358.85 = 2,036.93 48.01 .................. .................. .................. .................. 48 .................. .................. .................. .................. 48.01 15.46 * .................. 48 .................. = .................. 2,304.48 .................. 896 .................. .................. .................. .................. 15.46 50.26 * .................. 896 .................. = .................. 13,852.16 .................. 48 .................. .................. .................. .................. 50.26 50.46 * .................. 48 .................. = .................. 2,412.48 .................. 48 .................. .................. .................. .................. 50.46 * 48 = 2,422.08 .................. 20,991.20 20,991.20 .................. * * .................. 0.78535 0.21465 = = = 20,991.20 16,485.44 4,505.76 1.2781 .................. .................. .................. .................. 16,485.44 * 1.2781 = 21,070.04 21,070.04 + 4,505.76 = 25,575.80 2,036.93 + 7,962.00 = 9,998.93 25,575.80 ¥ 9,998.93 = 15,576.87 15,576.87 * 0.80 = 12,461.50 7,962.00 + 12,461.50 = 20,423.49 Total Payment Per 60-Day Episode = Total Case-Mix and WageAdjusted Episode Payment Amount + Outlier Payment ................. VerDate Sep<11>2014 0.55 0.78535 0.21465 1.2781 1,678.08 Total Wage-Adjusted Fixed Dollar Loss Amount (Wage-Adjusted Labor Portion plus Non-Labor Portion of the Case-Mix Adjusted Fixed Dollar Loss Amount) .............................................................. Total Wage-Adjusted Imputed Cost Amount: National Per-Unit Payment Amount—Skilled Nursing ................................ Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed Skilled Nursing Visit Costs (National Per-Unit Payment Amount * Number of Units) .................................................................................. National Per-Unit Payment Amount—Home Health Aide .......................... Number of 15-minute units (28 hours per week = 112 units per week for 8 weeks) .................................................................................................. Imputed Home Health Aide Costs (National Per-Unit Payment Amount * Number of Units) ..................................................................................... National Per-Unit Payment Amount—Occupational Therapy (OT) ............ Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed OT Visit Costs (National Per-Unit Payment Amount * Number of Units) ....................................................................................................... National Per-Unit Payment Amount—Physical Therapy (PT) .................... Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed PT Visit Costs (National Per-Unit Payment Amount * Number of Units) ....................................................................................................... * * * * Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32379 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules For Episodes 1 and 2 of this clinical scenario, the preceding calculation illustrates how HHAs are paid by Medicare for providing care to patients with higher resource use in their homes. c. Example Two: Home Health Episodes 3 and 4 ALS is a progressive disease such that the patient would most likely need care beyond a second 60-day HH episode. A beneficiary’s condition could become more complex, such that the patient could require a gastrostomy tube, which could be placed during a hospital stay. The patient could be discharged to home for enteral nutrition to maintain weight and continuing care for his/her stage two pressure ulcer. Given the complexity of the beneficiary’s condition in this example, the episode could remain at the highest level of care C3F3S1 and would now fit into equation 4. For the purposes of this example, we assume that services are rendered per week for a total of 8 weeks per home health episode. For both the third and fourth home health episodes of care, the calculation to determine outlier payment utilizing payment amounts and case mix weights for CY 2018 as described in as described in the CY 2018 HH PPS final rule (82 FR 51676) would be as follows, per 60-day episode: TABLE 28—CLINICAL SCENARIO CALCULATION: EPISODES 3 AND 4 HH outlier—CY 2018 illustrative values Value National, Standardized 60-day Episode Payment Rate .................................... Case-Mix Weight for Payment Group 4.0331 (for C3F3S1 for 20+ therapy) ... Case-Mix Adjusted Episode Payment Amount .................................................. Labor Portion of the Case-Mix Adjusted Episode Payment Amount ................ Non-Labor Portion of the Case-Mix Adjusted Episode Payment Amount ........ Wage Index Value (Beneficiary resides in 31084, Los Angeles-Long BeachGlendale, CA) ................................................................................................. Wage-Adjusted Labor Portion of the Case-Mix Adjusted Episode Payment Amount ........................................................................................................... NRS Payment Amount (Severity Level 2) ......................................................... Total Case-Mix and Wage-Adjusted Episode Payment Amount (WageAdjusted Labor Portion plus Non-Labor Portion of the Case-Mix Adjusted Episode Payment Amount plus the NRS Amount) ...................... Total Wage-Adjusted Fixed Dollar Loss Amount: Fixed Dollar Loss Amount (National, Standardized 60-day Episode Payment Rate * FDL Ratio) .......................................................................... Labor Portion of the Fixed Dollar Loss Amount ......................................... Non-Labor Amount of the Fixed Dollar Loss Amount ................................ Wage-Adjusted Fixed Dollar Loss Amount ................................................ Operation Adjuster Equals Output $3,039.64 2.1359 3,039.64 6,492.37 6,492.37 .................. .................. * * * .................. .................. 2.1359 0.78535 0.21465 .................. .................. = = = .................. .................. $6,492.37 5,098.78 1,393.59 1.2781 .................. .................. .................. .................. 5,098.78 324.53 * .................. 1.2781 .................. = = 6,516.75 324.53 .................. .................. .................. = 8,234.87 3,039.64 1,671.80 1,671.80 1,312.95 amozie on DSK3GDR082PROD with PROPOSALS2 Total Imputed Cost Amount for all Disciplines .................................... Labor Portion of the Imputed Costs for All Disciplines .............................. Non-Labor Portion of Imputed Cost Amount for All Disciplines ................. CBSA Wage Index (Beneficiary resides in 31084, Los Angeles-Long Beach-Glendale, CA) .............................................................................. Wage-Adjusted Labor Portion of the Imputed Cost Amount for All Disciplines .................................................................................................... Total Wage-Adjusted Imputed Cost Amount (Wage-Adjusted Labor Portion of the Imputed Cost Amount plus Non-Labor Portion of the Imputed Cost Amount) ............................................................... Total Payment Per 60-Day Episode: VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00041 Fmt 4701 0.55 0.78535 0.21465 1.2781 = = = = 1,671.80 1,312.95 358.85 1,678.08 1,678.08 Total Wage-Adjusted Fixed Dollar Loss Amount (Wage-Adjusted Labor Portion plus Non-Labor Portion of the Case-Mix Adjusted Fixed Dollar Loss Amount) .............................................................. Total Wage-Adjusted Imputed Cost Amount: National Per-Unit Payment Amount—Skilled Nursing ................................ Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed Skilled Nursing Visit Costs (National Per-Unit Payment Amount * Number of Units) .................................................................................. National Per-Unit Payment Amount—Home Health Aide .......................... Number of 15-minute units (28 hours per week = 112 units per week for 8 weeks) .................................................................................................. Imputed Home Health Aide Costs (National Per-Unit Payment Amount * Number of Units) ..................................................................................... National Per-Unit Payment Amount—Occupational Therapy (OT) ............ Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed OT Visit Costs (National Per-Unit Payment Amount * Number of Units) ....................................................................................................... National Per-Unit Payment Amount—Physical Therapy (PT) .................... Number of 15-minute units (45 minutes = 3 units twice per week for 8 weeks) ..................................................................................................... Imputed PT Visit Costs (National Per-Unit Payment Amount * Number of Units) ....................................................................................................... * * * * + 358.85 = 2,036.93 48.01 .................. .................. .................. .................. 48 .................. .................. .................. .................. 48.01 15.46 * .................. 48 .................. = .................. 2,304.48 .................. 896 .................. .................. .................. .................. 15.46 50.26 * .................. 896 .................. = .................. 13,852.16 .................. 48 .................. .................. .................. .................. 50.26 50.46 * .................. 48 .................. = .................. 2,412.48 .................. 48 .................. .................. .................. .................. 50.46 * 48 = 2,422.08 .................. 20,991.20 20,991.20 .................. * * .................. 0.78535 0.21465 = = = 20,991.20 16,485.44 4,505.76 1.2781 .................. .................. .................. .................. 16,485.44 * 1.2781 = 21,070.04 21,070.04 + 4,505.76 = 25,575.80 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32380 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 28—CLINICAL SCENARIO CALCULATION: EPISODES 3 AND 4—Continued HH outlier—CY 2018 illustrative values Value Outlier Threshold Amount (Total Wage-Adjusted Fixed Dollar Loss Amount + Total Case-Mix and Wage-Adjusted Episode Payment Amount) ................................................................................................... Total Wage-Adjusted Imputed Cost Amount¥Outlier Threshold Amount (Total Wage-Adjusted Fixed Dollar Loss Amount + Total Case-Mix and Wage-Adjusted Episode Payment Amount) ........................................... Outlier Payment = Imputed Costs Greater Than the Outlier Threshold * Loss-Sharing Ratio (0.80) ....................................................................... Total Payment Per 60-Day Episode = Total Case-Mix and WageAdjusted Episode Payment Amount + Outlier Payment ................. For Episodes 3 and 4 of this clinical scenario, the above calculation demonstrates how outlier payments could be made for patients with chronic, complex conditions under the HH PPS. We reiterate that outlier payments could provide payment to HHAs for those patients with higher resource use and that the patient’s condition does not need to improve for home health services to be covered by Medicare. We appreciate the feedback we have received from the public on the outlier policy under the HH PPS and look forward to ongoing collaboration with stakeholders on any further refinements that may be warranted. We note that this example is presented for illustrative purposes only, and is not intended to suggest that all diagnoses of ALS should receive the grouping assignment or number of episodes described here. The CMS Grouper assigns these groups based on information in the OASIS. F. Implementation of the Patient-Driven Groupings Model (PDGM) for CY 2020 amozie on DSK3GDR082PROD with PROPOSALS2 1. Background and Legislation, Overview, Data, and File Construction a. Background and Legislation In the CY 2018 HH PPS proposed rule, we proposed an alternative case mix-adjustment methodology (known as the Home Health Groupings Model or HHGM), to be implemented for home health periods of care beginning on or after January 1, 2019. Ultimately this proposed alternative case-mix adjustment methodology, including a proposed change in the unit of payment from 60 days to 30 days, was not finalized in the CY 2018 HH PPS final rule in order to allow us additional time to consider public comments for potential refinements to the methodology (82 FR 51676). On February 9, 2018, the Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115–123) was signed into law. Section 51001(a)(1) of the BBA of 2018 amended section 1895(b)(2) of the Act by adding a new subparagraph (B) to VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Operation Frm 00042 Fmt 4701 Equals Output 2,036.93 + 8,234.87 = 10,271.80 25,575.80 ¥ 10,271.80 = 15,304.00 15,304.00 * 0.80 = 12,243.20 12,243.20 + 8,234.87 = 20,478.07 require the Secretary to apply a 30-day unit of service for purposes of implementing the HH PPS, effective January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the Secretary to calculate a standard prospective payment amount (or amounts) for 30-day units of service that end during the 12-month period beginning January 1, 2020 in a budget neutral manner such that estimated aggregate expenditures under the HH PPS during CY 2020 are equal to the estimated aggregate expenditures that otherwise would have been made under the HH PPS during CY 2020 in the absence of the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of the Act requires that the calculation of the standard prospective payment amount (or amounts) for CY 2020 be made before, and not affect the application of, the provisions of section 1895(b)(3)(B) of the Act. Section 1895(b)(3)(A)(iv) of the Act additionally requires that in calculating the standard prospective payment amount (or amounts), the Secretary must make assumptions about behavioral changes that could occur as a result of the implementation of the 30-day unit of service under section 1895(b)(2)(B) of the Act and case-mix adjustment factors established under section 1895(b)(4)(B) of the Act. Section 1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide a description of the behavioral assumptions made in notice and comment rulemaking. Section 51001(a)(2)(B) of the BBA of 2018 also added a new subparagraph (D) to section 1895(b)(3) of the Act. Section 1895(b)(3)(D)(i) of the Act requires the Secretary to annually determine the impact of differences between assumed behavior changes as described in section 1895(b)(3)(A)(iv) of the Act, and actual behavior changes on estimated aggregate expenditures under the HH PPS with respect to years beginning with 2020 PO 00000 Adjuster Sfmt 4702 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, provide for one or more permanent increases or decreases to the standard prospective payment amount (or amounts) for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Additionally, 1895(b)(3)(D)(iii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, to provide for one or more temporary increases or decreases to the payment amount for a unit of home health services for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Such a temporary increase or decrease shall apply only with respect to the year for which such temporary increase or decrease is made, and the Secretary shall not take into account such a temporary increase or decrease in computing the payment amount for a unit of home health services for a subsequent year. Section 51001(a)(3) of the BBA of 2018 amends section 1895(b)(4)(B) of the Act by adding a new clause (ii) to require the Secretary to eliminate the use of therapy thresholds in the casemix system for 2020 and subsequent years. Lastly, section 51001(b)(4) of the BBA of 2018 requires the Secretary to pursue notice and comment rulemaking no later than December 31, 2019 on a revised case-mix system for payment of home health services under the HH PPS b. Overview To meet the requirement under section 51001(b)(4) of the BBA of 2018 to engage in notice and comment rulemaking on a HH PPS case-mix system and to better align payment with E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules patient care needs and better ensure that clinically complex and ill beneficiaries have adequate access to home health care, we are proposing case-mix methodology refinements through the implementation of the Patient-Driven Groupings Model (PDGM). The proposed PDGM shares many of the features included in the alternative case mix-adjustment methodology proposed in the CY 2018 HH PPS proposed rule. We propose to implement the PDGM for home health periods of care beginning on or after January 1, 2020. The implementation of the PDGM will require provider education and training, updating and revising relevant manuals, and changing claims processing systems. Implementation starting in CY 2020 would provide opportunity for CMS, its contractors, and the agencies themselves to prepare. This patientcentered model groups periods of care in a manner consistent with how clinicians differentiate between patients and the primary reason for needing home health care. As required by section 1895(b)(2)(B) of the Act, we propose to use 30-day periods rather than the 60-day episode used in the current payment system. In addition, section 1895(b)(4)(B)(ii) of the Act eliminates the use of therapy thresholds in the case-mix adjustment for determining payment. The proposed PDGM does not use the number of therapy visits in determining payment. The change from the current case-mix adjustment methodology for the HH PPS, which relies heavily on therapy thresholds as a major determinant for payment and thus provides a higher payment for a higher volume of therapy provided, to the PDGM would remove the financial incentive to overprovide therapy in order to receive a higher payment. The PDGM would base casemix adjustment for home health payment solely on patient characteristics, a more patient-focused approach to payment. Finally, the PDGM relies more heavily on clinical characteristics and other patient information (for example, diagnosis, functional level, comorbid conditions, admission source) to place patients into clinically meaningful payment categories. In total, there are 216 different payment groups in the PDGM. Costs during an episode/period of care are estimated based on the concept of resource use, which measures the costs associated with visits performed during a home health episode/period. For the current HH PPS case-mix weights, we use Wage Weighted Minutes of Care (WWMC), which uses data from the Bureau of Labor Statistics VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 (BLS) reflecting the Home Health Care Service Industry. For the PDGM, we propose shifting to a Cost-Per-Minute plus Non-Routine Supplies (CPM + NRS) approach, which uses information from the Medicare Cost Report. The CPM + NRS approach incorporates a wider variety of costs (such as transportation) compared to the BLS estimates and the costs are available for individual HHA providers while the BLS costs are aggregated for the Home Health Care Service industry. Similar to the current payment system, 30-day periods under the PDGM would be classified as ‘‘early’’ or ‘‘late’’ depending on when they occur within a sequence of 30-day periods. Under the current HH PPS, the first two 60-day episodes of a sequence of adjacent 60day episodes are considered early, while the third 60-day episode of that sequence and any subsequent episodes are considered late. Under the PDGM, the first 30-day period is classified as early. All subsequent 30-day periods in the sequence (second or later) are classified as late. We propose to adopt this timing classification for 30-day periods with the implementation of the PDGM for CY 2020. Similar to the current payment system, we propose that a 30-day period could not be considered early unless there was a gap of more than 60 days between the end of one period and the start of another. The comprehensive assessment would still be completed within 5 days of the start of care date and completed no less frequently than during the last 5 days of every 60 days beginning with the start of care date, as currently required by § 484.55, Condition of participation: Comprehensive assessment of patients. In addition, the plan of care would still be reviewed and revised by the HHA and the physician responsible for the home health plan of care no less frequently than once every 60 days, beginning with the start of care date, as currently required by § 484.60(c), Condition of participation: Care planning, coordination of services, and quality of care. Under the PDGM, we propose that each period would be classified into one of two admission source categories —community or institutional— depending on what healthcare setting was utilized in the 14 days prior to home health. The 30-day period would be categorized as institutional if an acute or post-acute care stay occurred in the 14 days prior to the start of the 30day period of care. The 30-day period would be categorized as community if there was no acute or post-acute care stay in the 14 days prior to the start of the 30-day period of care. PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 32381 The PDGM would group 30-day periods into categories based on a variety of patient characteristics. We propose grouping periods into one of six clinical groups based on the principal diagnosis. The principal diagnosis reported would provide information to describe the primary reason for which patients are receiving home health services under the Medicare home health benefit. The proposed six clinical groups, are as follows: • Musculoskeletal Rehabilitation. • Neuro/Stroke Rehabilitation. • Wounds—Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care. • Complex Nursing Interventions. • Behavioral Health Care (including Substance Use Disorders). • Medication Management, Teaching and Assessment (MMTA). Under the PDGM, we propose that each 30-day period would be placed into one of three functional levels. The level would indicate if, on average, given its responses on certain functional OASIS items, a 30-day period is predicted to have higher costs or lower costs. We are proposing to assign roughly 33 percent of periods within each clinical group to each functional level. The criteria for assignment to each of the three functional levels may differ across each clinical group. The proposed functional level assignment under the PDGM is very similar to the functional level assignment in the current payment system. Finally, the PDGM includes a comorbidity adjustment category based on the presence of secondary diagnoses. We propose that, depending on a patient’s secondary diagnoses, a 30-day period may receive ‘‘no’’ comorbidity adjustment, a ‘‘low’’ comorbidity adjustment, or a ‘‘high’’ comorbidity adjustment. For low-utilization payment adjustments (LUPAs) under the PDGM, we propose that the LUPA threshold would vary for a 30-day period under the PDGM depending on the PDGM payment group to which it is assigned. For each payment group, we propose to use the 10th percentile value of visits to create a payment group specific LUPA threshold with a minimum threshold of at least 2 for each group. Figure BBB1 represents how each 30day period of care would be placed into one of the 216 home health resource groups (HHRGs) under the proposed PDGM for CY 2020. BILLING CODE 4210–01–P E:\FR\FM\12JYP2.SGM 12JYP2 32382 BILLING CODE 4210–01–C amozie on DSK3GDR082PROD with PROPOSALS2 c. Data and File Construction To create the PDGM proposed model and related analyses, a data file based on home health episodes of care as reported in Medicare home health claims was utilized. The claims data provide episode-level data (for example, episode From and Through Dates, total number of visits, HHRG, diagnoses), as VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 well as visit-level data (visit date, visit length in 15-minute units, discipline of the staff, etc.). The claims also provide data on whether NRS was provided during the episode and total charges for NRS. The core file for most of the analyses for this proposed rule includes 100 percent of home health episode claims with Through Dates in Calendar Year (CY) 2017, processed by March 2, 2018, PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 accessed via the Chronic Conditions Data Warehouse (CCW). Original or adjustment claims processed after March 2, 2018, would not be reflected in the core file. The claims-based file was supplemented with additional variables that were obtained from the CCW, such as information regarding other Part A and Part B utilization. The data were cleaned by processing any remaining adjustments and by E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.003</GPH> Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32383 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules excluding duplicates and claims that were Requests for Anticipated Payment (RAP). In addition, visit-level variables needed for the analysis were extracted from the revenue center trailers (that is, the line items that describe the visits) and downloaded as a separate visit-level file, with selected episode-level variables merged onto the records for visits during those episodes. To account for potential data entry errors, the visitlevel variables for visit length were topcensored at 8 hours.23 A set of data cleaning exclusions were applied to the episode-level file, which resulted in the exclusion of the following: • Episodes that were RAPs. • Episodes with no covered visits. • Episodes with any missing units or visit data. • Episodes with zero payments. • Episodes with no charges. • Non-LUPA episodes missing an HHRG. The analysis file also includes data on patient characteristics obtained from the OASIS assessments conducted by home health agency (HHA) staff at the start of each episode. The assessment data are electronically submitted by HHAs to a central CMS repository. In constructing the core data file, 100 percent of the OASIS assessments submitted October 2016 through December 2017 from the CMS repository were uploaded by CMS to the CCW. A CCW-derived linking key (Bene ID) was used to match the OASIS data with CY 2017 episodes of care. Episodes that could not be linked with an OASIS assessment were excluded from the analysis file, as they included insufficient patient-level data to create the PDGM. To construct measures of resource use, a variety of data sources were used (see section III.F.2 of this proposed rule for the proposed methodology used to calculate the cost of care under the PDGM). First, BLS data on average wages and fringe benefits were used to produce wage-weighted minutes of care (WWMC), the approach used in the current system to calculate the cost of care. The wage data are for North American Industry Classification System (NAICS) 621600—Home Health Care Services (see Table 29). TABLE 29—BLS STANDARD OCCUPATION CLASSIFICATION (SOC) CODES FOR HOME HEALTH PROVIDERS— Continued Standard Occupation Code (SOC) No. 29–1127 ................ 21–1022 ................ 21–1023 ................ 31–1011 ................ Occupation title Speech-Language Pathologists. Medical and Public Health Social Workers. Mental Health and Substance Abuse Social Workers. Home Health Aides. The WWMC approach determines resource use for each episode by multiplying utilization (in terms of the number of minutes of direct patient care provided by each discipline) by the corresponding opportunity cost of that care (represented by wage and fringe TABLE 29—BLS STANDARD OCCUPA- benefit rates from the BLS).24 Table 30 TION CLASSIFICATION (SOC) CODES shows the occupational titles and corresponding mean hourly wage rates FOR HOME HEALTH PROVIDERS from the BLS. The employer cost per hour worked shown in the fifth column Standard Occupation Occupation is calculated by adding together the title Code (SOC) No. mean hourly wage rates and the fringe 29–1141 ................ Registered Nurses. benefit rates from the BLS. For home 29–2061 ................ Licensed Practical and Lihealth disciplines that include multiple censed Vocational Nurses. occupations (such as skilled nursing), 29–1123 ................ Physical Therapists. the opportunity cost is generated by 31–2021 ................ Physical Therapist Assistants. 31–2022 ................ Physical Therapist Aides. weighting the employer cost by the 29–1122 ................ Occupational Therapists. proportions of the labor mix.25 31–2011 ................ Occupational Therapist AssistOtherwise, the opportunity cost is the ants. same as the employer cost per hour. 31–2012 ................ Occupational Therapist Aides. TABLE 30—OCCUPATIONAL EMPLOYMENT AND WAGES PROVIDED BY THE FEDERAL BUREAU OF LABOR STATISTICS amozie on DSK3GDR082PROD with PROPOSALS2 Occupation title Registered Nurses .............. Licensed Practical and Licensed Vocational Nurses. Physical Therapists ............. Physical Therapist Assistants. Occupational Therapists ..... Occupational Therapist Assistants. Speech-Language Pathologists. Medical and Public Health Social Workers. Mental Health and Substance Abuse Social Workers. Home Health Aides ............. National employment counts Mean hourly wage Estimate of benefits as a % of wages Estimated employer cost per hour worked Labor mix Home health discipline Opportunity cost 179,280 85,410 $33.34 22.03 43.85 43.85 $47.96 31.69 0.66 0.34 Skilled Nursing ................... $42.42 24,810 7,330 47.23 31.43 40.92 35.79 66.55 42.68 0.66 0.34 Physical Therapy ................ 58.55 10,760 2,270 45.27 33.83 40.92 35.79 63.79 45.94 0.79 0.21 Occupational Therapy ........ 59.97 5,360 47.08 40.92 66.34 ............ Speech Therapy ................. 66.34 18,930 28.76 40.92 40.53 0.97 Medical Social Service ....... 40.42 500 25.85 40.92 36.43 0.03 408,920 11.25 35.79 15.28 ............ Home Health Aide .............. 15.28 Source: May 2016 National Industry-Specific Occupational Employment and Wage Estimates—NAICS 621600—Home Health Care Services. 23 Less than 0.1 percent of all visits were recorded as having greater than 8 hours of service. 24 Opportunity costs represent the foregone resources from providing each minute of care versus using the resources for another purpose (the next best alternative). Generally, opportunity costs VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 represent more than the monetary costs, but in these analyses, they are proxied using hourly wage rates. 25 Labor mix represents the percentage of employees with a particular occupational title (as obtained from claims) within a home health PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 discipline. Physical therapist aides and occupational therapist aides were not included in the labor mix. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32384 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules Home Health Agency Medicare Cost Report (MCR) data for FY 2016 were also used to construct a measure of resource use after trimming out HHAs whose costs were outliers (see section III.F.2 of this proposed rule). These data are used to provide a representation of the average costs of visits provided by HHAs in the six Medicare home health disciplines: Skilled nursing; physical therapy; occupational therapy; speechlanguage pathology; medical social services; and home health aide services. Cost report data are publicly available at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/ Downloadable-Public-Use-Files/CostReports/. More details regarding how HHA MCR data were used in constructing the CPM+NRS measure of resource use can be found in section III.F.2 of this proposed rule. A comment submitted in response to the CY 2018 HH PPS proposed rule questioned the trimming process for the Medicare cost report data used to calculate the cost-per-minute plus nonroutine supplies (CPM+NRS) methodology used to estimate resource use (outlined in section III.F.2 of this rule). The commenter stated that for rebasing, CMS audited 100 cost reports and the findings of such audits found that costs were overstated by 8 percent and that finding was attributed to the entire population of HHA Medicare cost reports. The commenter questioned if CMS applied the 8 percent ‘‘adjustment factor’’ in last year’s proposed rule, requested CMS provide the number of cost reports used for the proposed rule, asked if only cost reports of freestanding HHAs were used, and requested that CMS describe what percentage of cost reports did not list any costs for NRS, yet listed NRS charges. For the calculations in the CY 2018 HH PPS proposed rule, CMS applied the trimming methodology described in detail in the ‘‘Analyses in Support of Rebasing & Updating Medicare Home Health Payment Rates’’ Report available at: https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ HomeHealthPPS/Downloads/Analysesin-Support-of-Rebasing-and-Updatingthe-Medicare-Home-Health-PaymentRates-Technical-Report.pdf. This is also the trimming methodology outlined in the CY 2014 HH PPS proposed rule (78 FR 40284). Of note, for each discipline and for NRS, we also followed the methodology laid out in the ‘‘Rebasing Report’’ by trimming out values that fell in the top or bottom 1 percent of the distribution across all HHAs. This included the cost-per-visit values for each discipline and NRS cost-to-charge ratios that fell in the top or bottom 1 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 percent of the distribution across all HHAs. For this proposed rule, we applied the same trimming methodology. We included both freestanding and facility-based HHA Medicare cost report data in our rebasing calculations as outlined in the CY 2014 HH PPS proposed and final rules and in our analysis of FY 2015 HHA Medicare cost report data for the CY 2018 HH PPS proposed rule. We similarly included both freestanding and facility-based HHA Medicare cost report data in our analysis of FY 2016 cost report data for this proposed rule. We note that although we found an 8 percent overstatement of costs from the Medicare cost reports audits performed to support the rebasing adjustments, we did not apply an 8 percent adjustment to HHA costs in the CY 2014 HH PPS proposed or final rules. We also did not apply an 8 percent adjustment to the costs in the CY 2018 HH PPS proposed rule or in this proposed rule. The 8 percent overstatement was determined using a small sample size of HHA Medicare cost reports and the CY 2014 HH PPS proposed rule included this information as illustrative only. The information was not used in any cost calculations past or present. Before trimming, there were 10,394 cost reports for FY 2016. In this proposed rule, we used 7,458 cost reports. Of the 7,458 cost reports, 5,447 (73.4 percent) had both NRS charges and costs, 1,672 (22.4 percent) had neither NRS charges or costs, and 339 (4.5 percent) had NRS charges but no NRS costs. There were no cost reports with NRS costs, but no NRS charges. The initial 2017 analytic file included 6,771,059 episodes. Of these, 959,410 (14.2 percent) were excluded because they could not be linked to OASIS assessments or because of the claims data cleaning process reasons listed above. This yielded a final analytic file that included 5,811,649 episodes. Those episodes are 60-day episodes under the current payment system, but for the PDGM those 60-day episodes were converted into two 30-day periods. This yielded a final PDGM analytic file that included 10,160,226, 30-day periods. Certain 30-day periods were excluded for the following reasons: • Inability to merge to certain OASIS items to create the episode’s functional level that is used for risk adjustment. For all the periods in the analytic file, there was a look-back through CY 2016 for a period with a Start of Care or Resumption of Care assessment that preceded the period being analyzed and was in the same sequence of periods. If such an assessment was found, it was PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 used to impute responses for OASIS items that were not included in the follow-up assessment. Periods that were linked to a follow-up assessment which did not link to a Start of Care or Resumption of Care assessment using the process described above were dropped (after exclusions, n = 9,471,529). • No nursing visits or therapy visits (after exclusions, n = 9,287,622). • LUPAs were excluded from the analysis. Periods that are identified as LUPAs in the current payment system were excluded in the creation of the functional score. Following the creation of the score (and the corresponding levels), case-mix group specific LUPA thresholds were created and episodes/ periods were excluded that were below the new LUPA threshold when computing the case-mix weights.26 Therefore, the final analytic sample included 8,624,776 30-day periods that were used for the analyses in the PDGM. In response to the CY 2018 HH PPS proposed rule, we received many comments stating there was limited involvement with the industry in the development of the alternative case-mix adjustment methodology. Commenters also stated that they were unable to obtain the necessary data in order to replicate and model the effects on their business. We note that, through notice and comment rulemaking and other processes, stakeholders always have the opportunity to reach out to CMS and provide suggestions for improvement in the payment methodology under the HH PPS. In the CY 2014 HH PPS final rule, we noted that we were continuing to work on improvements to our case-mix adjustment methodology and welcomed suggestions for improving the case-mix adjustment methodology as we continued in our case-mix research (78 FR 72287). The analyses and the ultimate development of an alternative case-mix adjustment methodology was shared with stakeholders via technical expert panels, clinical workgroups, and special open door forums. We also provided high-level summaries on our case-mix methodology refinement work in the HH PPS proposed rules for CYs 2016 and 2017 (80 FR 39839, and 81 FR 76702). A detailed technical report was posted on the CMS website in December of 2016, additional technical expert panel and clinical workgroup webinars were held after the posting of the technical report, and a National Provider call occurred in January 2017 26 The case-mix group specific LUPA thresholds were determined using episodes that were considered LUPAs under the current payment system. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 to further solicit feedback from stakeholders and the general public.27 28 As noted above, the CY 2018 HH PPS proposed rule further solicited comments on an alternative case-mix adjustment methodology. Ultimately the proposed alternative case-mix adjustment methodology, including a proposed change in the unit of payment from 60 days to 30 days, was not finalized in the CY 2018 HH PPS final rule in order to allow CMS additional time to consider public comments for potential refinements to the model (82 FR 51676). On February 1, 2018, CMS convened another TEP, to gather perspectives and identify and prioritize recommendations from industry leaders, clinicians, patient representatives, and researchers with experience with home health care and/or experience in home health agency management regarding the casemix adjustment methodology refinements described in the CY 2018 HH PPS proposed rule (82 FR 35270), and alternative case-mix models submitted during 2017 as comments to the CY 2018 HH PPS proposed rule. During the TEP, there was a description and solicitation of feedback on the components of the proposed case-mix methodology refinement, such as resource use, 30-day periods, clinical groups, functional levels, comorbidity groups, and other variables used to group periods into respective case-mix groups. Also discussed were the comments received from the CY 2018 HH PPS proposed rule, the creation of case-mix weights, and an open discussion to solicit feedback and recommendations for next steps. This TEP satisfied the requirement set forth in section 51001(b)(1) of the BBA of 2018, which requires that at least one session of such a TEP be held between January 1, 2018 and December 31, 2018. Lastly, section 51001(b)(3) of the BBA of 2018 requires the Secretary to issue a report to the Committee on Ways and Means and Committee on Energy and Commerce of the House of Representatives and the Committee on 27 Abt Associates. ‘‘Overview of the Home Health Groupings Model.’’ Medicare Home Health Prospective Payment System: Case-Mix Methodology Refinements. Cambridge, MA, November 18, 2016. Available at https:// downloads.cms.gov/files/hhgm%20technical%20 report%20120516%20sxf.pdf. 28 Centers for Medicare & Medicaid Services (CMS). ‘‘Certifying Patients for the Medicare Home Health Benefit.’’ MLN ConnectsTM National Provider Call. Baltimore, MD, December 16, 2016. Slides, examples, audio recording and transcript available at https://www.cms.gov/Outreach-andEducation/Outreach/NPC/National-Provider-Callsand-Events-Items/2017-01-18-HomeHealth.html?DLPage=2&DLEntries=10&DLSort=0& DLSortDir=descending. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 32385 Finance of the Senate on the recommendations from the TEP members, no later than April 1, 2019. This report is available on the CMS HHA Center web page at: https:// www.cms.gov/center/provider-Type/ home-Health-Agency-HHA-Center.html and satisfies the requirement of section 51001(b)(3) of the BBA of 2018. Finally, with respect to comments regarding the availability of data to replicate and model the effects of the PDGM on HHAs, we note that generally the data needed to replicate and model the effects of the proposed PDGM are available by request through the CMS Data Request Center.29 Although claims data for home health are available on a quarterly and annual basis as Limited Data Set (LDS) files and Research Identifiable Files (RIFs); we note that assessment data (OASIS) are not available as LDS files through the CMS Data Request Center. While CMS is able to provide LDS files in a more expedited manner, it may take several months for CMS to provide RIFs. Therefore, we will provide upon request a Home Health Claims-OASIS LDS file to accompany the CY 2019 HH PPS proposed and final rules. We believe that in making a Home Health Claims-OASIS LDS file available upon request in conjunction with the CY 2019 HH PPS proposed and final rules, this would address concerns from stakeholders regarding data access and transparency in annual ratesetting. The Home Health Claims-OASIS LDS file can be requested by following the instructions on the following CMS website: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-forOrder/Data-Disclosures-DataAgreements/DUA_-_NewLDS.html and a file layout will be available. This file will contain information from claims data matched with assessment data for CY 2017, both obtained from the Chronic Conditions Data Warehouse (CCW), and each observation in the file will represent a 30-day period of care with variables created that provide information corresponding to both the 30-day period of care and the 60-day episode of care. The file will also contain variables that show the case-mix group that a particular claim would be grouped into under both the new PDGM case-mix methodology and the current case-mix adjustment methodology as well as variables for all the assessment items used for grouping the claim into its appropriate case-mix group under the PDGM and variables used for calculating resource use. Because this Home Health Claims-OASIS LDS file includes variables used for calculating resource use, this file will also include publically available data from home health cost reports and the BLS. Some of the cost data in this file is trimmed and imputed before being used as outlined above. We note that much of the content of the Home Health ClaimsOASIS LDS file will be derived from CMS data sources. That is, many elements of claims or elements of OASIS will not be copied to the LDS file as is. For example, we will have variables in the data files that will record the aggregated number of visits and minutes of service by discipline type. We will need to create those aggregates from the line item data available on the claims data. Because we will be taking data from different sources (claims, OASIS, and cost reports/BLS), we will match the data across those sources. Information from claims and costs reports will be linked using the CCN. OASIS assessment data will be linked to those sources using information available both on the claim and OASIS. As noted earlier in this section, any episodes that could not be linked with an OASIS assessment were excluded from the analysis file, as they included insufficient patient-level data to re-group such episodes into one of the 216 case-mix groups under the PDGM. In addition, similar to the CY 2018 HH PPS proposed rule, we will again provide a PDGM Grouper Tool in conjunction with this proposed rule on CMS’ HHA Center web page to allow HHAs to replicate the PDGM methodology using their own internal data.30 In addition, in conjunction with this proposed rule, we will post a file on the HHA Center web page that contains estimated Home Health Agency-level impacts as a result of the proposed PDGM. 29 https://www.resdac.org/cms-data/request/cmsdata-request-center. 30 https://www.cms.gov/center/provider-Type/ home-Health-Agency-HHA-Center.html. PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 2. Methodology Used To Calculate the Cost of Care To construct the case-mix weights for the PDGM proposal, the costs of providing care needed to be determined. A Wage-Weighted Minutes of Care (WWMC) approach is used in the current payment system based on data from the BLS. However, we are proposing to adopt a Cost-per-Minute plus Non-Routine Supplies (CPM + NRS) approach, which uses information from HHA Medicare Cost Reports and Home Health Claims. • Home Health Medicare Cost Report Data: All Medicare-certified HHAs must report their own costs through publicly- E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32386 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules available home health cost reports maintained by the Healthcare Cost Report Information System (HCRIS). Freestanding HHAs report using a HHAspecific cost report while HHAs that are hospital-based report using the HHA component of the hospital cost reports. These cost reports enable estimation of the cost per visit by provider and the estimated NRS cost to charge ratios. To obtain a more robust estimate of cost, a trimming process was applied to remove cost reports with missing or questionable data and extreme values.31 • Home Health Claims Data: Medicare home health claims data are used in both the previous WWMC approach and in the CPM+NRS method to obtain minutes of care by discipline of care. Under the proposed PDGM, we group 30-day periods of care into their casemix groups taking into account admission source, timing, clinical group, functional level, and comorbidity adjustment. From there, the average resource use for each case-mix group dictates the group’s case-mix weight. We propose that resource use be estimated with the cost of visits recorded on the home health claim plus the cost of NRS recorded on the claims. The cost of NRS is generated by taking NRS charges on claims and converting them to costs using a NRS cost to charge ratio that is specific to each HHA. NRS costs are then added to the resource use estimates. That overall resource use estimate is then used to establish the case-mix weights. Similar to the current system, NRS would still be paid prospectively under the PDGM, but the PDGM eliminates the separate case-mix adjustment model for NRS. Under the proposed alternative casemix methodology discussed in the CY 2018 HH PPS proposed rule, we proposed to calculate resource use using the CPM+NRS approach (82 FR 35270). In response to the CY 2018 HH PPS proposed rule, several commenters expressed support for the proposed change to the CPM+NRS methodology used to measure resource use, noting that such an approach incorporates a wider variety of costs (such as transportation) compared to the current WWMC approach. Alternatively, other commenters responding to last year’s proposed rule objected to using 31 The trimming methodology is described in the report ‘‘Analyses in Support of Rebasing & Updating Medicare Home Health Payment Rates’’ (Morefield, Christian, and Goldberg 2013). See https://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HomeHealthPPS/Downloads/ Analyses-in-Support-of-Rebasing-and-Updatingthe-Medicare-Home-Health-Payment-RatesTechnical-Report.pdf. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Medicare cost report data rather than Wage-Weighted Minutes of Care (WWMC) to calculate resource use. The commenters indicated that the strength and utility of period-specific cost depends on the accuracy and consistency of agencies’ reported charges, cost-to-charge ratios, and period minutes and indicated that they believe there are no incentives for ensuring the accuracy of HHA cost reports, which they believe may result in erroneous data. Several commenters also indicated that the use of cost report data in lieu of WWMC favors facilitybased agencies because they believe that facility-based agencies have the ability to allocate indirect overhead costs from their parent facilities to their service cost and argued that the proposed alternative case-mix methodology would reward inefficient HHAs with historically high costs. A few commenters stated that Non-Routine Supplies (NRS) should not be incorporated into the base rate and then wage-index adjusted (as would be the case if CMS were to use the CPM+NRS approach to estimate resource use). The commenters stated that HHAs’ supply costs are approximately the same nationally, regardless of rural or urban locations and regardless of the wageindex, and including NRS in the base rate will penalize rural providers and unnecessarily overpay for NRS in high wage-index areas. We note that in accordance with the requirement of section 51001 of the BBA of 2018, a Technical Expert Panel (TEP) convened in February 2018 to solicit feedback and identify and prioritize recommendations from a wide variety of industry experts and patient representatives regarding the public comments received on the proposed alternative case-mix adjustment methodology. We received similar comments on the approach to calculating resource use using the CPM+NRS approach, versus the WWMC approach, bothin response to the CY 2018 HH PPS proposed rule and those provided by the TEP participants. We believe that using HHA Medicare cost report data, through the CPM+NRS approach, to calculate the costs of providing care better reflects changes in utilization, provider payments, and supply amongst Medicare-certified HHAs. Using the BLS average hourly wage rates for the entire home health care service industry does not reflect changes in Medicare home health utilization that impact costs, such as the allocation of overhead costs when Medicare home health visit patterns change. Utilizing data from HHA Medicare cost reports better represents PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 the total costs incurred during a 30-day period (including, but not limited to, direct patient care contract labor, overhead, and transportation costs), while the WWMC method provides an estimate of only the labor costs (wage and fringe benefit costs) related to direct patient care from patient visits that are incurred during a 30-day period. With regards to accuracy, we note that each HHA Medicare cost report is required to be certified by the Officer or Director of the home health agency as being true, correct, and complete with potential penalties should any information in the cost report be a misrepresentation or falsification of information. As noted above, and in the CY 2018 HH PPS proposed rule, we applied the trimming methodology described in detail in the ‘‘Analyses in Support of Rebasing & Updating Medicare Home Health Payment Rates’’ Report. This is also the trimming methodology outlined in the CY 2014 HH PPS proposed rule (78 FR 40284) in determining the rebased national, standardized 60-day episode payment amount. For each discipline and for NRS used in calculating resource use using the CPM+NRS approach, we also followed the methodology laid out in the ‘‘Rebasing Report’’ by trimming out values that fall in the top or bottom 1 percent of the distribution across all HHAs. This included the cost per visit values for each discipline and NRS costto-charge ratios that fall in the top or bottom 1 percent of the distribution across all HHAs. Normalizing data by trimming out missing or extreme values is a widely accepted methodology both within CMS and amongst the health research community and provides a more robust measure of average costs per visit that is reliable for the purposes of establishing base payment amounts and case-mix weights under the HH PPS. Using HHA Medicare cost report data to establish the case-mix weight aligns with the use of this data in determining the national, standardized 60-day episode payment amount under the HH PPS. In response to commenters’ concerns regarding the allocation of overhead costs by facility-based HHAs, we note that a single HHA’s costs impact only a portion of the calculation of the weights and costs are blended together across all HHAs. The payment regression was estimated using 8,624,776 30-day periods from 10,480 providers. On average, each provider contributed 823 30-day periods to the payment regression, which is only 0.010 percent of all 30-day periods. Therefore, including or excluding any single HHA, on average, would not dramatically E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules impact the results of the payment regression. Further, facility-based HHAs are only 8 percent of HHAs whereas 92 percent of HHAs are freestanding, and coincidentally the percentage of 30-day periods furnished by facility-based versus freestanding HHAs is also 8 and 92 percent, respectively. Additionally, in the PDGM, we estimate the payment regression using provider-level fixed effects; therefore we are looking at the within provider variation in resource use. In the CY 2008 HH PPS final rule, CMS noted that use of non-routine medical supplies is unevenly distributed across episodes of care in home health. In addition, the majority of episodes do not incur any NRS costs and, at that time, the current payment system overcompensated for episodes with no NRS costs. In the CY 2008 HH PPS proposed rule, we stated that patients with certain conditions, many of them related to skin conditions, were more likely to require high non-routine medical supply utilization (72 FR 49850), and that we would continue to look for ways to improve our approach to account for NRS costs and payments in the future (72 FR 25428). We believe that the proposed PDGM offers an alternative method for accounting for NRS costs and payments by grouping patients more likely to require high NRS utilization. For example, while the Wound group and Complex Nursing Interventions groups comprise about 9 percent and 4 percent of all 30-day periods of care, respectively; roughly 27 percent of periods where NRS was supplied were assigned to the Wound and Complex Nursing Interventions groups and 44 percent of NRS costs fall into the Wound and Complex Nursing groups. We note that CY 2017 claims data indicates that about 60 percent of 60-day episodes did not provide any NRS. In using the CPM + NRS approach to calculate the cost of proving care (resource use), NRS costs are reflected in the average resource use that drives the case-mix weights. If there is a high amount of NRS cost for all periods in a particular group (holding all else equal), the resource use for those periods will be higher relative to the overall average and the case-mix weight will correspondingly be higher. Similar to the current system, NRS would still be paid prospectively under the PDGM, but the PDGM eliminates the separate casemix adjustment model for NRS. Incorporating the NRS cost into the measure of overall resource use (that is, the dependent variable of the payment model) requires adjusting the NRS charges submitted on claims based on the NRS cost-to-charge ratio from cost report data. The following steps would be used to generate the measure of resource use under this CPM + NRS approach: (1) From the cost reports, obtain total costs for each of the six home health disciplines for each HHA. (2) From the cost reports, obtain the number of visits by each of the six home health disciplines for each HHA. (3) Calculate discipline-specific cost per visit values by dividing total costs [1] by number of visits [2] for each discipline for each HHA. For HHAs that did not have a cost report available (or a cost report that was trimmed from the sample), imputed values were used as follows: • A state-level mean was used if the HHA was not hospital-based. The statelevel mean was computed using all nonhospital based HHAs in each state. • An urban nationwide mean was used for all hospital-based HHAs located in a Core-based Statistical Area (CBSA). The urban nation-wide mean was computed using all hospital-based HHAs located in any CBSA. • A rural nationwide mean was used for all hospital-based HHAs not in a CBSA. The rural nation-wide mean was computed using all hospital-based HHAs not in a CBSA. (4) From the home health claims data, obtain the average number of minutes of care provided by each discipline across all episodes for a HHA. 32387 (5) From the home health claims data, obtain the average number of visits provided by each discipline across all episodes for each HHA. (6) Calculate a ratio of average visits to average minutes by discipline by dividing average visits provided [5] by average minutes of care [4] by discipline for each HHA. (7) Calculate costs per minute by multiplying the HHA’s cost per visit [3] by the ratio of average visits to average minutes [6] by discipline for each HHA. (8) Obtain 30-day period costs by multiplying costs per minute [7] by the total number of minutes of care provided during a 30-day period by discipline. Then, sum these costs across the disciplines for each period. This approach accounts for variation in the length of a visit by discipline. NRS costs are added to the resource use calculated in [8] in the following way: (9) From the cost reports, determine the NRS cost-to-charge ratio for each HHA. The NRS ratio is trimmed if the value falls in the top or bottom 1 percent of the distribution across all HHAs from the trimmed sample. Imputation for missing or trimmed values is done in the same manner as it was done for cost per visit (see [3] above). (10) From the home health claims data, obtain NRS charges for each period. (11) Obtain NRS costs for each period by multiplying charges from the home health claims data [10] by the cost-tocharge ratio from the cost reports [9] for each HHA. Resource use is then obtained by: (12) Summing costs from [8] with NRS costs from [11] for each 30-day period. Table 31 shows these costs for 30-day periods in CY 2017 (n = 8,624,776). On average, total 30-day period costs as measured by resource use are $1,570.68. The distribution ranges from a 5th percentile value of $296.66 to a 95th percentile value of $3,839.91. TABLE 31—DISTRIBUTION OF AVERAGE RESOURCE USE USING CPM + NRS APPROACH [30 Day periods] amozie on DSK3GDR082PROD with PROPOSALS2 Statistics Mean N 5th Percentile 10th Percentile 25th Percentile 50th Percentile 75th Percentile 90th Percentile 95th Percentile Average Resource Use (CPM + NRS) ...................................... $1,570.68 8,624,776 $296.66 $394.31 $679.12 $1,272.18 $2,117.47 $3,107.93 $3,839.91 The distributions and magnitude of the estimates of costs for the CPM + NRS method versus the WWMC method are very different. The differences arise because the CPM + NRS method VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 incorporates HHA-specific costs that represent the total costs incurred during a 30-day period (including overhead costs), while the WWMC method provides an estimate of only the labor PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 costs (wage + fringe) related to direct patient care from patient visits that are incurred during a 30-day period. Those costs are not HHA-specific and do not account for any non-labor costs (such as E:\FR\FM\12JYP2.SGM 12JYP2 32388 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules transportation costs) or the non-direct patient care labor costs (such as, administration and general labor costs). Because the costs estimated using the two approaches are measuring different items, they cannot be directly compared. However, if the total cost of a 30-day period is correlated with the labor that is provided during visits, the two approaches should be highly correlated. The correlation coefficient (estimated by comparing a 30-day period’s CPM + NRS resource use to the same period’s WWMC resource use) between the two approaches to calculating resource use is equal to 0.8512 (n = 8,624,776). Therefore, the relationship in relative costs is similar between the two methods. Using cost report data to develop case-mix weights more evenly weights skilled nursing services and therapy services than the BLS data. Table 32 shows the ratios between the estimated costs per hour for each of the home health disciplines compared with skilled nursing resulting from the CPM + NRS versus WWMC methods. Under the CPM + NRS methodology, the ratio for physical therapy costs per hour to skilled nursing is 1.14 compared with 1.36 using the WWMC method. TABLE 32—RELATIVE VALUES IN COSTS PER HOUR BY DISCIPLINE [Skilled nursing is base] Estimated cost per hour Skilled nursing amozie on DSK3GDR082PROD with PROPOSALS2 CPM + NRS ............................................. WWMC ..................................................... 1.00 1.00 In response to the CY 2018 HH PPS proposed rule (82 FR 35270), a few commenters, stated that based on their operational experiences with clinical staffing labor costs, HHA cost report data suggests more parity exists between skilled nursing (‘‘SN’’) versus physical therapist (‘‘PT’’) costs than in fact exists. Commenters stated that BLS data showing a 40 percent difference between SN and PT costs are more reflective of the human resources experiences in the markets where they operate. As such, commenters believe the use of cost report data would cause the proposed alternative case-mix methodology to overpay for nursing services and underpay for therapy services, although it was not clear from the comments why the relative relationship in cost between disciplines would necessarily mean that nursing would be overpaid or underpaid relative to therapy. We note that the HHA Medicare cost report data reflects all labor costs, including contract labor costs. The BLS data only reflects employed staff. This may partially explain why a 40 percent variation between SN and PT costs is not evident in the cost report data. However, the comparison is somewhat inappropriate because the BLS data only reflects labor costs whereas the HHA Medicare cost report data includes labor and non-labor costs. As noted earlier in Table 32, there is only a 14 percent variation using the CPM + NRS methodology. Moreover, in aggregate, about 15 percent of compensation costs are contract labor costs and this varies among the disciplines with contract labor costs accounting for a much higher proportion of therapy visit costs compared to skilled nursing visit costs. Utilization also varies among freestanding providers with smaller VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Physical therapy Occupational therapy 1.14 1.36 1.15 1.38 providers having a higher proportion of contract labor costs, particularly for therapy services compared to larger providers. The decision of whether to/ or what proportion of contract labor to use is at the provider’s discretion. Finally, we note that in order to be eligible for Medicare HH PPS payments, providers must complete the HHA Medicare cost report and certify the report by the Officer or Director of the home health agency as being true, correct, and complete; therefore, such data can and should be used to calculate the cost of care. We have determined that using cost report data to calculate the cost of home health care better aligns the case-mix weights with the total relative cost for treating various patients. In addition, using cost report data allows us to incorporate NRS into the case-mix system, rather than maintaining a separate payment system. Therefore, we are re-proposing to calculate the cost of a 30-day period of home health care under the proposed PDGM using the cost per minute plus non-routine supplies (CPM + NRS) approach outlined above, as also outlined in the CY 2018 proposed rule. We invite comments on the proposed methodology for calculating the cost of a 30-day period of care under the PDGM. 3. Change From a 60-Day to a 30-Day Unit of Payment a. Background Currently, HHAs are paid for each 60day episode of home health care provided. In the CY 2018 HH PPS proposed rule, CMS proposed a change from making payment based on 60-day episodes to making payment based on 30-day periods, effective for January 1, PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 Speech therapy 1.25 1.56 Medical social service 1.39 0.94 Home health aide 0.40 0.35 2019. Examination of the resources used within a 60-day episode of care identified differences in resources used between the first 30-day period within a 60-day episode and the second 30-day period within a 60-day episode. Episodes have more visits, on average, during the first 30 days compared to the last 30 days and costs are much higher earlier in the episode and lesser later on; therefore, dividing a single 60-day episode into two 30-day periods more accurately apportioned payments. In addition, with the proposed removal of therapy thresholds from the case-mix adjustment methodology under the HH PPS, a shorter period of care reduced the variation and improved the accuracy of the case-mix weights generated under the PDGM. CMS did not finalize the implementation of a 30-day unit of payment in the CY 2018 HH PPS final rule (82 FR 51676). Section 1895(b)(2)(B) of the Act, as added by section 51001(a)(1) of the BBA of 2018, requires the Secretary to apply a 30-day unit of service for purposes of implementing the HH PPS, effective January 1, 2020. We note that we interpret the term ‘‘unit of service’’ to be synonymous with ‘‘unit of payment’’ and will henceforth refer to ‘‘unit of payment’’ in this proposed rule with regards to payment under the HH PPS. We propose to make HH payments based on a 30-day unit of payment effective January 1, 2020. While we are proposing to change to a 30-day unit of payment, we note that the comprehensive assessment would still be completed within 5 days of the start of care date and completed no less frequently than during the last 5 days of every 60 days beginning with the start of care date, as currently required by § 484.55, Condition of participation: Comprehensive assessment of patients. E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 In addition, the plan of care would still be reviewed and revised by the HHA and the physician responsible for the home health plan of care no less frequently than once every 60 days, beginning with the start of care date, as currently required by § 484.60(c), Condition of participation: Care planning, coordination of services, and quality of care. b. 30-Day Unit of Payment Under section 1895(b)(3)(A)(iv) of the Act, we are required to calculate a 30day payment amount for CY 2020 in a budget neutral manner such that estimated aggregate expenditures under the HH PPS during CY 2020 are equal to the estimated aggregate expenditures that otherwise would have been made under the HH PPS during CY 2020 in the absence of the change to a 30-day unit of payment. Furthermore, as also required by section 1895(b)(3)(A)(iv) of the Act, to calculate a 30-day payment amount in a budget-neutral manner, we are required to make assumptions about behavior changes that could occur as a result of the implementation of the 30day unit of payment. In addition, in calculating a 30-day payment amount in a budget-neutral manner, we must take into account behavior changes that could occur as a result of the case-mix adjustment factors that are implemented in CY 2020. We are also required to calculate a budget-neutral 30-day payment amount before the provisions of section 1895(b)(3)(B) of the Act are applied, that is, the home health applicable percentage increase, the adjustment for case-mix changes, the adjustment if quality data is not reported, and the productivity adjustment. In calculating the budget-neutral 30day payment amount, we propose to make three assumptions about behavior change that could occur in CY 2020 as a result of the implementation of the 30day unit of payment and the implementation of the PDGM case-mix adjustment methodology outlined in this proposed rule: • Clinical Group Coding: A key component of determining payment under the PDGM is the 30-day period’s clinical group assignment, which is based on the principal diagnosis code for the patient as reported by the HHA on the home health claim. Therefore, we assume that HHAs will change their documentation and coding practices and would put the highest paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group. While we do not support or condone coding practices or the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 provision of services solely to maximize payment, we often take into account expected behavioral effects of policy changes related to the implementation of the proposed rule. • Comorbidity Coding: The PDGM further adjusts payments based on patients’ secondary diagnoses as reported by the HHA on the home health claim. While the OASIS only allows HHAs to designate 1 primary diagnosis and 5 secondary diagnoses, the home health claim allows HHAs to designate 1 principal diagnosis and 24 secondary diagnoses. Therefore, we assume that by taking into account additional ICD–10–CM diagnosis codes listed on the home health claim (beyond the 6 allowed on the OASIS), more 30day periods of care will receive a comorbidity adjustment than periods otherwise would have received if we only used the OASIS diagnosis codes for payment. The comorbidity adjustment in the PDGM can increase payment by up to 20 percent. • LUPA Threshold: Rather than being paid the per-visit amounts for a 30-day period of care subject to the lowutilization payment adjustment (LUPA) under the proposed PDGM, we assume that for one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold HHAs will provide 1 to 2 extra visits to receive a full 30-day payment.32 LUPAs are paid when there are a low number of visits furnished in a 30-day period of care. Under the PDGM, the LUPA threshold ranges from 2–6 visits depending on the case-mix group assignment for a particular period of care (see section F.9 of this proposed rule for the LUPA thresholds that correspond to the 216 case-mix groups under the PDGM). Table 33 includes estimates of what the 30-day payment amount would be for CY 2019 (using CY 2017 home health utilization data) in order to achieve budget neutrality both with and without behavioral assumptions and including the application of the proposed home health payment update percentage of 2.1 percent outlined in section C.2 of this proposed rule. We note that these are only estimates to illustrate the 30-day payment amount if we had proposed to implement the 30day unit of payment and the proposed PDGM for CY 2019. However, because we are proposing to implement the 30day unit of payment and proposed 32 Current data suggest that what would be about ⁄ of the LUPA episodes with visits near the LUPA threshold move up to become non-LUPA episodes. We assume this experience will continue under the PDGM, with about 1⁄3 of those episodes 1 or 2 visits below the thresholds moving up to become nonLUPA episodes. 13 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 32389 PDGM for CY 2020, we would propose the actual 30-day payment amount in the CY 2020 HH PPS proposed rule calculated using CY 2018 home health utilization data, and we would calculate this amount before application of the proposed home health update percentage required for CY 2020 (as required by section 1895(b)(3)(iv) of the Act). In order to calculate the budget neutral 30-day payment amounts in this proposed rule, both with and without behavioral assumptions, we first calculated the total, aggregate amount of expenditures that would occur under the current case-mix adjustment methodology (as described in section III.B. of this rule) and the 60-day episode unit of payment using the proposed CY 2019 payment parameters (e.g., proposed 2019 payment rates, proposed 2019 case-mix weights, and outlier fixed-dollar loss ratio). That resulted in a total aggregate expenditures target amount of $16.1 billion.33 We then calculated what the 30-day payment amount would need to be set at in CY 2019, with and without behavior assumptions, while taking into account needed changes to the outlier fixed-dollar loss ratio under the PDGM in order to pay out no more than 2.5 percent of total HH PPS payments as outlier payments (refer to section III.F.12 of this proposed rule) and in order for Medicare to pay out $16.1 billion in total expenditures in CY 2019 with the application of a 30-day unit of payment under the PDGM. 33 The initial 2017 analytic file included 6,771,059 60-day episodes ($18.2 billion in total expenditures). Of these, 959,410 (14.2 percent) were excluded because they could not be linked to OASIS assessments or because of the claims data cleaning process reasons listed in section III.F.1 of this proposed rule. We note that of the 959,410 claims excluded, 620,336 were excluded because they were RAPs without a final claim or they were claims with zero payment amounts, resulting in $17.4 billion in total expenditures. After removing all 959,410 excluded claims, the 2017 analytic file consisted of 5,811,649 60-day episodes ($16.4 billion in total expenditures). 60-day episodes of duration longer than 30 days were divided into two 30-day periods in order to calculate the 30-day payment amounts. As noted in section III.F.1 of this proposed rule, there were instances where 30-day periods were excluded from the 2017 analytic file (for example, we could not match the period to a start of care or resumption of care OASIS to determine the functional level under the PDGM, the 30-day period did not have any skilled visits, or because information necessary to calculate payment was missing from claim record). The final 2017 analytic file used to calculate budget neutrality consisted of 9,285,210 30-day periods ($16.1 billion in total expenditures) drawn from 5,456,216 60-day episodes. E:\FR\FM\12JYP2.SGM 12JYP2 32390 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 33—ESTIMATES OF 30-DAY BUDGET-NEUTRAL PAYMENT AMOUNTS 30-day budget neutral (BN) standard amount Behavioral assumption amozie on DSK3GDR082PROD with PROPOSALS2 No Behavioral Assumptions .................................................................................................................................... LUPA Threshold (1⁄3 of LUPAs 1–2 visits away from threshold get extra visits and become case-mix adjusted) Clinical Group Coding (among available diagnoses, one leading to highest payment clinical grouping classification designated as principal) .......................................................................................................................... Comorbidity Coding (assigns comorbidity level based on comorbidities appearing on HHA claims and not just OASIS) ................................................................................................................................................................. Clinical Group Coding + Comorbidity Coding ......................................................................................................... Clinical Group Coding + Comorbidity Coding + LUPA Threshold .......................................................................... If no behavioral assumptions were made, we estimate that the 30-day payment amount needed to achieve budget neutrality would be $1,873.91. The clinical group and comorbidity coding assumptions would result in the need to decrease the budget-neutral 30day payment amount to $1,786.54 (a 4.66 percent decrease from $1,873.91). Adding the LUPA assumption would require us to further decrease that amount to $1,753.68 (a 6.42 percent decrease from $1,873.91). We note that we are also required under section 1895(b)(3)(D)(i) of the Act, as added by section 51001(a)(2)(B) of the BBA of 2018, to analyze data for CYs 2020 through 2026, after implementation of the 30-day unit of payment and new case-mix adjustment methodology, to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures. We interpret actual behavior change to encompass both behavior changes that were outlined above, as assumed by CMS when determining the budget-neutral 30-day payment amount for CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 is determined. The data from CYs 2020 through 2026 will be available to determine whether a prospective adjustment (increase or decrease) is needed no earlier than in years 2022 through 2028 rulemaking. As noted previously, under section 1895(b)(3)(D)(ii) of the Act, we are required to provide one or more permanent adjustments to the 30-day payment amount on a prospective basis, if needed, to offset increases or decreases in estimated aggregate expenditures as calculated under section 1895(b)(3)(D)(i) of the Act. Clause (iii) of section 1895(b)(3)(D) of the Act requires the Secretary to make temporary adjustments to the 30-day payment amount, on a prospective basis, in order to offset increases or decreases in estimated aggregate VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 expenditures, as determined under clause (i) of such section. The temporary adjustments allow us to recover excess spending or give back the difference between actual and estimated spending (if actual is less than estimated) not addressed by permanent adjustments. For instance, if expenditures are estimated to be $18 billion in CY 2020, but expenditures are actually $18.25 billion in CY 2020, then we can reduce payments (temporarily) in the future to recover the $250 million. As noted above, section 1895(b)(3)(A)(iv) of the Act requires the Secretary to calculate a budget-neutral 30-day payment amount to be paid for home health units of service that are furnished and end during the 12-month period beginning January 1, 2020. For implementation purposes, we propose that the 30-day payment amount would be paid for home health services that start on or after January 1, 2020. More specifically, for 60-day episodes that begin on or before December 31, 2019 and end on or after January 1, 2020 (episodes that would span the January 1, 2020 implementation date), payment made under the Medicare HH PPS would be the CY 2020 national, standardized 60-day episode payment amount. For home health units of service that begin on or after January 1, 2020, the unit of service would now be a 30-day period and payment made under the Medicare HH PPS would be the CY 2020 national, standardized prospective 30-day payment amount. For home health units of service that begin on or after December 2, 2020 through December 31, 2020 and end on or after January 1, 2021, the HHA would be paid the CY 2021 national, standardized prospective 30-day payment amount. We are soliciting comments on our proposals, including the proposed behavior change assumptions outlined above to be used in determining the 30day payment amount for CY 2020 and the corresponding regulation text PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 Percent change from no behavioral assumptions $1,873.91 1,841.05 ........................ ¥1.75 1,793.69 ¥4.28 1,866.76 1,786.54 1,753.68 ¥0.38 ¥4.66 ¥6.42 changes outlined in section III.F.13 and IX. of this proposed rule. c. Split Percentage Payment Approach for a 30-Day Unit of Payment In the current HH PPS, there is a split percentage payment approach to the 60day episode. The first bill, a Request for Anticipated Payment (RAP), is submitted at the beginning of the initial episode for 60 percent of the anticipated final claim payment amount. The second, final bill is submitted at the end of the 60-day episode for the remaining 40 percent. For all subsequent episodes for beneficiaries who receive continuous home health care, the episodes are paid at a 50/50 percentage payment split. In the CY 2018 HH PPS proposed rule (82 FR 35270), we solicited comments as to whether the split payment approach would still be needed for HHAs to maintain adequate cash flow if the unit of payment changes from 60day episodes to 30-day periods of care. In addition, we solicited comments on ways to phase-out the split percentage payment approach in the future. Specifically, we solicited comments on reducing the percentage of the upfront payment over a period of time and if in the future the split percentage approach was eliminated, we solicited comments on the need for HHAs to submit a notice of admission (NOA) within 5 days of the start of care to assure being established as the primary HHA for the beneficiary and so that the claims processing system is alerted that a beneficiary is under a HH period of care to enforce the consolidating billing edits as required by law. Commenters generally expressed support for continuing the split percentage payment approach in the future under the proposed alternative case-mix model. While we solicited comments on the possibility of phasing-out the split percentage payment approach in the future and the need for a NOA, commenters did not provide suggestions for a phase-out approach, but stated that they did not agree with requiring a NOA given the E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules experience with such a process under the Medicare hospice benefit. While CMS did not finalize the implementation of a 30-day unit of payment in the CY 2018 HH PPS final rule (82 FR 51676), the BBA of 2018 now requires a change to the unit of payment from a 60-day episode to a 30day period of care, as outlined in section F.3.b above, effective January 1, 2020. We continue to believe that as a result of the reduced timeframe for the unit of payment, that a split percentage approach to payment may not be needed for HHAs to maintain adequate cash flow. Currently, about 5 percent of requests for anticipated payment are not submitted until the end of a 60-day episode of care and the median length of days for RAP submission is 12 days from the start of the 60-day episode. As such, we are reevaluating the necessity of RAPs for existing and newly-certified HHAs versus the risks they pose to the Medicare program. RAP payments can result in program integrity vulnerabilities. For example, a final claim was never submitted for $321 million worth of RAP payments between July 1, 2015 and July 31, 2016. While CMS typically can recoup RAP overpayments from providers that continue to submit final claims to the Medicare program, some fraud schemes have involved collecting these RAP payments, never submitting final claims, and closing the HHA before Medicare can take action. Below are two examples of HHAs that were identified for billing large amounts of RAPs with no final claim: • Provider 1 is a Home Health Agency located in Michigan. It was identified for submitting home health claims for beneficiaries located in California and Florida. Further analysis found that the HHA was submitting RAPs with no final claims. CMS discovered that the address on record for the HHA was vacant for an extended period of time. In addition, CMS determined that although Provider 1 had continued billing and receiving payments for RAP claims, it had not submitted a final claim in 10 months. Ultimately, the HHA submitted a total of $50,234,430.36 in RAP payments and received $37,204,558.80 in RAP payments. In addition to the large amount of money paid to the HHA, Medicare beneficiaries were also impacted by the HHA’s billing behavior. For example, a Florida beneficiary who needed home health services was unable to receive the care required due to the RAP submission by this Provider. • Provider 2 is a Home Health Agency that is also located in Michigan that submitted a significant number of RAPs with no final claim. While the majority VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 of these beneficiaries were located in Michigan, data analysis identified beneficiaries who were not likely homebound or qualified for home health services. CMS discovered that the address on record for the HHA was vacant. Provider 2 had not submitted any final claims in more than one year and was no longer billing the Medicare program. However, the HHA was paid a total of $5,765,261.04 in RAP payments that had no final claim. Given the program integrity concerns outlined above and the reduced timeframe for the unit of payment (30days rather than 60-days), we are proposing not to allow newly-enrolled HHAs, that is HHAs certified for participation in Medicare effective on or after January 1, 2019, to receive RAP payments beginning in CY 2020. This would allow newly-enrolled HHAs to structure their operations without becoming dependent on a partial, advanced payment and take advantage of receiving full payments for every 30day period of care. We are proposing that HHAs, that are certified for participation in Medicare effective on or after January 1, 2019, would still be required to submit a ‘‘no pay’’ RAP at the beginning of care in order to establish the home health episode, as well as every 30-days thereafter. RAP submissions are currently operationally significant as the RAP establishes the HHA as the primary HHA for the beneficiary during that timeframe and alerts the claims processing system that a beneficiary is under the care of an HHA to enforce the consolidating billing edits required by law under section 1842(b)(6)(F) of the Act. Without such notification, there would be an increase in denials of claims subject to the home health consolidated billing edits that are prevented when an episode/period is established in the common working file (CWF) by the RAP, potentially resulting in increases in appeals, and increases in situations where other providers, including other HHAs, would not have easy information on whether a patient was already being served by an HHA. CMS invites comments on whether the burden of submitting a ‘‘no-pay’’ RAP by newly-enrolled HHAs outweighs the risks to the Medicare program and providers associated with not submitting them. We propose that existing HHAs, that is HHAs certified for participation in Medicare with effective dates prior to January 1, 2019, would continue to receive RAP payments upon implementation of the 30-day unit of payment and the proposed PDGM casemix adjustment methodology in CY 2020. However, we are again soliciting PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 32391 comments on ways to phase-out the split percentage payment approach in the future given that CMS is required to implement a 30-day unit of payment beginning on January 1, 2020 as outlined above. Specifically, we are soliciting comments on reducing the percentage of the upfront payment incrementally over a period of time. If in the future the split percentage approach was eliminated, we are also soliciting comments on the need for HHAs to submit a NOA within 5 days of the start of care to assure being established as the primary HHA for the beneficiary during that timeframe and so that the claims processing system is alerted that a beneficiary is under a HH period of care to enforce the consolidating billing edits as required by law. As outlined above, there are significant drawbacks to both Medicare and providers of not establishing a NOA process upon elimination of RAPs. In summary, we invite comments on the change in the unit of payment from a 60-day episode of care to a 30-day period of care; the proposed calculation of the 30-day payment amount in a budget-neutral manner and behavior change assumptions for CY 2020; the proposed interpretation of the statutory language regarding actual behavior change; the proposal not to allow newly-enrolled HHAs (HHAs certified for participation in Medicare effective on or after January 1, 2019) to receive RAP payments upon implementation of the 30-day unit of payment in CY 2020, yet still require the submission of a ‘‘no pay’’ RAP at the beginning of care; the proposal to maintain the split percentage payment approach for existing HHAs and applying such policy to 30-day periods of care; and the associated regulations text changes outlined in section III.F.13 and IX of this proposed rule. We are also soliciting comments on ways the split percentage payment approach could be phased-out and whether to implement a NOA process if the split percentage payment approach is eliminated in the future. 4. Timing Categories In the CY 2018 HH PPS proposed rule, we described analysis showing the impact of timing on home health resource use and proposed to classify the 30-day periods under the proposed alternative case-mix adjustment methodology as ‘‘early’’ or ‘‘late’’ depending on when they occur within a sequence of 30-day periods (82 FR 35307). Under the current HH PPS, the first two 60-day episodes of a sequence of adjacent 60-day episodes are considered early, while the third 60-day E:\FR\FM\12JYP2.SGM 12JYP2 32392 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules episode of that sequence and any subsequent episodes are considered late. Under the alternative case-mix adjustment methodology, we proposed that the first 30-day period would be classified as early and all subsequent 30-day periods in the sequence (second or later) would be classified as late. Similar to the current payment system, we proposed that a 30-day period could not be considered early unless there was a gap of more than 60 days between the end of one period and the start of another, or it was the first period in a sequence of periods in which there was no more than 60 days between the end of that period and the start of the next period. In response to the CY 2018 HH PPS proposed rule, several commenters were supportive of the inclusion of the timing category in the alternative case-mix adjustment methodology, stating that this differentiation would reflect that HHA costs are typically highest during the first 30 days of care. However, other commenters expressed concerns regarding timing, stating that HHAs may modify the ways in which they provide care, that the change would cause a decrease in overall payment to HHAs and an increase in hospital readmissions, and that the categories would not account for increased costs in the later periods of care. Several commenters described concerns regarding the potential for problematic provider behavior due to financial incentives as well as the potential for problems with operational aspects of the timing element of the alternative casemix adjustment methodology. Additionally, some commenters suggested that we modify the definition of an ‘‘early’’ 30-day period to either the first two 30-day periods or the first four 30-days of care, stating that those definitions would more closely mirror the current payment system’s definition of ‘‘early’’ and that HHAs would otherwise experience a payment decrease when compared to the current 60-day episode payment amount. As described in detail in the CY 2018 HH PPS proposed rule, our proposal regarding the timing element of the alternative case-mix adjustment methodology was intended to refine and to better fit costs incurred by agencies for patients with differing characteristics and needs under the HH PPS (82 FR 35270). Analysis of home health data demonstrates that under the current payment system, when analyzed by 30-day periods, HHAs provide more resources in the first 30-day period of home health (‘‘early’’) than in later periods of care. The differences in the average resource use during early and late home health episodes when divided into 30-day periods are presented in Table 34, and shows the first 30-day periods in a home health sequence have significantly higher average resource use at $2,113.66 as compared with subsequent 30-day periods. Specifically, the later 30-day periods showed an average resource use of $1,311.73, a difference of more than $800 or a 38 percent decrease. Table 34 also shows a significant difference between the early and late median values of resource use. The median for the first 30-day period is $1,866.79, while the median for subsequent 30-day periods is $987.94, a difference of more than $878 or an approximately 47 percent decrease. TABLE 34—AVERAGE RESOURCE USE BY TIMING [30-Day periods] Average resource use Timing Frequency of periods Percent of periods Standard deviation of resource use 25th percentile of resource use Median resource use 75th percentile of resource use Early 30-Day Periods ................................................................ Late 30-Day Periods ................................................................. $2,113.66 1,311.73 2,785,039 5,839,737 32.3 67.7 $1,236.30 1,125.44 $1,232.23 534.82 $1,866.79 987.94 $2,707.04 1,735.69 Total ................................................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47 amozie on DSK3GDR082PROD with PROPOSALS2 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). There is significant difference in the resource utilization between early and late 30-day periods as demonstrated in Table 34. Moreover, the predictive power of the proposed PDGM in terms of estimating resource utilization improved when separating episodes into 30-day periods rather than 60-day periods (that is, the first and second 30day periods). We believe that a PDGM that accounts for the demonstrated increase in resource utilization in the first 30-day period better captures the variations in resource utilization and further promotes the goal of payment accuracy within the HH PPS. Moreover, we note that the resource cost estimates are derived from a very large, representative dataset. Therefore, we expect that the proposal reflects agencies’ average costs for all home health service delivered in the period examined. We have constructed the revised case-mix adjustment model based upon the actual resources expended by home health agencies for VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Medicare beneficiaries, which show that typically HHAs provide more visits during the first 30 days of care and utilize less resources thereafter. We reiterate that the timing categories are reflective of the utilization patterns observed in the data analyzed for the purposes of constructing the PDGM. The weights of the two timing categories are driven by the mix of services provided, the costs of services provided as determined by cost report data, the length of the visits, and the number of visits provided. The categorization of 30-day periods as ‘‘early’’ and ‘‘late’’ serves to better align payments with already existing resource use patterns. This alignment of payment with resource use is not to be interpreted as placing a value judgment on particular care patterns or patient populations. Our goal in developing the PDGM is to provide an appropriate payment based on the identified resource use of different patient groups, not to PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 encourage, discourage, value, or devalue one type of skilled care over another. For the reasons described above, we are proposing to classify the 30-day periods under the proposed PDGM as ‘‘early’’ or ‘‘late’’ depending on when they occur within a sequence of 30-day periods. For the purposes of defining ‘‘early’’ and ‘‘late’’ periods for the proposed PDGM, we are proposing that only the first 30-day period in a sequence of periods be defined as ‘‘early’’ and all other subsequent 30-day periods would be considered ‘‘late’’. Additionally, we are proposing that the definition of a ‘‘home health sequence’’ (as currently described in § 484.230) will remain unchanged relative to the current system, that is, 30-day periods are considered to be in the same sequence as long as no more than 60 days pass between the end of one period and the start of the next, which is consistent with the definition of a ‘‘home health spell of illness’’ described at section 1861(tt)(2) of the Act. We note E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules that because section 1861(tt)(2) of the Act is a definition related to eligibility for home health services as described at section 1812(a)(3) of the Act, it does not affect or restrict our ability to implement a 30-dayunit of payment. At this time, the data do not support the notion that the first two 30-day periods should be defined as early, as only the first 30-day period presents marked increase in resource use. We believe the PDGM’s definition of ‘‘early’’ as the first 30-day period most accurately reflects agencies’ average costs for patients with characteristics measured on the OASIS and used in defining payment groups and supports the shift from the current ‘‘early’’ category as defined by two 60-day episodes. We continue to believe that a PDGM that accounts for the actual, demonstrated increase in resource utilization in the first 30-day period better captures the variations in resource utilization. Additionally, in our CY 2008 HH PPS final rule, we implemented an ‘‘early’’ and ‘‘late’’ distinction in the HH PPS in which the late episode groupings were weighted more heavily than those episodes designated as early due to heavier resource use during later episodes (72 FR 49770). At that time, commenters expressed concerns that this heavier weighting for later episodes could lead to gaming by providers, with patients on service longer than would be appropriate, and providers not discharging patients when merited. During our analysis in support of subsequent refinements to the HH PPS in 2015, we analyzed the utilization patterns observed in the CY 2013 claims data and observed that the resource use for later episodes had indeed shifted such that later episodes had less resource use than earlier periods, which was the opposite of the pattern observed prior to CY 2008. Furthermore, in its 2016 Report to Congress, MedPAC noted that, between 2002 and 2014, a pattern in home health emerged where the number of episodes of care provided to home health beneficiaries trended upwards, with the average number of episodes per user increasing by 18 percent, rising from 1.6 to 1.9 episodes per user.34 MedPAC noted that this upward trajectory coincided with, among other changes, higher payments for the third and later episodes in a consecutive spell of home health episodes. Given the longitudinal variation in terms of resource provision during home health episodes, we 34 https://www.medpac.gov/docs/default-source/ reports/chapter-8-home-health-care-services-march2016-report-.pdf. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 believe that restricting the ‘‘early’’ definition to the first 30-day period is most appropriate for this facet of the PDGM. Our analysis of home health resource use as well as comments from the public that confirm that more resources are provided in the first 30 days provide compelling evidence to limit the definition of early to the first 30-day period. Moreover, the public comments we received in response to the CY 2018 HH PPS proposed rule presented conflicting predictions regarding anticipated provider behavior in response to the implementation of the alternative casemix adjustment methodology. Several commenters stated that they expected providers to discharge patients after the first 30-days of care, given that the casemix weights are, on average, higher for the first 30-days of care. Other commenters expressed concern that providers may attempt to keep home health beneficiaries on service for as long as possible. Additionally, meeting the requirement of section 51001 of the BBA of 2018, a Technical Expert Panel (TEP) was convened in February 2018 to solicit feedback and identify and prioritize recommendations from a wide variety of industry experts and patient representatives regarding the public comments received on the proposed alternative case-mix adjustment methodology. Comments on the timing categories and suggestions for refinement to this adjustment were very similar between those received on the CY 2018 HH PPS proposed rule and those made by the TEP participants. We note the PDGM case-mix weights reflect existing patterns of resource use observed in our analyses of CY 2016 home health claims data. Since we propose to recalibrate the PDGM casemix weights on an annual basis to ensure that the case-mix weights reflect the most recent utilization data available at the time of rulemaking, future recalibrations of the PDGM casemix weights may result in changes to the case-mix weights for early versus late 30-day periods of care as a result of changes in utilization patterns. Several commenters responding to the CY 2018 HH PPS proposed rule suggested that we revise the model such that a readmission to home health within the 60-day gap period results in an ‘‘early’’ instead of a ‘‘late’’ 30-day period. However, we note that the PDGM also includes a category determined specifically by source of admission, which would account for any readmission to home health. Under the PDGM we already account for whether the patient was admitted to home health care from the community PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 32393 or following an institutional stay, including inpatient stays that occur after the commencement of a home health care. For example, if the original home health stay was categorized as community and subsequently the patient experienced an inpatient stay, the subsequent home health stay would reset to institutional upon discharge from the inpatient setting. Similarly, we note that for the purposes of the timing component of the PDGM, an intervening hospital stay would not trigger recategorization to an ‘‘early’’ period unless there were a 60-day gap in home health care. Therefore, we do not believe that the timing element of the PDGM would create a financial incentive to inappropriately encourage the admission of home health patients to an acute care setting in order to receive a subsequent home health referral in the higher-paid ‘‘early’’ category. Our proposal was intended to refine and to better fit costs incurred by agencies for patients with differing characteristics and needs under the prospective payment system. Therefore, we expect that the addition of both the source of admission, as well as the timing categories do reflect agencies’ average costs for home health patients and used in defining payment groups. We believe that crafting a multi-pronged case-mix adjustment model, which includes adjustments based both on timing within a home health sequence as well as the source of the beneficiary admission, will serve to more accurately account for resources required for Medicare beneficiaries and similarly provide a differentiated payment amount for care. Several commenters responding to the CY 2018 HH PPS proposed rule expressed concern regarding the operational aspects of the timing element of the alternative case-mix adjustment methodology. As we described in the CY 2018 HH PPS proposed rule, and as we are proposing in this rule, we would use Medicare claims data and not the OASIS assessment in order to determine if a 30day period is considered ‘‘early’’ or ‘‘late’’ (82 FR 35309). We have developed claims processing procedures to reduce the amount of administrative burden associated with the implementation of the PDGM. Providers would not have to determine whether a 30-day period is early (the first 30-day period) or later (all adjacent 30-day periods beyond the first 30-day period) if they choose not to. Information from Medicare systems would be used during claims processing to automatically assign the appropriate timing category. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32394 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules To identify the first 30-day period within a sequence, the Medicare claims processing system would verify that the claim ‘‘From date’’ and ‘‘Admission date’’ match. If this condition were to be met, our systems would send the ‘‘early’’ indicator to the HH Grouper for the 30-day period of care. When the claim was received by CMS’s Common Working File (CWF), the system would look back 60 days to ensure there was not a prior, related 30-day period. If not, the claim would continue to be paid as ‘‘early.’’ If another related 30-day period were to be identified, that is an earlier 30-day period in the sequence, the claim would be flagged as ‘‘late’’ and returned to the shared systems for subsequent regrouping and re-pricing. Those periods that are not the first 30-day period in a sequence of adjacent periods, separated by no more than a 60 day gap, would be categorized as ‘‘late’’ periods and placed in corresponding PDGM categories. Early 30-day periods are defined as the initial 30-day period in a sequence of adjacent 30-day periods. Late 30-day periods are defined as all subsequent adjacent periods beyond the first 30-day period. Periods are considered to be adjacent if they are contiguous, meaning that they are separated by no more than a 60-day period between 30-day periods of care. In determining a gap, we only consider whether the beneficiary was receiving home health care from traditional fee-for-service Medicare. For example, if the beneficiary has not received home health care through traditional Medicare for at least 60 days, and then receives home health care from agency A, that is an early 30-day period. If that 30-day period receives a PEP adjustment and agency B recertifies the beneficiary for a second 30-day period, that second 30-day period is now considered a late 30-day period. However, the beneficiary could have received home health care from other traditional Medicare providers within 60 days before coming to agency A. The designation of early or late would depend upon how many adjacent periods of care were received prior to coming to agency A. The CWF will examine claims upon receipt in comparison to all previously processed 30-day period to verify that the period is correctly designated as early or later. The 60-day period to determine a gap that will begin a new sequence of 30day periods will be counted in most instances from the calculated end date of the 30-day period. That is, in most cases CWF will count from ‘‘day 30’’ of a 30-day period without regard to an earlier discharge date. The exception to this is for 30-day periods that were VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 subject to PEP adjustment. In PEP cases, CWF will count 60 days from the date of the last billable home health visit provided. Under the current HH PPS, the partial episode payment (PEP) adjustment is a proportion of the episode payment that is based on the span of days, including the start-of-care date or first billable service date, through and including the last billable service date under the original plan of care, before the intervening event in a home health beneficiary’s care, which is defined as: A beneficiary elected transfer, or a discharge and return to home health that would warrant, for purposes of payment, a new OASIS assessment, physician certification of eligibility, and a new plan of care. Because PEPs are paid based upon the last billable service date and not necessarily based on the last day of a 60day episode, we would consider the end of the PEP HH episode as the last billable home health visit provided and begin the count of gap days from the date of the last billable home health visit and not ‘‘day 30’’ of a 30-day period. Regarding PEP adjustments, consider the following example: A 30-day period is opened on January 1, 2020 which would normally span until January 30, 2020. If this 30-day period were not subject to a PEP adjustment, any 30-day period beginning within 60 days following January 30, 2020 would be considered an adjacent 30-day period. In the case of a PEP adjustment, the determination of an adjacent 30-day period would no longer be based on day 60, but would instead be based on the latest billable visit in the 30-day period. Assume in the example, the patient is transferred to another HHA (triggering the PEP adjustment) on January 15, 2020 but the last billable visit is provided on January 13, 2020. In this case, any 30day period beginning within 60 days following the January 13, 2020 visit would be considered an adjacent 30-day period. Intervening stays in inpatient facilities will not create any special considerations in counting the 60-day gap. If an inpatient stay occurred within a period, it would not be a part of the gap, as counting would begin at ‘‘day 60’’ which in this case would be later than the inpatient discharge date. If an inpatient stay occurred within the time after the end of the HH period and before the beginning of the next one, those days would be counted as part of the gap just as any other days would. If periods are received after a particular claim is paid that change the sequence initially assigned to the paid period (for example, by service dates PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 falling earlier than those of the paid period, or by falling within a gap between paid periods), Medicare systems will initiate automatic adjustments to correct the payment of any necessary periods. Upon receipt of a HH period coded to represent the early 30-day period in a sequence, Medicare systems will search the period history records that are maintained for each beneficiary. If an existing 30-day period is found on that history, the claim for the new period will be recoded to represent its sequence correctly and paid according to the changed code. In addition, when any new 30-day period is added to those history records for each beneficiary, the coding representing period sequence on previously paid periods will be checked to see if the presence of the newly added period causes the need for changes to those periods. If the need for changes is found, Medicare systems will initiate automatic adjustments to those previously paid periods. For example, a given 30-day period is initially determined to be and paid as the early period in a sequence of periods. After some amount of time, a claim is submitted by another HHA that occurs before the previously designated first period in the sequence of adjacent periods and is less than 60 days before the beginning of that previously designated first period. In such a case, the 30-day period corresponding to the newly submitted claim becomes the first 30-day period of this sequence of adjacent 30-day periods and thus is considered to be an early period. The 30-day period previously designated as the first 30-day period in the sequence of periods now becomes the second 30day period in the sequence of adjacent periods, thus changing its status from that of an early period to that of a late period. We plan to develop materials regarding timing categories, including such topics as claims adjustments and resolution of claims processing issues. We will also update guidance in the Medicare Claims Processing Manual, as well as the Medicare Benefit Manual as appropriate with detailed procedures. We will also work with our Medicare Administrative Contractors (MACs) to address any concerns regarding the processing of home health claims as well as develop training materials to facilitate all aspects of the transition the PDGM, including the unique aspects of the timing categories. Several commenters responding to the CY 2018 HH PPS proposed rule had concerns regarding the potential for problematic provider behavior due to financial incentives. We note that we E:\FR\FM\12JYP2.SGM 12JYP2 32395 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules fully intend to monitor provider behavior in response to the new PDGM. As we receive and evaluate new data related to the provision of Medicare home health care under the PDGM, we will reassess the appropriateness of the payment levels for ‘‘early’’ and ‘‘late’’ periods in a sequence of periods. Additionally, we will share any concerning behavior or patterns with the Medicare Administrative Contracts (MACs) as well as our Center for Program Integrity. We plan to monitor for and identify any variations in the patterns of care provided to home health patients, including both increased and decreased provision of care to Medicare beneficiaries. We note that an increase in the volume of Medicare beneficiaries receiving home health care may, in fact, represent a positive outcome of the PDGM, signaling increased access to care for the Medicare population, so long as said increase in volume of beneficiaries is appropriate and in keeping with eligibility guidelines for the Medicare home health benefit. We invite public comments on the timing categories in the proposed PDGM and the associated regulations text changes outlined in section III.F.13. of this proposed rule. 5. Admission Source Category In the CY 2018 HH PPS proposed rule, we described analysis showing the impact of the source of admission on home health resource use and proposed to classify periods into one of two admission source categories— community or institutional—depending on what healthcare setting was utilized in the 14 days prior to home health (82 FR 35309). We proposed that a 30-day period would be categorized as institutional if an acute or post-acute care (PAC) stay occurred in the 14 days prior to the start of the 30-day period of care. We also proposed that a 30-day period would be categorized as community if there was no acute or PAC stay in the 14 days prior to the start of the 30-day period of care. We proposed to adopt this categorization by admission source with the implementation of alternative case-mix adjustment methodology refinements. The proposed admission source category was discussed in detail in the CY 2018 HH PPS proposed rule and we solicited public comments on the admission source component of the proposed alternative case-mix adjustment methodology. Several commenters expressed their support for the admission categories within the framework of the alternative case-mix adjustment methodology refinements, as they believe that these groups would be meaningful and would more appropriately align the cost of Medicare home health care with payments, thereby improving the accuracy of the HH payment system under the alternative case-mix adjustment methodology refinements. Commenters also expressed a variety of concerns regarding admission source, stating that the source of a home health admission may not always correspond with home health beneficiary needs and associated provider costs, that the categories would discourage the admission of community entrants due to lower reimbursement, that the differentiation may encourage HHAs to favor hospitalization during an episode of home health care, that agencies’ ability to provide the care for beneficiaries in the community would be reduced, and that small HHAs with no hospital affiliation would be negatively impacted. Several commenters recommended that CMS consider incorporating other clinical settings into the definition of the institutional category, including hospices and outpatient facilities. Several commenters also expressed concern regarding the operational aspects of the admission source category, requesting guidance for retroactive adjustments, plans for the claims readjustment process due to institutional claim issues, definitions for timely filing, and guidance regarding when occurrence codes may be utilized. Moreover, in accordance with the requirement of section 51001 of the BBA of 2018, a Technical Expert Panel (TEP) convened in February 2018 to solicit feedback and identify and prioritize recommendations from a wide variety of industry experts and patient representatives regarding the public comments received on the proposed alternative case-mix adjustment methodology. Comments on the admission source categories and suggestions for refinement to this element of the alternative case-mix system were very similar between those received in response to the CY 2018 HH PPS proposed rule and those provided by the TEP participants. We appreciate commenters’ feedback regarding the admission source element of the alternative case-mix adjustment methodology. The intention of the proposal included in the CY 2018 HH PPS proposed rule, including the admission source component, was to refine and to better fit costs incurred by agencies for patients with differing characteristics and needs under the HH prospective payment system, and we believe that the differing weights for source of admission will serve to promote appropriate alignment between costs and payment within the HH PPS. As described in the CY 2018 HH PPS proposed rule, our analytic findings demonstrate that institutional admissions have higher average resource use when compared with community admissions, which ultimately led to the inclusion of the admission source category within the framework of the alternative case-mix adjustment methodology refinements (82 FR 35309). The differences in care needs during home health based on admission source are illustrated in the resource utilization figures presented in Table 35, which shows the distribution of admission sources as well as average resource use for 30-day periods by admission source. TABLE 35—AVERAGE RESOURCE USE BY ADMISSION SOURCE (14 DAY LOOK-BACK; 30 DAY PERIODS) ADMISSION SOURCE, COMMUNITY AND INSTITUTIONAL ONLY amozie on DSK3GDR082PROD with PROPOSALS2 Average resource use Frequency of periods Percent of periods Standard deviation of resource use 25th percentile of resource use Median resource use 75th percentile of resource use Community ................................................................................ Institutional ................................................................................ $1,363.11 2,171.00 6,408,805 2,215,971 74.3 25.7 $1,119.20 1,303.24 $570.26 1,246.05 $1,062.05 1,920.06 $1,817.75 2,791.91 Total ................................................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). Institutional admissions have significantly higher average resource use VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 at $2,171.00 compared with community admissions at $1,363.11, a difference of PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 $807.89. Median values of resource use also show a significant difference E:\FR\FM\12JYP2.SGM 12JYP2 32396 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 between sources of admission, with institutional resource use at $1,920.06 while community resource use is at $1,062.05, a difference of $858.01. The pattern of higher resource use for institutional admissions as compared to community admissions remains consistent for the 25th and 75th percentiles, with a difference of approximately $675 and $974, respectively. Additionally, we note that we do not show preference to any particular patient profile, but rather aim to better align home health payment with the costs associated with providing care. As discussed in our CY 2018 HH PPS proposed rule, current research around those patients who are discharged from acute and PAC settings shows that these beneficiaries tend to be sicker upon admission, are being discharged rapidly back to the community, and are more likely to be re-hospitalized after discharge due to the acute nature of their illness.35 Additionally, as further described in the CY 2018 HH PPS proposed rule, research studies indicate that patients admitted to home health from institutional settings are vulnerable to adverse effects and injury because of the functional decline that occurs due to their institutional stay, indicating that the patient population referred from an institutional setting requires more concentrated resources and supports to account for and mitigate this functional decline.36 Moreover, as described in the CY 2018 HH PPS proposed rule, research suggests that the reduction in monitoring from the level typically experienced in an inpatient facility to that in the home environment can potentially cause gaps in care and consequently increased risk for adverse events for the newly-admitted home health beneficiary, and any negative impacts of the transition to the home setting can be reduced by an appropriate increase in care for the beneficiary, particularly through more frequent assessment of their condition and ongoing monitoring once transferred to the home environment.37 Furthermore, research discussed in our CY 2018 HH PPS proposed rule shows that 35 O’Connor, M. (2012, February). Hospitalization Among Medicare-Reimbursed Skilled Home Health Recipients. Retrieved March 02, 2017, from https:// www.ncbi.nlm.nih.gov/pmc/articles/PMC4690459. 36 Rosati, R. J., Huang, L., Navaie-Waliser, M., & Feldman, P. H. (2003). Risk Factors for Repeated Hospitalizations Among Home Healthcare Recipients. Journal For Healthcare Quality, 25(2), 4–11. doi:10.1111/j.1945–1474.2003.tb01038.x. 37 Forster, A. J. (2003). The Incidence and Severity of Adverse Events Affecting Patients after Discharge from the Hospital. Annals of Internal Medicine, 138(3), 161. doi:10.7326/0003–4819– 138–3–200302040–00007. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 beneficiaries discharged from institutional settings are more vulnerable because of, among other factors, the need to manage new health care issues, major modifications to medication interventions, and the coordination of follow-up appointments, which could lead to the risk for adverse drug events, for errors in a beneficiary’s medication regimen, and for the need to readmit to the hospital due to deterioration of the patient’s condition.38 Additionally, we note that the goal of the admission source variable is not to identify or evaluate for increases in rehospitalization in the home health beneficiary population but rather to align payment with the costs of providing home health care. Other CMS initiatives such as the HH QRP as well as the HH VBP demonstration take into account readmissions, among other measures of quality. However, because this population is at higher risk for possible readmission to an institutional setting, we believe that more intensive supports, partnered with differentiated payment weights, are appropriate in crafting a payment system that better reflects the costs incurred by HHAs while also promoting the delivery of quality care to the Medicare population. In summary, clinical research continues to indicate that the needs of the institutional population are intensive. Likewise, our analysis of home health data shows that costs sustained by home health agencies for those beneficiaries admitted from institutional settings are higher than community entrants. Therefore, we believe that accounting for these material differences in the care needs of the beneficiary population admitted from institutional settings and their resultant, differentiated resource use, will serve to better align payments with actual costs incurred by HHAs when caring for Medicare beneficiaries. We expect that HHAs will continue to provide the most appropriate care to Medicare home health beneficiaries, regardless of admission source or any other category related to home health payment. As we noted in the CY 2018 HH PPS proposed rule, the primary goal of home health care is to provide restorative care when improvement is expected, maintain function and health status if improvement is not expected, slow the rate of functional decline to avoid institutionalization in an acute or 38 Meyers, A. G., Salanitro, A., Wallston, K. A., Cawthon, C., Vasilevskis, E. E., Goggins, K. M., . . . Kripalani, S. (2014). Determinants of health after hospital discharge: Rationale and design of the Vanderbilt Inpatient Cohort Study (VICS). BMC Health Services Research, 14(1). doi:10.1186/1472– 6963–14–10. PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 post-acute care setting, and/or facilitate transition to end-of-life care as appropriate (82 FR 35348). The primary goal of the HH PPS is to align payment with the costs of providing home health care. Furthermore, in our CY 2000 HH PPS final rule, commenters asserted that patients admitted to home health from the hospital were often more acutely ill and resource-intensive than other patients, particularly when compared with beneficiaries who had no institutional care prior to admission (64 FR 41147). We appreciate the concerns expressed in response to the CY 2018 HH PPS proposed rule regarding possible behavioral changes by providers given the perceived incentives created by the admission source categories within the alternative casemix adjustment methodology. However, we continue to expect that HHAs will provide the appropriate care needed by all beneficiaries who are eligible for the home health benefit, including those beneficiaries with medically-complex conditions who are admitted from the community. We will carefully monitor the outcomes of the proposed change, including any impacts to community entrants, and make further refinements as necessary. Regarding the incorporation of other clinical settings into the definition of the institutional category under the alternative case-mix adjustment methodology that some commenters raised in response to the CY 2018 HH PPS proposed rule, such as emergency department (ED) use and observational stays, we propose to only include those stays that are considered institutional stays in other Medicare settings. For example, observational stays do not count towards the 3-day window for an admission to a SNF because they are not categorized as inpatient. Additionally, in our analysis of 2017 HH claims data, we identified those HH stays that, within the 14 days prior to admission to HH, had been preceded by ED visits or outpatient observational stays and isolated these stays from stays that would otherwise be grouped into the community admission source category. As demonstrated in Table 36, 30-day periods of care for beneficiaries with a preceding ED visit (which would otherwise be grouped into the community admission source category) do not show higher resource use when compared to those beneficiaries entering from acute or PAC settings, with an average resource use at $1,660.64 per home health period as compared to $2,171.00 for institutional admits. When compared with those patients admitted from the community, admissions from E:\FR\FM\12JYP2.SGM 12JYP2 32397 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules the ED show somewhat higher resource use at $1,660.64 per home health period as compared to $1,337.73 for community admits. We note that the volume of patients with preceding ED visits is relatively low, at about 5.8 percent of total home health periods. TABLE 36—AVERAGE RESOURCE USE BY ADMISSION SOURCE (14 DAY LOOK-BACK, 30 DAY PERIODS) ADMISSION SOURCE: COMMUNITY, INSTITUTIONAL, AND EMERGENCY DEPARTMENT Average resource use Number of 30-day periods Percent of 30-day periods Standard deviation of resource use 25th percentile of resource use Median resource use 75th percentile of resource use Community ................................................................................ Institutional ................................................................................ Emergency Department ............................................................ $1,337.73 2,171.00 1,660.64 5,905,217 2,215,971 503,588 68.5 25.7 5.8 $1,108.57 1,303.24 1,197.60 $558.54 1,246.05 782.63 $1,035.34 1,920.06 1,396.50 $1,779.73 2,791.91 2,225.38 Total ................................................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47 Similarly, 30-day periods for beneficiaries with preceding observational stays (which would otherwise be grouped into the community admission source category) also do not show higher resource use when compared to those beneficiaries entering from acute or PAC settings, as described in Table 37, with average resource use at $1,820.06 per home health period as compared to $2,171.00 for institutional admits. TABLE 37—AVERAGE RESOURCE USE BY ADMISSION SOURCE (14 DAY LOOK-BACK; 30 DAY PERIODS) ADMISSION SOURCE: COMMUNITY, INSTITUTIONAL, AND OBSERVATIONAL STAYS Average resource use Number of 30-day periods Percent of 30-day periods Standard deviation of resource use 25th percentile of resource use Median resource use 75th percentile of resource use $1,350.90 2,171.00 1,820.06 6,242,043 2,215,971 166,762 72.4% 25.7% 1.9% $1,114.94 1,303.24 1,180.96 $564.31 1,246.05 960.15 $1,048.86 1,920.06 1,589.08 $1,799.27 2,791.91 2,399.68 Total ................................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 Community ................................................................................ Institutional ................................................................................ Observational Stays .................................................................. 1,570.68 8,624,776 100.0% 1,221.38 679.12 1,272.18 2,117.47 When compared with those patients admitted from the community, admissions from observational stays show higher resource use at $1,820.06 per home health period as compared to $1,350.90 for community admits. However, the volume of patients with preceding observational stays is very low, at about 2 percent of total home health periods. In summary, home health stays with preceding observational stays and ED visits show resource use that falls between that of the institutional and community categories. However, the resource use is not equivalent to that of the institutional settings; therefore, we do not believe it appropriate to include observational stays and ED visits in the institutional category for the purposes of the PDGM. Additionally, including these stays in the institutional category would lead to a small reduction in the overall average resource use and related case mix weights for groups admitted from acute and PAC settings. Moreover, including ED or observational stays with discharges from acute care hospitals, LTCHs, IRFs and SNFs would be inconsistent with section 1861(tt)(1) of the Act, which defines the term ‘‘postinstitutional home health services’’ as discharges from hospitals (which include IRFs and LTCHs) and SNFs VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 within 14 days of when home health care is initiated. We explored the option of creating a third admission source category specifically for observational stays/ED visits. In order to more fully understand the potential impact of a third category, we analyzed the overall impact of the creation of such a category. For the purposes of this analysis, in the event that a home health stay was preceded by both an institutional stay and an observation stay or ED visit, the case would be grouped into the institutional category. Our findings indicate for those HH stays with a preceding outpatient observational stay/ED visit, the overall payment weight for associated groups for ‘‘early’’ 30-day periods (as defined in section III.F.4 of this rule) would be approximately 6 percent higher than the community admission counterparts, whereas institutional stays would see weights that are approximately 19 percent higher than community admissions. When examining the overall payment weights for ‘‘late’’ 30day periods (as defined in section III.F.4 of this rule), HH stays with a preceding outpatient admission would observe weights that are approximately 10 percent higher than the community admission counterparts, whereas institutional stays would see weights PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 that are approximately 43 percent higher than community admissions. However, we are concerned that a third admission source category for observational stays and ED visits could create an incentive for providers to encourage outpatient encounters both prior to a 30-day period of care or within a 30-day period of care within 14 days of the start of the next 30-day period, thereby potentially inappropriately increasing costs to the Medicare program overall. The clinical threshold for an observational stay or an ED visit is not as high as that required for an institutional admission, and we are concerned that home health agencies may encourage beneficiaries to engage with emergency departments before initiating a home health stay. For example, in the FY 2014 IPPS/ LTCH PPS final rule and also the Medicare Benefit Policy Manual Chapter 1—Inpatient Hospital Services Covered Under Part A, CMS clarified and specified in the regulations that an individual becomes an inpatient of a hospital, including a long term care hospital or a Critical Access Hospital, when formally admitted as such pursuant to an order for inpatient admission by a physician or other qualified practitioner described in the final regulations (78 FR 50495). The E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32398 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules order is required for payment of hospital inpatient services under Medicare Part A. CMS also specified that for those hospital stays in which the physician expects the beneficiary to require care that crosses two midnights and admits the beneficiary based upon that expectation, Medicare Part A payment is generally appropriate. Additionally, for the purposes of admissions to skilled nursing facilities, the Medicare Benefit Policy Manual Chapter 8—Coverage of Extended Care (SNF) Services Under Hospital Insurance states that in order to qualify for post-hospital extended care services, the individual must have been an inpatient of a hospital for a medically necessary stay of at least three consecutive calendar days and that time spent in observation or in the emergency room prior to (or in lieu of) an inpatient admission to the hospital does not count toward the 3-day qualifying inpatient hospital stay, as a person who appears at a hospital’s emergency room seeking examination or treatment or is placed on observation has not been admitted to the hospital as an inpatient; instead, the person receives outpatient services. Furthermore, admission to an inpatient rehabilitation facility (IRF) requires that for IRF care to be considered reasonable and necessary, the documentation in the patient’s IRF medical record must demonstrate a reasonable expectation that the patient must require active and ongoing intervention of multiple therapy disciplines, at least one of which must be PT or OT; require an intensive rehabilitation therapy program, generally consisting of 3 hours of therapy per day at least 5 days per week; or in certain well-documented cases, at least 15 hours of intensive rehabilitation therapy within a 7consecutive day period, beginning with the date of admission; reasonably be expected to actively participate in, and benefit significantly from the intensive rehabilitation therapy program; require physician supervision by a rehabilitation physician, with face-toface visits at least 3 days per week to assess the patient both medically and functionally and to modify the course of treatment as needed; and require an intensive and coordinated interdisciplinary team approach to the delivery of rehabilitative care, as described in detail in Medicare Benefit Policy Manual, Chapter 1—Inpatient Hospital Services Covered Under Part A 110.2—Inpatient Rehabilitation Facility Medical Necessity Criteria. Conversely, CMS specified that for hospital stays in which the physician expects the patient to require care less VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 than two midnights, payment under Medicare Part A is generally inappropriate. (However, we note that in the CY 2016 Outpatient Prospective Payment System final rule, CMS adopted a policy such that for stays for which the physician expects the patient to need less than two midnights of hospital care (and the procedure is not on the inpatient-only list or otherwise listed as a national exception), an inpatient admission may be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician (80 FR 70297).) Regarding emergency department visits by Medicare beneficiaries, services are generally covered by Medicare Part B in instances where a beneficiary experiences an injury, a sudden illness, or an illness that quickly worsens. In the case of observational stays, as described in the Medicare Claims Processing Manual, Chapter 12, observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. As described in the Medicare Benefit Policy Manual, Chapter 6— Hospital Services Covered Under Part B 20.6—Outpatient Observation Services, observation services are commonly ordered for patients who present to the emergency department and who then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge. Moreover, the Medicare Claims Processing Manual in Chapter 4—Part B Hospital, 290—Outpatient Observation Services states that observation services are covered by Medicare only when provided by the order of a physician or another individual authorized by state licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours. In summary, the clinical thresholds for coverage and payment for an admission to institutional settings are higher when compared with ED visits and observational stays. Finally, we note that the proportion of home health PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 periods with admissions from ED visits and observational stays is low relative to community and institutional counterparts. Creating a third community admission source category for observational stays and ED visits would potentially introduce added complexity into the payment system for a small portion of home health stays, which could lead to the creation of payment groups that contain very few stays with very little difference in casemix weights across the landscape of groups. For all of these reasons, we believe that incorporating HH stays with preceding observational stays and ED visits into the community admission category is most appropriate at this time. However, we note that as we receive and evaluate new data related to the provision of Medicare home health care under the PDGM, we will continue to assess the appropriateness of the payment levels for admission source within a home health period and give consideration to any cost differentiation evidenced by the resources required by those home health patients with a preceding outpatient event. Regarding the operational aspects of the admission source category, as described in the CY 2018 HH PPS proposed rule, we have developed automated claims processing procedures with the goal of reducing the amount of administrative burden associated with the admission source category of the alternative case-mix adjustment methodology (82 FR 35309). For example, Medicare systems will automatically determine whether a beneficiary has been discharged from an institutional setting for which Medicare paid the claim, using information used during claims processing to systematically identify admission source and address this issue. When the Medicare claims processing system receives a Medicare home health claim, the systems will check for the presence of a Medicare acute or PAC claim for an institutional stay. If such an institutional claim is found, and the institutional stay occurred within 14 days of the home health admission, our systems will trigger an automatic adjustment of the corresponding HH claim to the appropriate institutional category. Similarly, when the Medicare claims processing system receives a Medicare acute or PAC claim for an institutional stay, the systems will check for the presence of a subsequent HH claim with a community payment group. If such a HH claim is found, and the institutional stay occurred within 14 days of the home health admission, our systems will trigger an automatic E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules adjustment of the HH claim to the appropriate institutional category. This process may occur any time within the 12-month timely filing period for the acute or PAC claim. The OASIS assessment will not be utilized in evaluating for admission source information. Moreover, as we also proposed in the CY 2018 HH PPS proposed rule, we propose in this rule that newly-created occurrence codes would also be established, allowing HHAs to manually indicate on Medicare home health claims that an institutional admission had occurred prior to the processing of an acute or PAC Medicare claim, if any, in order to receive the higher payment associated with the institutional admission source sooner (82 FR 35312). However, the usage of the occurrence codes is limited to situations in which the HHA has information about the acute or PAC stay. We also noted that the use of these occurrence codes would not be limited to home health beneficiaries for whom the acute or PAC claims were paid by Medicare. HHAs would also use the occurrence codes for beneficiaries with acute or PAC stays paid by other payers, such as the Veterans Administration (VA). If a HHA does not include on the HH claim the occurrence code indicating that a home health patient had a previous institutional stay, processed either by Medicare or other institutions such as the VA, such an admission will be categorized as ‘‘community’’ and paid accordingly. However, if later a Medicare acute or PAC claim for an institutional stay occurring within 14 days of the home health admission is submitted within the timely filing deadline and processed by the Medicare systems, the HH claim would be automatically adjusted and recategorized as an institutional admission and appropriate payment modifications would be made. If there was a non-Medicare institutional stay occurring within 14 days of the home health admission but the HHA was not aware of such a stay, upon learning of such a stay, the HHA would be able to resubmit the HH claim that included an occurrence code, subject to the timely filing deadline, and payment adjustments would be made accordingly. We note that the Medicare claims processing system will check for the presence of an acute or PAC Medicare claim for an institutional stay occurring within 14 days of the home health admission on an ongoing basis and automatically assign the home health claim as ‘‘community’’ or ‘‘institutional’’ appropriately. As a VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 result, with respect to a HH claim with a Medicare institutional stay occurring within 14 days of home health admission, we will not require the submission of an occurrence code in order to appropriately categorize the HH claim to the applicable admission source. With respect to a HH claim with a non-Medicare institutional stay occurring with 14 days of home health admission, a HHA would need to submit an occurrence code on the HH claim in order to have the HH claim categorized as ‘‘institutional’’ and paid the associated higher amount. Additionally, we plan to provide education and training regarding all aspects of the admission source process and to develop materials for guidance on claims adjustments, for resolution of claims processing issues, for defining timely filing windows, and for appropriate usage of occurrence codes through such resources as the Medicare Learning Network. We will also update guidance in the Medicare Claims Processing Manual as well as the Medicare Benefit Policy Manual as appropriate with detailed procedures. We will also work with our Medicare Administrative Contractors (MACs) to address any concerns regarding the processing of home health claims as well as develop training materials to facilitate all aspects of the transition to the PDGM, including the unique aspects of the admission source categories. With regards to the length of time for resubmission of home health claims that reflect a non-Medicare institutional claim, all appropriate Medicare rules regarding timely filing of claims will still apply. Procedures required for the resubmission of home health claims will apply uniformly for those claims that require editing due to the need to add or remove occurrence codes. Details regarding the timely filing guidelines for the Medicare program are available in the Medicare Claims Processing Manual, Chapter 1—General Billing Requirements, which is available at the following website: https:// www.cms.gov/Regulations-andGuidance/Guidance/Manuals/ downloads/clm104c01.pdf. Additionally, adjustments to any resubmitted home health claims will be processed in the same manner as other edited Medicare home health claims. Additionally, we plan to perform robust testing within the Medicare claims processing system to optimize and streamline the payment process. Regarding the process by which HHAs should verify a non-Medicare institutional stay, as we noted in in the CY 2018 HH PPS proposed rule, we expect home health agencies would PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 32399 utilize discharge summaries from all varieties of institutional providers (that is, Medicare and non-Medicare) to inform the usage of these occurrence codes, and these discharge documents should already be part of the beneficiary’s home health medical record used to support the certification of patient eligibility as outlined in § 424.22(c) (82 FR 35309). Providers should utilize existing strategies and techniques for verification of such stays and incorporate relevant clinical information into the plan of care, as is already required by our Conditions of Participation. Our evaluation process within the Medicare claims processing system will check for the presence of an acute or PAC Medicare claim for an institutional stay occurring within 14 days of the home health admission on an ongoing basis. Under this approach, the Medicare systems would only evaluate for whether an acute or PAC Medicare claim for an institutional stay occurring within 14 days of the home health admission was processed by Medicare, not whether it was paid. Therefore, we do not expect that a home health claim will be denied due to unpaid Medicare claims for preceding acute or PAC admissions. Moreover, as previously stated above, we note that providers would have the option to submit the occurrence code indicating a preceding institutional stay in order to categorize the home health admission as ‘‘institutional.’’ In the case of a HHA submitting an occurrence code because of a preceding Medicare institutional stay, if upon medical review after finding no Medicare acute or PAC claims in the National Claims History, and there is documentation of a Medicare acute or PAC stay within the 14 days prior to the home health admission, but the institutional setting did not submit its claim in a timely fashion, or at all, we would permit the institutional categorization for the payment of the home health claim through appropriate administrative action. Similarly, in the case of a HHA submitting an occurrence code because of a preceding non-Medicare institutional stay, if documentation of a non-Medicare acute or PAC stay within the 14 days prior to the home health admission, is found, we would permit the categorization of the home health claim as ‘‘institutional’’. However, if upon medical review after finding no acute or PAC Medicare claims in the National Claims History, and there is no documentation of an acute or PAC stay, either a Medicare or non-Medicare stay, within 14 days of the home health admission, we would E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32400 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules correct the overpayment. If upon medical review after finding no Medicare acute or PAC claims in the National Claims History and we find that an HHA is systematically including occurrence codes that indicate the patient’s admission source was ‘‘institutional,’’ but no documentation exists in the medical record of Medicare or non-Medicare stays, we would refer the HHA to the zone program integrity contractor (ZPIC) for further review. Moreover, we intend to consider targeted approaches for medical review after the implementation of the admission source element of the PDGM, including potentially identifying HHAs that have claims that are consistently associated with acute or PAC denials, whose utilization pattern of acute or PAC occurrence codes is aberrant when compared with their peers, or other such metrics that would facilitate any targeted reviews. For all of the reasons described above, we are proposing to establish two admission source categories for grouping 30-day periods of care under the PDGM—institutional and community—as determined by the healthcare setting utilized in the 14 days prior to home health admission. We are proposing that 30-day periods for beneficiaries with any inpatient acute care hospitalizations, skilled nursing facility (SNF) stays, inpatient rehabilitation facility (IRF) stays, or long term care hospital (LTCH) stays within the 14 days prior to a home health admission would be designated as institutional admissions. We are proposing that the institutional admission source category would also include patients that had an acute care hospital stay during a previous 30-day period of care and within 14 days prior to the subsequent, contiguous 30-day period of care and for which the patient was not discharged from home health and readmitted (that is, the admission date and from date for the subsequent 30-day period of care do not match) as we acknowledge that HHAs have discretion as to whether they discharge the patient due to a hospitalization and then readmit the patient after hospital discharge. However, we are proposing that we would not categorize PAC stays (SNF, IRF, LTCH stays) that occur during a previous 30-day period and within 14 days of a subsequent, contiguous 30-day period of care (that is, the admission date and from date for the subsequent 30-day period of care do not match) as institutional, as we would expect the HHA to discharge the patient if the patient required PAC in a different setting and then readmitted the patient, VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 if necessary, after discharge from such setting. If the patient was discharged and then readmitted to home health, the admission date and ‘‘from’’ date on the 30-day claim would match and the claims processing system will look for an acute or a PAC stay within 14 days of the home health admission date. This admission source designation process would be applicable to institutional stays paid by Medicare or any other payer. All other 30-day periods would be designated as community admissions. For the purposes of a RAP, we would only adjust the final home health claim submitted for source of admission. For example, if a RAP for a community admission was submitted and paid, and then an acute or PAC Medicare claim was submitted for that patient before the final home health claim was submitted, we would not adjust the RAP and would only adjust the final home health claim so that it reflected an institutional admission. Additionally, HHAs would only indicate admission source occurrence codes on the final claim and not on any RAPs submitted. We invite public comments on the admission source component of the proposed PDGM payment system. 6. Clinical Groupings In the CY 2018 HH PPS proposed rule (82 FR 35307), we discussed the findings of the Home Health Study Report to Congress, which indicates that the current payment system may encourage HHAs to select certain types of patients over others.39 Patients with a higher severity of illness, including those receiving a greater level of skilled nursing care; for example, patients with wounds, with ostomies, or who are receiving total parenteral nutrition or mechanical ventilation were associated with higher resource use and lower margins. This may have produced a disincentive for providing care for patients with higher clinical acuity, and thereby may have limited access of home health services to these vulnerable patient populations.40 We noted that payment should be predicated on resource use and proposed that adjusting payment based on identified 39 Report to Congress. Medicare Home Health Study: An Investigation on Access to Care and Payment for Vulnerable Patient Populations. Available at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ HomeHealthPPS/Downloads/HH-Report-toCongress.pdf. 40 Report to the Congress: Medicare Payment Policy. (2015)Home health care services: Assessing payment adequacy and updating payments. Ch.9 https://www.medpac.gov/docs/default-source/ reports/chapter-9-home-health-care-services-march2015-report-.pdf?sfvrsn=0. PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 clinical characteristics and associated services would better align payment with resource use. For these reasons, we propose grouping 30-day periods of care into six clinical groups: Musculoskeletal Rehabilitation, Neuro/Stroke Rehabilitation, Wounds—Post-Op Wound Aftercare and Skin/NonSurgical Wound Care, Behavioral Health Care (including Substance Use Disorder), Complex Nursing Interventions, Medication Management, Teaching and Assessment (MMTA). These clinical groups are designed to capture the most common types of care that HHAs provide. We propose placement of each 30-day period of care into a specific clinical group based on the primary reason the patient is receiving home health care as determined by the principal diagnosis reported on the claim. Although the principal diagnosis code is the basis for the clinical grouping, secondary diagnosis codes and patient characteristics would then be used to case-mix adjust the period further through the comorbidity adjustment and functional level. A complete list of ICD– 10–CM codes and their assigned clinical groupings is posted on the CMS HHA Center web page (https://www.cms.gov/ center/provider-Type/home-HealthAgency-HHA-Center.html). More information on the analysis and development of the groupings can be found in the CY 2018 HH PPS proposed rule as well as the HHGM technical report from December 2016, also available on the HHA Center webpage. In the CY 2018 HH PPS proposed rule, we solicited comments on the clinical groups and the assigned clinical groupings of the ICD–10–CM codes. Additionally, in February 2018, a Technical Expert Panel (TEP) was held in order to gain insight from industry leaders, clinicians, patient representatives, and researchers with experience in home health care and/or experience in home health agency management. Many commenters and TEP members supported the patientcentered approach to grouping patients by clinical characteristics, and several commenters felt that the clinical groupings did capture the majority of characteristics of the home health population. Specifically, commenters generally approved of the higherweighted complex nursing and wound groups, and agreed with the ‘‘importance the HHGM places on these complex patients through its proposed payment rate.’’ One commenter stated that ‘‘the most complex and costly beneficiaries for a HHA are those that require intensive nursing care, while E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules those that require intensive therapy produce a significant margin with less cost.’’ Additional comments on the clinical groups generally included the following: Concern that some diagnosis codes are not used to group claims into the six clinical groups; concern about reduced therapy use in the clinical groups that aren’t specifically for musculoskeletal or neurological rehabilitation; concern that the groups do not capture clinically complex patients that require multiple home health disciplines; suggestions that the clinical groups should be based on impairments rather than diagnoses; and concern that the MMTA clinical group encompasses too many diagnosis codes. Several commenters expressed concern that certain ICD 10–CM diagnosis codes were not used for payment (for example, codes that were not used to group claims into the six clinical groupings), which could possibly restrict access to the benefit or force beneficiaries to seek care in institutional settings. Others had concerns regarding specific diagnosis codes they felt should be reassigned to different clinical groups. As outlined in the HHGM technical report from December 2016 and in the CY 2018 HH PPS proposed rule (82 FR 35314), there were several reasons why a diagnosis code was not assigned to one of the six clinical groups. These included if the diagnosis code was too vague, meaning the code does not provide adequate information to support the need for skilled home health services (for example H57.9, Unspecified disorder of eye and adnexa); the code, based on ICD 10–CM, American Hospital Association (AHA) Coding Clinic, or Medicare Code Edits (MCE) would indicate a non-home health service (for example, dental codes); the code is a manifestation code subject to a manifestation/etiology convention, meaning that the etiology code must be reported as the principal diagnosis, or the code is subject to a code first sequencing convention (for example, G99.2 myelopathy in diseases classified elsewhere); the code identifies a condition which would be unlikely to require home health services (for example, L81.2, Freckles); the code is restricted to the acute care setting per ICD 10–CM/AHA Coding Clinic, or the diagnosis indicates death as the outcome (for example S06.1X7A, Traumatic cerebral edema with loss of consciousness of any duration with death due to brain injury prior to regaining consciousness). We did, however, review and re-group certain codes based on commenter feedback. For example, with regard to the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 classification of N39.0, Urinary tract infection, site not specified as an invalid code to group the home health period of care, we do agree that absent definitive information provided by the referring physician, a home health clinician would not know the exact site of a urinary tract infection (UTI). As such, Urinary tract infection, site not specified (N39.0) will be grouped under MMTA, as the home health services required would most likely involve teaching about the treatment for the UTI, as well as evaluating the effectiveness of the medication regimen. We encourage HHAs to review the list of diagnosis codes in the PDGM Grouping Tool posted on the HHA Center web page at: https://www.cms.gov/center/providerType/home-Health-Agency-HHACenter.html. Additionally, the ICD–10– CM code set exceeds the ICD–9–CM in the number of diagnoses and conditions and contains codes that are much more granular. Therefore, we disagree that excluding certain codes from payment will restrict access, considering the increase in diagnoses potentially requiring home health. With regard to commenter concern that the HHGM clinical groups did not account for the need for therapy in home health periods that are not specifically grouped into musculoskeletal or neurological rehabilitation, we continue to expect the ordering physician, in conjunction with the therapist to develop and follow a plan of care for any home health patient, regardless of clinical group, as outlined in the skilled service requirements at § 409.44, when therapy is deemed reasonable and necessary. Although the principal diagnosis is a contributing factor in the PDGM and determines the clinical group, it is not the only consideration in determining what home health services are needed in a patient’s plan of care. It is the responsibility of the patient’s treating physician to determine if and what type of therapy the patient needs regardless of clinical grouping. In accordance with § 409.44(c)(1)(i), the therapy goals must be established by a qualified therapist in conjunction with the physician when determining the plan of care. As such, therapy may likely be included in the plan of care for a patient in any of the six clinical groupings. Any therapy indicated in the plan of care is expected to meet the requirements outlined in § 409.44, which states that all therapy services must relate directly and specifically to a treatment regimen (established by the physician, after any needed consultation with the qualified therapist). Additional requirements PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 32401 dictate that the amount, frequency, and duration of the services must be reasonable and necessary, as determined by a qualified therapist and/or physician, using accepted standards of clinical practice. One goal in developing the PDGM is to provide an appropriate payment based on the identified resource use of different patient groups, not to encourage, discourage, value, or devalue one type of skilled care over another. Likewise, for patients requiring two or three home health disciplines, the PDGM takes into account the functional level and comorbidities of the patient after the primary reason for the period is captured by the clinical grouping. Decreasing functional status, as indicated by a specific set of OASIS items, and the presence of certain comorbid conditions, is associated with increased resource use. Here is where, when combined with the clinical grouping, any multi-disciplinary therapy patients would be captured. For instance, a patient grouped into the Neuro-Rehabilitation clinical grouping with a high Functional Level (meaning high functional impairment) indicates increased therapy needs, potentially utilizing all skilled therapy disciplines. Additionally, the comorbidity adjustment further case mixes the period and increases payment to capture the additional resource use for a patient regardless of whether the services are skilled nursing or therapy based. Therefore, a patient with complex needs, including multiple therapy disciplines and medical management, is captured by the combination of the different levels of the PDGM. Furthermore, the current case-mix adjustment methodology does not differentiate between utilization of therapy disciplines and whether or not all three are utilized for the same patient. We have determined that the PDGM’s functional level when combined with the clinical grouping and comorbidity adjustment actually provides a much clearer picture of the patient’s needs, particularly in relation to therapy services. Comments on the CY 2018 HH PPS proposed rule and at the 2018 TEP indicated that diagnosis does not always correlate with need and that impairments and functional limitations are better predictors of therapy services. Additionally, some commenters stated that clinicians are more likely to focus on impairments and functional limitations when conceptualizing overall patient care, and suggested using them as the basis for the clinical groups rather than diagnosis codes. We do agree that diagnosis alone does not E:\FR\FM\12JYP2.SGM 12JYP2 32402 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules provide the entire clinical picture of the home health patient; however, in the same way the clinical group is one aspect of the PDGM, therapy services are only one aspect of home health. In fact, the multidisciplinary nature of the benefit is precisely the reason that diagnosis should be an important aspect of the clinical groupings model. The various home health disciplines have different but overlapping roles in treating the patient; however, a diagnosis is used across disciplines and has important implications for patient care. A patient’s diagnosis consists of a known set of signs and symptoms agreed upon by the medical community. Each different healthcare discipline uses these identifiable signs and symptoms to apply its own approach and skill set to treat the patient. However, it remains a patient centered approach. Several commenters and TEP participants alike, stated that the MMTA clinical group is too broad and should be divided into more clinical groups or subgroups. One commenter questioned whether it made sense to assign patients to different clinical groupings if roughly 60 percent of 30-day periods will fall into the MMTA category. Others considered it an ‘‘other’’ category that was counter to the goal of clarifying the need for home health. A significant goal of the PDGM is to clearly define what types of services are provided in home health and accurately ascribe payment to resource use. Our analysis showed that there are four very broad categories of interventions frequently provided in the home that are not attributable to one specific intervention or diagnosis: Health teaching; guidance and counseling; case management; treatments and procedures; and surveillance. These categories cross the spectrum of diagnoses, medications, and interventions, which understandably is why this clinical grouping represents the majority of home health episodes. We believe that these four broad categories of interventions in MMTA cannot be underestimated in importance. We stated in the CY 2018 HH PPS proposed rule that many home health patients have multi-morbidity and polypharmacy, making education and surveillance crucial in the management of the home health patient in order to prevent medication errors and adverse effects. However, the principal diagnosis necessitating home care for these patients may not involve a complex nursing intervention, behavioral health, rehabilitation, or wound care. This group represents a broader, but no less important reason for home care. We believe MMTA is not so much an ‘‘other’’ category as much as it appears to represent the foundation of home health. Many commenters highlighted the complexity of home health patients; pointing to multimorbidity, ‘‘quicker and sicker’’ discharges, and polypharmacy as important factors in maintaining home health access. CMS agrees that these issues alone are important reasons for ordering home health services and necessitate their own clinical grouping. When initially developing the model, we looked at breaking MMTA into subgroups in order to account for differences amongst diagnoses within the broader category of this group. We found that the variation in resource use was similar across those subgroups and determined separating diagnoses further would only serve to make the model more complex and without significant variations in case-mix. However, in response to public comments and the discussion at the 2018 TEP,20 we performed further analysis on the division of MMTA into subgroups in order to estimate the payment regression if these groups were separated from MMTA. We conducted a thorough review of all the diagnosis codes grouped into MMTA. We then grouped the codes into subgroups based on feedback from public comments, which mainly focused on cardiac, oncology, infectious, and respiratory diagnoses. We created the additional subgroups (Surgical/Procedural Aftercare, Cardiac/ Circulatory, Endocrine, GI/GU, Infectious Diseases/Neoplasms, Respiratory, and Other) based on data that showed above-average resource use for the codes in those groups, and then combined certain groups that had a minimal number of codes. Those results are shown in Table 38. TABLE 38—DISTRIBUTION OF RESOURCE USE BY 30-DAY PERIODS [MMTA subgroups] Subgroup N Mean Median 304,871 1,594,149 425,077 402,322 347,755 724,722 1,226,750 $1,605.43 1,433.02 1,524.45 1,414.44 1,400.65 1,411.61 1,366.56 $1,326.03 1,121.27 1,062.41 1,115.29 1,077.58 1,122.23 1,035.76 Total ...................................................................................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 Aftercare ...................................................................................................................................... Cardiac/Circulatory ...................................................................................................................... Endocrine ..................................................................................................................................... GI/GU ........................................................................................................................................... Infectious Diseases/Neoplasms/Blood-forming Diseases ........................................................... Respiratory ................................................................................................................................... Other ............................................................................................................................................ 5,025,646 1,428.17 1,105.20 Table 39 shows the impact each MMTA variable has on case-mix weight. The impact is calculated by taking the regression coefficient for each variable (unreported here) and dividing by the average resource use of the 30-day periods in the model. Model 1 shows the result when MMTA clinical group is not separated into subgroups. Model 1 shows that all else equal, being in MMTA—Low Functional impairment causes no increase in case-mix weight (for example, a 30-day period’s case-mix weight would be calculated with the coefficients from the constant of the model plus the admission source/timing of the period plus the comorbidity adjustment). A 30-day period in MMTA—Medium Functional would increase the case-mix weight by 0.1560. A 30-day period in MMTA—High Functional would increase the case-mix weight by 0.2731. Model 2 shows the same information but now includes the MMTA subgroups. In any given functional level, many of the MMTA subgroups have an impact on the casemix weight that is similar to what is found in Model 1. For example, a period in MMTA (Other)—Medium Functional 20 https://www.cms.gov/center/provider-Type/ home-Health-Agency-HHA-Center.html. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules has an increase in case-mix of 0.1568 (which is very similar to the 0.1560 value found in Model 1). There are some groups like Aftercare, Endocrine, and GI/GU which show different impacts than Model 1. Also, to a lesser extent these differences also exist for the ‘‘Infectious Diseases/Neoplasms/Blood forming Diseases’’ and ‘‘Respiratory’’ subgroups. Some of these differences are driven by periods which are paid using an outlier adjustment. Model 3 removes 32403 outliers and the corresponding results for the Endocrine subgroup are very similar to Model 1. Some differences (for example in Aftercare) persist; however, the change in case-mix weight remains similar to Model 1. TABLE 39—CHANGE IN CASE-MIX WEIGHT ASSOCIATED WITH MMTA VARIABLES Model 1 Change in case-mix weight Variable MMTA—Low Functional ....................................................................................................... MMTA—Medium Functional ................................................................................................. MMTA—High Functional ...................................................................................................... MMTA (Other)—Low Functional ........................................................................................... MMTA (Other)—Medium Functional .................................................................................... MMTA (Other)—High Functional .......................................................................................... MMTA (Aftercare)—Low Functional ..................................................................................... MMTA (Aftercare)—Medium Functional ............................................................................... MMTA (Aftercare)—High Functional .................................................................................... MMTA (Cardiac/Circulatory)—Low Functional ..................................................................... MMTA (Cardiac/Circulatory)—Medium Functional ............................................................... MMTA (Cardiac/Circulatory)—High Functional .................................................................... MMTA (Endocrine)—Low Functional ................................................................................... MMTA (Endocrine)—Medium Functional ............................................................................. MMTA (Endocrine)—High Functional ................................................................................... MMTA (GI/GU)—Low Functional ......................................................................................... MMTA (GI/GU)—Medium Functional ................................................................................... MMTA (GI/GU)—High Functional ......................................................................................... MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)—Low Functional .......... MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)—Medium Functional .... MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)—High Functional ......... MMTA (Respiratory)—Low Functional ................................................................................. MMTA (Respiratory)—Medium Functional ........................................................................... MMTA (Respiratory)—High Functional ................................................................................ The results show that the change in case-mix weight was minimal for the 30day periods assigned to these subgroups compared to the case-mix weights without the subgroups. Additionally, the impact of other variables in the model (admission source/timing, comorbidity adjustment) on the final case-mix weights were similar whether or not MMTA subgroups were used. Overall, using the MMTA subgroup model would result in more payment groups but not dramatic differences in case-mix weights across those groups. For this reason, we are not proposing to divide the MMTA clinical group into subgroups and to leave them as is shown in Table 40. However, we are soliciting comments from the public on whether there may be other compelling reasons why MMTA should be broken Model 2 Change in case-mix weight 0.000 0.1560 0.2731 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 0.000 0.1568 0.2896 ¥0.1082 0.0798 0.2588 ¥0.0239 0.1371 0.2737 0.1105 0.2859 0.4071 ¥0.0751 0.0997 0.1992 ¥0.0452 0.1068 0.2281 ¥0.0501 0.1027 0.2241 Model 3 (outliers excluded) Change in case-mix weight ........................ ........................ ........................ 0.000 0.1523 0.2748 ¥0.1196 0.0701 0.2491 ¥0.0050 0.1652 0.2952 0.0282 0.1833 0.3086 ¥0.0639 0.1256 0.2231 ¥0.0472 0.1128 0.2379 ¥0.0488 0.1163 0.2400 out into subgroups as shown in Table 38, even if the additional subgroups do not result in significant differences in case-mix weights across those subgroups. We note that we also plan continue to examine trends in reporting and resource utilization to determine if future changes to the clinical groupings are needed after implementation of the PDGM. TABLE 40—PROPOSED CLINICAL GROUPS USED IN THE PDGM amozie on DSK3GDR082PROD with PROPOSALS2 Clinical groups The primary reason for the home health encounter is to provide: Musculoskeletal Rehabilitation ............................ Neuro/Stroke Rehabilitation ................................ Wounds—Post-Op Wound Aftercare and Skin/ Non-Surgical Wound Care. Behavioral Health Care ....................................... Complex Nursing Interventions ........................... Medication Management, Teaching and Assessment (MMTA). VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Therapy (physical, occupational or speech) for a musculoskeletal condition. Therapy (physical, occupational or speech) for a neurological condition or stroke. Assessment, treatment & evaluation of a surgical wound(s); assessment, treatment & evaluation of non-surgical wounds, ulcers, burns, and other lesions. Assessment, treatment & evaluation of psychiatric conditions, including substance use disorders. Assessment, treatment & evaluation of complex medical & surgical conditions including IV, TPN, enteral nutrition, ventilator, and ostomies. Assessment, evaluation, teaching, and medication management for a variety of medical and surgical conditions not classified in one of the above listed groups. PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32404 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 7. Functional Levels and Corresponding OASIS Items amozie on DSK3GDR082PROD with PROPOSALS2 As part of the overall payment adjustment under an alternative casemix adjustment methodology, in the CY 2018 Home Health Prospective Payment System proposed rule (82 FR 35317), we proposed including a functional level adjustment to account for the resource costs associated with providing home health care to those patients with functional impairments. Research has shown a relationship exists between functional status, rates of hospital readmission, and the overall costs of health care services.42 Functional status is defined in a number of ways, but generally, functional status reflects an individual’s ability to carry out activities of daily living (ADLs) and to participate in various life situations and in society.43 CMS currently requires the collection of data on functional status in home health through a standardized assessment instrument: The Outcome and Assessment Information Set (OASIS). Under the current HH PPS, a functional status score is derived from the responses to those items and this score contributes to the overall case-mix adjustment for a home health episode payment. Including functional status in the case-mix adjustment methodology allows for higher payment for those patients with higher service needs. As functional status is commonly used for risk adjustment in various payment systems, including in the current HH PPS, we proposed that the alternative case-mix adjustment methodology would also adjust payments based on responses to selected functional OASIS items that have demonstrated higher resource use. Therefore, we examined every OASIS item for potential inclusion in the alternative case-mix adjustment methodology including those items associated with functional status. Generally, worsening functional status is associated with higher resource use, indicating that the responses to functional OASIS items may be useful as adjustors to construct case-mix weights for an alternative case-mix adjustment methodology. However, due 42 Burke, R. MD, MS, Whitfield, E. Ph.D., Hittle, D. Ph.D., Min, S. Ph.D., Levy, C. MD, Ph.D., Prochazka, A. MD, MS, Coleman, E. MD, MPH, Schwartz, R. MD, Ginde, A. (2016). ‘‘Hospital Readmission From Post-Acute Care Facilities: Risk Factors, Timing, and Outcomes’’. The Journal of Post-Acute Care and Long Term Care Medicine. (17), 249–255. 43 Clauser, S. Ph.D., and Arlene S. Bierman, M.D., M.S. (2003). ‘‘Significance of Functional Status Data for Payment and Quality’’. Health Care Financing Review. 24(3), 1–12. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 to the lack of variation in resource use across certain responses and because certain responses were infrequently chosen, we combined some responses into larger response categories to better capture the relationship between worsening functional status and resource use. The resulting combinations of responses for these OASIS items are found at Exhibit 7–2 in the HHGM technical report, ‘‘Overview of the Home Health Groupings Model,’’ on the HHA Center web page.44 Each OASIS item included in the final model has a positive relationship with resource use, meaning as functional status declines (as measured by a higher response category), periods have more resource use, on average. As such, in the CY 2018 HH PPS proposed rule, we proposed that the following OASIS items would be included as part of the functional level adjustment under an alternative case-mix adjustment methodology: • M1800: Grooming. • M1810: Current Ability to Dress Upper Body. • M1820: Current Ability to Dress Lower Body. • M1830: Bathing. • M1840: Toilet Transferring. • M1850: Transferring. • M1860: Ambulation/Locomotion. • M1033 Risk of Hospitalization (at least four responses checked, excluding responses #8, #9, and #10).45 In the CY 2018 HH PPS proposed rule, we discussed how under the HHGM a home health period of care receives points based on each of the responses associated with the proposed functional OASIS items which are then converted into a table of points corresponding to increased resource use. That is, the higher the points, the higher the functional impairment. The sum of all of these points’ results in a functional impairment score which is used to group home health periods into a functional level with similar resource use. We proposed three functional impairment levels of low, medium, and high with approximately one third of home health periods from each of the clinical groups within each level. This means home health periods in the low impairment level have responses for the proposed functional OASIS items that are associated with the lowest resource use on average. Home health periods in the high impairment level have 44 https://downloads.cms.gov/files/ hhgm%20technical%20report%20120516 %20sxf.pdf. 45 Exclusions of the OASIS C–1 Item M1033 include, response #8: ‘‘currently reports exhaustion’’; response #9: ‘‘other risk(s) not listed in 1–8; response #10: None of the above. PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 responses for the proposed functional OASIS items that are associated with the highest resource use on average. We also proposed that the functional impairment level thresholds would vary between the clinical groups to account for the patient characteristics within each clinical group associated with increased resource costs affected by functional impairment. We provided a detailed analysis of the development of the functional points and the functional impairment level thresholds by clinical group in the HHGM technical report 46 and in Tables 36 and 37 in the CY 2018 HH PPS proposed rule (82 FR 35321). In the CY 2018 HH PPS proposed rule, we solicited comments on the proposed functional OASIS items, the associated points, and the thresholds by clinical group used to group patients into three functional impairment levels under the HHGM, as outlined above. The majority of comments received were from physical therapists, physical therapy assistants, occupational therapists, and national physical, occupational, and speech-language pathology associations. Likewise, a Technical Expert Panel (TEP) was convened in February 2018 to collect perspectives, feedback, and identify and prioritize recommendations from a wide variety of industry experts and patient representatives regarding the public comments received on the proposed HHGM. Comments were very similar between those received on the CY 2018 HH PPS proposed rule and those made by the TEP participants. Most commenters agreed that the level of functional impairment should be included as part of the overall casemix adjustment in a revised case-mix model. Likewise, commenters were generally supportive of the OASIS items selected to be used in the functional level payment adjustment. Commenters noted that the role of patient characteristics and functional status as an indicator of resource use is a wellestablished principle in rehabilitation care. Some commenters stated that adopting a similar component in the home health payment system will help to remove the incentive to provide unnecessary therapy services to reach higher classifications for payment but will also move the HH PPS toward greater consistency with other postacute care prospective payment systems. Other comments received on the functional impairment level adjustment 46 ‘‘Medicare Home Health Prospective Payment System: Case-Mix Methodology Refinements Overview of the Home Health Groupings Model’’ located at https://downloads.cms.gov/files/ hhgm%20technical%20report%20 120516%20sxf.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules encompassed several common themes: The effect of the IMPACT Act provisions on the HHGM; adequacy of the functional impairment thresholds and corresponding payment adjustments; potential HHA behavioral changes to the provision of home health services; the impact of the removal of therapy thresholds on HHAs; and recommendations for the inclusion of other OASIS items into the functional impairment level adjustment. We note that the analysis presented in the CY 2018 HH PPS proposed rule was based on CY 2016 home health episodes using version OASIS–C1/ICD–10 data set, which did not include the aforementioned IMPACT Act functional items. To accommodate new data being collected for the Home Health Quality Reporting Program in support of the IMPACT Act, CMS has proposed to add the functional items, Section GG, ‘‘Functional Abilities and Goals’’, to the OASIS data set effective January 1, 2019. Because these GG functional items are not required to be collected on the OASIS until January 1, 2019, we do not have the data to determine the effect, if any, of these newly added items on resource costs during a home health period of care. However, if the alternative case-mix adjustment methodology, is implemented in CY 2020, we would continue to examine the effects of all OASIS items, including the ‘‘GG’’ functional items, on resource use to determine if any refinements are warranted. Addressing those comments regarding the use and adequacy of the functional impairment thresholds to adjust payment, we remind commenters that the structure of categorizing functional impairment into Low, Medium, and High levels has been part of the home health payment structure since the implementation of the HH PPS. The current HH PPS groups’ scores are based on functional OASIS items with similar average resource use within the same functional level, with approximately a third of episodes classified as low functional score, a third of episodes are classified as medium functional score, and a third of episodes are classified as high functional score. Likewise, the PDGM groups’ scores would be based on functional OASIS items with similar resource use and would have three levels of functional impairment severity: Low, medium and high. However, the three functional impairment thresholds vary between the clinical groups to account for the patient characteristics within that clinical group associated with increased resource costs affected by functional impairment. This is to further ensure that payment is more VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 accurately aligned with actual patient resource needs. As such, we believe the more granular structure of these functional levels provides the information needed on functional impairment and allows greater flexibility for clinicians to tailor a more patient-centered home health plan of care to meet the individualized needs of their patients. As HHA-reported OASIS information determines the functional impairment levels, accurate reporting on the OASIS will help to ensure that the case-mix adjustment is in alignment with the actual level of functional impairment. Concerns regarding HHAs changing the way they provide services to eligible beneficiaries, specifically therapy services, should be mitigated by the more granular functional impairment level adjustment (for example, functional thresholds which vary between each of the clinical groups). The functional impairment level casemix payment adjustment is reflective of the resource costs associated with these reported OASIS items and therefore ensures greater payment accuracy based on patient characteristics. We believe that this approach will help to maintain and could potentially increase access to needed therapy services. We remind HHAs that the provision of home health services should be based on patient characteristics and identified care needs. This could include those patients with complex and/or chronic care needs, or those patients requiring home health services over a longer period of time or for which there is no measureable or expected improvement. While the majority of commenters agreed that the elimination of therapy thresholds is appropriate because of the financial incentive to overprovide therapy services, some commenters indicated that the reductions in payment for therapy visits could result in a decrease in HHA viability and could force some HHAs to go out of business, such as those HHAs that provide more therapy services than nursing. We note that section 51001(a)(3) of the BBA of 2018 amended section 1894(b)(4)(B) of the Act to prohibit the use of therapy thresholds as part of the overall case-mix adjustment for CY 2020 and subsequent years. Consequently, we have no regulatory discretion in this matter. Several commenters provided recommendations for additional OASIS items for inclusion to account for functional impairment. Most notably, commenters suggested adding OASIS items associated with cognition, instrumental activities of daily living (IADLs), and caregiver support. The PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 32405 current HH PPS does not use OASIS items associated with cognition, IADLs, or caregiver support to case-mix adjust for payment. Nonetheless, the relationship between cognition and functional status is important and welldocumented in health care literature so we included them in our analysis because they generally have clinical significance based on research and standards of practice. As described in the CY 2018 HH PPS proposed rule and the technical report, we examined every single OASIS item and its effect on costs. These included those OASIS items associated with cognition, IADLs, and caregiver support. Only those OASIS items associated with higher resource costs were considered for inclusion in the functional level adjustment in the HHGM. Despite commenters’ recommendations, the variables suggested were only minimally helpful in explaining or predicting resource use and most reduced the amount of actual payment. As such, we excluded variables associated with cognition, IADLs, and caregiver support because they would decrease payment for a home health period of care which is counter to the purpose of a case-mix adjustment under the HHGM. The complete analysis of all of the OASIS items can be found in the HHGM technical report on the HHA Center web page.47 After careful consideration of all comments received on the functional level adjustment as part of an alternative case-mix adjustment methodology, we believe that the three PDGM functional impairment levels in each of the six clinical groups are designed to capture the level of functional impairment. We believe that the more granular nature of the levels of functional impairment by clinical group would encourage therapists to determine the appropriate services for their patients in accordance with identified needs rather than an arbitrary threshold of visits. While the functional level adjustment is not meant to be a direct proxy for the therapy thresholds, the PDGM has other casemix variables to adjust payment for those patients requiring multiple therapy disciplines or those chronically ill patients with significant functional impairment. We believe that also accounting for timing, source of admission, clinical group (meaning the primary reason the patient requires home health services), and the presence of comorbidities will provide the necessary adjustments to payment to ensure that care needs are met based on 47 https://downloads.cms.gov/files/hhgm%20 technical%20report%20120516%20sxf.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 32406 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules actual patient characteristics. Therefore, we continue to uphold that the functional impairment level adjustment is sufficient and along with the other case-mix adjustments, payment will better align with the costs of providing services. In summary, we are proposing that the OASIS items identified in the CY 2018 HH PPS proposed rule would be included as part of the functional impairment level payment adjustment under the proposed PDGM. These items are: • M1800: Grooming. • M1810: Current Ability to Dress Upper Body. • M1820: Current Ability to Dress Lower Body. • M1830: Bathing. • M1840: Toilet Transferring. • M1850: Transferring. • M1860: Ambulation/Locomotion. • M1033: Risk of Hospitalization.48 We are proposing that a home health period of care receives points based on each of the responses associated with the proposed functional OASIS items which are then converted into a table of points corresponding to increased resource use (See Table 41). The sum of all of these points results in a functional score which is used to group home health periods into a functional level with similar resource use. We are proposing three functional levels of low impairment, medium impairment, and high impairment with approximately one third of home health periods from each of the clinical groups within each functional impairment level (See Table 42). The CY 2018 HH PPS Proposed rule (82 FR 35320) and the technical report posted on the HHA Center web page provide a more detailed explanation as to the construction of these functional impairment levels using the proposed OASIS items. TABLE 41—OASIS POINTS TABLE FOR THOSE ITEMS ASSOCIATED WITH INCREASED RESOURCE USE USING A REDUCED SET OF OASIS ITEMS, CY 2017 Points (2017) Response category M1800: Grooming ...................................................................................... M1810: Current Ability to Dress Upper Body ............................................ M1820: Current Ability to Dress Lower Body ............................................ 2 ................................................................................................................. M1830: Bathing .......................................................................................... M1840: Toilet Transferring ........................................................................ M1850: Transferring .................................................................................. M1860: Ambulation/Locomotion ................................................................ M1033: Risk of Hospitalization .................................................................. 1 ....................................................... 1 ....................................................... 1 ....................................................... 11 ..................................................... 1 ....................................................... 2 ....................................................... 3 ....................................................... 1 ....................................................... 1 ....................................................... 2 ....................................................... 1 ....................................................... 2 ....................................................... 3 ....................................................... 4 or more items checked ................ 4 6 5 20.9 3 13 21 4 4 8 11 13 25 11 Percent of periods in 2017 with this response category 56.9 60.0 59.3 18.0 53.1 23.6 32.1 37.8 59.2 25.2 52.8 14.8 17.8 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017(as of March 2, 2018). TABLE 42—THRESHOLDS FOR FUNCTIONAL LEVELS BY CLINICAL GROUP, CY 2017 Clinical group Level of impairment MMTA ........................................................................................................................... Low ........................................................... Medium ..................................................... High ........................................................... Low ........................................................... Medium ..................................................... High ........................................................... Low ........................................................... Medium ..................................................... High ........................................................... Low ........................................................... Medium ..................................................... High ........................................................... Low ........................................................... Medium ..................................................... High ........................................................... Low ........................................................... Medium ..................................................... High ........................................................... Behavioral Health ......................................................................................................... Complex Nursing Interventions .................................................................................... Musculoskeletal Rehabilitation ..................................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 Neuro Rehabilitation ..................................................................................................... Wound .......................................................................................................................... Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). 48 In Version OASIS C–2 (effective 1/1/2018), three responses are excluded: #8:‘‘currently reports VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 exhaustion’’, #9: ‘‘other risks not listed in 1–8’’, and #10: ‘‘None of the above’’. PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 Points (2017 data) 0–37 38–53 54+ 0–38 39–53 54+ 0–36 37–57 58+ 0–39 40–53 54+ 0–45 46–61 62+ 0–43 44–63 64+ Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 32407 Table 43 shows the average resource use by clinical group and functional level for CY 2017: TABLE 43—AVERAGE RESOURCE USE BY CLINICAL GROUP AND FUNCTIONAL LEVEL, CY 2017 Mean resource use MMTA—Low ................ MMTA—Medium .......... MMTA—High ................ Behavioral Health—Low Behavioral Health—Medium .......................... Behavioral Health— High .......................... Complex—Low ............. Complex—Medium ....... Complex—High ............ MS Rehab—Low .......... MS Rehab—Medium .... MS Rehab—High ......... Neuro—Low ................. Neuro—Medium ........... Neuro—High ................ Wound—Low ................ Wound—Medium ......... Wound—High ............... Total ...................... Frequency of periods Percent of periods Standard deviation of resource use 25th Percentile of resource use Median resource use 75th Percentile of resource use $1,236.05 1,487.24 1,667.38 971.26 1,650,146 1,709,484 1,402,299 98,193 19.1 19.8 16.3 1.1 $1,076.20 1,162.37 1,274.53 845.25 $511.06 628.29 719.29 397.45 $907.38 1,202.12 1,371.99 686.39 $1,632.74 2,020.73 2,265.39 1,285.36 1,309.40 93,145 1.1 990.34 557.57 1,064.55 1,784.48 1,485.06 1,313.78 1,668.06 1,771.05 1,545.07 1,731.15 1,900.89 1,591.74 1,833.25 1,945.49 1,663.25 1,893.35 2,044.09 1,570.68 96,899 104,504 104,717 97,779 587,873 536,444 469,117 308,011 287,788 303,787 275,383 238,063 261,144 8,624,776 1.1 1.2 1.2 1.1 6.8 6.2 5.4 3.6 3.3 3.5 3.2 2.8 3.0 100.0 1,092.42 1,194.16 1,415.99 1,527.71 1,048.07 1,111.26 1,243.84 1,163.69 1,271.31 1,420.56 1,271.45 1,370.79 1,520.35 1,221.38 653.44 553.50 694.35 704.28 779.96 931.97 1,009.66 744.21 900.27 899.47 790.83 927.26 975.19 679.12 1,233.97 953.84 1,275.32 1,336.79 1,323.12 1,527.46 1,672.76 1,323.86 1,568.22 1,618.16 1,328.52 1,550.78 1,644.10 1,272.18 2,027.14 1,669.45 2,202.65 2,361.61 2,055.60 2,293.96 2,520.57 2,127.18 2,467.92 2,629.54 2,152.26 2,475.29 2,669.06 2,117.47 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). Like the annual recalibration of the case-mix weights under the current HH PPS, we expect that annual recalibrations would also be made to the PDGM case-mix weights. If the PDGM is finalized for CY 2020, we will update the functional points and thresholds using the most current claims data available. Likewise, we would continue to analyze all of the components of the case-mix adjustment, including adjustment for functional status, and would make refinements as necessary to ensure that payment for home health periods are in alignment with the costs of providing care. We invite comments on the proposed OASIS items and the associated points and thresholds used to group patients into three functional impairment levels under the PDGM, as outlined above. amozie on DSK3GDR082PROD with PROPOSALS2 8. Comorbidity Adjustment The alternative case-mix adjustment methodology proposed in the CY 2018 HH PPS proposed rule, groups home health periods based on the primary reason for home health care (principal diagnosis), functional level, admission source, and timing. To further account for differences in resource use based on patient characteristics, in the CY 2018 HH PPS proposed rule, we proposed to use the presence of comorbidities as part of the overall case-mix adjustment under the alternative case-mix adjustment methodology. Specifically, VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 we proposed a home health specific list of comorbidities further refined into broader, body system-based categories and more granular subcategories to capture those conditions that affect resource costs during a home health period of care. The proposed comorbidities included those conditions that represent more than 0.1 percent of periods and had at least as high as the median resource use as they indicate a direct relationship between the comorbidity and resource utilization. Specifically, we proposed a list based on the principles of patient assessment by body systems and their associated diseases, conditions, and injuries to develop larger categories of conditions that identified clinically relevant relationships associated with increased resource use. The broad, body systembased categories we proposed to use to group comorbidities within the HHGM included the following: • Heart Disease • Respiratory Disease • Circulatory Disease and Blood Disorders • Cerebral Vascular Disease • Gastrointestinal Disease • Neurological Disease and Associated Conditions • Endocrine Disease • Neoplasms • Genitourinary and Renal Disease • Skin Disease • Musculoskeletal Disease or Injury PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 • Behavioral Health (including Substance Use Disorders) • Infectious Disease These broad categories used to group comorbidities within the alternative case-mix adjustment methodology were further refined by grouping similar diagnoses within the broad categories into statistically and clinically significant subcategories which would receive the comorbidity adjustment in the alternative case-mix adjustment methodology (for example, Heart Disease 1; Cerebral Vascular Disease 4). All of the comorbidity diagnoses grouped into the aforementioned categories and subcategories are posted on the Home Health Agency web page and listed in the HHGM technical report at the following link: https:// www.cms.gov/Center/Provider-Type/ Home-Health-Agency-HHA-Center.html. We originally proposed that if a 30day period of care had at least one secondary diagnosis reported on the home health claim that fell into one of the subcategories, that 30-day period of care would receive a comorbidity adjustment to account for higher costs associated with the comorbidity. Therefore, the payment adjustment for comorbidities would be predicated on the presence of one of the identified diagnoses within the subcategories associated with increased resource use at or above the median. The comorbidity adjustment amount would be the same E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32408 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules across all of the subcategories. A 30-day period of care would receive only one comorbidity adjustment regardless of the number of secondary diagnoses reported on the home health claim that fell into one of the subcategories associated with higher resource use. If there is no reported diagnosis that meets the comorbidity adjustment criteria, the 30-day period of care would not qualify for the payment adjustment. We solicited comments on the proposed comorbidity adjustment in the CY 2018 HH PPS proposed rule, including the proposed comorbidity diagnoses and their associated subcategories, as part of the overall alternative case-mix adjustment methodology. While all commenters supported the inclusion of a comorbidity adjustment, most commenters said that a single comorbidity payment amount as part of the overall case-mix adjustment is insufficient to fully capture the home health needs and resource costs associated with the presence of comorbidities. Meeting the requirement of section 51001 of the BBA of 2018, a Technical Expert Panel (TEP) was convened in February 2018 to collect perspectives, feedback, and identify and prioritize recommendations from a wide variety of industry experts and patient representatives regarding the public comments received on the proposed alternative case-mix adjustment methodology. Comments on the comorbidity adjustment and suggestions for refinement to this adjustment were very similar between those received on the CY 2018 HH PPS proposed rule and those made by the TEP participants. Specifically, the majority of commenters stated that the presence of multiple comorbidities has more of an effect on home health resource use than a single comorbidity and that any case-mix adjustment should account for multiple comorbidities. There was general agreement that most home health patients have multiple conditions which increase the complexity of their care and affects the ability to care for one’s self at home. Several suggested that CMS should let the data help determine how many comorbidity adjustment levels there should be and what percentage of 30-day periods should be in each level. Some commenters stated they preferred specificity and complexity over simplicity if the complexity improved accuracy. Others suggested including interactions between comorbidities in the model, specifically interactions of comorbid conditions with the principal diagnosis and with other comorbidities. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Commenters and TEP members alike focused on those conditions they saw as most impactful on the provision of care to home health beneficiaries. These conditions included chronic respiratory and cardiac conditions, as well as psychological and diabetes-related conditions. Most encouraged CMS to continue to develop a system to allow for appropriate changes to be made over time to the list of comorbidity subcategories that would assign a comorbidity adjustment to a 30-day period of care. We agree with commenters that the relationship between comorbidities and resource use can be complex and that a single adjustment, regardless of the type or number of comorbidities, may be insufficient to fully capture the resource use of a varied population of home health beneficiaries. However, we also recognize that adjusting payment based on the number of reported comorbidities may encourage HHAs to inappropriately report comorbid conditions in order to increase payment, regardless of any true impact on the home health plan of care. Currently, OASIS instructions state that clinicians must list each diagnosis for which the patient is receiving home care and to enter the level of highest specificity as required by ICD–10 CM coding guidelines. These instructions state that clinicians should list diagnoses in the order that best reflects the seriousness of each condition and supports the disciplines and services provided.49 We also note that CMS currently uses interaction items as part of the HH PPS case-mix adjustments. In the CY 2008 HH PPS final rule (72 FR 49772), we added secondary diagnoses and their interactions with the principal diagnosis as part of the clinical dimension in the overall case-mix adjustment. However, analysis since then has shown that nominal case-mix growth became an ongoing issue resulting from the incentive in the current HH PPS to code only those conditions associated with clinical points even though the data did not show an associated increase in resource utilization. Likewise, when we looked at a multi-morbidity approach to the overall case-mix adjustment to a home health period of care, for the CY 2018 HH PPS proposed rule our analysis showed that the reporting of secondary diagnoses on home health claims was not robust enough to support a payment adjustment based on the presence of 49 ‘‘Outcome and Assessment I OASIS Information Set C2 Guidance Manual Effective January 1, 2018 accessed at https://www.cms.gov/ Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HomeHealthQualityInits/Downloads/ OASIS–C2-Guidance-Manual-Effective_1_1_18.pdf. PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 multiple comorbidities. This means that the data did not show significant variations in resource use with an increase in reported comorbidities. In spite of concerns of potential manipulation of coding patterns to increase payment due to the comorbidity adjustment, the results of our most recent analyses for this proposed rule show compelling evidence that patients with certain comorbidities and interactions of certain comorbid conditions (as described later in this section) have home health episodes with higher resource use than home health episodes without those comorbidities or interactions. The goal of our analyses was to identify those clinically and statistically significant comorbidities and interactions that could be used to further case-mix adjust a 30-day home health period of care. As a result of these analyses, we identified that there were certain individual comorbidity subgroups and interactions of the comorbidity subgroups (for example, having diagnoses associated with two of the comorbidity subgroups) which could be used as part of the comorbidity case-mix adjustment in the PDGM. To identify these relationships with resource utilization, we looked at all diagnoses reported on the OASIS (M1021, M1023, and M1025) for each 30-day period of care. These fields represent 18 different diagnoses which could be reported on the OASIS. In the PDGM, the principal diagnosis assigns each 30-day period of care into a clinical group which identifies the primary reason the patient requires home health services. During our analysis, this usually was the reported principal diagnosis, but in cases where the diagnosis did not link to a clinical group (for example, the diagnosis could not be reported as a principal diagnosis in accordance with ICD–10 CM coding guidelines), we used a secondary diagnosis to assign the 30-day period of care into a clinical group. Any other diagnoses, except the one used to link the 30-day period of care into a clinical group, were considered comorbidities. However, if one of those comorbid diagnoses was in the same ICD–10 CM block of codes as the diagnosis used to place the 30-day period of care into a clinical group, then that comorbid diagnosis was excluded (for example, if the reported principal diagnosis was I63.432, Cerebral infarction due to embolism of left post cerebral artery, and the reported secondary diagnosis was I65.01, Occlusion and stenosis of right vertebral artery, I65.01 would be excluded as a comorbidity as both codes are in the same block of ICD–10 E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules diagnosis codes, Cerebrovascular Diseases, and both would group into the Neuro clinical group if reported as the principal diagnosis). Then, we checked those reported comorbid diagnoses against the home health-specific comorbidity subgroup list to see if any reported secondary diagnoses are listed in a subgroup (for example, if a reported secondary diagnosis was I50.9, Heart Failure, unspecified, this diagnosis is found in the Heart 11 subgroup). We went through the following steps to determine which individual comorbidity subgroups would be used as part of the comorbidity adjustment: • After dropping the comorbidity subgroups with a small number of 30- day periods of care (for example, those that made up fewer than 0.1 percent of 30-day periods of care), this left 59 different comorbidity subgroups. • Of those, there are 56 comorbidity subgroups with a p-value less than or equal to 0.05. • Of those 56 subgroups, there are 22 comorbidity subgroups that have a positive coefficient when regressing resource use on the comorbidity subgroups (and the interactions as described below) and indicators for the clinical group, functional level, admission source, and timing. We determine the median coefficient of those 22 comorbidity subgroups to be $60.67. 32409 • There are 11 comorbidity subgroups with coefficients that are at or above the median (for example, $60.67 or above). This is a decrease from the 15 subgroups presented in the CY 2018 HH PPS proposed rule. Potential reasons for this decrease include the use of CY 2017 data in this analysis, whereas the 2018 HH PPS proposed rule used CY 2016 data; the combination and/or addition of comorbidity groups; and the inclusion of the interactions between the comorbidities. Those 11 individual comorbidity subgroups that are statistically and clinically significant for potential inclusion in the comorbidity case-mix adjustment are listed below in Table 44: TABLE 44—INDIVIDUAL SUBGROUPS FOR COMORBIDITY ADJUSTMENT Comorbidity subgroup Description Neuro 11 ............... Neuro 10 ............... Circulatory 9 .......... Heart 11 ................ Cerebral 4 ............. Neuro 5 ................. Skin 1 .................... Neuro 7 ................. Circulatory 10 ........ Skin 3 .................... Skin 4 .................... Includes diabetic retinopathy and other blindness .......................................................................................... Includes diabetic neuropathies ........................................................................................................................ Includes acute and chronic embolisms and thrombosis .................................................................................. Includes heart failure ........................................................................................................................................ Includes sequelae of cerebrovascular diseases .............................................................................................. Includes Parkinson’s Disease .......................................................................................................................... Includes cutaneous abscess, cellulitis, and lymphangitis ................................................................................ Includes hemiplegia, paraplegia, and quadriplegia ......................................................................................... Includes varicose veins with ulceration ........................................................................................................... Include diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers ...... Includes stages Two-Four and unstageable pressure ulcers by site .............................................................. Coefficient $61.23 67.98 86.62 101.57 128.78 144.99 174.93 204.42 215.67 365.78 484.83 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). Next, we examined the impact of interactions between the various comorbidity subgroups on resource use. The following steps show how we identified which interactions (for example, diagnoses from two different comorbidity subgroups) had a clinically and statistically significant relationship with increased resource utilization and could be used for the comorbidity adjustment: • After dropping the combinations of comorbidity subgroups and interactions with a small number of 30-day periods of care (that is, those that made up fewer than 0.1 percent of 30-day periods of care), there are 343 different comorbidity subgroup interactions (for example, comorbidity subgroup interaction Skin 1 plus Skin 3). As mentioned previously, we regressed resource use on the comorbidity subgroups, the interactions, and indicators for the clinical group, functional level, admission source, and timing. • From that regression, we found 187 comorbidity subgroup interactions with a p-value less than or equal to 0.05. • Of those 187 comorbidity subgroup interactions, there are 27 comorbidity subgroup interactions where the coefficient on the comorbidity subgroup interaction term plus the coefficients on both single comorbidity variables equals a value that exceeds $150. We used $150 as the inclusion threshold as this amount is approximately three times that of the median value for the individual comorbidity subgroups and we believe is appropriate to reflect the increased resource use associated with comorbidity interactions. The 27 comorbidity subgroup interactions that are statistically and clinically significant for potential inclusion in the comorbidity adjustment are listed in Table 45. TABLE 45—COMORBIDITY SUBGROUP INTERACTIONS FOR COMORBIDITY ADJUSTMENT Sum of interaction term plus single comorbidity coefficients amozie on DSK3GDR082PROD with PROPOSALS2 Comorbidity subgroup interaction Comorbidity subgroup Description Comorbidity subgroup Description 1 .................. 2 .................. 3 .................. Circulatory 4 .... Endocrine 3 ..... Neuro 3 ........... Hypertensive Chronic Kidney Disease ........ Diabetes with Complications ........................ Dementia in diseases classified elsewhere Neuro 11 ......... Neuro 7 ........... Skin 3 .............. $151.98 162.35 190.30 4 .................. 5 .................. 6 .................. Circulatory 4 .... Cerebral 4 ....... Neuro 7 ........... Skin 1 .............. Heart 11 .......... Renal 3 ............ 7 .................. 8 .................. Circulatory 10 .. Heart 11 .......... Hypertensive Chronic Kidney Disease ........ Sequelae of Cerebrovascular Diseases ...... Includes hemiplegia, paraplegia, and quadriplegia. Includes varicose veins with ulceration ....... Heart Failure ................................................ Includes diabetic retinopathy and other blindness .... Includes hemiplegia, paraplegia, and quadriplegia ... Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Cutaneous abscess, cellulitis, and lymphangitis ....... Heart Failure .............................................................. Nephrogenic Diabetes Insipidus ................................ Endocrine 3 ..... Neuro 5 ........... Diabetes with Complications ...................................... Parkinson’s Disease ................................................... 205.52 212.88 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 193.33 195.55 202.44 32410 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 45—COMORBIDITY SUBGROUP INTERACTIONS FOR COMORBIDITY ADJUSTMENT—Continued Comorbidity subgroup interaction Comorbidity subgroup 9 .................. Description Comorbidity subgroup Description Heart 12 .......... Other Heart Diseases .................................. Skin 3 .............. 10 ................ Neuro 3 ........... Dementia in diseases classified elsewhere Skin 4 .............. 11 ................ Behavioral 2 .... Mood Disorders ............................................ Skin 3 .............. 12 ................ 13 ................ Circulatory 10 .. Circulatory 4 .... Includes varicose veins with ulceration ....... Hypertentive Chronic Kidney Disease ......... Heart 11 .......... Skin 3 .............. 14 ................ Renal 1 ............ Chronic kidney disease and ESRD ............. Skin 3 .............. 15 ................ Respiratory 5 ... COPD and Asthma ...................................... Skin 3 .............. 16 ................ Skin 1 .............. Skin 3 .............. 17 ................ Renal 3 ............ Cutaneous abscess, cellulitis, and lymphangitis. Nephrogenic Diabetes Insipidus .................. Skin 4 .............. 18 ................ Heart 11 .......... Heart Failure ................................................ Skin 3 .............. 19 ................ Heart 12 .......... Other Heart Diseases .................................. Skin 4 .............. 20 ................ Respiratory 5 ... COPD and Asthma ...................................... Skin 4 .............. 21 ................ Circulatory 7 .... Atherosclerosis ............................................. Skin 3 .............. 22 ................ Renal 1 ............ Chronic kidney disease and ESRD ............. Skin 4 .............. 23 ................ Endocrine 3 ..... Diabetes with Complications ........................ Skin 4 .............. 24 ................ Endocrine 3 ..... Diabetes with Complications ........................ Skin 3 .............. 25 ................ Circulatory 4 .... Hypertensive Chronic Kidney Disease ........ Skin 4 .............. 26 ................ Heart 11 .......... Heart Failure ................................................ Skin 4 .............. 27 ................ Skin 3 .............. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Skin 4 .............. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Stages Two-Four and unstageable pressure ulcers by site. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Heart Failure .............................................................. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Stages Two-Four and unstageable pressure ulcers by site. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Stages Two-Four and unstageable pressure ulcers by site. Stages Two-Four and unstageable pressure ulcers by site. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Stages Two-Four and unstageable pressure ulcers by site. Stages Two-Four and unstageable pressure ulcers by site. Diseases of arteries, arterioles and capillaries with ulceration and non-pressure chronic ulcers. Stages Two-Four and unstageable pressure ulcers by site. Stages Two-Four and unstageable pressure ulcers by site. Stages Two-Four and unstageable pressure ulcers by site. Sum of interaction term plus single comorbidity coefficients 260.83 274.16 287.42 292.39 296.70 300.31 306.63 390.47 422.34 422.20 423.08 428.02 432.46 436.39 487.96 504.54 509.63 529.47 750.85 amozie on DSK3GDR082PROD with PROPOSALS2 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). In order to be considered a comorbidity subgroup interaction, at least two reported diagnoses, must occur in the above corresponding combinations, as shown in Table 45. For example, one diagnosis from Heart 11 must be reported along with at least one diagnosis from Neuro 5 in order to qualify for comorbidity subgroup interaction 8. In other words, the comorbidity subgroups are not interchangeable between the interaction groups (for example, reported conditions from the Renal 1 and Respiratory 5 subgroups would not be considered an interaction for purposes of the comorbidity adjustment). For illustrative purposes, this would mean that if a 30-day period of care had the following secondary diagnoses reported, I50.22, chronic systolic (congestive) heart failure and G20, Parkinson’s Disease (these diagnoses fall under comorbidity subgroups Heart 11 and Neuro 5 respectively and are in the same comorbidity subgroup interaction), this interaction of comorbid conditions results in a higher level of resource use VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 than just having a comorbid diagnosis classified in Heart 11 or in Neuro 5. There will be an updated PDGM Grouper Tool posted on the HHA Center web page that HHAs can access to simulate the HIPPS code and case-mix weight under the PDGM.50 This Grouper Tool allows providers to fill in information, including the comorbidities, to determine whether a home health period of care would receive a comorbidity adjustment under the PDGM. The comorbidity interactions identify subgroup combinations of comorbidities that are associated with higher levels of resource use. As such, we believe that the comorbidity adjustment payment should be dependent on whether the 30day period of care has an individual comorbidity subgroup associated with higher resource use or there is a comorbidity subgroup interaction resulting in higher resource use. Therefore, we propose to have three 50 https://www.cms.gov/Center/Provider-Type/ Home-Health-Agency-HHA-Center.html. PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 levels in the PDGM comorbidity casemix adjustment: No Comorbidity Adjustment, Low Comorbidity Adjustment, and High Comorbidity Adjustment. This means that depending on if and which secondary diagnoses are reported, a 30-day period of care may receive no comorbidity adjustment (meaning, no secondary diagnoses exist or do not meet the criteria for a comorbidity adjustment), a ‘‘low’’ comorbidity adjustment, or a ‘‘high’’ comorbidity adjustment. We propose that home health 30-day periods of care can receive a comorbidity payment adjustment under the following circumstances: • Low comorbidity adjustment: There is a reported secondary diagnosis that falls within one of the home-health specific individual comorbidity subgroups, as listed in Table 44, (for example, Heart Disease 11, Cerebral Vascular Disease 4, etc.) associated with higher resource use, or; • High comorbidity adjustment: There are two or more secondary diagnoses reported that fall within the E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules same comorbidity subgroup interaction, as listed in Table 45, (for example, Heart 11 plus Neuro 5) that are associated with higher resource use. Under the PDGM, a 30-day period of care can receive payment for a low comorbidity adjustment or a high comorbidity adjustment, but not both. A 30-day period of care can receive only one low comorbidity adjustment regardless of the number of secondary diagnoses reported on the home health claim that fell into one of the individual comorbidity subgroups or one high comorbidity adjustment regardless of the number of comorbidity group interactions, as applicable. The low comorbidity adjustment amount would be the same across all 11 individual comorbidity subgroups. Similarly, the high comorbidity adjustment amount would be the same across all 27 comorbidity subgroup interactions. See Table 48 in section III.F.10 of this proposed rule for the coefficient amounts associated with both the low 32411 and high comorbidity adjustment, as well as for all of the case-mix variables in the PDGM. If a 30-day home health period of care does not have any reported comorbidities that fall into one of the payment adjustments described above, there would be no comorbidity adjustment applied. Table 46 illustrates the average resource use for each of the comorbidity levels as described in this section. TABLE 46—AVERAGE RESOURCE USE BY COMORBIDITY ADJUSTMENT, CY 2017 Mean resource use No Comorbidity Adjustment .......................... Comorbidity Adjustment—Has at least one comorbidity from comorbidity list, no interaction from interaction list .................. Comorbidity Adjustment—Has at least one interaction from interaction list ........... Total ...................... Frequency of periods Percent of periods Standard deviation of resource use 25th percentile of resource use Median resource use 75th percentile of resource use $1,539.92 5,402,694 62.6 $1,183.86 $673.27 $1,253.95 $2,078.68 1,575.12 2,721,969 31.6 1,248.71 658.77 1,262.47 2,131.92 1,878.84 500,113 5.8 1,412.06 880.07 1,523.87 2,469.93 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47 amozie on DSK3GDR082PROD with PROPOSALS2 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018). Changing to three comorbidity levels results in 216 possible case-mix groups for the purposes of adjusting payment in the PDGM. While this is more case-mix groups than the 144 case-mix groups proposed in the CY 2018 HH PPS proposed rule, this change is responsive to the comments received regarding refinements to the comorbidity adjustment without being unduly complex. We believe that this method for adjusting payment for the presence of comorbidities is more robust, reflective of patient characteristics, better aligns payment with actual resource use, and addresses comments received from the CY 2018 HH PPS proposed rule and recommendations from TEP members. The comorbidity payment adjustment takes into account the presence of individual comorbid conditions, as well as the interactions between multiple comorbid conditions, and reflects the types of conditions most commonly seen in home health patients. Similar to monitoring of nominal casemix growth under the current HH PPS, upon implementation of the PDGM, CMS will monitor the reporting of secondary diagnoses to determine whether adjustments to payment based on the number of reported comorbidities is resulting in HHAs inappropriately VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 reporting comorbid conditions solely for the purpose of increased payment and appropriate program integrity actions will be taken. As mentioned previously in this section, there will be an updated PDGM Grouper Tool posted on the HHA Center web page which will be key to understanding whether a 30-day home health period of care would receive a no, low, or high comorbidity adjustment under the PDGM. If implemented, we would continue to examine the relationship of reported comorbidities on resource utilization and make the appropriate payment refinements to help ensure that payment is in alignment with the actual costs of providing care. We invite comments on the change to the comorbidity case-mix adjustment in the PDGM including the three comorbidity levels: No Comorbidity, Low Comorbidity, and High Comorbidity Adjustment. We also invite comments on the payment associated with the Low Comorbidity and High Comorbidity Adjustment to account for increased resource utilization resulting from the presence of certain comorbidities and comorbidity interactions. PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 9. Change in the Low-Utilization Payment Adjustment (LUPA) Threshold Currently, a 60-day episode with four or fewer visits is paid the national per visit amount by discipline, adjusted by the appropriate wage index based on the site of service of the beneficiary, instead of the full 60-day episode payment amount. Such payment adjustments are called Low Utilization Payment Adjustments (LUPAs). While the alternative case-mix model proposed in the CY 2018 HH PPS proposed rule still included LUPAs, the approach to calculating the LUPA thresholds needed to change due to the proposed change in the unit of payment to 30-day periods of care from 60-day episodes. The 30-day periods of care have substantially more episodes with four or fewer visits than 60-day episodes. To create LUPA thresholds we proposed in the CY 2018 HH PPS proposed rule to set the LUPA threshold at the 10th percentile value of visits or 2, whichever is higher, for each payment group, (82 FR 35324). We received comments in response to the CY 2018 HH PPS proposed rule on maintaining the use of a single LUPA threshold instead of varying the thresholds at the subgroup level. Other commenters expressed concern that the variable LUPA thresholds will add E:\FR\FM\12JYP2.SGM 12JYP2 32412 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules additional administrative burden and create additional opportunity for error. After analyzing the data to evaluate the potential impact, we believe that the change to a 30-day period of care under the proposed PDGM from the current 60-day episode warrants variable LUPA thresholds depending on the payment group to which it is assigned. We believe that the proposed LUPA thresholds that vary based on the casemix assignment for the 30-day period of care in the proposed PDGM is an improvement over the current 5 visit threshold that does not vary by case-mix assignment. This is the same approach proposed in the CY 2018 proposed rule where LUPA thresholds would vary by case-mix group. LUPA thresholds that vary by case-mix group take into account different resource use patterns based on beneficiaries’ clinical characteristics. Additionally, we do not believe that the case-mix-specific LUPA thresholds would result in additional administrative burden as LUPA visits are billed the same as non-LUPA periods. Likewise, the PDGM will not be implemented until January 1, 2020, giving HHAs and vendors sufficient time to make necessary changes to their systems and to ensure that appropriate quality checks are in place to minimize any claims errors. Therefore, we propose to vary the LUPA threshold for a 30-day period of care under the PDGM depending on the PDGM payment group to which it is assigned. We note that in the current payment system, approximately 8 percent of episodes are LUPAs. Under the PDGM, consistent with the CY 2018 HH PPS proposed rule, we propose the 10th percentile value of visits or 2 visits, whichever is higher, in order to target approximately the same percentage of LUPAs (approximately 7.1 percent of 30-day periods would be LUPAs (assuming no behavior change)). For example, for episodes in the payment group corresponding to ‘‘MMTA– Functional Level Medium—Early Timing—Institutional Admission—No Comorbidity’’ (HIPPS code 2AB1 in Table 47), the threshold is four visits. If a home health 30-day period of care is assigned to that particular payment group had three or fewer visits the HHA would be paid using the national pervisit rates in section III.C.4 of this proposed rule instead of the case-mix adjusted 30-day period of care payment amount. The LUPA thresholds for the PDGM payment group with the corresponding HIPPS code is listed in Table 47. TABLE 47—PROPOSED LUPA THRESHOLDS FOR THE PROPOSED PDGM PAYMENT GROUPS amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 1AA11 1AA21 1AA31 1AB11 1AB21 1AB31 1AC11 1AC21 1AC31 1BA11 1BA21 1BA31 1BB11 1BB21 1BB31 1BC11 1BC21 1BC31 1CA11 1CA21 1CA31 1CB11 1CB21 1CB31 1CC11 1CC21 1CC31 1DA11 1DA21 1DA31 1DB11 1DB21 1DB31 1DC11 1DC21 1DC31 1EA11 1EA21 1EA31 1EB11 1EB21 1EB31 Clinical group and functional level ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... VerDate Sep<11>2014 MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—High ........................................... MMTA—High ........................................... MMTA—High ........................................... Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—High ........................................... Neuro—High ........................................... Neuro—High ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Medium .................................... Wound—Medium .................................... Wound—Medium .................................... Wound—High .......................................... Wound—High .......................................... Wound—High .......................................... Complex—Low ........................................ Complex—Low ........................................ Complex—Low ........................................ Complex—Medium .................................. Complex—Medium .................................. Complex—Medium .................................. Complex—High ....................................... Complex—High ....................................... Complex—High ....................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00074 Timing and admission source Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Fmt 4701 Sfmt 4702 Comorbidity adjustment (0 = none, 1 = single comorbidity, 2 = interaction) .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. E:\FR\FM\12JYP2.SGM Visit threshold (10th percentile or 2—whichever is higher) 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 12JYP2 4 4 4 4 4 5 4 4 4 4 5 5 5 5 5 4 5 5 4 4 4 5 5 5 4 5 4 3 2 4 3 3 4 3 3 3 5 5 5 5 5 5 32413 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 47—PROPOSED LUPA THRESHOLDS FOR THE PROPOSED PDGM PAYMENT GROUPS—Continued amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 1EC11 1EC21 1EC31 1FA11 1FA21 1FA31 1FB11 1FB21 1FB31 1FC11 1FC21 1FC31 2AA11 2AA21 2AA31 2AB11 2AB21 2AB31 2AC11 2AC21 2AC31 2BA11 2BA21 2BA31 2BB11 2BB21 2BB31 2BC11 2BC21 2BC31 2CA11 2CA21 2CA31 2CB11 2CB21 2CB31 2CC11 2CC21 2CC31 2DA11 2DA21 2DA31 2DB11 2DB21 2DB31 2DC11 2DC21 2DC31 2EA11 2EA21 2EA31 2EB11 2EB21 2EB31 2EC11 2EC21 2EC31 2FA11 2FA21 2FA31 2FB11 2FB21 2FB31 2FC11 2FC21 2FC31 3AA11 3AA21 Clinical group and functional level ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... VerDate Sep<11>2014 Timing and admission source MS Rehab—High .................................... MS Rehab—High .................................... MS Rehab—High .................................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—High ......................... Behavioral Health—High ......................... Behavioral Health—High ......................... MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—High ........................................... MMTA—High ........................................... MMTA—High ........................................... Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—High ........................................... Neuro—High ........................................... Neuro—High ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Medium .................................... Wound—Medium .................................... Wound—Medium .................................... Wound—High .......................................... Wound—High .......................................... Wound—High .......................................... Complex—Low ........................................ Complex—Low ........................................ Complex—Low ........................................ Complex—Medium .................................. Complex—Medium .................................. Complex—Medium .................................. Complex—High ....................................... Complex—High ....................................... Complex—High ....................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—High .................................... MS Rehab—High .................................... MS Rehab—High .................................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—High ......................... Behavioral Health—High ......................... Behavioral Health—High ......................... MMTA—Low ........................................... MMTA—Low ........................................... Comorbidity adjustment (0 = none, 1 = single comorbidity, 2 = interaction) Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Community .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Early—Institutional .................................. Late—Community ................................... Late—Community ................................... 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM Visit threshold (10th percentile or 2—whichever is higher) 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 12JYP2 5 5 5 3 3 3 4 4 4 4 4 4 3 4 4 4 5 5 4 4 4 5 5 5 6 6 6 5 5 5 4 4 4 5 5 5 4 5 4 3 3 4 4 4 5 4 4 4 5 5 5 6 6 6 6 6 6 3 3 4 4 4 5 4 4 5 2 2 32414 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 47—PROPOSED LUPA THRESHOLDS FOR THE PROPOSED PDGM PAYMENT GROUPS—Continued amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 3AA31 3AB11 3AB21 3AB31 3AC11 3AC21 3AC31 3BA11 3BA21 3BA31 3BB11 3BB21 3BB31 3BC11 3BC21 3BC31 3CA11 3CA21 3CA31 3CB11 3CB21 3CB31 3CC11 3CC21 3CC31 3DA11 3DA21 3DA31 3DB11 3DB21 3DB31 3DC11 3DC21 3DC31 3EA11 3EA21 3EA31 3EB11 3EB21 3EB31 3EC11 3EC21 3EC31 3FA11 3FA21 3FA31 3FB11 3FB21 3FB31 3FC11 3FC21 3FC31 4AA11 4AA21 4AA31 4AB11 4AB21 4AB31 4AC11 4AC21 4AC31 4BA11 4BA21 4BA31 4BB11 4BB21 4BB31 4BC11 Clinical group and functional level ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... VerDate Sep<11>2014 MMTA—Low ........................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—High ........................................... MMTA—High ........................................... MMTA—High ........................................... Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—High ........................................... Neuro—High ........................................... Neuro—High ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Medium .................................... Wound—Medium .................................... Wound—Medium .................................... Wound—High .......................................... Wound—High .......................................... Wound—High .......................................... Complex—Low ........................................ Complex—Low ........................................ Complex—Low ........................................ Complex—Medium .................................. Complex—Medium .................................. Complex—Medium .................................. Complex—High ....................................... Complex—High ....................................... Complex—High ....................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—High .................................... MS Rehab—High .................................... MS Rehab—High .................................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—High ......................... Behavioral Health—High ......................... Behavioral Health—High ......................... MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Low ........................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—Medium ..................................... MMTA—High ........................................... MMTA—High ........................................... MMTA—High ........................................... Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Low ............................................ Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—Medium ...................................... Neuro—High ........................................... 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00076 Timing and admission source Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Community Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Fmt 4701 Comorbidity adjustment (0 = none, 1 = single comorbidity, 2 = interaction) ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... Sfmt 4702 E:\FR\FM\12JYP2.SGM Visit threshold (10th percentile or 2—whichever is higher) 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 12JYP2 3 2 2 3 2 2 3 2 2 2 2 2 3 2 2 2 2 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 2 2 3 2 2 2 2 2 2 2 2 2 3 3 3 3 3 4 3 3 4 3 4 3 4 4 5 4 32415 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 47—PROPOSED LUPA THRESHOLDS FOR THE PROPOSED PDGM PAYMENT GROUPS—Continued HIPPS 4BC21 4BC31 4CA11 4CA21 4CA31 4CB11 4CB21 4CB31 4CC11 4CC21 4CC31 4DA11 4DA21 4DA31 4DB11 4DB21 4DB31 4DC11 4DC21 4DC31 4EA11 4EA21 4EA31 4EB11 4EB21 4EB31 4EC11 4EC21 4EC31 4FA11 4FA21 4FA31 4FB11 4FB21 4FB31 4FC11 4FC21 4FC31 Clinical group and functional level ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... Neuro—High ........................................... Neuro—High ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Low ........................................... Wound—Medium .................................... Wound—Medium .................................... Wound—Medium .................................... Wound—High .......................................... Wound—High .......................................... Wound—High .......................................... Complex—Low ........................................ Complex—Low ........................................ Complex—Low ........................................ Complex—Medium .................................. Complex—Medium .................................. Complex—Medium .................................. Complex—High ....................................... Complex—High ....................................... Complex—High ....................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Low ..................................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—Medium ............................... MS Rehab—High .................................... MS Rehab—High .................................... MS Rehab—High .................................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Low ......................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—Medium ................... Behavioral Health—High ......................... Behavioral Health—High ......................... Behavioral Health—High ......................... amozie on DSK3GDR082PROD with PROPOSALS2 In summary, we propose to vary the LUPA threshold for a 30-day period of care under the PDGM depending on the PDGM payment group to which it is assigned. We also propose that the LUPA thresholds for each PDGM payment group would be re-evaluated every year based on the most current utilization data available. We invite public comments on the LUPA threshold methodology proposed for the PDGM and the associated regulations text changes in section III.F.13 of this proposed rule. 10. HH PPS Case-Mix Weights Under the PDGM Section 1895(b)(4)(B) requires the Secretary to establish appropriate case mix adjustment factors for home health services in a manner that explains a significant amount of the variation in cost among different units of services. In the CY 2018 HH PPS proposed rule (82 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Timing and admission source Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... FR 35270), we proposed an alternative case-mix adjustment methodology to better align payment with patient care needs. The proposed alternative casemix adjustment methodology places patients into meaningful payment categories based on patient characteristics (principal diagnosis, functional level, comorbid conditions, referral source and timing). We did not finalize the alternative case-mix adjustment methodology in the CY 2018 final rule in order to consider comments and feedback for any potential refinements to the model. Refinements were made to the comorbidity case-mix adjustment while all other variables remain as proposed in the CY 2018 HH PPS proposed rule (for example, clinical group, functional level, admission source, and episode timing). As outlined in previous sections of this proposed rule, we are again proposing an alternative case-mix adjustment PO 00000 Frm 00077 Comorbidity adjustment (0 = none, 1 = single comorbidity, 2 = interaction) Fmt 4701 Sfmt 4702 Visit threshold (10th percentile or 2—whichever is higher) 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 4 4 3 3 3 4 4 4 3 4 4 2 3 3 3 3 4 3 3 3 3 3 3 4 4 4 4 4 4 2 2 2 3 3 3 3 3 4 methodology, called the PDGM, but this methodology now results in 216 unique case-mix groups. These 216 unique case-mix payment groups are called Home Health Resource Groups (HHRGs). In accordance with the BBA of 2018, the proposed PDGM will be implemented in a budget neutral manner. To generate PDGM case-mix weights, we utilized a data file based on home health episodes of care, as reported in Medicare home health claims. The claims data provide episode-level data as well as visit-level data. The claims also provide data on whether nonroutine supplies (NRS) was provided during the episode and the total charges for NRS. We used CY 2017 home health claims data with linked OASIS assessment data to obtain patient characteristics. We determined the casemix weight for each of the different PDGM payment groups by regressing E:\FR\FM\12JYP2.SGM 12JYP2 32416 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules resource use on a series of indicator variables for each of the categories using a fixed effects model. The regression measures resource use with the Cost per Minute (CPM) + NRS approach outlined in section III.F.2 of this proposed rule. The model used in the PDGM payment regression generates outcomes that are statistically significant and consistent with findings. We received comments in response to the proposed alternative case-mix adjustment methodology in the CY 2018 HH PPS proposed rule on the standards for subsequent case-mix weight recalibration (nature and timing). Similar to the annual recalibration of the case-mix weights under the current HH PPS, annual recalibration will be made to the PDGM case-mix weights. We will make refinements as necessary to ensure that payment for home health periods are in alignment with costs. We note that this includes a re-calculation of the proposed PDGM case-mix weights for CY 2020 in the CY 2020 HH PPS proposed rule using CY 2018 home health claims data linked with OASIS assessment data. In other words, the table below represents the PDGM casemix weights if we were to implement the PDGM in CY 2019. However, since we are proposing to implement the PDGM on January 1, 2020, the actual PDGM case-mix weights for CY 2020 will be updated in the CY 2020 HH PPS proposed rule. We also received a comment from MedPAC about the development of alternative case-mix adjustment methodology using the regression approach, which is a statistical estimate of the cost associated with a payment group instead of the actual cost. MedPAC stated that this approach results in estimated payments that may not equal the actual costs experienced by HHAs. As noted, CMS has used a regression approach since the inception of the HH PPS in 2000. The regression smoothens weights compared to a system where each payment group receives a weight that is based solely on the average resource use of all 30-day periods in a payment group compared to the overall average resource use across all 30 day periods. Smoothing the weights helps to see relationships between variables and foresee trends. In addition, using a regression approach to calculate case-mix weights allows CMS to use a fixed effects model, which will estimate the variation observed within individual HHAs and opposed to estimating the variation across HHAs. With the fixed effects, the coefficients should better estimate the relationship the regression variables have with resource use compared to not accounting for fixed effects. We continue to believe that using a regression approach for the calculation of the HH PPS case-mix weights is most appropriate. After best fitting the model on home health episodes from 2017 data, we used the estimated coefficients of the model to predict the expected average resource use of each episode based on the five PDGM categories. In order to normalize the results, we have divided the regression predicted resource use of each episode by the overall average resource use of all episodes used to estimate the model in order to calculate the case mix weight of all episodes within a particular payment group, where each payment group is defined as the unique combination of the subgroups within the five PDGM categories (admission source, timing of the 30-day period, clinical grouping, functional level, and comorbidity adjustment). The case-mix weight is then used to adjust the base payment rate to determine each period’s payment. Table 48 shows the coefficients of the payment regression used to generate the weights, and the coefficients divided by average resource use. Information can be found in section III.F.6 of this rule for the clinical groups, section III.F.7 of this rule for the functional levels, section III.F.5 for admission source, section III.F.4 for timing, and section III.F.8 for the comorbidity adjustment. TABLE 48—COEFFICIENT OF PAYMENT REGRESSION AND COEFFICIENT DIVIDED BY AVERAGE RESOURCE USE FOR PDGM PAYMENT GROUP Variable Coefficient Coefficient divided by average resource use amozie on DSK3GDR082PROD with PROPOSALS2 Clinical Group and Functional Level (MMTA—Low is excluded) MMTA—Medium Functional .................................................................................................................................... MMTA—High Functional .......................................................................................................................................... Behavioral Health—Low Functional ........................................................................................................................ Behavioral Health—Medium Functional .................................................................................................................. Behavioral Health—High Functional ........................................................................................................................ Complex—Low Functional ....................................................................................................................................... Complex—Medium Functional ................................................................................................................................. Complex—High Functional ...................................................................................................................................... MS Rehab—Low Functional .................................................................................................................................... MS Rehab—Medium Functional .............................................................................................................................. MS Rehab—High Functional ................................................................................................................................... Neuro—Low Functional ........................................................................................................................................... Neuro—Medium Functional ..................................................................................................................................... Neuro—High Functional .......................................................................................................................................... Wound—Low Functional .......................................................................................................................................... Wound—Medium Functional ................................................................................................................................... Wound—High Functional ......................................................................................................................................... $237.83 416.75 ¥116.39 169.86 309.97 ¥27.39 331.88 476.69 141.37 338.96 558.95 329.19 593.98 711.48 368.43 628.37 822.84 0.1514 0.2653 ¥0.0741 0.1081 0.1974 ¥0.0174 0.2113 0.3035 0.0900 0.2158 0.3559 0.2096 0.3782 0.4530 0.2346 0.4001 0.5239 ¥646.84 278.85 45.71 ¥0.4118 0.1775 0.0291 Referral Source With Timing (Community Early excluded) Community—Late .................................................................................................................................................... Institutional—Early ................................................................................................................................................... Institutional—Late .................................................................................................................................................... VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32417 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 48—COEFFICIENT OF PAYMENT REGRESSION AND COEFFICIENT DIVIDED BY AVERAGE RESOURCE USE FOR PDGM PAYMENT GROUP—Continued Variable Coefficient divided by average resource use Coefficient Comorbidity Adjustment (No Comorbidity Adjustment Group is excluded) Comorbidity Adjustment—Has at least one comorbidity from comorbidity list, no interaction from interaction list Comorbidity Adjustment—Has at least one interaction from interaction list ........................................................... 92.44 345.20 0.0589 0.2198 Constant ................................................................................................................................................................... Average Resource Use ........................................................................................................................................... N .............................................................................................................................................................................. Adj. R-Squared ........................................................................................................................................................ $1,560.37 $1,570.68 8,624,776 0.2925 0.9934 ........................ ........................ ........................ Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018) for which we had a linked OASIS assessment. LUPA episodes, outlier episodes, and episodes with PEP adjustments were excluded. Table 49 presents the case-mix weight for each HHRG in the regression model (Table 48). LUPA episodes, outlier episodes, and episodes with PEP adjustments were excluded. Please find LUPA information in section III.F.9 of this rule. Weights are determined by first calculating the predicted resource use for episodes with a particular combination of admission source, episode timing, clinical grouping, functional level, and comorbidity adjustment. This combination specific calculation is then divided by the average resource use of all the episodes that were used to estimate the standard 30-day payment rate, which is $1,570.68. The resulting ratio represents the case-mix weight for that particular combination of a HHRG payment group. The adjusted R-squared value for this model is 0.2925 which is slightly higher than the adjusted R-squared value of 0.2704 that we proposed in CY 2018 by using the CY 2016 claims data. The adjusted R-squared value provides a measure of how well observed outcomes are replicated by the model, based on the proportion of total variation of outcomes explained by the model. As noted above, there are 216 different HHRG payment groups under the PDGM. There are 15 HHRG payment groups that represent roughly 50.2 percent of the total episodes. There are 61 HHRG payment groups that represent roughly 1.0 percent of total episodes. The HHRG payment group with the smallest weight has a weight of 0.5075 (community admitted, late, behavioral health, low functional impairment level, with no comorbidity adjustment). The HHRG payment group with the largest weight has a weight of 1.9146 (institutional admitted, early, wound, high functional impairment level, with interactive comorbidity adjustment). TABLE 49—CASE MIX WEIGHTS FOR EACH HHRG PAYMENT GROUP amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 1AA11 1AA21 1AA31 1AB11 1AB21 1AB31 1AC11 1AC21 1AC31 1BA11 1BA21 1BA31 1BB11 1BB21 1BB31 1BC11 1BC21 1BC31 1CA11 1CA21 1CA31 1CB11 1CB21 1CB31 1CC11 1CC21 1CC31 1DA11 ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... VerDate Sep<11>2014 Timing and admission source Clinical group and functional level MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—High ................................................... MMTA—High ................................................... MMTA—High ................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—High ................................................... Neuro—High ................................................... Neuro—High ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Medium ............................................ Wound—Medium ............................................ Wound—Medium ............................................ Wound—High .................................................. Wound—High .................................................. Wound—High .................................................. Complex—Low ................................................ 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00079 Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Fmt 4701 Sfmt 4702 .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... E:\FR\FM\12JYP2.SGM Proposed CY 2019 weight Comorbidity adjustment 12JYP2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 0.9934 1.0523 1.2132 1.1449 1.2037 1.3646 1.2588 1.3176 1.4785 1.2030 1.2619 1.4228 1.3716 1.4305 1.5914 1.4464 1.5053 1.6662 1.2280 1.2869 1.4478 1.3935 1.4523 1.6133 1.5173 1.5762 1.7371 0.9760 32418 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 49—CASE MIX WEIGHTS FOR EACH HHRG PAYMENT GROUP—Continued amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 1DA21 1DA31 1DB11 1DB21 1DB31 1DC11 1DC21 1DC31 1EA11 1EA21 1EA31 1EB11 1EB21 1EB31 1EC11 1EC21 1EC31 1FA11 1FA21 1FA31 1FB11 1FB21 1FB31 1FC11 1FC21 1FC31 2AA11 2AA21 2AA31 2AB11 2AB21 2AB31 2AC11 2AC21 2AC31 2BA11 2BA21 2BA31 2BB11 2BB21 2BB31 2BC11 2BC21 2BC31 2CA11 2CA21 2CA31 2CB11 2CB21 2CB31 2CC11 2CC21 2CC31 2DA11 2DA21 2DA31 2DB11 2DB21 2DB31 2DC11 2DC21 2DC31 2EA11 2EA21 2EA31 2EB11 2EB21 2EB31 2EC11 2EC21 ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... ........... ........... VerDate Sep<11>2014 Timing and admission source Clinical group and functional level Complex—Low ................................................ Complex—Low ................................................ Complex—Medium .......................................... Complex—Medium .......................................... Complex—Medium .......................................... Complex—High ............................................... Complex—High ............................................... Complex—High ............................................... MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—High ............................................ MS Rehab—High ............................................ MS Rehab—High ............................................ Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—High ................................. Behavioral Health—High ................................. Behavioral Health—High ................................. MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—High ................................................... MMTA—High ................................................... MMTA—High ................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—High ................................................... Neuro—High ................................................... Neuro—High ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Medium ............................................ Wound—Medium ............................................ Wound—Medium ............................................ Wound—High .................................................. Wound—High .................................................. Wound—High .................................................. Complex—Low ................................................ Complex—Low ................................................ Complex—Low ................................................ Complex—Medium .......................................... Complex—Medium .......................................... Complex—Medium .......................................... Complex—High ............................................... Complex—High ............................................... Complex—High ............................................... MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—High ............................................ MS Rehab—High ............................................ 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00080 Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Community Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Early—Institutional Fmt 4701 Sfmt 4702 .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... E:\FR\FM\12JYP2.SGM Proposed CY 2019 weight Comorbidity adjustment 12JYP2 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 1.0348 1.1958 1.2047 1.2636 1.4245 1.2969 1.3558 1.5167 1.0834 1.1423 1.3032 1.2092 1.2681 1.4290 1.3493 1.4082 1.5691 0.9193 0.9782 1.1391 1.1016 1.1604 1.3214 1.1908 1.2496 1.4106 1.1710 1.2298 1.3907 1.3224 1.3812 1.5422 1.4363 1.4951 1.6561 1.3805 1.4394 1.6003 1.5491 1.6080 1.7689 1.6239 1.6828 1.8437 1.4055 1.4644 1.6253 1.5710 1.6299 1.7908 1.6948 1.7537 1.9146 1.1535 1.2124 1.3733 1.3823 1.4411 1.6020 1.4745 1.5333 1.6942 1.2610 1.3198 1.4807 1.3868 1.4456 1.6065 1.5268 1.5857 32419 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 49—CASE MIX WEIGHTS FOR EACH HHRG PAYMENT GROUP—Continued amozie on DSK3GDR082PROD with PROPOSALS2 HIPPS 2EC31 2FA11 2FA21 2FA31 2FB11 2FB21 2FB31 2FC11 2FC21 2FC31 3AA11 3AA21 3AA31 3AB11 3AB21 3AB31 3AC11 3AC21 3AC31 3BA11 3BA21 3BA31 3BB11 3BB21 3BB31 3BC11 3BC21 3BC31 3CA11 3CA21 3CA31 3CB11 3CB21 3CB31 3CC11 3CC21 3CC31 3DA11 3DA21 3DA31 3DB11 3DB21 3DB31 3DC11 3DC21 3DC31 3EA11 3EA21 3EA31 3EB11 3EB21 3EB31 3EC11 3EC21 3EC31 3FA11 3FA21 3FA31 3FB11 3FB21 3FB31 3FC11 3FC21 3FC31 4AA11 4AA21 4AA31 4AB11 4AB21 4AB31 ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... VerDate Sep<11>2014 Clinical group and functional level Timing and admission source MS Rehab—High ............................................ Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—High ................................. Behavioral Health—High ................................. Behavioral Health—High ................................. MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—High ................................................... MMTA—High ................................................... MMTA—High ................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—High ................................................... Neuro—High ................................................... Neuro—High ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Medium ............................................ Wound—Medium ............................................ Wound—Medium ............................................ Wound—High .................................................. Wound—High .................................................. Wound—High .................................................. Complex—Low ................................................ Complex—Low ................................................ Complex—Low ................................................ Complex—Medium .......................................... Complex—Medium .......................................... Complex—Medium .......................................... Complex—High ............................................... Complex—High ............................................... Complex—High ............................................... MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—High ............................................ MS Rehab—High ............................................ MS Rehab—High ............................................ Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—High ................................. Behavioral Health—High ................................. Behavioral Health—High ................................. MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Low ................................................... MMTA—Medium ............................................. MMTA—Medium ............................................. MMTA—Medium ............................................. Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Early—Institutional .......................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Community ........................................... Late—Institutional ........................................... Late—Institutional ........................................... Late—Institutional ........................................... Late—Institutional ........................................... Late—Institutional ........................................... Late—Institutional ........................................... 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM Proposed CY 2019 weight Comorbidity adjustment 12JYP2 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 1.7466 1.0969 1.1557 1.3166 1.2791 1.3380 1.4989 1.3683 1.4272 1.5881 0.5816 0.6405 0.8014 0.7330 0.7919 0.9528 0.8469 0.9058 1.0667 0.7912 0.8500 1.0110 0.9598 1.0186 1.1796 1.0346 1.0934 1.2544 0.8162 0.8750 1.0360 0.9817 1.0405 1.2015 1.1055 1.1643 1.3253 0.5642 0.6230 0.7840 0.7929 0.8518 1.0127 0.8851 0.9440 1.1049 0.6716 0.7305 0.8914 0.7974 0.8563 1.0172 0.9375 0.9963 1.1573 0.5075 0.5664 0.7273 0.6898 0.7486 0.9095 0.7790 0.8378 0.9987 1.0225 1.0814 1.2423 1.1740 1.2328 1.3937 32420 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 49—CASE MIX WEIGHTS FOR EACH HHRG PAYMENT GROUP—Continued HIPPS 4AC11 4AC21 4AC31 4BA11 4BA21 4BA31 4BB11 4BB21 4BB31 4BC11 4BC21 4BC31 4CA11 4CA21 4CA31 4CB11 4CB21 4CB31 4CC11 4CC21 4CC31 4DA11 4DA21 4DA31 4DB11 4DB21 4DB31 4DC11 4DC21 4DC31 4EA11 4EA21 4EA31 4EB11 4EB21 4EB31 4EC11 4EC21 4EC31 4FA11 4FA21 4FA31 4FB11 4FB21 4FB31 4FC11 4FC21 4FC31 ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... .......... .......... .......... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... ........... Timing and admission source Clinical group and functional level MMTA—High ................................................... MMTA—High ................................................... MMTA—High ................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Low .................................................... Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—Medium .............................................. Neuro—High ................................................... Neuro—High ................................................... Neuro—High ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Low ................................................... Wound—Medium ............................................ Wound—Medium ............................................ Wound—Medium ............................................ Wound—High .................................................. Wound—High .................................................. Wound—High .................................................. Complex—Low ................................................ Complex—Low ................................................ Complex—Low ................................................ Complex—Medium .......................................... Complex—Medium .......................................... Complex—Medium .......................................... Complex—High ............................................... Complex—High ............................................... Complex—High ............................................... MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Low ............................................. MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—Medium ....................................... MS Rehab—High ............................................ MS Rehab—High ............................................ MS Rehab—High ............................................ Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Low ................................. Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—Medium ........................... Behavioral Health—High ................................. Behavioral Health—High ................................. Behavioral Health—High ................................. Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Late—Institutional Proposed CY 2019 weight Comorbidity adjustment ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... ........................................... 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 1.2879 1.3467 1.5076 1.2321 1.2910 1.4519 1.4007 1.4595 1.6205 1.4755 1.5344 1.6953 1.2571 1.3160 1.4769 1.4226 1.4814 1.6424 1.5464 1.6053 1.7662 1.0051 1.0639 1.2249 1.2338 1.2927 1.4536 1.3260 1.3849 1.5458 1.1125 1.1714 1.3323 1.2383 1.2972 1.4581 1.3784 1.4373 1.5982 0.9484 1.0073 1.1682 1.1307 1.1895 1.3505 1.2199 1.2787 1.4397 amozie on DSK3GDR082PROD with PROPOSALS2 Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 for which we had a linked OASIS assessment. LUPA episodes, outlier episodes, and episodes with PEP adjustments were excluded. In conjunction with the implementation of the PDGM, we are proposing to revise the frequency with which we update the HH PPS Grouper software used to assign the appropriate HIPPS code used for case-mix adjustment onto the claim. Since CY 2004 when the HH PPS moved from a fiscal year to a calendar year basis, we have updated the Grouper software twice a year. We provide an updated version of the Grouper software effective every October 1 in order to address ICD coding revisions, which are effective on October 1. We also provide an updated VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 version of the HH PPS Grouper software effective on January 1 in order to capture the new or revised HH PPS policies that become effective on January 1. In an effort to reduce provider burden associated with testing and installing two software releases, we propose to discontinue the October release of the HH PPS Grouper software and provide a single HH PPS Grouper software release effective January 1 of each calendar year. We propose that the January release of the HH PPS Grouper software would include the most recent revisions to the ICD coding system as PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 well as the payment policy updates contained in the HH PPS final rule. Therefore, under this proposal, during the last quarter of each calendar year, HHAs would continue to use the ICD– 10–CM codes and reporting guidelines that they would have used for the first three calendar quarters. HHAs would begin using the most recent ICD–10–CM codes and reporting guidelines on home health claims beginning on January 1 of each calendar year. We are soliciting comments on this proposal. We invite comments on the proposed PDGM case-mix weights, case-mix E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 weight methodology and proposed annual recalibration of the case-mix weights, updates to the HH PPS Grouper software, and the associated regulations text changes in section III.F.13 of this proposed rule. 11. Low-Utilization Payment Adjustment (LUPA) Add-On Payments and Partial Payment Adjustments Under PDGM LUPA episodes qualify for an add-on payment in the case that the established episode is the first or only episode in a sequence of adjacent episodes. As stated in the CY 2008 HH PPS final rule, LUPA add-on payments are made because the national per-visit payment rates do not adequately account for the front-loading of costs for the first episode of care as the average visit lengths in these initial LUPAs are 16 to 18 percent higher than the average visit lengths in initial nonLUPA episodes (72 FR 49848). LUPA episodes that occur as the only episode or as an initial episode in a sequence of adjacent episodes are adjusted by applying an additional amount to the LUPA payment before adjusting for area wage differences. Under the PDGM, we propose that the LUPA add-on factors will remain the same as the current payment system, described in section III.C.4 of this proposed rule. We multiply the per-visit payment amount for the first SN, PT, or SLP visit in LUPA episodes that occur as the only episode or an initial episode in a sequence of adjacent episodes by the appropriate factor (1.8451 for SN, 1.6700 for PT, and 1.6266 for SLP) to determine the LUPA add-on payment amount. The current partial episode payment (PEP) adjustment is a proportion of the episode payment and is based on the span of days including the start-of-care date (for example, the date of the first billable service) through and including the last billable service date under the original plan of care before the intervening event in a home health beneficiary’s care defined as: • A beneficiary elected transfer, or • A discharge and return to home health that would warrant, for purposes of payment, a new OASIS assessment, physician certification of eligibility, and a new plan of care. We received comments on eliminating PEPs in response to the CY 2018 HH PPS proposed rule. We note that the change in the unit of payment from 60 days to 30 days will reduce the number of instances where a PEP adjustment occurs. However, we believe maintaining a PEP adjustment policy is appropriate to ensure that Medicare is not paying twice for the same period of VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 care, as the PEP is involved with patient transfers there is a risk of a duplicate payment error. For example, if a patient chooses to transfer to a different HHA during the course of a home health period of care, the payment is proportionally adjusted to reflect the length of time the beneficiary remained under the agency’s care prior to the intervening event and ensures that Medicare is not paying two HHAs for the same 30-day period of care. In summary for 30-day periods of care, we propose that the process for partial payment adjustments would remain the same as the existing policies pertaining to partial episode payments. When a new 30-day period begins due to the intervening event of the beneficiary elected transfer or discharge and return to home health during the 30-day episode, the original 30-day period would be proportionally adjusted to reflect the length of time the beneficiary remained under the agency’s care prior to the intervening event. The proportional payment is the partial payment adjustment. The partial payment adjustment is calculated by using the span of days (first billable service date through and including the last billable service date) under the original plan of care as a proportion of 30. The proportion is multiplied by the original case-mix and wage index 30day payment. 12. Payments for High-Cost Outliers Under the PDGM As described in section III.E of this proposed rule, section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the home health payment amount in the case of outliers because of unusual variations in the type or amount of medically necessary care. The history of and current methodology for payment of high-cost outliers under the HH PPS is described in detail in section III.E of this proposed rule. In the CY 2018 HH PPS proposed rule (82 FR 35270), we proposed that we would maintain the current methodology for payment of high-cost outliers upon implementation of a 30-day unit of payment and that we would calculate payment for high-cost outliers based upon 30-day periods of care. Commenters expressed concerns regarding the outlier policy proposed in the CY 2018 HH PPS proposed rule and the potential for more providers to exceed the 10 percent outlier cap under a 30-day period of care. Commenters also suggested modification to the 8hour cap on the amount of time per day that is permitted to be counted toward PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 32421 the estimation of an episode’s costs for outlier calculation purposes. While we appreciate commenters’ feedback regarding the proposed outlier payment policy described in the CY 2018 HH PPS proposed rule, we are proposing to maintain the existing outlier policy under the proposed PDGM, except that outlier payments would be determined on a 30-day basis to align with the 30-day unit of payment under the proposed PDGM. We believe that maintaining the existing outlier policy and applying such policy to 30day periods of care would ensure a smooth transition within the framework of the proposed PDGM. We plan to closely evaluate and model projected outlier payments within the framework of the PDGM and consider modifications to the outlier policy as appropriate. The requirement that the total amount of outlier payments not exceed 2.5 percent of total home health payments as well as the 10 percent cap on outlier payments at the home health agency level are statutory requirements, as described in section 1895(b)(5) of the Act. Therefore, we do not have the authority to adjust or eliminate the 10percent cap or increase the 2.5 percent maximum outlier payment amount. Regarding the 8-hour limit on the amount of time per day counted toward the estimation of an episode’s costs, as noted in the CY2017 HH PPS final rule (81 FR 76729), where a patient is eligible for coverage of home health services, Medicare statute limits the amount of part-time or intermittent home health aide services and skilled nursing services covered during a home health episode. Section 1861(m)(7)(B) of the Act states that the term ‘‘ ‘part-time or intermittent services’ means skilled nursing and home health aide services furnished any number of days per week as long as they are furnished (combined) less than 8 hours each day and 28 or fewer hours each week (or, subject to review on a case-by-case basis as to the need for care, less than 8 hours each day and 35 or fewer hours per week).’’ Therefore, the daily and weekly cap on the amount of skilled nursing and home health aide services combined is a limit defined within the statute. As we further noted in the CY 2018 HH PPS final rule (81 FR 76729), because outlier payments are predominately driven by the provision of skilled nursing services, the 8-hour daily cap on services aligns with the statute, which requires that skilled nursing and home health aide services combined be furnished less than 8 hours each day. Therefore, we believe that maintaining the 8-hour per day cap is appropriate under the proposed PDGM. E:\FR\FM\12JYP2.SGM 12JYP2 32422 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 Simulating payments using preliminary CY 2017 claims data and the CY 2019 payment rates, we estimate that outlier payments under the proposed PDGM with 30-day periods of care would comprise approximately 4.77 percent of total HH PPS payments in CY 2019. Given the statutory requirement to target up to, but no more than, 2.5 percent of total payments as outlier payments, we currently estimate that the FDL ratio under the proposed PDGM would need to change from 0.55 to 0.71. However, given the proposed implementation of the PDGM for 30-day periods of care beginning on or after January 1, 2020, we will update our estimate of outlier payments as a percent of total HH PPS payments using the most current and complete utilization data available at the time of CY 2020 rate-setting. We invite public comments on maintaining the current outlier payment methodology outlined in section III.E of this proposed rule for the proposed PDGM and the associated changes in the regulations text as described in section III.F.13 of this proposed rule. 13. Conforming Regulations Text Revisions for the Implementation of the PDGM in CY 2020 We are proposing to make a number of revisions to the regulations to implement the PDGM for episodes beginning on or after January 1, 2020, as outlined in sections III.F.1 through III.F.12 of this proposed rule. We propose to make conforming changes in § 409.43 and part 484 Subpart E to revise the unit of service from a 60-day episode to a 30-day period. In addition, we are proposing to restructure § 484.205. These revisions would be effective on January 1, 2020. Specifically, we propose to: • Revise § 409.43, which outlines plan of care requirements. We propose to revise several paragraphs to phase out the unit of service from a 60-day episode for claims beginning on or before December 31, 2019, and to implement a 30-day period as the new unit of service for claims beginning on or after January 1, 2020 under the PDGM. We propose to move and revise paragraph (c)(2) to § 484.205 as paragraph (c)(2) aligns more closely with the regulations addressing the basis of payment. • Revise the definitions of rural area and urban area in § 484.202 to remove ‘‘with respect to home health episodes ending on or after January 1, 2006’’ from each definition as this verbiage is no longer necessary. • Restructure § 484.205 to provide more logical organization and revise to VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 account for the change in the unit of payment under the HH PPS for CY 2020. The PDGM uses 30-day periods rather than the 60-day episode used in the current payment system. Therefore, we propose to revise § 484.205 to remove references to ‘‘60-day episode’’ and to refer more generally to the ‘‘national, standardized prospective payment’’. We are also proposing revisions to § 484.205 as follows: ++ Add paragraphs to paragraph (b) to define the unit of payment. ++ Move language which addresses the requirement for OASIS submission from § 484.210 and insert it into § 484.205 as new paragraph (c). ++ Move paragraph (c)(2) from § 409.43 to § 484.205 as new paragraph (g) in order to better align with the regulations detailing the basis of payment. ++ Add paragraph (h) to discuss split percentage payments under the current model and the proposed PDGM. We are not proposing to change the requirements or policies relating to durable medical equipment or furnishing negative pressure wound therapy using a disposable device. • Remove § 484.210 which discusses data used for the calculation of the national prospective 60-day episode payment as we believe that this information is duplicative and already incorporated in other sections of part 484, subpart E. • Revise the section heading of § 484.215 from ‘‘Initial establishment of the calculation of the national 60-day episode payment’’ to ‘‘Initial establishment of the calculation of the national, standardized prospective 60day episode payment and 30-day payment rates.’’ Also, we propose to add paragraph (f) to this section to describe how the national, standardized prospective 60-day episode payment rate is converted into a national, standardized prospective 30-day period payment and when it applies. • Revise the section heading of § 484.220 from ‘‘Calculation of the adjusted national prospective 60-day episode payment rate for case-mix and area wage levels’’ to ‘‘Calculation of the case-mix and wage area adjusted prospective payment rates.’’ We propose to remove the reference to ‘‘national 60day episode payment rate’’ and replace it with ‘‘national, standardized prospective payment’’. • Revise the section heading in § 484.225 from ‘‘Annual update of the unadjusted national prospective 60-day episode payment rate’’ to ‘‘Annual update of the unadjusted national, standardized prospective 60-day episode and 30-day payment rates’’. PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 Also, we propose to revise § 484.225 to remove references to ‘‘60-day episode’’ and to refer more generally to the ‘‘national, standardized prospective payment’’. In addition, we propose to add paragraph (d) to describe the annual update for CY 2020 and subsequent calendar years. • Revise the section heading of § 484.230 from ‘‘Methodology used for the calculation of low-utilization payment adjustment’’ to ‘‘Low utilization payment adjustment’’. Also, we propose to designate the current text to paragraph (a) and insert language such that proposed paragraph (a) applies to claims beginning on or before December 31, 2019, using the current payment system. We propose to add paragraph (b) to describe how low utilization payment adjustments are determined for claims beginning on or after January 1, 2020, using the proposed PDGM. • Revise the section heading of § 484.235 from ‘‘Methodology used for the calculation of partial episode payment adjustments’’ to ‘‘Partial payment adjustments’’. We propose to remove paragraphs (a), (b), and (c). We propose to remove paragraphs (1), (2), and (3) which describe partial payment adjustments from paragraph (d) in § 484.205 and incorporate them into § 484.235. We propose to add paragraph (a) to describe partial payment adjustments under the current system, that is, for claims beginning on or before December 31, 2019, and paragraph (b) to describe partial payment adjustments under the proposed PDGM, that is, for claims beginning on or after January 1, 2020. • Revise the section heading for § 484.240 from ‘‘Methodology used for the calculation of the outlier payment’’ to ‘‘Outlier payments.’’ In addition, we propose to remove language at paragraph (b) and append it to paragraph (a). We propose to add language to proposed revised paragraph (a) such that paragraph (a) will apply to payments under the current system, that is, for claims beginning on or before December 31, 2019. We propose to revise paragraph (b) to describe payments under the proposed PDGM, that is, for claims beginning on or after January 1, 2020. In paragraph (c), we propose to replace the ‘‘estimated’’ cost with ‘‘imputed’’ cost. Lastly, we propose to revise paragraph (d) to reflect the per15 minute unit approach to imputing the cost for each claim. We are soliciting comments on the proposed PDGM as outlined in sections III.F.1 through III.F.12 and the associated regulations text changes E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules described above and in section IX of this proposed rule. G. Proposed Changes Regarding Certifying and Recertifying Patient Eligibility for Medicare Home Health Services 1. Background Sections 1814(a) and 1835(a) of the Act require that a physician certify patient eligibility for home health services (and recertify, where such services are furnished over a period of time). The certifying physician is responsible for determining whether the patient meets the eligibility criteria (that is, homebound status and need for skilled services) and for understanding the current clinical needs of the patient such that the physician can establish an effective plan of care. In addition, as a condition for payment, section 6407 of the Affordable Care Act amended sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act requiring, as part of the certification for home health services, that prior to certifying a patient’s eligibility for the Medicare home health benefit the certifying physician must document that the physician himself or herself or an allowed non-physician practitioner had a face-to-face encounter with the patient. The regulations at 42 CFR 424.22(a) and (b) set forth the requirements for certification and recertification of eligibility for home health services. The regulations at § 424.22(c) provide the supporting documentation requirements used as the basis for determining patient eligibility for Medicare home health services. amozie on DSK3GDR082PROD with PROPOSALS2 2. Current Supporting Documentation Requirements In determining whether the patient is or was eligible to receive services under the Medicare home health benefit at the start of care, as of January 1, 2015, we require documentation in the certifying physician’s medical records and/or the acute/post-acute care facility’s medical records (if the patient was directly admitted to home health) to be used as the basis for certification of home health eligibility as described at § 424.22(c). Specifically, the certifying physician and/or the acute/post-acute care facility medical record (if the patient was directly admitted to home health) for the patient must contain information that justifies the referral for Medicare home health services. This includes documentation that substantiates the patient’s: • Need for the skilled services; and • Homebound status; Likewise, the certifying physician and/or the acute/post-acute care facility VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 medical record (if the patient was directly admitted to home health) for the patient must contain the actual clinical note for the face-to-face encounter visit that demonstrates that the encounter: • Occurred within the required timeframe, • Was related to the primary reason the patient requires home health services; and • Was performed by an allowed provider type. This information can be found most often in clinical and progress notes and discharge summaries. While the face-toface encounter must be related to the primary reason for home health services, the patient’s skilled need and homebound status can be substantiated through an examination of all submitted medical record documentation from the certifying physician, acute/post-acute care facility, and/or HHA (if certain requirements are met). The synthesis of progress notes, diagnostic findings, medications, and nursing notes, help to create a longitudinal clinical picture of the patient’s health status to make the determination that the patient is eligible for home health services. HHAs must obtain as much documentation from the certifying physician’s medical records and/or the acute/post-acute care facility’s medical records (if the patient was directly admitted to home health) as they deem necessary to assure themselves that the Medicare home health patient eligibility criteria have been met. HHAs must be able to provide it to CMS and its review entities upon request. If the documentation used as the basis for the certification of eligibility (that is, the certifying physician’s and/or the acute/post-acute care facility’s medical record documentation) is not sufficient to demonstrate that the patient is or was eligible to receive services under the Medicare home health benefit, payment will not be rendered for home health services provided. 3. Proposed Regulations Text Changes Regarding Information Used to Satisfy Documentation of Medicare Eligibility for Home Health Services Section 51002 of the BBA of 2018 amended sections 1814(a) and 1835(a) of the Act to provide that, effective for physician certifications and recertifications made on or after January 1, 2019, in addition to using the documentation in the medical record of the certifying physician or of the acute or post-acute care facility (where home health services were furnished to an individual who was directly admitted to the HHA from such facility), the PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 32423 Secretary may use documentation in the medical record of the HHA as supporting material, as appropriate to the case involved. We believe the BBA of 2018 provisions are consistent with our existing policy in this area, which is currently reflected in sub-regulatory guidance in the Medicare Benefit Policy Manual (Pub.100–02, chapter 7, section 30.5.1.2) and the Medicare Program Integrity Manual (Pub. 100–08, chapter 6, section 6.2.3).51 The sub-regulatory guidance describes the circumstances in which HHA documentation can be used along with the certifying physician and/ or acute/post-acute care facility medical record to support the patient’s homebound status and skilled need. Specifically, we state that information from the HHA, such as the plan of care required in accordance with 42 CFR 409.43 and the initial and/or comprehensive assessment of the patient required in accordance with 42 CFR 484.55, can be incorporated into the certifying physician’s medical record for the patient and used to support the patient’s homebound status and need for skilled care. However, this information must be corroborated by other medical record entries in the certifying physician’s and/or the acute/ post-acute care facility’s medical record for the patient. This means that the appropriately incorporated HHA information, along with the certifying physician’s and/or the acute/post-acute care facility’s medical record, creates a clinically consistent picture that the patient is eligible for Medicare home health services. The certifying physician officially incorporates the HHA information into his/her medical record for the patient by signing and dating the material. Once incorporated, the documentation from the HHA, in conjunction with the certifying physician and/or acute/post-acute care facility documentation, must substantiate the patient’s eligibility for home health services. While we believe the provisions in section 51002 of the BBA of 2018 do not require a change to the current regulations because the provisions are consistent with existing CMS policy, we are discretionarily proposing to amend the regulations text at 42 CFR 424.22(c) to align the regulations text with current sub-regulatory guidance to allow medical record documentation from the HHA to be used to support the basis for certification and/or recertification of 51 https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/ bp102c07.pdf and https://www.cms.gov/ Regulations-and-Guidance/Guidance/Manuals/ Downloads/pim83c06.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32424 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules home health eligibility, if the following requirements are met: • The documentation from the HHA can be corroborated by other medical record entries in the certifying physician’s and/or the acute/post-acute care facility’s medical record for the patient, thereby creating a clinically consistent picture that the patient is eligible for Medicare home health services as specified in § 424.22 (a)(1) and (b). • The certifying physician signs and dates the HHA documentation demonstrating that the documentation from the HHA was considered when certifying patient eligibility for Medicare home health services. HHA documentation can include, but is not limited to, the patient’s plan of care required in accordance with 42 CFR 409.43 and the initial and/or comprehensive assessment of the patient required in accordance with 42 CFR 484.55. We believe that this proposal incorporates existing sub-regulatory flexibilities into the regulations text that allow HHA medical record documentation to support the basis of home health eligibility. By incorporating the existing subregulatory guidance into regulation, HHAs are assured that HHA-generated documentation can be used as supporting material for the basis of home health eligibility, as long as all conditions are met, as described previously. HHAs have the discretion to determine the type and format of any documentation used to support home health eligibility. The expectation is that the HHA-generated supporting medical record documentation would be used to support the existing medical record of the certifying physician or the acute/ post-acute care facility to create a clinically consistent picture that the individual is confined to the home and requires skilled services. Anecdotally, we have received reports from HHAs that they typically include this supporting information on the plan of care. Generally, the certifying physician is also the physician who establishes the plan of care and the plan of care must be signed by the physician. Consequently, no additional burden is incurred by either the HHA or the certifying physician. As existing subregulatory guidance allows HHAgenerated documentation to be used as supporting material for the physician’s determination of eligibility for home health services, we expect that most HHAs already have a process in place to provide this information to the certifying physician or the acute/post- VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 acute care facility. We welcome comments on this assumption. We invite comments on this proposal to amend the regulations text at § 424.22(c), which would codify subregulatory guidance allowing HHAgenerated medical record documentation to be used as supporting material to the certifying physician’s or the acute and/or post-acute care facility’s medical record documentation as part of the certification and/or recertification of eligibility for home health services, under certain circumstances. The corresponding proposed regulations text changes can be found in section VIII. of this proposed rule. 4. Proposed Elimination of Recertification Requirement To Estimate How Much Longer Home Health Services Will Be Required In the CY 2018 HH PPS proposed rule (82 FR 35378), we invited public comments about improvements that can be made to the health care delivery system that reduce unnecessary burdens for clinicians, other providers, and patients and their families. Specifically, we asked the public to submit their ideas for regulatory, sub-regulatory, policy, practice, and procedural changes to reduce burdens for hospitals, physicians, and patients, improve the quality of care, decrease costs, and ensure that patients and their providers and physicians are making the best health care choices possible. We specifically stated that CMS would not respond to the comment submissions in the final rule. Instead, we would review the comments submitted in response to the requests for information and actively consider them as we develop future regulatory proposals or future subregulatory policy guidance. Several commenters requested that CMS consider eliminating the requirement that the certifying physician include an estimate of how much longer skilled services will be required at each home health recertification, as set forth at § 424.22(b)(2) and in sub-regulatory guidance in the Medicare Benefit Policy Manual (Chapter 7, Section 30.5.2). Commenters stated that this estimate is duplicative of the Home Health Conditions of Participation (CoP) requirements for the content of the home health plan of care, set out at 42 CFR 484.60(a)(2). The Home Health CoP at § 484.60(a)(2) sets forth the requirements for the content of the home health plan of care, which includes the types of services, supplies, and equipment required, as well as, the PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 frequency and duration of visits to be made. Commenters stated that the plan of care requirement already includes the frequency and duration of visits to be made and is an estimate of how much longer home health services are expected to be required by the patient. They observed that including this information as part of the recertification statement is duplicative and unnecessary. Commenters went on to say that because the certifying physician must review, sign and date the plan of care at least every 60-days, he/she is attesting to how much longer he/she thinks the patient will require home health services. Commenters also stated that this estimate appears to have no value to the patient, the physician, the HHA, or to CMS, but failure to include the physician’s estimate of how much longer skilled care will be required can result in claim denials. We have determined that the estimate of how much longer skilled care will be required at each recertification is not currently used for quality, payment, or program integrity purposes. Given this consideration and the Home Health CoP requirements for the content of the home health plan of care, and to mitigate any potential denials of home health claims that otherwise would meet all other Medicare requirements, we are proposing to eliminate the regulatory requirement as set forth at 42 CFR 424.22(b)(2), that the certifying physician, as part of the recertification process, provide an estimate of how much longer skilled services will be required. All other recertification content requirements under § 424.22(b)(2) would remain unchanged. We believe the elimination of this recertification requirement would result in a reduction of burden for certifying physicians by reducing the amount of time physicians spend on the recertification process and would result in an overall cost savings of $14.2 million. We provided a more detailed description of this burden reduction in section VIII.C.1.c. of this proposed rule. We invite comments regarding the proposed elimination of the requirement that the certifying physician include an estimate of how much longer skilled services will be required at each home health recertification, as well as the corresponding regulations text changes at § 424.22(b)(2). While we are not proposing any additional changes to the home health payment regulations in this proposed rule as suggested by commenters in the RFI, we will continue to consider whether future regulatory or subregulatory changes are warranted to reduce unnecessary burden. We thank E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 the commenters for taking the time to convey their thoughts and suggestions on this initiative. H. Proposed Change Regarding Remote Patient Monitoring Under the Medicare Home Health Benefit Section 4012 of the 21st Century Cures Act directed the Centers for Medicare & Medicaid Services (CMS) to provide information on the current use of and/or barriers to telehealth services. This directive, along with advancements in technology, prompted us to examine ways in which HHAs can integrate telehealth and/or remote patient monitoring into the care planning process. Telehealth services, under section 1834(m)(4) of the Act, include services such as professional consultations, office visits, pharmacologic management, and office psychiatry services furnished via a telecommunications system by a distant site physician or practitioner to a patient located at a designated ‘‘originating site.’’ Originating sites, as defined under section 1834(m)(4)(C) of the Act, generally must be certain kinds of healthcare settings located in certain geographic areas. This definition generally does not include the beneficiary’s home. As a Medicare condition for payment, an interactive telecommunications system generally is required when furnishing telehealth services. Medicare defines ‘‘interactive telecommunication systems’’ as audio and video equipment permitting twoway, real-time interactive communication between the patient and distant site physician or practitioner (42 CFR 410.78). Telehealth services are used to substitute for professional inperson visits when certain eligibility criteria are met. For patients receiving care under the Medicare home health benefit, section 1895(e)(1)(A) of the Act prohibits payment for services furnished via a telecommunications system if such services substitute for in-person home health services ordered as part of a plan of care certified by a physician. However, the statute does not define the term ‘‘telecommunications system’’ as it relates to the provision of home health care and explicitly notes that an HHA is not prevented from providing services via a telecommunications system, assuming the service is not considered a home health visit for purposes of eligibility or payment. Remote patient monitoring, while a service using a form of telecommunications, is not considered a Medicare telehealth service as defined under section 1834(m) of the Act, but rather uses ‘‘digital technologies to collect medical and other forms of VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 health data from individuals in one location and electronically transmit that information securely to health care providers in a different location for assessment and recommendations.’’ 52 For example, remote patient monitoring allows the patient to collect and transmit his or her own clinical data, such as weight, blood pressure, and heart rate for monitoring and analysis. The clinical data is monitored without a direct interaction between the practitioner and beneficiary, and then reviewed by the HHA for potential consultation with the certifying physician for changes in the plan of care. Additionally, because remote patient monitoring is not statutorily considered a telehealth service, it would not be subject to the restrictions on originating site and interactive telecommunications systems technology. We believe remote patient monitoring could be beneficial in augmenting the home health services outlined in the patient’s plan of care, without replicating or replacing home health visits. The plan of care, in accordance with the home health conditions of participation (CoPs), must identify patient-specific measurable outcomes and goals, and be established, periodically reviewed, and signed by a physician (42 CFR 484.60(a)). The HHA must also promptly alert the relevant physician(s) to any changes in the patient’s condition or needs that suggest that outcomes are not being achieved, or that the plan of care must be altered (42 CFR 484.60(c)). Remote patient monitoring could enable the HHA to more quickly identify any changes in the patient’s clinical condition, as well as monitor patient compliance, prompting physician review of, and potential changes to, the plan of care, as required per the CoPs. Particularly in cases where the home health patient is admitted for skilled observation and assessment of the patient’s condition due to a reasonable potential for complications or an acute episode, remote patient monitoring could augment home health visits until the patient’s clinical condition stabilized. Fluctuating or abnormal vital signs could be monitored between visits, potentially leading to quicker interventions and updates to the treatment plan. A review of the literature shows that utilizing remote patient monitoring in chronic disease management has the potential to ‘‘significantly improve an individual’s quality of life, allowing 52 https://www.cchpca.org/remote-patientmonitoring. PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 32425 patients to maintain independence, prevent complications, and minimize costs.’’ 53 Specifically for patients with chronic obstructive pulmonary disease (COPD) and congestive heart failure (CHF), research indicates that remote patient monitoring has been successful in reducing readmissions and long-term acute care utilization.54 Likewise, a systematic review of evidence collected by the Agency for Healthcare Research and Quality (AHRQ) revealed that remote patient monitoring of chronic cardiac and respiratory conditions resulted in lower mortality, improved quality of life, and reductions in hospital admissions.55 If changes in condition are identified early through careful monitoring, serious complications may be avoided, potentially preventing emergency department visits and hospital admissions. Surveillance and case management are frequently occurring interventions in home health, and remote patient monitoring leverages technology to encourage patient involvement and accountability in order to improve care coordination. Anecdotally, we have heard from various home health agencies regarding integration of remote patient monitoring into the care planning process. For example, on a recent site visit to a home health agency, CMS participated in a care coordination meeting, which included a discussion of the agency’s experience implementing remote patient monitoring in home health episodes. Certain patients with chronic conditions received tablets pre-loaded with software enabling patients to take and transmit their vital signs on a daily basis. The transmitted health data was then monitored and analyzed by an outside service, which contacted the HHA with any changes or abnormalities. This example highlights how remote patient monitoring could be integrated into the home health episode of care. Additionally, we believe that the growth of technology and new software development could be used in the 53 Rojhan, K., Laplante, S., Sloand, J., Main, C., Ibrahim, A., Wild, J., Sturt, N. Remote Monitoring of Chronic Diseases: A Landscape Assessment of Policies in Four European Countries (2016) PLOS One. V11 (5) https://dx.doi.org/10.1371%2Fjour nal.pone.0155738. 54 Broad, J., Davis, C., Bender, M., Smith, T. (2014) Feasibility and Acute Care Utilization Outcomes of a Post-Acute Transitional Telemonitoring Program for Underserved Chronic Disease Patients. Journal of Cardiac Failure. Vol 20 (8S) S116. https://dx.doi.org/10.1016/j.cardfail.2 014.06.328. 55 Department of Health and Human Services, Agency for Healthcare Research and Quality, Telehealth: Mapping the Evidence for Patient Outcomes from Systematic Reviews, Technical Brief Number 26 (Washington, DC: June 2016). E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 32426 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules provision of care and care coordination in the home, as well as empower patients to be active participants in their disease management. Other than the statutory requirement that services furnished via a telecommunications system may not substitute for in-person home health services ordered as part of a plan of care certified by a physician, we do not have specific policies surrounding the use of remote patient monitoring by HHAs. We anticipate that HHAs would follow clinical and manufacturer guidelines when implementing the technology into clinical practice, while still meeting all statutory requirements, conditions for payment, and the home health conditions of participation. Medicare began making separate payment in CY 2018 for CPT code 99091 that allows physicians and other healthcare professionals to bill for the collection and interpretation of physiologic data digitally stored and/or transmitted by the patient and/or caregiver to the physician or other qualified health care professional (82 CFR 53013). CPT code 99091 is paid under the Medicare physician fee schedule, and thus cannot be billed by HHAs. Additionally, it includes the interpretation of the physiologic data, whereas the HHA would only be responsible for the collection of the data. However, with this distinction, we feel the code’s description accurately describes remote monitoring services. Therefore, we propose to define remote patient monitoring under the Medicare home health benefit as ‘‘the collection of physiologic data (for example, ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the HHA.’’ Although the cost of remote patient monitoring is not separately billable under the HH PPS and may not be used as a substitute for in-person home health services, there is nothing to preclude HHAs from using remote patient monitoring to augment the care planning process as appropriate. As such, we believe the expenses of remote patient monitoring, if used by the HHA to augment the care planning process, must be reported on the cost report as allowable administrative costs (that is, operating expenses) that are factored into the costs per visit. Currently, costs associated with remote patient monitoring are reported on line 23.20 on Worksheet A, as direct costs associated with telemedicine. For 2016, approximately 3 percent of HHAs reported telemedicine costs that accounted for roughly 1 percent of their total agency costs on the HHA cost VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 report. However, these costs are not allocated to the costs per visit. We propose to amend the regulations at 42 CFR 409.46 to include the costs of remote patient monitoring as an allowable administrative cost (that is, operating expense), if remote patient monitoring is used by the HHA to augment the care planning process. This would allow HHAs to report the costs of remote patient monitoring on the HHA cost report as part of their operating expenses. These costs would then be factored into the costs per visit. Factoring the costs associated with remote patient monitoring into the costs per visit has important implications for assessing home health costs relevant to payment, including HHA Medicare margin calculations. We are soliciting comments on the proposed definition of remote patient monitoring under the HH PPS to describe telecommunication services used to augment the plan of care during a home health episode. Additionally, we welcome comments regarding additional utilization of telecommunications technologies for consideration in future rulemaking. We are also soliciting comments on the proposed changes to the regulations at 42 CFR 409.46, to include the costs of remote patient monitoring as allowable administrative costs (that is, operating expenses), as detailed in section IX. of this proposed rule. IV. Home Health Value-Based Purchasing (HHVBP) Model A. Background As authorized by section 1115A of the Act and finalized in the CY 2016 HH PPS final rule (80 FR 68624), we began testing the HHVBP Model on January 1, 2016. The HHVBP Model has an overall purpose of improving the quality and delivery of home health care services to Medicare beneficiaries. The specific goals of the Model are to: (1) Provide incentives for better quality care with greater efficiency; (2) study new potential quality and efficiency measures for appropriateness in the home health setting; and (3) enhance the current public reporting process. Using the randomized selection methodology finalized in the CY 2016 HH PPS final rule, we selected nine states for inclusion in the HHVBP Model, representing each geographic area across the nation. All Medicarecertified Home Health Agencies (HHAs) providing services in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington (competing HHAs) are required to compete in the Model. Requiring all Medicare-certified HHAs PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 providing services in the selected states to participate in the Model ensures that: (1) There is no selection bias; (2) participating HHAs are representative of HHAs nationally; and, (3) there is sufficient participation to generate meaningful results. As finalized in the CY 2016 HH PPS final rule, the HHVBP Model uses the waiver authority under section 1115A(d)(1) of the Act to adjust Medicare payment rates under section 1895(b) of the Act beginning in CY 2018 based on the competing HHAs’ performance on applicable measures. Payment adjustments will be increased incrementally over the course of the HHVBP Model in the following manner: (1) A maximum payment adjustment of 3 percent (upward or downward) in CY 2018; (2) a maximum payment adjustment of 5 percent (upward or downward) in CY 2019; (3) a maximum payment adjustment of 6 percent (upward or downward) in CY 2020; (4) a maximum payment adjustment of 7 percent (upward or downward) in CY 2021; and (5) a maximum payment adjustment of 8 percent (upward or downward) in CY 2022. Payment adjustments are based on each HHA’s Total Performance Score (TPS) in a given performance year (PY) comprised of: (1) A set of measures already reported via the Outcome and Assessment Information Set (OASIS) and completed Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) surveys for all patients serviced by the HHA and select claims data elements; and (2) three New Measures for which points are achieved for reporting data. For CY 2019, we are proposing to remove five measures and add two new proposed composite measures to the applicable measure set for the HHVBP model, revise our weighting methodology for the measures, and rescore the maximum number of improvement points. B. Quality Measures 1. Proposal To Remove Two OASISBased Measures Beginning With Performance Year 4 (CY 2019) In the CY 2016 HH PPS final rule, we finalized a set of quality measures in Figure 4a: Final PY1 Measures and Figure 4b: Final PY1 New Measures (80 FR 68671 through 68673) for the HHVBP Model used in PY1, referred to as the starter set. We also stated that this set of measures will be subject to change or retirement during subsequent model years and revised through the rulemaking process (80 FR 68669). E:\FR\FM\12JYP2.SGM 12JYP2 amozie on DSK3GDR082PROD with PROPOSALS2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules The measures were selected for the Model using the following guiding principles: (1) Use a broad measure set that captures the complexity of the services HHAs provide; (2) incorporate flexibility for future inclusion of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT) measures that cut across post-acute care settings; (3) develop ‘second generation’ (of the HHVBP Model) measures of patient outcomes, health and functional status, shared decision making, and patient activation; (4) include a balance of process, outcome and patient experience measures; (5) advance the ability to measure cost and value; (6) add measures for appropriateness or overuse; and (7) promote infrastructure investments. This set of quality measures encompasses the multiple National Quality Strategy (NQS) domains 56 (80 FR 68668). The NQS domains include six priority areas identified in the CY 2016 HH PPS final rule (80 FR 68668) as the CMS Framework for Quality Measurement Mapping. These areas are: (1) Clinical quality of care; (2) Care coordination; (3) Population & community health; (4) Person- and Caregiver-centered experience and outcomes; (5) Safety; and (6) Efficiency and cost reduction. Figures 4a and 4b of the CY 2016 HH PPS final rule identified 15 outcome measures (five from the HHCAHPS, eight from OASIS, and two claims-based measures), and nine process measures (six from OASIS, and three New Measures, which were not previously reported in the home health setting) for use in the Model. In the CY 2017 HH PPS final rule, we removed four measures from the measure set for PY1 and subsequent performance years: (1) Care Management: Types and Sources of Assistance; (2) Prior Functioning ADL/ IADL; (3) Influenza Vaccine Data Collection Period: Does this episode of care include any dates on or between October 1 and March 31?; and (4) Reason Pneumococcal Vaccine Not Received, for the reasons discussed in that final rule (81 FR 76743 through 76747). In the CY 2018 HH PPS final rule, we removed the Drug Education on All Medications Provided to Patient/ Caregiver during All Episodes of Care from the set of applicable measures beginning with PY3 for the reasons discussed in that final rule (82 FR 51703 through 51704). 56 2015 Annual Report to Congress, https:// www.ahrq.gov/workingforquality/reports/annualreports/nqs2015annlrpt.htm. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 For PY4 and subsequent performance years, we propose to remove two OASIS-based process measures, Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received, from the set of applicable measures. We adopted the Influenza Immunization Received for Current Flu Season measure beginning PY1 of the model. Since that time, we have received input from both stakeholders and a Technical Expert Panel (TEP) convened by our contractor in 2017 that because the measure does not exclude HHA patients who were offered the vaccine but declined it and patients who were ineligible to receive it due to contraindications, the measure may not fully capture HHA performance in the administration of the influenza vaccine. In response to these concerns, we are proposing to remove the measure from the applicable measure set beginning PY4. We also adopted the Pneumococcal Polysaccharide Vaccine Ever Received measure beginning PY1 of the model. This process measure reports the percentage of HH episodes during which patients were determined to have ever received the Pneumococcal Polysaccharide Vaccine. The measure is based on guidelines previously issued by the Advisory Committee on Immunization Practices (ACIP),57 which recommended use of a single dose of the 23-valent pneumococcal polysaccharide vaccine (PPSV23) among all adults aged 65 years and older and those adults aged 19–64 years with underlying medical conditions that put them at greater risk for serious pneumococcal infection.58 In 2014, the ACIP updated its guidelines to recommend that both PCV13 and PPSV23 be given to all immunocompetent adults aged ≥65 years.59 The recommended intervals for 57 The Advisory Committee on Immunization Practices was established under Section 222 of the Public Health Service Act (42 U.S.C. 217a), as amended, to assist states and their political subdivisions in the prevention and control of communicable diseases; to advise the states on matters relating to the preservation and improvement of the public’s health; and to make grants to states and, in consultation with the state health authorities, to agencies and political subdivisions of states to assist in meeting the costs of communicable disease control programs. (Charter of the Advisory Committee on Immunization Practices, filed April 1, 2018. https://www.cdc.gov/ vaccines/acip/committee/ACIP-Charter-2018.pdf). 58 Prevention of Pneumococcal Disease: Recommendations of the Advisory Committee on Immunization Practices (ACIP), MMWR 1997;46:1– 24. 59 Tomczyk S, Bennett NM, Stoecker C, et al. Use of 13-valent pneumococcal conjugate vaccine and 23-valent pneumococcal polysaccharide vaccine among adults aged ≥65 years: Recommendations of PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 32427 sequential administration of PCV13 and PPSV23 depend on several patient factors including: The current age of the adult, whether the adult had previously received PPSV23, and the age of the adult at the time of prior PPSV23 vaccination (if applicable). Because the Pneumococcal Polysaccharide Vaccine Ever Received measure does not fully reflect the current ACIP guidelines, we are proposing to remove this measure from the model beginning PY4. 2. Proposal To Replace Three OASISBased Measures With Two Composite Measures Beginning With Performance Year 4 As previously noted, one of the goals of the HHVBP Model is to study new potential quality and efficiency measures for appropriateness in the home health setting. In the CY 2018 HH PPS Final Rule, we solicited comment on additional quality measures for future consideration in the HHVBP model, specifically a Total Change in ADL/IADL Peformance by HHA Patients Measure, a Composite Functional Decline Measure, and behavioral health measures (82 FR 51706 through 51711). For the reasons discussed, we are proposing to replace three individual OASIS measures (Improvement in Bathing, Improvement in Bed Transferring, and Improvement in Ambulation-Locomotion) with two composite measures: Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility. These proposed measures use several of the same ADLs as the composite measures discussed in the CY 2018 HH PPS Final Rule (82 FR 51707). Our contractor convened a TEP in November 2017, which supported the use of two proposed composite measures in place of the three individual measures because HHA performance on the three individual measures would be combined with HHA performance on six additional ADL measures to create a more comprehensive assessment of HHA performance across a broader range of patient ADL outcomes. The TEP also noted that HHA performance is currently measured based on any change in improvement in patient status, while the composite measures would report the magnitude of patient change (either improvement or decline) across six self-care and three mobility patient outcomes. There are currently three ADL improvement measures in the HHVBP Model (Improvement in Bathing, the Advisory Committee on Immunization Practices (ACIP). MMWR 2014; 63: 822–5. E:\FR\FM\12JYP2.SGM 12JYP2 32428 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules Improvement in Bed Transferring, and Improvement in AmbulationLocomotion). The maximum cumulative score across all three measures is 30. Because we are proposing to replace these three measures with the two composite measures, we are also proposing that each of the two composite measures would have a maximum score of 15 points, to ensure that the relative weighting of ADL-based measures would stay the same if the proposal to replace the three ADL improvement measures with the two composite measures is adopted. That is, there would still be a maximum of 30 points available for ADL related measures. The proposed Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility measures would represent a new direction in how quality of patient care is measured in home health. Both of these proposed composite measures combine several existing and endorsed Home Health Quality Reporting Program (HH QRP) outcome measures into focused composite measures to enhance quality reporting. These proposed composite measures fit within the Patient and Family Engagement 60 domain as functional status and functional decline are important to assess for residents in home health settings. Patients who receive care from an HHA may have functional limitations and may be at risk for further decline in function because of limited mobility and ambulation. The proposed Total Normalized Composite Change in Self-Care measure computes the magnitude of change, either positive or negative, based on a normalized amount of possible change on each of six OASIS-based quality outcomes. These six outcomes are as follows: • Improvement in Grooming (M1800) • Improvement in Upper Body Dressing (M1810) • Improvement in Lower Body Dressing (M1820) • Improvement in Bathing (M1830) • Improvement in Toileting Hygiene (M1845) • Improvement in Eating (M1870) The proposed Total Normalized Composite Change in Mobility measure computes the magnitude of change, either positive or negative, based on the normalized amount of possible change on each of three OASIS-based quality outcomes. These three outcomes are as follows: • Improvement in Toilet Transferring (M1840) • Improvement in Bed Transferring (M1850) • Improvement in Ambulation/ Locomotion (M1860) The magnitude of possible change for these OASIS items varies based on the number of response options. For example, M1800 (grooming) has four behaviorally-benchmarked response options (0 = most independent; 3 = least independent) while M1830 (bathing) has seven behaviorally-benchmarked response options (0 = most independent; 6 = least independent). The maximum possible change for a patient on item M1800 is 3, while the maximum possible change for a patient on item M1830 is 6. Both proposed composite measures would be computed and normalized at the episode level, then aggregated to the HHA level using the following steps: • Step 1: Calculate absolute change score for each OASIS item (based on change between Start of Care(SOC)/ Resumption of Care (ROC) and discharge) used to compute the Total Normalized Composite Change in SelfCare (6 items) or Total Normalized Composite Change in Mobility (3 items) measures. • Step 2: Normalize scores based on maximum change possible for each OASIS item (which varies across different items). The normalized scores result in a maximum possible change for any single item equal to ‘‘1’’; this score is provided when a patient achieves the maximum possible change for the OASIS item. • Step 3: Total score for Total Normalized Composite Change in Self- Care or Total Normalized Composite Change in Mobility is calculated by summing the normalized scores for the items in the measure. Hence, the maximum possible range of normalized scores at the patient level for Total Normalized Composite Change in SelfCare is ¥6 to +6, and for Total Normalized Composite Change in Mobility is ¥3 to +3. We created two prediction models for the proposed Total Normalized Composite Change in Self-Care (TNC_ SC) and Total Normalized Composite Change in Mobility (TNC_MOB) measures using information from OASIS items and patient clinical condition categories (see Table 50 for details on the number of OASIS items and OASIS clinical categories used in the prediction models). We computed multiple ordinary least squares (OLS) analyses beginning with risk factors that were available from OASIS D items and patient condition groupings. Any single OASIS D item might have more than one risk factor because we create dichotomous risk factors for each response option on scaled (from dependence to independence) OASIS items. Those risk factors that were statistically significant at p <0.0001 level were kept in the prediction model. These two versions (CY 2014 and CY 2015) of the prediction models were done as ‘‘proof of concept.’’ We are proposing that the actual prediction models that would be used if the proposed composite measures are finalized would use episodes of care that ended in CY 2017, which would be the baseline year for the quality outcome measures used to compute the two proposed composite measures, as listed previously. The baseline year for these two composite measures would be calendar year 2017. The following Table 50 provides an overview of results from the CY 2014 and CY 2015 prediction models for each proposed measure with estimated Rsquared values comparing observed vs. predicted episode-level performance. amozie on DSK3GDR082PROD with PROPOSALS2 TABLE 50—OBSERVED VERSUS PREDICTED EPISODE-LEVEL PEFORMANCE FOR THE PROPOSED TOTAL NORMALIZED COMPOSITE CHANGE MEASURES Number of OASIS items used Prediction model for 2014 TNC_SC .............................................................................................................................. 2015 TNC_SC .............................................................................................................................. 2014 TNC_MOB .......................................................................................................................... 60 2017 Measures under Consideration List. https://www.cms.gov/Medicare/Quality-Initiatives- VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Patient-Assessment-Instruments/QualityMeasures/ PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 42 41 42 Number of clinical categories 14 13 16 R-squared value 0.299 0.311 0.289 Downloads/2017-CMS-Measurement-Priorities-andNeeds.pdf. E:\FR\FM\12JYP2.SGM 12JYP2 32429 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 50—OBSERVED VERSUS PREDICTED EPISODE-LEVEL PEFORMANCE FOR THE PROPOSED TOTAL NORMALIZED COMPOSITE CHANGE MEASURES—Continued Number of OASIS items used Prediction model for 2015 TNC_MOB .......................................................................................................................... Table 50 presents the following summary information for the prediction models for the two proposed composite measures. • Prediction Model for: This column identifies the measure and year of data used for the two ‘‘proof of concept’’ prediction models created for each of the two proposed composite measures, Total Normalized Composite Change in Self-Care (TNC_SC) and Total Normalized Composite Change in Mobility (TNC_MOB). The development of the prediction models was identical in terms of the list of potential risk factors and clinical categories. The only difference was one set of prediction models used episodes of care that ended in CY 2014, while the other set of prediction models used episodes of care that ended in CY 2015. • Number of OASIS Items Used: This column indicates the number of OASIS items used as risk factors in the prediction model. For each prediction model, the number of OASIS items used is based on the number of risk factors that were statistically significant at p <0.0001 level in the prediction model. • Number of Clinical Categories: This column indicates the number of patient clinical categories (for example, diagnoses related to infections or neoplasms or endocrine disorders) that are used as risk factors in the prediction model. • R-squared Value: The R-squared values are a measure of the proportion of the variation in outcomes that is accounted for by the prediction model. The results show that the methodology that was used to create the prediction models produced very consistent models that predict at least 29 percent of the variability in the proposed composite measures. The prediction models are applied at the episode level to create a specific predicted value for the composite measure for each episode of care. These episode level predicted values are averaged to compute a national predicted value and an HHA predicted value. The episode level observed values are averaged to compute the HHA observed value. The HHA TNC_SC and TNC_MOB observed scores are risk adjusted based on the following formula: HHA Risk Adjusted = HHA Observed + National Predicted¥HHA Predicted HHAs are not allowed to skip any of the OASIS items that are used to compute these proposed composite measures or the risk factors that comprise the prediction models for the two proposed composite measures. The OASIS items typically do not include ‘‘not available (NA)’’ or ‘‘unknown (UK)’’ response options, and per HHQRP requirements,61 HHAs must provide responses to all OASIS items for the OASIS assessment to be accepted into the CMS data repository. Therefore, while we believe the likelihood that a value for one of these items would be missing is extremely small, we are proposing to impute a value of ‘‘0’’ if a value is ‘‘missing.’’ Specifically, if for some reason the information on one or more OASIS items that are used to compute TNC_SC or TNC_MOB is missing, we impute the value of ‘‘0’’ (no Number of clinical categories 41 R-squared value 18 0.288 change) for the missing value. Similarly, if for some reason the information on one or more OASIS items that are used as a risk factor is missing, we impute the value of ‘‘0’’ (no effect) for missing values that comprise the prediction models for the two proposed composite measures. Table 51 contains summary information for these two proposed composite measures. Because the proposed TNC_SC and TNC_MOB are composite measures rather than simple outcome measures, the terms ‘‘Numerator’’ and ‘‘Denominator’’ do not apply to how these measures are calculated. Therefore, for these proposed composite measures, the ‘‘Numerator’’ and ‘‘Denominator’’ columns in Table 51 are replaced with columns describing ‘‘Measure Computation’’ and ‘‘Risk Adjustment’’. Table 51 contains the set of applicable measures under the HHVBP model, if we finalize our proposals to remove the OASIS-based measures, Influenza Immunization Received for Current Flu Season, Pneumococcal Polysaccharide Vaccine Ever Received, Improvement in Ambulation-Locomotion, Improvement in Bed Transferring, and Improvement in Bathing, and add the two proposed OASIS-based outcome composite measures, Total Change in Self-Care and Total Change in Mobility. This measure set, if our proposals are finalized, would be applicable to PY4 and each subsequent performance year until such time that another set of applicable measures, or changes to this measure set, are proposed and finalized in future rulemaking. TABLE 51—MEASURE SET FOR THE HHVBP MODEL BEGINNING PY 4 * Measure title Measure type Identifier Clinical Quality of Care. amozie on DSK3GDR082PROD with PROPOSALS2 NQS domains Data source Improvement in Dyspnea. Outcome ...... NA ................ OASIS (M1400). Communication & Care Coordination. Discharged to Community. Outcome ...... NA ................ OASIS (M2420). Numerator Denominator Number of home health episodes of care where the discharge assessment indicates less dyspnea at discharge than at start (or resumption) of care. Number of home health episodes where the assessment completed at the discharge indicates the patient remained in the community after discharge. Number of home health episodes of care ending with a discharge during the reporting period, other than those covered by generic or measure-specific exclusions. Number of home health episodes of care ending with discharge or transfer to inpatient facility during the reporting period, other than those covered by generic or measure-specific exclusions. 61 Data Specifications—https://www.cms.gov/ Medicare/Quality-Initiatives-Patient-AssessmentInstruments/OASIS/DataSpecifications.html. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 32430 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 51—MEASURE SET FOR THE HHVBP MODEL BEGINNING PY 4 *—Continued NQS domains Measure title Measure type Identifier Numerator Denominator Efficiency & Cost Reduction. Acute Care Hospitalization: Unplanned Hospitalization during first 60 days of Home Health. Outcome ...... NQF0171 ..... CCW (Claims). Number of home health stays for patients who have a Medicare claim for an unplanned admission to an acute care hospital in the 60 days following the start of the home health stay. NQF0173 ..... CCW (Claims). Number of home health stays for patients who have a Medicare claim for outpatient emergency department use and no claims for acute care hospitalization in the 60 days following the start of the home health stay. Outcome ...... NQF0177 ..... OASIS (M1242). Patient Safety ........ Improvement in Outcome ...... Management of Oral Medications. NQF0176 ..... OASIS (M2020). Patient & Caregiver-Centered Experience. Patient & Caregiver-Centered Experience. Care of Patients ... Outcome ...... ...................... CAHPS ........ Number of home health episodes of care where the value recorded on the discharge assessment indicates less frequent pain at discharge than at the start (or resumption) of care. Number of home health episodes of care where the value recorded on the discharge assessment indicates less impairment in taking oral medications correctly at discharge than at start (or resumption) of care. NA ................................................... Number of home health stays that begin during the 12-month observation period. A home health stay is a sequence of home health payment episodes separated from other home health payment episodes by at least 60 days. Number of home health stays that begin during the 12-month observation period. A home health stay is a sequence of home health payment episodes separated from other home health payment episodes by at least 60 days. Number of home health episodes of care ending with a discharge during the reporting period, other than those covered by generic or measure-specific exclusions. Efficiency & Cost Reduction. Emergency Department Use without Hospitalization. Outcome ...... Patient Safety ........ Improvement in Pain Interfering with Activity. Communications between Providers and Patients. Specific Care Issues. Outcome ...... ...................... CAHPS ........ NA ................................................... NA. Outcome ...... ...................... CAHPS ........ NA ................................................... NA. Overall rating of home health care. Willingness to recommend the agency. Influenza Vaccination Coverage for Home Health Care Personnel. Outcome ...... ...................... CAHPS ........ NA ................................................... NA. Outcome ...... ...................... CAHPS ........ NA ................................................... NA. Process ........ NQF0431 (Used in other care settings, not Home Health). Herpes zoster (Shingles) vaccination: Has the patient ever received the shingles vaccination?. Process ........ NA ................ Reported by Healthcare personnel in the de- Number of healthcare personnel HHAs nominator population who during who are working in the through the time from October 1 (or when healthcare facility for at least 1 Web Portal. the vaccine became available) working day between October 1 through March 31 of the following and March 31 of the following year: (a) Received an influenza year, regardless of clinical revaccination administered at the sponsibility or patient contact. healthcare facility, or reported in writing or provided documentation that influenza vaccination was received elsewhere: Or (b) were determined to have a medical contraindication/condition of severe allergic reaction to eggs or to other components of the vaccine or history of GuillainBarre Syndrome within 6 weeks after a previous influenza vaccination; or (c) declined influenza vaccination; or (d) persons with unknown vaccination status or who do not otherwise meet any of the definitions of the previously mentioned numerator categories. Reported by Total number of Medicare bene- Total number of Medicare beneHHAs ficiaries aged 60 years and over ficiaries aged 60 years and over through who report having ever received receiving services from the HHA. Web Portal. zoster vaccine (shingles vaccine). amozie on DSK3GDR082PROD with PROPOSALS2 Patient & Caregiver-Centered Experience. Patient & Caregiver-Centered Experience. Patient & Caregiver-Centered Experience. Population/Community Health. Population/Community Health. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00092 Data source Fmt 4701 Sfmt 4702 E:\FR\FM\12JYP2.SGM 12JYP2 Number of home health episodes of care ending with a discharge during the reporting period, other than those covered by generic or measure-specific exclusions. NA. 32431 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules TABLE 51—MEASURE SET FOR THE HHVBP MODEL BEGINNING PY 4 *—Continued NQS domains Measure title Communication & Care Coordination. NQS domains Measure title Measure type Identifier Process ........ Advance Care Plan. NQF0326 ..... Data source Measure type Identifier Numerator Denominator Reported by Patients who have an advance HHAs care plan or surrogate decision through maker documented in the medWeb Portal. ical record or documentation in the medical record that an advanced care plan was discussed but the patient did not wish or was not able to name a surrogate decision maker or provide an advance care plan. Data source All patients aged 65 years and older. Measure computation ** Risk adjustment ** A prediction model is computed at the episode level. The predicted value for the HHA and the national value of the predicted values are calculated and are used to calculate the risk-adjusted rate for the HHA, which is calculated using this formula: HHA Risk Adjusted = HHA Observed + National Predicted ¥ HHA Predicted. A prediction model is computed at the episode level. The predicted value for the HHA and the national value of the predicted values are calculated and are used to calculate the risk-adjusted rate for the HHA, which is calculated using this formula: HHA Risk Adjusted = HHA Observed + National Predicted ¥ HHA Predicted. Patient and Family Engagement. Total Normalized Composite Change in SelfCare. Composite Outcome. NA ................ OASIS (M1800) (M1810) (M1820) (M1830) (M1845) (M1870). The total normalized change in self-care functioning across six OASIS items (grooming, bathing, upper & lower body dressing, toilet hygiene, and eating). Patient and Family Engagement. Total Normalized Composite Change in Mobility. Composite Outcome. NA ................ OASIS (M1840) (M1850) (M1860). The total normalized change in mobility functioning across three OASIS items (toilet transferring, bed transferring, and ambulation/ locomotion). * Notes: For more detailed information on the measures using OASIS refer to the OASIS–C2 Guidance Manual effective January 1, 2017 available at https:// www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/Downloads/OASIS-C2-Guidance-Manual-6-29-16.pdf. For NQF endorsed measures see The NQF Quality Positioning System available at https://www.qualityforum.org/QPS. For non-NQF measures using OASIS see links for data tables related to OASIS measures at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/ index.html. For information on HHCAHPS measures see https://homehealthcahps.org/SurveyandProtocols/SurveyMaterials.aspx. ** Because the proposed Total Normalized Composite Change in Self-Care and Mobility measures are composite measures rather than simply outcome measures, the terms ‘‘Numerator’’ and ‘‘Denominator’’ do not apply. amozie on DSK3GDR082PROD with PROPOSALS2 We invite public comment on the proposals to remove two OASIS-based measures, Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received, from the set of applicable measures for PY4 and subsequent performance years. We also invite public comment on the proposals to replace three OASIS-based measures, Improvement in AmbulationLocomotion, Improvement in Bed Transferring, and Improvement in Bathing, with two proposed composite measures, Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility, for PY4 and subsequent performance years. 3. Proposal To Reweight the OASISBased, Claims-Based, and HHCAHPS Measures In the CY 2016 HH PPS final rule, we finalized weighting measures within each of the HHVBP Model’s four classifications (Clinical Quality of Care, Care Coordination and Efficiency, Person and Caregiver-Centered Experience, and New Measures) the VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 same for the purposes of payment adjustment. We finalized weighting each individual measure equally because we did not want any one measure within a classification to be more important than another measure, to encourage HHAs to approach quality improvement initiatives more broadly, and to address concerns where HHAs may be providing services to beneficiaries with different needs. Under this approach, a measure’s weight remains the same even if some of the measures within a classification group have no available data. We stated that in subsequent years of the Model, we would monitor the impact of equally weighting the individual measures and may consider changes to the weighting methodology after analysis and in rulemaking (80 FR 68679). For PY4 and subsequent performance years, we are proposing to revise how we weight the individual measures and to amend § 484.320(c) accordingly. Specifically, we are proposing to change our methodology for calculating the Total Performance Score (TPS) by weighting the measure categories so that PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 the OASIS-based measure category and the claims-based measure category would each count for 35 percent and the HHCAHPS measure category would count for 30 percent of the 90 percent of the TPS that is based on performance of the Clinical Quality of Care, Care Coordination and Efficiency, and Person and Caregiver-Centered Experience measures. Note that these measures and their proposed revised weights would continue to account for the 90 percent of the TPS that is based on the Clinical Quality of Care, Care Coordination and Efficiency, and Person and CaregiverCentered Experience measures. Data reporting for each New Measure would continue to have equal weight and account for the 10 percent of the TPS that is based on the New Measures collected as part of the Model. As discussed further below, we believe that this proposed reweighting, to allow for more weight for the claims-based measures, would better support improvement in those measures. Weights would also be adjusted under this proposal for HHAs that are missing entire measure categories. For example, E:\FR\FM\12JYP2.SGM 12JYP2 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 if an HHA is missing all HHCAHPS measures, the OASIS and claims-based measure categories would both have the same weight (50 percent each). We believe that this approach would also increase the weight given to the claimsbased measures, and as a result give HHAs more incentive to focus on improving them. Additionally, if measures within a category are missing, the weights of the remaining measures within that measure category would be adjusted proportionally, while the weight of the category as a whole would remain consistent. We are also proposing that the weight of the Acute Care Hospitalization: Unplanned Hospitalization during first 60 days of Home Health claims-based measure would be increased so that it has three times the weight of the Emergency Department Use without Hospitalization claims-based measure, based on our understanding that HHAs may have more control over the Acute Care VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Hospitalization: Unplanned Hospitalization during first 60 days of Home Health claims-based measure. In addition, because inpatient hospitalizations generally cost more than ED visits, we believe improvement in the Acute Care Hospitalization: Unplanned Hospitalization during first 60 days of Home Health claims-based measure may have a greater impact on Medicare expenditures. We are proposing to reweight the measures based on our ongoing monitoring and analysis of claims and OASIS-based measures, which shows that there has been a steady improvement in OASIS-based measures, while improvement in claims-based measures has been relatively flat. For example, Figures 5 and 6 show the change in average performance for the claims-based and OASIS-based performance measures used in the Model. For both figures, we report the trends observed in Model and non- PO 00000 Frm 00094 Fmt 4701 Sfmt 4725 Model states. In both Model and nonModel states, there has been a slight increase (indicating worse performance) in the Acute Care Hospitalization: Unplanned Hospitalization during first 60 days of Home Health measure. For all OASIS-based measures, except the Improvement in Management of Oral Medications measure and the Discharge to Community measure, there has been substantial improvement in both Model and non-Model states. Given these results, we believe that increasing the weight given to the claims-based measures, and the Acute Care Hospitalization: Unplanned Hospitalization during first 60 days of Home Health measure in particular, may give HHAs greater incentive to focus on quality improvement in the claimsbased measures. Increasing the weight of the claims-based measures was also supported by the contractor’s TEP. BILLING CODE 4120–01–P E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.004</GPH> 32432 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 proposed composite measures) accounting for an equal proportion of that 50 percent, and the total weight given to the claims-based measures scores would be 50 percent, with the Acute Care Hospitalization: Unplanned Hospitalizations measure accounting for 37.50 percent and the ED Use without Hospitalization measure accounting for 12.50 percent. Finally, Table 52 shows the change in the number of HHAs, by size, that would qualify for a TPS and payment adjustment under the current and proposed weighting methodologies, using CY 2016 data. We note that Table 52 reflects only the proposed changes to the weighting methodology and not the PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 other proposed changes to the HHVBP model for CY 2019 which, if finalized, would change the proposed weights as set forth in Table 52. We refer readers to Table 65 in section X. of this proposed rule, which reflects the weighting that would apply if all of our proposed changes, including the proposed changes to the applicable measure set, are adopted for CY 2019. As reflected in that table, the two proposed composite measures, if finalized, would have weights of 7.5 percent when all three measure categories are reported. E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.005</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 Table 52 shows the current and proposed weights for each measure based on this proposal to change the weighting methodology from weighting each individual measure equally to weighting the OASIS, claims-based, and HHCAHPS measure categories at 35percent, 35-percent and 30-percent, respectively. Table 52 also shows the proposed weighting methodology based on various scoring scenarios. For example, for HHAs that are exempt from their beneficiaries completing HHCAHPS surveys, the total weight given to OASIS-based measures scores would be 50 percent, with all OASISbased measures (other than the two 32433 amozie on DSK3GDR082PROD with PROPOSALS2 32434 BILLING CODE 4120–01–C Jkt 244001 Current Weights (equal weighting) All No No No claims or Measures HHCAHPS claims HHCAHPS (n=1,026) (n=465) (n=20) (n=99) LargeHHAs SmallHHAs Frm 00096 Fmt 4701 Sfmt 4702 12JYP2 claims-based measures account for 35percent, and the HHCAHPS account for 30-percent of the 90 percent of the TPS that is based on performance on these E:\FR\FM\12JYP2.SGM Coordination and Efficiency, and Person and Caregiver-Centered Experience classifications so that the OASIS-based measures account for 35-percent, the PO 00000 OASIS Flu vaccine ever received* Pneumococcal vaccine* Improve Bathing** Improve Bed Transfer** Improve Ambulation** Improve Oral Meds Improve Dyspnea Improve Pain Discharge to Community Total weight for OASIS measures Claims Hospitalizations Outpatient ED Total weight for claims measures HHCAHPS Care of patients Communication between provider and patient Discussion of specific care issues Overall rating of care Willingness to recommend HHA to family or friends Total weight for HHCAHPS measures Proposed Weights (OASIS 35%; Claims 35%; HHCAHPS 30%) All No No claims or Measures HHCAHPS HHCAHPS (n=1,026) (n=460) No claims (n=20) (n=73) 1023 3 382 83 20 0 49 50 1023 3 380 80 20 0 39 34 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 9.09% 9.09% 9.09% 9.09% 9.09% 9.09% 9.09% 9.09% 9.09% 7.14% 7.14% 7.14% 7.14% 7.14% 7.14% 7.14% 7.14% 7.14% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% 3.89% 3.89% 3.89% 3.89% 3.89% 3.89% 3.89% 3.89% 3.89% 5.56% 5.56% 5.56% 5.56% 5.56% 5.56% 5.56% 5.56% 5.56% 5.98% 5.98% 5.98% 5.98% 5.98% 5.98% 5.98% 5.98% 5.98% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% ll.ll% 56.25% 81.82% 64.26% 100.00% 35.00% 50.00% 53.85% 100.00% 6.25% 6.25% 9.09% 9.09% 0.00% 0.00% 0.00% 0.00% 26.25% 8.75% 37.50% 12.50% 0.00% 0.00% 0.00% 0.00% 12.50% 18.18% 0.00% 0.00% 35.00% 50.00% 0.00% 0.00% 6.25% 0.00% 7.14% 0.00% 6.00% 0.00% 9.23% 0.00% 6.25% 6.25% 6.25% 0.00% 0.00% 0.00% 7.14% 7.14% 7.14% 0.00% 0.00% 0.00% 6.00% 6.00% 6.00% 0.00% 0.00% 0.00% 9.23% 9.23% 9.23% 0.00% 0.00% 0.00% 6.25% 0.00% 7.14% 0.00% 6.00% 0.00% 9.23% 0.00% 31.25% 0.00% 35.70% 0.00% 30.00% 0.00% 46.15% 0.00% Notes: *Measures are proposed to be removed from the applicable measure set beginning CY 2019/PY 4. **Measures are proposed to be removed if proposed composite measures are added to the applicable measure set beginning CY 2019/PY 4. Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules 17:39 Jul 11, 2018 We invite public comment on the proposal to reweight the measures within the Clinical Quality of Care, Care VerDate Sep<11>2014 EP12JY18.006</GPH> TABLE 52: CURRENT AND PROPOSED WEIGHTS FOR INDIVIDUAL PERFORMANCE MEASURES 32435 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules measures, for PY4 and subsequent performance years. We are also proposing to amend § 484.320 to reflect these proposed changes. Specifically, we are proposing to amend § 484.320 to state that for performance years 4 and 5, CMS will sum all points awarded for each applicable measure within each category of measures (OASIS-based, claims-based, and HHCAHPS) excluding the New Measures, weighted at 35percent for the OASIS-based measure category, 35-percent for the claimsbased measure category, and 30-percent for the HHCAHPS measure category, to calculate a value worth 90-percent of the Total Performance Score. Table 53 is a sample calculation to show how this proposal, in connection with the proposed changes to the measure set, would affect scoring under the model as set forth in prior rulemaking (80 FR 68679 through 68686) when all three measure categories are reported. TABLE 53—SAMPLE HHVBP TOTAL PERFORMANCE SCORE CALCULATION UNDER CURRENT AND PROPOSED WEIGHTS FOR INDIVIDUAL PERFORMANCE MEASURES Points for current measures OASIS: Composite self-care ...................................................... Composite mobility ....................................................... Flu vaccine ever received ............................................. Pneumococcal vaccine ................................................. Improvement in bathing ................................................ Improvement in bed transfer ........................................ Improvement in ambulation .......................................... Improve oral meds ........................................................ Improve Dyspnea .......................................................... Improve Pain ................................................................. Discharge to community ............................................... Claims: Outpatient ED ............................................................... Hospitalizations ............................................................. HHCAHPS: Care of patients ............................................................ Communication between provider and patient ............. Discussion of special care issues ................................ Overall rating of care .................................................... Willingness to recommend HHA to family and friends Total ....................................................................... Current weight (%) Points for proposed measures 0.00 0.00 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 7.661 5.299 N/A N/A N/A N/A N/A 3.302 4.633 4.279 0.618 7.50 7.50 0.00 0.00 0.00 0.00 0.00 5.00 5.00 5.00 5.00 9.19 6.36 N/A N/A N/A N/A N/A 2.64 3.71 3.42 0.49 0 1.18 6.25 6.25 0 1.18 8.75 26.25 0.00 4.96 10 10 10 5.921 8.406 6.25 6.25 6.25 6.25 6.25 10 10 10 5.921 8.406 6.00 6.00 6.00 6.00 6.00 9.60 9.60 9.60 5.68 8.07 87.123 100.00 ........................ 100.00 57.776 Current Raw score ................................................................................................................................................................ Scaled score (adjusted for # of measures present) ................................................................................................ Weighted score (90% of scaled score) ................................................................................................................... New measure score ................................................................................................................................................. Weighted new measure score (10% of new measure score) ................................................................................. TPS (sum of weighted score and weighted new measure score) .......................................................................... amozie on DSK3GDR082PROD with PROPOSALS2 1. Proposal To Rescore the Maximum Amount of Improvement Points In the CY 2016 HH PPS final rule, we finalized that an HHA could earn 0–10 points based on how much its performance in the performance period improved from its performance on each measure in the Clinical Quality of Care, Care Coordination and Efficiency, and Person and Caregiver-Centered Experience classifications during the baseline period. We noted, in response to public comment about our scoring methodology for improvement points, that we would monitor and evaluate the impact of awarding an equal amount of points for both achievement and improvement and may consider changes to the weight of the improvement score relative to the achievement score in VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 future years through rulemaking (80 FR 68682). We are proposing to reduce the maximum amount of improvement points, from 10 points to 9 points, for PY4 and subsequent performance years for all measures except for, if finalized, the Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility measures, for which the maximum improvement points would be 13.5. The maximum score of 13.5 represents 90percent of the maximum 15 points that could be earned for each of the two proposed composite measures. The HHVBP Model focuses on having all HHAs provide high quality care and we believe that awarding more points for achievement than for improvement beginning with PY4 of the model would support this goal. We expect that at this PO 00000 Frm 00097 Weighted points N/A N/A 7.662 8.162 5.064 4.171 3.725 3.302 4.633 4.279 0.618 Total performance score calculation C. Performance Scoring Methodology Proposed weight (%) Fmt 4701 Sfmt 4702 87.123 58.082 52.274 100.000 10 62.274 Proposed 57.776 57.776 51.998 100.000 10 61.998 point several years into participation in the Model, participating HHAs have had enough time to make the necessary investments in quality improvement efforts to support a higher level of care, warranting a slightly stronger focus on achievement over improvement on measure performance. We believe that reducing the maximum improvement points to 9 would encourage HHAs to focus on achieving higher performance levels and incentivizing in this manner would encourage HHAs to rely less on their improvement and more on their achievement. This proposal would also be consistent with public comments, and suggestions provided by our contractor’s TEP. As summarized in the CY 2016 HH PPS final rule, we received comments encouraging us to focus on rewarding E:\FR\FM\12JYP2.SGM 12JYP2 32436 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules HHVBP is now proposing a scoring methodology where HHAs could earn a maximum of 9 improvement points. We propose that an HHA would earn 0–9 points based on how much its performance during the performance period improved from its performance on each measure in the Clinical Quality of Care, Care Coordination and Efficiency, and Person and CaregiverCentered Experience classifications during the baseline period. A unique improvement range for each measure would be established for each HHA that defines the difference between the HHA’s baseline period score and the same state level benchmark for the measure used in the achievement scoring calculation, according to the proposed improvement formula. If an HHA’s performance on the measure during the performance period was— • Equal to or higher than the benchmark score, the HHA could receive an improvement score of 9 points (an HHA with performance equal to or higher than the benchmark score could still receive the maximum of 10 points for achievement); 2. Examples of Calculating Achievement and Improvement Scores exceeds the benchmark so the HHA earned the maximum 10 points based on its achievement score. Its improvement score is irrelevant in the calculation because measure performance exceeded the benchmark. Figure 7 also shows the scoring for HHA ‘B.’ As referenced below, HHA B’s performance on this measure went from 52.168 (which was below the achievement threshold) in the baseline period to 76.765 (which is above the achievement threshold) in the performance period. Applying the achievement scale, HHA B’ would earn 1.067 points for achievement, calculated as follows: 9 * (76.765 ¥ 75.358)/ (97.676 ¥ 75.358) + 0.5 = 1.067.62 Calculating HHA B’s improvement score yields the following result: based on HHA B’s period-to-period improvement, from 52.168 in the baseline year to 76.765 in the performance year, HHA B would earn 4.364 points, calculated as follows: 9 * (76.765 ¥ 52.168)/(97.676 ¥ 75.358) ¥ 0.5 = 4.364.63 Because the higher of the achievement and improvement scores is used, HHA B would receive 4.364 points for this measure. In Figure 8, HHA ‘C’ yielded a decline in performance on the improvement in pain measure, falling from 70.266 to 58.487. HHA C’s performance during the performance period was lower than the achievement threshold of 75.358 and, as a result, the HHA would receive 0 points based on achievement. It would also receive 0 points for improvement, because its performance during the performance period was lower than its performance during the baseline period. 62 Achievement points are calculated as 9 * (HHA Performance Year Score ¥ Achievement Threshold)/(Benchmark ¥ Achievement threshold) + 0.5. 63 The formula for calculating improvement points is 9 * (HHA Performance Year Score ¥ HHA Baseline Period Score)/(HHA Benchmark ¥ HHA Baseline Period Score) ¥ 0.5. For illustrative purposes we present the following examples of how the proposed changes to the performance scoring methodology would be applied in the context of the measures in the Clinical Quality of Care, Care Coordination and Efficiency, and Person and Caregiver Centered Experience classifications. These HHA examples are based on data from 2015 (for the baseline period) and 2016 (for the performance year). Figure 7 shows the scoring for HHA ‘A’ as an example. The benchmark calculated for the improvement in pain measure is 97.676 for HHA A (note that the benchmark is calculated as the mean of the top decile in the baseline period for the state). The achievement threshold was 75.358 (this is defined as the performance of the median or the 50th percentile among HHAs in the baseline period for the state). HHA A’s Year 1 performance rate for the measure was 98.348, which VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 • Greater than its baseline period score but below the benchmark (within the improvement range), the HHA could receive an improvement score of 0–9 (except for, if finalized, the Total Normalized Composite Change in SelfCare and Total Normalized Composite Change in Mobility measures, for which the maximum improvement score would be 15) for each of the two proposed composite measures) based on the formula and as illustrated in the examples below; or, • Equal to or lower than its baseline period score on the measure, the HHA could receive zero points for improvement. BILLING CODE 4120–01–P E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.007</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 the achievement of specified quality scores, and reduce the emphasis on improvement scores after the initial 3 years of the HHVBP Model. Some commenters suggested measuring performance primarily based on achievement of specified quality scores with a declining emphasis over time on improvement versus achievement (80 FR 68682). The TEP also agreed with reducing the maximum number of improvement points, which they believed would better encourage HHAs to pursue improved health outcomes for beneficiaries. We note that for the Hospital Value-Based Purchasing (HVBP) Program, CMS finalized a scoring methodology where hospitals could earn a maximum of 9 improvement points if their improvement score falls between the improvement threshold and the benchmark (76 FR 26515). Similarly, 32437 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules FIGURE 7: EXAMPLE OF AN HHA EARNING POINTS BY ACHIEVEMENT OR IMPROVEMENT SCORING Measure: Improvement in Pain Achievement Threshold Achievement 75.358 Benchmark <E(:-------~) 97.676 Achievement Range HHAA 98.348 HHA A Score: 10 maximum points for achievement Performance Year Score Baseline Year Score 52.168 HHA B Improvement +----------+ 76.765 VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4725 E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.008</GPH> amozie on DSK3GDR082PROD with PROPOSALS2 HHA B Score: The greater of 1.067 points for achievement and 4.364 points for improvement. 32438 BILLING CODE 4120–01–C We would monitor and evaluate the impact of reducing the maximum improvement points to 9 and would consider whether to propose more changes to the weight of the improvement score relative to the achievement score in future years through rulemaking. We invite public comment on the proposal to reduce the maximum amount of improvement points, from 10 points to 9 points for PY 4 and subsequent performance years. amozie on DSK3GDR082PROD with PROPOSALS2 D. Update on the Public Display of Total Performance Scores In the CY 2016 HH PPS final rule (80 FR 68658), we stated that one of the three goals of the HHVBP Model is to enhance the current public reporting processes. We reiterated this goal and continued discussing the public display of HHAs’ Total Performance Scores (TPSs) in the CY 2017 HH PPS final rule (81 FR 76751 through 76752). We believe that publicly reporting a participating HHA’s TPS will encourage VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 providers and patients to use this information when selecting an HHA to provide quality care. We are encouraged by the previous stakeholder comments and support for public reporting that could assist patients, physicians, discharge planners, and other referral sources to choose higher-performing HHAs. In the CY 2017 HH PPS final rule, we noted that one commenter suggested that we not consider public display until after the Model was evaluated. Another commenter favored the public display of the TPS, but recommended that CMS use a transparent process and involve stakeholders in deciding what will be reported, and provide a review period with a process for review and appeal before reporting. As discussed in the CY 2017 HH PPS final rule, we are considering public reporting for the HHVBP Model after allowing analysis of at least eight quarters of performance data for the Model and the opportunity to compare how these results align with other publicly reported quality data (81 FR PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 76751). While we are not making a specific proposal at this time, we are soliciting further public comment on what information, specifically from the CY 2017 Annual Total Performance Score and Payment Adjustment Reports and subsequent annual reports, should be made publicly available. We note that HHAs have the opportunity to review and appeal their Annual Total Performance Score and Payment Adjustment Reports as outlined in the appeals process finalized in the CY 2017 HH PPS final rule (81 FR 76747 through 76750). Examples of the information included in the Annual Total Performance Score and Payment Adjustment Report include the agency: Name, address, TPS, payment adjustment percentage, performance information for each measure used in the Model (for example, quality measure scores, achievement, and improvement points), state and cohort information, and percentile ranking. Based on the public comments received, we will consider what information, specifically from the annual reports, we may E:\FR\FM\12JYP2.SGM 12JYP2 EP12JY18.009</GPH> Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules consider proposing for public reporting in future rulemaking. amozie on DSK3GDR082PROD with PROPOSALS2 V. Proposed Updates to the Home Health Quality Reporting Program (HH QRP) A. Background and Statutory Authority Section 1895(b)(3)(B)(v)(II) of the Social Security Act (the Act) requires that for 2007 and subsequent years, each HHA submit to the Secretary in a form and manner, and at a time, specified by the Secretary, such data that the Secretary determines are appropriate for the measurement of health care quality. To the extent that an HHA does not submit data with respect to a year in accordance with this clause, the Secretary is directed to reduce the HH market basket percentage increase applicable to the HHA for such year by 2 percentage points. As provided at section 1895(b)(3)(B)(vi) of the Act, depending on the market basket percentage increase applicable for a particular year, for 2015 and each subsequent year (except 2018), the reduction of that increase by 2 percentage points for failure to comply with the requirements of the HH QRP and further reduction of the increase by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act may result in the home health market basket percentage increase being less than 0.0 percent for a year, and may result in payment rates under the Home Health PPS for a year being less than payment rates for the preceding year. For more information on the policies we have adopted for the HH QRP, we refer readers to the CY 2007 HH PPS final rule (71 FR 65888 through 65891), the CY 2008 HH PPS final rule (72 FR 49861 through 49864), the CY 2009 HH PPS update notice (73 FR 65356), the CY 2010 HH PPS final rule (74 FR 58096 through 58098), the CY 2011 HH PPS final rule (75 FR 70400 through 70407), the CY 2012 HH PPS final rule (76 FR 68574), the CY 2013 HH PPS final rule (77 FR 67092), the CY 2014 HH PPS final rule (78 FR 72297), the CY 2015 HH PPS final rule (79 FR 66073 through 66074), the CY 2016 HH PPS final rule (80 FR 68690 through 68695), the CY 2017 HH PPS final rule (81 FR 76752), and the CY 2018 HH PPS final rule (82 FR 51711 through 51712). Although we have historically used the preamble to the HH PPS proposed and final rules each year to remind stakeholders of all previously finalized program requirements, we have concluded that repeating the same discussion each year is not necessary for every requirement, especially if we have codified it in our regulations. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Accordingly, the following discussion is limited as much as possible to a discussion of our proposals for future years of the HH QRP, and represents the approach we intend to use in our rulemakings for this program going forward. B. General Considerations Used for the Selection of Quality Measures for the HH QRP 1. Background For a detailed discussion of the considerations we historically used for measure selection for the HH QRP quality, resource use, and others measures, we refer readers to the CY 2016 HH PPS final rule (80 FR 68695 through 68696). 2. Accounting for Social Risk Factors in the HH QRP Program In the CY 2018 HH PPS final rule (82 FR 51713 through 51714) we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.64 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in our value-based purchasing programs.65 As we noted in the CY 2018 HH PPS final rule (82 FR 51713 through 51714), 64 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. 65 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 32439 ASPE’s report to Congress, which was required by the IMPACT Act, found that, in the context of value based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. ASPE is continuing to examine this issue in its second report required by the IMPACT Act, which is due to Congress in the fall of 2019. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through 38429), the National Quality Forum (NQF) undertook a 2-year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.66 The trial period ended in April 2017 and a final report is available at: https:// www.qualityforum.org/SES_Trial_ Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,67 allowing further examination of social risk factors in outcome measures. In the CY 2018/FY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS to explore whether factors could be used to stratify or risk adjust the measures (beyond dual eligibility), to consider the full range of differences in patient backgrounds that might affect outcomes, to explore risk adjustment approaches, and to offer careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In 66 Available at https://www.qualityforum.org/SES_ Trial_Period.aspx. 67 Available at: https://www.qualityforum.org/ WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID=86357. E:\FR\FM\12JYP2.SGM 12JYP2 32440 Federal Register / Vol. 83, No. 134 / Thursday, July 12, 2018 / Proposed Rules amozie on DSK3GDR082PROD with PROPOSALS2 general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned CMS to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based payment program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, we are considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. C. Proposed Removal Factors for Previously Adopted HH QRP Measures As a part of our Meaningful Measures Initiative, discussed in section I.D.1 of this proposed rule, we strive to put patients first, ensuring that they, along with their clinicians, are empowered to make decisions about their own healthcare using data-driven information that is increasingly aligned with a parsimonious set of meaningful quality measures. We began reviewing the HH QRP measure set in accordance with the Meaningful Measures Initiative discussed in section I.D.1 of this proposed rule, and we are working to identify how to move the HH QRP forward in the least burdensome manner possible, while continuing to prioritize and incentivize improvement in the quality of care provided to patients. VerDate Sep<11>2014 17:39 Jul 11, 2018 Jkt 244001 Specifically, we believe the goals of the HH QRP and the measures used in the program overlap with the Meaningful Measures Initiative priorities, including making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable. We also evaluated the appropriateness and completeness of the HH QRP’s current measure removal factors. In the CY 2017 HH PPS final rule (81 FR 76754 through 76755), we adopted a process for retaining, removing, and replacing previously adopted HH QRP measures. To be consistent with other established quality reporting programs, we are proposing to replace the six criteria used when considering a quality measure for removal, finalized in the CY 2017 HH PPS final rule (81 FR 76754 through 76755), with the following seven measure removal factors, finalized for the LTCH QRP in the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53614 through 53615), for the SNF QRP in the FY 2016 SNF PPS final rule (80 FR 46431 through 46432), and for the IRF QRP in the CY 2013 OPPS/ASC final rule (77 FR 68502 through 68503), for use in the HH QRP: • Factor 1. Measure performance among HHAs is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made. • Factor 2. Performance or improvement on a measure does not result in better patient outcomes. • Factor 3. A measure does not align with current clinical guidelines or practice. • Factor 4. A more broadly applicable measure (across settings, populations, or conditions) for the particular topic is available. • Factor 5. A measure that is more proximal in time to desired patient outcomes for the particular topic is available. • Factor 6. A measure that is more strongly associated with desired patient outcomes for the particular topic is available. • Factor 7. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm. We believe these measure removal factors are substantively consistent with the criteria we previously adopted (only we are changing the terminology to call them ‘‘factors’’) and appropriate for use in the HH QRP. However, even if one or more of the measure removal factors applies, we might nonetheless choose to retain the measure for certain specified reasons. Examples of such instances PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 could include when a particular measure addresses a gap in quality that is so significant that removing the measure could result in poor quality, or in the event that a given measure is statutorily required. Furthermore, we note that consistent with other quality reporting programs, we apply these factors on a case-by-case basis. We finalized in the CY 2017 HH PPS final rule (81 FR 76755) that removal of a HH QRP measure would take place through notice and comment rulemaking, unless we determined that a measure was causing concern for patient safety. Specifically, in the case of a HH QRP measure for which there was a reason to believe that the continued collection raised possible safety concerns, we would promptly remove the measure and publish the justification for the removal in the Federal Register during the next rulemaking cycle. In addition, we would immediately notify HHAs and the public through the usual communication channels, including listening sessions, memos, email notification, and Web postings. If we removed a measure from the HH QRP under these circumstances but also collected data on that measure under different statutory authority for a different purpose, we would notify stakeholders that we would also cease collecting the data under that alternative statutory authority. In this proposed rule, we are proposing to adopt an additional factor to consider when evaluating potential measures for removal from the HH QRP measure set: • Factor 8. The costs associated with a measure outweigh the benefit of its continued use in the program. As we discussed in section I.D.1 of this proposed rule, with respect to our new Meaningful Measures Initiative, we are engaging in efforts to ensure that the HH QRP measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but not limited to the following: • Provider and clinician information collection burden and burden associated with the submitting/reporting of quality measures to CMS. • The provider and clinician cost associated with complying with other HH programmatic requirements. E:\FR\FM\12JYP2.SGM 12JYP2

Agencies

[Federal Register Volume 83, Number 134 (Thursday, July 12, 2018)]
[Proposed Rules]
[Pages 32340-32440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X18-10712]

[[Page 32339]]

Vol. 83

Thursday,

No. 134

July 12, 2018

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 409, 424, 484, et al.

Medicare and Medicaid Programs; CY 2019 Home Health Prospective Payment
System Rate Update and CY 2020 Case-Mix Adjustment Methodology
Refinements; Home Health Value-Based Purchasing Model; Home Health
Quality Reporting Requirements; Home Infusion Therapy Requirements; and
Training Requirements for Surveyors of National Accrediting
Organizations; Proposed Rule

Federal Register / Vol. 83 , No. 134 / Thursday, July 12, 2018 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 424, 484, 486, and 488

[CMS-1689-P]
RIN 0938-AT29

Medicare and Medicaid Programs; CY 2019 Home Health Prospective
Payment System Rate Update and CY 2020 Case-Mix Adjustment Methodology
Refinements; Home Health Value-Based Purchasing Model; Home Health
Quality Reporting Requirements; Home Infusion Therapy Requirements; and
Training Requirements for Surveyors of National Accrediting
Organizations

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the home health prospective
payment system (HH PPS) payment rates, including the national,
standardized 60-day episode payment rates, the national per-visit
rates, and the non-routine medical supply (NRS) conversion factor,
effective for home health episodes of care ending on or after January
1, 2019. It also proposes updates to the HH PPS case-mix weights for
calendar year (CY) 2019 using the most current, complete data available
at the time of rulemaking; discusses our efforts to monitor the
potential impacts of the rebasing adjustments that were implemented in
CYs 2014 through 2017; proposes a rebasing of the HH market basket
(which includes a decrease in the labor-related share); proposes the
methodology used to determine rural add-on payments for CYs 2019
through 2022, as required by section 50208 of the Bipartisan Budget Act
of 2018 hereinafter referred to as the ``BBA of 2018''; proposes
regulations text changes regarding certifying and recertifying patient
eligibility for Medicare home health services; and proposes to define
``remote patient monitoring'' and recognize the cost associated as an
allowable administrative cost. Additionally, it proposes case-mix
methodology refinements to be implemented for home health services
beginning on or after January 1, 2020, including a change in the unit
of payment from 60-day episodes of care to 30-day periods of care, as
required by section 51001 of the BBA of 2018; includes information on
the implementation of temporary transitional payments for home infusion
therapy services for CYs 2019 and 2020, as required by section 50401 of
the BBA of 2018; solicits comments regarding payment for home infusion
therapy services for CY 2021 and subsequent years; proposes health and
safety standards for home infusion therapy; and proposes an
accreditation and oversight process for home infusion therapy
suppliers. This rule proposes changes to the Home Health Value-Based
Purchasing (HHVBP) Model to remove two OASIS-based measures, replace
three OASIS-based measures with two new proposed composite measures,
rescore the maximum number of improvement points, and reweight the
measures in the applicable measures set. Also, the Home Health Quality
Reporting Program provisions include a discussion of the Meaningful
Measures Initiative and propose the removal of seven measures to
further the priorities of this initiative. In addition, the HH QRP
offers a discussion on social risk factors and an update on
implementation efforts for certain provisions of the IMPACT Act. This
proposed rule clarifies the regulatory text to note that not all OASIS
data is required for the HH QRP. Finally, it would require that
accrediting organization surveyors take CMS-provided training.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 31, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1689-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three 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-1689-P, P.O. Box 8013,
Baltimore, MD 21244-8013. 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-1689-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: For general information about the Home
Health Prospective Payment System (HH PPS), send your inquiry via email
to: [email protected]
For general information about home infusion payment, send your
inquiry via email to: [email protected]
For information about the Home Health Value-Based Purchasing
(HHVBP) Model, send your inquiry via email to:
[email protected]
For information about the Home Health Quality Reporting Program (HH
QRP) contact: Joan Proctor, (410) 786-0949.
For information about home infusion therapy health and safety
standards, contact: Sonia Swancy, (410) 786-8445 or CAPT Jacqueline
Leach, (410) 786-4282.
For information about health infusion therapy accreditation and
oversight, contact: Caroline Gallaher (410) 786-8705.

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
website as soon as possible after they have been received: https://
www.regulations.gov. Follow the search instructions on that website to
view public comments.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Costs and Benefits
D. Improving Patient Outcomes and Reducing Burden Through
Meaningful Measures
II. Background
A. Statutory Background
B. Current System for Payment of Home Health Services
C. Updates to the Home Health Prospective Payment System
D. Advancing Health Information Exchange
III. Payment Under the Home Health Prospective Payment System (HH
PPS)
A. Monitoring for Potential Impacts--Affordable Care Act
Rebasing Adjustments
B. Proposed CY 2019 HH PPS Case-Mix Weights

[[Page 32341]]

C. Proposed CY 2019 Home Health Payment Rate Update
D. Proposed Rural Add-On Payments for CYs 2019 Through 2022
E. Proposed Payments for High-Cost Outliers Under the HH PPS
F. Proposed Implementation of the Patient-Driven Groupings Model
(PDGM) for CY 2020
G. Proposed Regulations Text Changes Regarding Certifying and
Recertifying Patient Eligibility for Medicare Home Health Services
H. The Role of Remote Patient Monitoring Under the Medicare Home
Health Benefit
IV. Home Health Value-Based Purchasing (HHVBP) Model
A. Background
B. Quality Measures
C. Performance Scoring Methodology
D. Update on the Public Display of Total Performance Scores
V. Home Health Quality Reporting Program (HH QRP)
A. Background and Statutory Authority
B. General Considerations Used for the Selection of Quality
Measures for the HH QRP
C. Proposed Removal Factors for Previously Adopted HH QRP
Measures
D. Quality Measures Currently Adopted for the HH QRP
E. Proposed Removal of HH QRP Measures Beginning With the CY
2021 HH QRP
F. IMPACT Act Implementation Update
G. Form, Manner, and Timing of OASIS Data Submission
H. Proposed Policies Regarding Public Display for the HH QRP
I. HHCAHPS
VI. Medicare Coverage of Home Infusion Therapy Services
A. General Background
B. Proposed Health and Safety Standards for Home Infusion
Therapy
C. Payment for Home Infusion Therapy Services
D. Approval and Oversight of Accrediting Organizations for Home
Infusion Therapy (HIT) Suppliers
VII. Changes to the Accreditation Requirements for Certain Medicare
Certified Providers and Suppliers
A. Background
B. Proposed Changes to Certain Requirements for Medicare-
Certified Providers and Suppliers at Part 488
VIII. Requests for Information
A. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible
Revisions to the CMS Patient Health and Safety Requirements for
Hospitals and Other Medicare- and Medicaid-Participating Providers
and Suppliers
B. Request for Information on Price Transparency: Improving
Beneficiary Access to Home Health Agency Charge Information
IX. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding the OASIS
C. ICRs Regarding Home Infusion Therapy
D. ICRs Regarding the Approval and Oversight of Accrediting
Organizations for Home Infusion Therapy
X. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
D. Detailed Economic Analysis
E. Alternatives Considered
F. Accounting Statement and Tables
G. Regulatory Reform Analysis Under E.O. 13771
H. Conclusion
Regulation Text

I. Executive Summary

A. Purpose

1. Home Health Prospective Payment System (HH PPS)
This proposed rule would update the payment rates for home health
agencies (HHAs) for calendar year (CY) 2019, as required under section
1895(b) of the Social Security Act (the Act). This proposed rule would
also update the case-mix weights under section 1895(b)(4)(A)(i) and
(b)(4)(B) of the Act for CY 2019. For home health services beginning on
or after January 1, 2020, this rule proposes case-mix methodology
refinements, which eliminate the use of therapy thresholds for case-mix
adjustment purposes; and proposes to change the unit of payment from a
60-day episode of care to a 30-day period of care, as mandated by
section 51001 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123)
(hereinafter referred to as the ``BBA of 2018''). This proposed rule
also: Proposes the methodology used to determine rural add-on payments
for CYs 2019 through 2022, as required by section 50208 of the BBA of
2018; proposes regulations text changes regarding certifying and
recertifying patient eligibility for Medicare home health services
under sections 1814(a) and 1835(a) of the Act; and proposes to define
``remote patient monitoring'' under the Medicare home health benefit
and to include the costs of such monitoring as an allowable
administrative cost. Lastly, this rule proposes changes to the Home
Health Value Based Purchasing (HHVBP) Model under the authority of
section 1115A of the Act, and the Home Health Quality Reporting Program
(HH QRP) requirements under the authority of section 1895(b)(3)(B)(v)
of the Act.
2. Home Infusion Therapy Services
This proposed rule would establish a transitional payment for home
infusion therapy services for CYs 2019 and 2020, as required by section
50401 of the BBA of 2018. In addition, this rule proposes health and
safety standards for home infusion therapy, proposes an accreditation
and oversight process for qualified home infusion therapy suppliers,
and solicits comments regarding payment for the home infusion therapy
services benefit for CY 2021 and subsequent years, as required by
section 5012 of the 21st Century Cures Act (Pub. L. 114-255).
3. Safety Standards for Home Infusion Therapy Services
This proposed rule would establish health and safety standards for
qualified home infusion therapy suppliers as required by Section 5012
of the 21st Century Cures Act. These proposed standards would establish
a foundation for ensuring patient safety and quality care by
establishing requirements for the plan of care to be initiated and
updated by a physician; 7-day-a-week, 24-hour-a-day access to services
and remote monitoring; and patient education and training regarding
their home infusion therapy care.

B. Summary of the Major Provisions

1. Home Health Prospective Payment System (HH PPS)
Section III.A. of this rule discusses our efforts to monitor for
potential impacts due to the rebasing adjustments implemented in CY
2014 through CY 2017, as mandated by section 3131(a) of the Patient
Protection and Affordable Care Act of 2010 (Pub. L. 111-148, enacted
March 23, 2010) as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152, enacted March 30, 2010),
collectively referred to as the ``Affordable Care Act''. In the CY 2015
HH PPS final rule (79 FR 66072), we finalized our proposal to
recalibrate the case-mix weights every year with the most current and
complete data available at the time of rulemaking. In section III.B of
this rule, we are recalibrating the HH PPS case-mix weights, using the
most current cost and utilization data available, in a budget-neutral
manner. In section III.C., we propose to rebase the home health market
basket and update the payment rates under the HH PPS by the home health
payment update percentage of 2.1 percent (using the proposed 2016-based
Home Health Agency (HHA) market basket update of 2.8 percent, minus 0.7
percentage point for multifactor productivity) as required by section
1895(b)(3)(B)(vi)(I) of the Act. Also in section III.C. of this
proposed rule, we propose to decrease the labor-related share from 78.5
to 76.1 percent of total costs on account of the rebasing of the home
health market basket. Lastly, in

[[Page 32342]]

section III.C. of this rule, we propose to update the CY 2019 home
health wage index using FY 2015 hospital cost report data. In section
III.D. of this proposed rule, we are proposing a new methodology for
applying rural add-on payments for CYs 2019 through 2022, as required
by section 50208 of the BBA of 2018. In section III.E. of this rule, we
are proposing to reduce the fixed-dollar loss ratio from 0.55 to 0.51
for CY 2019 in order to increase outlier payments as a percentage of
total payments so that this percentage is closer to, but no more than,
2.5 percent.
In the CY 2018 HH PPS proposed rule, CMS proposed an alternative
case-mix model, called the Home Health Groupings Model (HHGM).
Ultimately the HHGM, including a proposed change in the unit of payment
from 60 days to 30 days, was not finalized in the CY 2018 HH PPS final
rule in order to allow CMS additional time to consider public comments
for potential refinements to the model and other alternative case-mix
models (82 FR 51676). In section III.F. of this proposed rule, we are
again proposing to implement case-mix methodology refinements and a
change in the unit of payment from a 60-day episode of care to a 30-day
period of care; however, these changes would be effective January 1,
2020 and would be implemented in a budget neutral manner, as required
by section 51001 of the BBA of 2018. Since the proposed case-mix
methodology refinements represent a more patient-driven approach to
payment we are renaming the proposed case-mix adjustment methodology
refinements, formerly known as the Home Health Groupings Model or
``HHGM'', as the ``Patient-Driven Groupings Model'' or PDGM. The
proposed PDGM relies more heavily on clinical characteristics and other
patient information to place patients into meaningful payment
categories and eliminates the use of therapy service thresholds, as
required by section 51001(a)(3) of the BBA of 2018, that are currently
used to case-mix adjust payments under the HH PPS. There is also a
proposal regarding how CMS would determine whether 30-day periods of
care are subject to a Low-Utilization Payment Adjustment (LUPA). The
LUPA add-on policy, the partial episode payment adjustment policy, and
the methodology used to calculate payments for high-cost outliers would
remain unchanged except for occurring on a 30-day basis rather than a
60-day basis.
In section III.G. of this proposed rule, we are proposing
regulation text changes at 42 CFR 424.22(b)(2) to eliminate the
requirement that the certifying physician must estimate how much longer
skilled services will be needed as part of the recertification
statement. In addition, in section III.G of this rule, consistent with
section 51002 of the BBA of 2018, we are proposing to align the
regulations text at 42 CFR 424.22(c) with current subregulatory
guidance to allow medical record documentation from the HHA to be used
to support the basis for certification and/or recertification of home
health eligibility, if certain requirements are met.
In section III.H. of this proposed rule, we propose to define
``remote patient monitoring'' under the Medicare home health benefit as
the collection of physiologic data (for example, ECG, blood pressure,
glucose monitoring) digitally stored and/or transmitted by the patient
and/or caregiver to the HHA. Additionally in this section of the rule,
we propose changes to the regulations at 42 CFR 409.46 to include costs
of remote patient monitoring as allowable administrative costs.
2. Home Health Value Based Purchasing
In section IV of this proposed rule, we are proposing changes to
the Home Health Value Based Purchasing (HHVBP) Model implemented
January 1, 2016. We are proposing, beginning with performance year (PY)
4, to: Remove two Outcome and Assessment Information Set (OASIS) based
measures, Influenza Immunization Received for Current Flu Season and
Pneumococcal Polysaccharide Vaccine Ever Received, from the set of
applicable measures; replace three OASIS-based measures (Improvement in
Ambulation-Locomotion, Improvement in Bed Transferring, and Improvement
in Bathing) with two proposed composite measures on total normalized
composite change in self-care and mobility; change how we calculate the
Total Performance Scores by changing the weighting methodology for the
OASIS-based, claims-based, and HHCAHPS measures; and change the scoring
methodology by reducing the maximum amount of improvement points an HHA
could earn, from 10 points to 9 points. While we are not making a
specific proposal at this time, we are also providing an update on the
progress towards developing public reporting of performance under the
HHVBP Model and seeking comment on what information should be made
publicly available.
3. Home Health Quality Reporting Program
In section V. of this proposed rule, we are proposing to update our
policy for removing previously adopted Home Health (HH) Quality
Reporting Program (QRP) measures and to adopt eight measure removal
factors to align with other QRPs, to remove seven measures beginning
with the CY 2021 HH QRP, and to update our regulations to clarify that
not all OASIS data is required for the HH QRP. We are also providing an
update on the implementation of certain provisions of the IMPACT Act,
and a discussion of accounting for social risk factors in the HH QRP.
Finally, we are proposing to increase the number of years of data used
to calculate the Medicare Spending per Beneficiary measure for purposes
of display from 1 year to 2 years.
4. Home Infusion Therapy
In section VI.A. of this proposed rule, we discuss general
background of home infusion therapy services and how that will relate
to the implementation of the new home infusion benefit. In section
VI.B. of this proposed rule, we are proposing to add a new subpart I
under the regulations at 42 CFR part 486 to incorporate health and
safety requirements for home infusion therapy suppliers. The proposed
regulations would provide a framework for CMS to approve home infusion
therapy accreditation organizations. Proposed subpart I would include
General Provisions (Scope and Purpose, and Definitions) and Standards
for Home Infusion Therapy (Plan of Care and Required Services). In
section VI.C. of this proposed rule, we include information on
temporary transitional payments for home infusion therapy services for
CYs 2019 and 2020 as mandated by section 50401 of the BBA of 2018, and
solicits comments on the proposed regulatory definition of ``Infusion
Drug Administration Calendar Day''. Also in section VI.C. of this
proposed rule, we solicit comments regarding payment for home infusion
therapy services for CY 2021 and subsequent years as required by
section 5012(d) of the 21st Century Cures Act.
In section VI.D. of this proposed rule, we discuss the requirements
set forth in section 1861(iii)(3)(D)(III) of the Act, which mandates
that suppliers of home infusion therapy receive accreditation from a
CMS-approved Accrediting Organization (AO) in order to receive Medicare
payment. The Secretary must designate AOs to accredit suppliers
furnishing Home Infusion therapy (HIT) not later than January 1, 2021.
Qualified

[[Page 32343]]

HIT suppliers are required to receive accreditation before receiving
Medicare payment for services provided to Medicare beneficiaries.
At this time, no regulations exist to address the following
elements of CMS' approval and oversight of the AOs that accredit
suppliers of Home Infusion Therapy: (1) The required components to be
included in a Home Infusion Therapy AO's initial or renewal
accreditation program application; (2) regulations related to CMS'
review and approval of the Home Infusion Therapy AOs application for
approval of its accreditation program; and (3) the ongoing monitoring
and oversight of CMS-approved Home Infusion Therapy AOs. Therefore in
this rule, we propose to establish a set of regulations that will
govern the CMS approval and oversight process for all HIT AOs.
We also propose to modify the regulations for oversight for AOs
that accredit any Medicare-certified providers and suppliers at 42 CFR
488.5 by adding a requirement that the AOs must include a statement
with their application acknowledging that all AO surveyors are required
to complete the relevant program specific CMS online trainings
initially, and thereafter, consistent with requirements established by
CMS for state and federal surveyors. We would also add another
requirement at Sec. 488.5 that would require the AOs for Medicare
certified providers and suppliers to provide a written statement with
their application stating that if a fully accredited and facility
deemed to be in good-standing provides written notification that they
wish to voluntarily withdraw from the AO's CMS-approved accreditation
program, the AO must continue the facility's current accreditation
until the effective date of withdrawal identified by the facility or
the expiration date of the term of accreditation, whichever comes
first.

C. Summary of Costs, Transfers, and Benefits

Table 1--Summary of Costs, Transfers, and Benefits
----------------------------------------------------------------------------------------------------------------
Provision description Costs and cost savings Transfers Benefits
----------------------------------------------------------------------------------------------------------------
CY 2019 HH PPS Payment Rate Update... ....................... The overall economic To ensure home health
impact of the HH PPS payments are
payment rate update is consistent with
an estimated $400 statutory payment
million (2.1 percent) authority for CY 2019.
in increased payments
to HHAs in CY 2019.
CY 2019 Temporary Transitional ....................... The overall economic To ensure temporary
Payments for Home Infusion Therapy impact of the transitional payments
Services. temporary transitional for home infusion
payment for home therapy are consistent
infusion therapy with statutory
services is an authority for CY 2019.
estimated $60 million
in increased payments
to home infusion
therapy suppliers in
CY 2019.
CY 2019 HHVBP Model.................. ....................... The overall economic
impact of the HHVBP
Model provision for CY
2018 through 2022 is
an estimated $378
million in total
savings from a
reduction in
unnecessary
hospitalizations and
SNF usage as a result
of greater quality
improvements in the HH
industry (none of
which is attributable
to the changes
proposed in this
proposed rule). As for
payments to HHAs,
there are no aggregate
increases or decreases
expected to be applied
to the HHAs competing
in the model.
CY 2020 OASIS Changes................ The overall economic ....................... A reduction in burden
impact of the HH QRP to HHAs of
and the case-mix approximately 73 hours
adjustment methodology annually for a savings
changes is annual of approximately
savings to HHAs of an $5,150 annually per
estimated $60 million. HHA.
CY 2020 Case-Mix Adjustment ....................... The overall economic To ensure home health
Methodology Changes, Including a impact of the proposed payments are
Change in the Unit of Service from case-mix adjustment consistent with
60 to 30 days. methodology changes, statutory payment
including a change in authority for CY 2020.
the unit of service
from 60 to 30 days,
for CY 2020 results in
no estimated dollar
impact to HHAs, as
section 51001(a) of
the BBA of 2018
requires such change
to be implemented in a
budget-neutral manner.

[[Page 32344]]

Accreditation for Home Infusion ....................... The cost related to an
Therapy suppliers. AO obtaining CMS
approval of a home
infusion therapy
accreditation program
is estimated to be
$8,014.50 per each AO,
for AOs that have
previously submitted
an accreditation
application to CMS.
The cost across the
potential 6 home
infusion therapy AOs
would be $48,087.
The cost related to
each home infusion
therapy AO for
obtaining CMS approval
of a home infusion
therapy accreditation
program is estimated
to be $12,453 per each
AO, for AOs that have
not previously
submitted an
accreditation
application to CMS.
The cost across the
potential 6 home
infusion therapy AOs
would be $74,718.
We further estimate
that each home
infusion therapy AO
would incur an
estimated cost burden
in the amount of
$23,258 for compliance
with the proposed home
infusion therapy AO
approval and oversight
regulations at Sec.
Sec. 488.1010
through 488.1050
(including the filing
of an application).
The cost across the 6
potential home
infusion therapy AOs
would be $139,548.
----------------------------------------------------------------------------------------------------------------

D. Improving Patient Outcomes and Reducing Burden Through Meaningful
Measures

Regulatory reform and reducing regulatory burden are high
priorities for us. To reduce the regulatory burden on the healthcare
industry, lower health care costs, and enhance patient care, in October
2017, we launched the Meaningful Measures Initiative.\1\ This
initiative is one component of our agency-wide Patients Over Paperwork
Initiative \2\ which is aimed at evaluating and streamlining
regulations with a goal to reduce unnecessary cost and burden, increase
efficiencies, and improve beneficiary experience. The Meaningful
Measures Initiative is aimed at identifying the highest priority areas
for quality measurement and quality improvement in order to assess the
core quality of care issues that are most vital to advancing our work
to improve patient outcomes. The Meaningful Measures Initiative
represents a new approach to quality measures that fosters operational
efficiencies, and will reduce costs including, the collection and
reporting burden while producing quality measurement that is more
focused on meaningful outcomes.
---------------------------------------------------------------------------

\1\ Meaningful Measures web page: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
\2\ See Remarks by Administrator Seema Verma at the Health Care
Payment Learning and Action Network (LAN) Fall Summit, as prepared
for delivery on October 30, 2017 https://www.cms.gov/Newsroom/
MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-
30.html.
---------------------------------------------------------------------------

The Meaningful Measures Framework has the following objectives:
Address high-impact measure areas that safeguard public
health;
Patient-centered and meaningful to patients;
Outcome-based where possible;
Fulfill each program's statutory requirements;
Minimize the level of burden for health care providers
(for example, through a preference for EHR-based measures where
possible, such as electronic clinical quality measures);
Provide significant opportunity for improvement;
Address measure needs for population based payment through
alternative payment models; and
Align across programs and/or with other payers.
In order to achieve these objectives, we have identified 19
Meaningful Measures areas and mapped them to six overarching quality
priorities as shown in Table 2:

Table 2--Meaningful Measures Framework Domains and Measure Areas
------------------------------------------------------------------------
Quality priority Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm Healthcare-Associated
Caused in the Delivery of Care. Infections.
Preventable Healthcare Harm.

[[Page 32345]]

Strengthen Person and Family Engagement Care is Personalized and
as Partners in Their Care. Aligned with Patient's Goals.
End of Life Care according to
Preferences.
Patient's Experience of Care.
Patient Reported Functional
Outcomes.
Promote Effective Communication and Medication Management.
Coordination of Care. Admissions and Readmissions to
Hospitals.
Transfer of Health Information
and Interoperability.
Promote Effective Prevention and Preventive Care.
Treatment of Chronic Disease. Management of Chronic
Conditions.
Prevention, Treatment, and
Management of Mental Health.
Prevention and Treatment of
Opioid and Substance Use
Disorders.
Risk Adjusted Mortality.
Work with Communities to Promote Best Equity of Care.
Practices of Healthy Living. Community Engagement.
Make Care Affordable................... Appropriate Use of Healthcare.
Patient-focused Episode of
Care.
Risk Adjusted Total Cost of
Care.
------------------------------------------------------------------------

By including Meaningful Measures in our programs, we believe that
we can also address the following cross-cutting measure criteria:
Eliminating disparities;
Tracking measurable outcomes and impact;
Safeguarding public health;
Achieving cost savings;
Improving access for rural communities; and
Reducing burden.
We believe that the Meaningful Measures Initiative will improve
outcomes for patients, their families, and health care providers while
reducing burden and costs for clinicians and providers and promoting
operational efficiencies.

II. Background

A. Statutory Background

1. Home Health Prospective Payment System
a. Background
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted
August 5, 1997), significantly changed the way Medicare pays for
Medicare home health services. Section 4603 of the BBA mandated the
development of the HH PPS. Until the implementation of the HH PPS on
October 1, 2000, HHAs received payment under a retrospective
reimbursement system.
Section 4603(a) of the BBA mandated the development of a HH PPS for
all Medicare-covered home health 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 home health services paid under Medicare. Section
1895(b)(2) of the Act requires that, in defining a prospective payment
amount, the Secretary will consider an appropriate unit of service and
the number, type, and duration of visits provided within that unit,
potential changes in the mix of services provided within that unit and
their cost, and a general system design that provides for continued
access to quality services.
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 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 (as of the effective date
of the 2000 final rule), 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 requires the standard prospective
payment amounts be annually updated by the home health applicable
percentage increase. Section 1895(b)(4) of the Act governs the payment
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act
require the standard prospective payment amount to be adjusted for
case-mix and geographic differences in wage levels. Section
1895(b)(4)(B) of the Act requires the establishment of an appropriate
case-mix change adjustment factor for significant variation in costs
among different units of services.
Similarly, section 1895(b)(4)(C) of the Act requires the
establishment of wage adjustment factors that reflect the relative
level of wages, and wage-related costs applicable to home health
services furnished in a geographic area compared to the applicable
national average level. 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 home health services as required by
section 4603 of the BBA, as subsequently amended by section 5101 of the
Omnibus Consolidated and Emergency Supplemental Appropriations Act for
Fiscal Year 1999 (OCESAA), (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 of 1999, (BBRA) (Pub. L. 106-113,
enacted November 29, 1999). The requirements include the implementation
of a HH PPS for home health services, consolidated billing
requirements, and a number of other related changes. The HH PPS
described in that rule replaced the retrospective reasonable cost-based
system that was used by Medicare for the payment of home health
services under Part A and Part B. For a complete and full

[[Page 32346]]

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 linking the quality data submission to the
annual applicable payment percentage increase. This data submission
requirement is applicable for CY 2007 and each subsequent year. If an
HHA does not submit quality data, the home health market basket
percentage increase is reduced by 2 percentage points. In the November
9, 2006 Federal Register (71 FR 65884, 65935), we published a final
rule to implement the pay-for-reporting requirement of the DRA, which
was codified at Sec. 484.225(h) and (i) in accordance with the
statute. The pay-for-reporting requirement was implemented on January
1, 2007.
The Affordable Care Act made additional changes to the HH PPS. One
of the changes in section 3131 of the Affordable Care Act is the
amendment to section 421(a) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173,
enacted on December 8, 2003) as amended by section 5201(b) of the DRA.
Section 421(a) of the MMA, as amended by section 3131 of the Affordable
Care Act, requires that the Secretary increase, by 3 percent, the
payment amount otherwise made under section 1895 of the Act, for HH
services furnished in a rural area (as defined in section 1886(d)(2)(D)
of the Act) with respect to episodes and visits ending on or after
April 1, 2010, and before January 1, 2016.
Section 210 of the Medicare Access and CHIP Reauthorization Act of
2015 (Pub. L. 114-10) (MACRA) amended section 421(a) of the MMA to
extend the 3 percent rural add-on payment for home health services
provided in a rural area (as defined in section 1886(d)(2)(D) of the
Act) through January 1, 2018. In addition, section 411(d) of MACRA
amended section 1895(b)(3)(B) of the Act such that CY 2018 home health
payments be updated by a 1 percent market basket increase. This year,
section 50208(a)(1) of the BBA of 2018 again extended the rural add-on
through the end of 2018. In addition, this section of the BBA of 2018
made some important changes to the rural add-on for CYs 2019 through
2022, to be discussed below.
b. Current System for Payment of Home Health Services
Generally, Medicare currently makes payment under the HH PPS on the
basis of a national, standardized 60-day episode payment rate that is
adjusted for the applicable case-mix and wage index. The national,
standardized 60-day episode rate includes the six home health
disciplines (skilled nursing, home health aide, physical therapy,
speech-language pathology, occupational therapy, and medical social
services). Payment for non-routine supplies (NRS) is not part of the
national, standardized 60-day episode rate, but is computed by
multiplying the relative weight for a particular NRS severity level by
the NRS conversion factor. Payment for durable medical equipment
covered under the HH benefit is made outside the HH PPS payment system.
To adjust for case-mix, the HH PPS uses a 153-category case-mix
classification system to assign patients to a home health resource
group (HHRG). The clinical severity level, functional severity level,
and service utilization are computed from responses to selected data
elements in the OASIS assessment instrument and are used to place the
patient in a particular HHRG. Each HHRG has an associated case-mix
weight which is used in calculating the payment for an episode. Therapy
service use is measured by the number of therapy visits provided during
the episode and can be categorized into nine visit level categories (or
thresholds): 0 to 5; 6; 7 to 9; 10; 11 to 13; 14 to 15; 16 to 17; 18 to
19; and 20 or more visits.
For episodes with four or fewer visits, Medicare pays national per-
visit rates based on the discipline(s) providing the services. An
episode consisting of four or fewer visits within a 60-day period
receives what is referred to as a low-utilization payment adjustment
(LUPA). Medicare also adjusts the national standardized 60-day episode
payment rate for certain intervening events that are subject to a
partial episode payment adjustment (PEP adjustment). For certain cases
that exceed a specific cost threshold, an outlier adjustment may also
be available.
c. Updates to the Home Health Prospective Payment System
As required by section 1895(b)(3)(B) of the Act, we have
historically updated the HH PPS rates annually in the Federal Register.
The August 29, 2007 final rule with comment period set forth an update
to the 60-day national episode rates and the national per-visit rates
under the HH PPS for CY 2008. The CY 2008 HH PPS final rule included an
analysis performed on CY 2005 home health 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 home health patients. We identified 8.03 percent
of the total case-mix change as real, and therefore, decreased the
12.78 percent of total case-mix change by 8.03 percent to get a final
nominal case-mix increase measure of 11.75 percent (0.1278 * (1-0.0803)
= 0.1175).
To account for the changes in case-mix that were not related to an
underlying change in patient health status, we implemented a reduction,
over 4 years, to the national, standardized 60-day episode payment
rates. That reduction was to be 2.75 percent per year for 3 years
beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011.
In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses
of case-mix change and finalized a reduction of 3.79 percent, instead
of 2.71 percent, for CY 2011 and deferred finalizing a payment
reduction for CY 2012 until further study of the case-mix change data
and methodology was completed.
In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-
day national episode rates and the national per-visit rates. In
addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528),
our analysis indicated that there was a 22.59 percent increase in
overall case-mix from 2000 to 2009 and that only 15.76 percent of that
overall observed case-mix percentage increase was due to real case-mix
change. As a result of our analysis, we identified a 19.03 percent
nominal increase in case-mix. At that time, to fully account for the
19.03 percent nominal case-mix growth identified from 2000 to 2009, we
finalized a 3.79 percent payment reduction in CY 2012 and a 1.32
percent payment reduction for CY 2013.
In the CY 2013 HH PPS final rule (77 FR 67078), we implemented the
1.32 percent reduction to the payment rates for CY 2013 finalized the
previous year, to account for nominal case-mix growth from 2000 through
2010. When taking into account the total measure of case-mix change
(23.90 percent) and the 15.97 percent of total case-mix change
estimated as real from 2000 to 2010, we obtained a final nominal case-
mix change measure of 20.08 percent from

[[Page 32347]]

2000 to 2010 (0.2390 * (1 - 0.1597) = 0.2008). To fully account for the
remainder of the 20.08 percent increase in nominal case-mix beyond that
which was accounted for in previous payment reductions, we estimated
that the percentage reduction to the national, standardized 60-day
episode rates for nominal case-mix change would be 2.18 percent.
Although we considered proposing a 2.18 percent reduction to account
for the remaining increase in measured nominal case-mix, we finalized
the 1.32 percent payment reduction to the national, standardized 60-day
episode rates in the CY 2012 HH PPS final rule (76 FR 68532). Section
3131(a) of the Affordable Care Act added new section 1895(b)(3)(A)(iii)
to the Act, which required that, beginning in CY 2014, we apply an
adjustment to the national, standardized 60-day episode rate and other
amounts that reflect factors such as changes in the number of visits in
an episode, the mix of services in an episode, the level of intensity
of services in an episode, the average cost of providing care per
episode, and other relevant factors. Additionally, we were required to
phase in any adjustment over a 4-year period in equal increments, not
to exceed 3.5 percent of the payment amount (or amounts) as of the date
of enactment of the Affordable Care Act in 2010, and fully implement
the rebasing adjustments by CY 2017. Therefore, in the CY 2014 HH PPS
final rule (78 FR 72256) for each year, CY 2014 through CY 2017, we
finalized a fixed-dollar reduction to the national, standardized 60-day
episode payment rate of $80.95 per year, increases to the national per-
visit payment rates per year, and a decrease to the NRS conversion
factor of 2.82 percent per year. We also finalized three separate LUPA
add-on factors for skilled nursing, physical therapy, and speech-
language pathology and removed 170 diagnosis codes from assignment to
diagnosis groups in the HH PPS Grouper. In the CY 2015 HH PPS final
rule (79 FR 66032), we implemented the second year of the 4-year phase-
in of the rebasing adjustments to the HH PPS payment rates and made
changes to the HH PPS case-mix weights. In addition, we simplified the
face-to-face encounter regulatory requirements and the therapy
reassessment timeframes.
In the CY 2016 HH PPS final rule (80 FR 68624), we implemented the
third year of the 4-year phase-in of the rebasing adjustments to the
national, standardized 60-day episode payment amount, the national per-
visit rates and the NRS conversion factor (as discussed previously). In
the CY 2016 HH PPS final rule, we also recalibrated the HH PPS case-mix
weights, using the most current cost and utilization data available, in
a budget-neutral manner and finalized reductions to the national,
standardized 60-day episode payment rate in CY 2016, CY 2017, and CY
2018 of 0.97 percent in each year to account for estimated case-mix
growth unrelated to increases in patient acuity (that is, nominal case-
mix growth) between CY 2012 and CY 2014. Finally, section 421(a) of the
MMA, as amended by section 210 of the MACRA, extended the payment
increase of 3 percent for HH services provided in rural areas (as
defined in section 1886(d)(2)(D) of the Act) to episodes or visits
ending before January 1, 2018.
In the CY 2017 HH PPS final rule (81 FR 76702), we implemented the
last year of the 4-year phase-in of the rebasing adjustments to the
national, standardized 60-day episode payment amount, the national per-
visit rates and the NRS conversion factor (as outlined previously). We
also finalized changes to the methodology used to calculate outlier
payments under the authority of section 1895(b)(5) of the Act. Lastly,
in accordance with section 1834(s) of the Act, as added by section
504(a) of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113,
enacted December 18, 2015), we implemented changes in payment for
furnishing Negative Pressure Wound Therapy (NPWT) using a disposable
device for patients under a home health plan of care for which payment
would otherwise be made under section 1895(b) of the Act.
2. Home Infusion Therapy
Section 5012 of the 21st Century Cures Act (``the Cures Act'')
(Pub. L. 114-255), which amended sections 1861(s)(2) and 1861(iii) of
the Act, established a new Medicare home infusion therapy benefit. The
Medicare home infusion therapy benefit covers the professional services
including nursing services furnished in accordance with the plan of
care, patient training and education (not otherwise covered under the
durable medical equipment benefit), remote monitoring, and monitoring
services for the provision of home infusion therapy and home infusion
drugs furnished by a qualified home infusion therapy supplier. This
benefit will ensure consistency in coverage for home infusion benefits
for all Medicare beneficiaries. Section 50401 of the BBA of 2018
amended section 1834(u) of the Act by adding a new paragraph (7) that
establishes a home infusion therapy services temporary transitional
payment for eligible home infusion suppliers for certain items and
services furnished in coordination with the furnishing of transitional
home infusion drugs beginning January 1, 2019. This temporary payment
covers the cost of the same items and services, as defined in section
1861(iii)(2)(A) and (B) of the Act, related to the administration of
home infusion drugs. The temporary transitional payment would begin on
January 1, 2019 and end the day before the full implementation of the
home infusion therapy benefit on January 1, 2021, as required by
section 5012 of the 21st Century Cures Act.
Home infusion therapy is a treatment option for patients with a
wide range of acute and chronic conditions, ranging from bacterial
infections to more complex conditions such as late-stage heart failure
and immune deficiencies. Home infusion therapy affords a patient
independence and better quality of life, because it is provided in the
comfort of the patient's home at a time that best fits his or her
needs. This is significant, because generally patients can return to
their daily activities after they receive their infusion treatments
and, in many cases, they can continue their activities while receiving
their treatments. In addition, home infusion therapy can provide
improved safety and better outcomes. The home has been shown to be a
safe setting for patients to receive infusion therapy.\3\ Additionally,
patients receiving treatment outside of the hospital setting may be at
lower risk of hospital-acquired infections, which can be more difficult
to treat because of multi-drug resistance than those that are
community-acquired. This is particularly important for vulnerable
patients such as those who are immunocompromised, as hospital-acquired
infections are increasingly caused by antibiotic-resistant pathogens.
---------------------------------------------------------------------------

\3\ Bhole, M.V., Burton, J., & Chapel, H.M., (2008). Self-
infusion programs for immunoglobulin replacement at home:
Feasibility, safety and efficacy. Immunology and Allergy Clinics of
North America, 28(4), 821-832. doi:10.1016/j.iac.2008.06.005.
Souayah, N., Hasan, A., Khan, H., et al. (2011). The safety
profile of home infusion of intravenous immunoglobulin in patients
with neuroimmunologic disorders. Journal of Clinical Neuromuscular
Disease, 12(supp 4), S1-10. doi: 10.1097/CND.0b013e3182212589.
---------------------------------------------------------------------------

Infusion therapy typically means that a drug is administered
intravenously, but the term may also refer to situations where drugs
are provided through other non-oral routes, such as intramuscular
injections and epidural routes (into the membranes surrounding the
spinal cord). Diseases that may require infusion therapy include
infections that are unresponsive to oral antibiotics, cancer and
cancer-related pain,

[[Page 32348]]

dehydration, and gastrointestinal diseases or disorders which prevent
normal functioning of the gastrointestinal system. Other conditions
treated with specialty infusion therapies may include some forms of
cancers, congestive heart failure, Crohn's Disease, hemophilia,
hepatitis, immune deficiencies, multiple sclerosis and rheumatoid
arthritis. Infusion therapy originates with a prescription order from a
physician or another qualified prescriber who is overseeing the care of
the patient. The prescription order is sent to a home infusion therapy
supplier, which is a state-licensed pharmacy, physician, or other
provider of services or suppliers licensed by the state.
A 2010 Government Accountability Office (GAO) report (10-426) found
that most health insurers rely on credentialing, accreditation, or both
to help ensure that plan members receive quality home infusion services
from their network suppliers.\4\ Home infusion AOs conduct on-site
surveys to evaluate all components of the service, including medical
equipment, nursing, and pharmacy. Accreditation standards can include
such requirements as the CMS Conditions of Participation for home
health services, other Federal government regulations, and industry
best practices. All of the accreditation standards evaluate a range of
provider competencies, such as having a complete plan of care, response
to adverse events, and implementation of a quality improvement plan.
---------------------------------------------------------------------------

\4\ https://www.gao.gov/assets/310/305261.pdf.
---------------------------------------------------------------------------

Sections 1861(iii)(3)(D)(III) and 1834(u)(5) of the Act, as amended
by section 5012 of the Cures Act requires that, in order to participate
in Medicare, home infusion therapy suppliers must select a CMS-approved
AO and undergo an accreditation review process to demonstrate that the
home infusion therapy program meets the accreditation organization's
standards. Section 1861(iii) of the Act, as amended by section 5012 of
the Cures Act, sets forth standards in three areas: (1) Ensuring that
all patients have a plan of care established and updated by a physician
that sets out the care and prescribed infusion therapy necessary to
meet the patient-specific needs, (2) having procedures to ensure that
remote monitoring services associated with administering infusion drugs
in a patient's home are provided, and (3) having procedures to ensure
that patients receive education and training on the effective use of
medications and equipment in the home.

D. Advancing Health Information Exchange

The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care. The Office of the
National Coordinator for Health Information Technology (ONC) and CMS
work collaboratively to advance interoperability across settings of
care, including post-acute care.
The Improving Medicare Post-Acute Care Transformation Act of 2014
(Pub. L. 113-185) (IMPACT Act) requires assessment data to be
standardized and interoperable to allow for exchange of the data among
post-acute providers and other providers. To further interoperability
in post-acute care, CMS is developing a Data Element Library to serve
as a publically available centralized, authoritative resource for
standardized data elements and their associated mappings to health IT
standards. These interoperable data elements can reduce provider burden
by allowing the use and reuse of healthcare data, support provider
exchange of electronic health information for care coordination,
person-centered care, and support real-time, data driven, clinical
decision making. Once available, standards in the Data Element Library
can be referenced on the CMS website and in the ONC Interoperability
Standards Advisory (ISA).
The 2018 Interoperability Standards Advisory (ISA) is available at:
https://www.healthit.gov/standards-advisory.
Most recently, the 21st Century Cures Act (Pub. L. 114-255),
enacted in 2016, requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. Specifically,
Congress directed ONC to ``develop or support a trusted exchange
framework, including a common agreement among health information
networks nationally.'' This framework (https://beta.healthit.gov/topic/
interoperability/trusted-exchange-framework-and-common-agreement)
outlines a common set of principles for trusted exchange and minimum
terms and conditions for trusted exchange in order to enable
interoperability across disparate health information networks. In
another important provision, Congress defined ``information blocking''
as practices likely to interfere with, prevent, or materially
discourage access, exchange, or use of electronic health information,
and established new authority for HHS to discourage these practices. We
invite providers to learn more about these important developments and
how they are likely to affect HHAs.

III. Proposed Provisions for Payment Under the Home Health Prospective
Payment System (HH PPS)

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

1. Analysis of FY 2016 HHA Cost Report Data
As part of our efforts in monitoring the potential impacts of the
rebasing adjustments finalized in the CY 2014 HH PPS final rule (78 FR
72293), we continue to update our analysis of home health cost report
and claims data. Previous years' cost report and claims data analyses
and results can be found in the CY 2018 HH PPS proposed rule (82 FR
35277-35278). For this proposed rule, we analyzed the 2016 HHA cost
report data (the most recent, complete data available at the time of
this proposed rule) and 2016 HHA claims data to obtain the average
number of visits per episode that match to the year of cost report data
analyzed. To determine the 2016 average cost per visit per discipline,
we applied the same trimming methodology outlined in the CY 2014 HH PPS
proposed rule (78 FR 40284) and weighted the costs per visit from the
2016 cost reports by size, facility type, and urban/rural location so
the costs per visit were nationally representative according to 2016
claims data. The 2016 average number of visits was taken from 2016
claims data. We estimated the cost of a 60-day episode in CY 2016 to be
$2,538.54 using 2016 cost report data (Table 2). However, the national,
standardized 60-day episode payment amount in CY 2016 was $2,965.12.
The difference between the 60-day episode payment rate and average cost
per episode of care for CY 2016 was 16.8 percent.

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Table 2--2016 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
2016 Average 2016 Average 2016 Average 2016 Average
Discipline costs per NRS costs per cost + NRS per number of 2016 60-Day
visit visit visit visits episode costs
----------------------------------------------------------------------------------------------------------------
Skilled Nursing................. $132.83 $3.41 $136.24 8.81 $1,200.27
Physical Therapy................ 156.04 3.41 159.45 5.58 889.73
Occupational Therapy............ 153.53 3.41 156.94 1.56 244.83
Speech Pathology................ 170.06 3.41 173.47 0.32 55.51
Medical Social Services......... 219.73 3.41 223.14 0.14 31.24
Home Health Aides............... 60.50 3.41 63.91 1.83 116.96
-------------------------------------------------------------------------------
Total....................... .............. .............. .............. 18.24 2,538.54
----------------------------------------------------------------------------------------------------------------
Source: Medicare cost reports pulled in March 2018 and Medicare claims data from 2015 and 2016 for episodes
(excluding low-utilization payment adjusted episodes and partial-episode-payment adjusted episodes), linked to
OASIS assessments for episodes ending in CY 2016.

2. Analysis of CY 2017 HHA Claims Data
In the CY 2014 HH PPS final rule (78 FR 72256), some commenters
expressed concern that the rebasing of the HH PPS payment rates would
result in HHA closures and would therefore diminish access to home
health services. In addition to examining more recent cost report data,
for this proposed rule we examined home health claims data from all
four years during which rebasing adjustments were made (CY 2014, CY
2015, CY 2016, and CY 2017), the first calendar year of the HH PPS (CY
2001), and claims data for the year prior to the implementation of the
rebasing adjustments (CY 2013). Preliminary analysis of CY 2017 home
health claims data indicates that the number of episodes decreased by
5.3 percent and the number of home health users that received at least
one episode of care decreased by 3.2 percent from 2016 to 2017, while
the number of FFS beneficiaries decreased 0.1 percent from 2016 to
2017. Between 2013 and 2014 there appears to be a net decrease in the
number of HHAs billing Medicare for home health services of 1.6
percent, a continued decrease of 1.7 percent from 2014 to 2015, a
decrease of 3.4 percent from 2015 to 2016, and a decrease of 4.4
percent from 2016 to 2017. We note that in CY 2016 there were 2.9 HHAs
per 10,000 FFS beneficiaries and 2.8 HHAs per 10,000 FFS beneficiaries
in CY 2017, which remains markedly higher than the 1.9 HHAs per 10,000
FFS beneficiaries close to the inception of the HH PPS in 2001 (the HH
PPS was implemented on October 1, 2000). The number of home health
users, as a percentage of FFS beneficiaries, has decreased from 9.0
percent in 2013 to 8.4 percent in 2017.

Table 3--Home Health Statistics, CY 2001 and CY 2013 Through CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001 2013 2014 2015 2016 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of episodes...................................... 3,896,502 6,708,923 6,451,283 6,340,932 6,294,234 5,963,780
Beneficiaries receiving at least 1 episode (Home Health 2,412,318 3,484,579 3,381,635 3,365,512 3,350,174 3,242,346
Users).................................................
Part A and/or B FFS beneficiaries....................... 34,899,167 38,505,609 38,506,534 38,506,534 38,555,150 38,509,031
Episodes per Part A and/or B FFS beneficiaries.......... 0.11 0.17 0.17 0.17 0.16 0.15
Home health users as a percentage of Part A and/or B FFS 6.9% 9.0% 8.8% 8.8% 8.7% 8.4%
beneficiaries..........................................
HHAs providing at least 1 episode....................... 6,511 11,889 11,693 11,381 11,102 10,612
HHAs per 10,000 Part A and/or B FFS beneficiaries....... 1.9 3.1 3.0 3.0 2.9 2.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014 and August 19, 2014 for CY 2013
data; accessed on May 7, 2015 for CY 2001 and CY 2014 data; accessed on April 7, 2016 for CY 2015 data; accessed on March 20, 2017 for CY 2016 data;
accessed on March 8, 2018 for CY 2017 data; and Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries
are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months
of Medicare Advantage coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
(``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
a year the beneficiary is counted within each state's unique number of beneficiaries served.

In addition to examining home health claims data from all four
years of the implementation of rebasing adjustments required by the
Affordable Care Act, we examined trends in home health utilization for
all years starting in CY 2001 and up through CY 2017. Figure 1,
displays the average number of visits per 60-day episode of care and
the average payment per visit. While the average payment per visit has
steadily increased from approximately $116 in CY 2001 to $170 for CY
2017, the average total number of visits per 60-day episode of care has
declined, most notably between CY 2009 (21.7 visits per episode) and CY
2010 (19.8 visits per episode), which was the first year that the 10
percent agency-level cap on HHA outlier payments was implemented. The
average of total visits per episode has steadily decreased from 21.7 in
2009 to 17.9 in 2017.
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Figure 2 displays the average number of visits by discipline type
for a 60-day episode of care and shows that while the number of therapy
visits per 60-day episode of care has increased steadily, the number of
skilled nursing and home health aide visits have decreased between CY
2009 and CY 2017. The results of the Report to Congress, ``Medicare
Home Health Study: An Investigation on Access to Care and Payment for
Vulnerable Patient Populations'', required by section 3131(d) of the
Affordable Care Act, suggests that the current home health payment
system may discourage HHAs from serving patients with clinically
complex and/or poorly controlled chronic conditions who do not qualify
for therapy but require a large number of skilled nursing visits.\5\
The home health study results seem to be consistent with the recent
trend in the decreased number of visits per episode of care driven by
decreases in skilled nursing and home health aide services evident in
Figures 1 and 2.
---------------------------------------------------------------------------

\5\ Report to Congress Medicare Home Health Study: An
Investigation on Access to Care and Payment for Vulnerable Patient
Populations (2014). Available at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/HH-Report-
to-Congress.pdf.

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As part of our monitoring efforts, we also examined the trends in
episode timing and service use over time. Specifically, we examined the
percentage of early episodes with 0 to 19 therapy visits, late episodes
with 0 to 19 therapy visits, and episodes with 20+ therapy visits from
CY 2008 to CY 2017. In CY 2008, we implemented refinements to the HH
PPS case-mix system. As part of those refinements, we added additional
therapy thresholds and differentiated between early and late episodes
for those episodes with less than 20+ therapy visits. Early episodes
are defined as the 1st or 2nd episode in a sequence of adjacent covered
episodes. Late episodes are defined as the 3rd and subsequent episodes
in a sequence of adjacent covered episodes. Table 4 shows that the
percentage of early and late episodes from CY 2008 to CY 2017 has
remained relatively stable over time. There has been a decrease in the
percentage of early episodes with 0 to 19 therapy visits from 65.9
percent in CY 2008 to 61.3 percent in CY 2017 and a slight increase in
the percentage of late episodes with 0 to 19 therapy visits from 29.5
percent in CY 2008 to 31.2 percent in CY 2017. In 2015, the case-mix
weights for the third and later episodes of care with 0 to 19 therapy
visits decreased as a result of the CY 2015 recalibration of the case-
mix weights. Despite the decreases in the case-mix weights for the
later episodes, the percentage of late episodes with 0 to 19 therapy
visits did not change substantially. However, episode timing is not a
variable in the determination of the case-mix weights for those
episodes with 20+ therapy visits and the percentage of episodes with
20+ therapy visits has increased from 4.6 percent in CY 2008 to 7.6
percent in CY 2017.

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Table 4--Home Health Episodes by Episode Timing, CY 2008 Through CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of % of early Number of late % of late
early episodes episodes episodes episodes Number of % of episodes
Year All episodes (excluding (excluding (excluding (excluding episodes with with 20+
episodes with episodes with episodes with episodes with 20+ visits visits
20+ visits) 20+ visits) 20+ visits) 20+ visits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008.................................... 5,423,037 3,571,619 65.9 1,600,587 29.5 250,831 4.6
2009.................................... 6,530,200 3,701,652 56.7 2,456,308 37.6 372,240 5.7
2010.................................... 6,877,598 3,872,504 56.3 2,586,493 37.6 418,601 6.1
2011.................................... 6,857,885 3,912,982 57.1 2,564,859 37.4 380,044 5.5
2012.................................... 6,767,576 3,955,207 58.4 2,458,734 36.3 353,635 5.2
2013.................................... 6,733,146 4,023,486 59.8 2,347,420 34.9 362,240 5.4
2014.................................... 6,616,875 3,980,151 60.2 2,263,638 34.2 373,086 5.6
2015.................................... 6,644,922 4,008,279 60.3 2,205,052 33.2 431,591 6.5
2016.................................... 6,294,232 3,802,254 60.4 2,053,972 32.6 438,006 7.0
2017.................................... 5,963,778 3,655,636 61.3 1,857,840 31.2 450,302 7.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on March 6, 2018.
Note(s): Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0'' (``Non-payment/zero
claims'') and ``2'' (``Interim--first claim'') are excluded.

We also examined trends in admission source for home health
episodes over time. Specifically, we examined the admission source for
the ``first or only'' episodes of care (first episodes in a sequence of
adjacent episodes of care or the only episode of care) from CY 2008
through CY 2017 (Figure 3). The percentage of first or only episodes
with an acute admission source, defined as episodes with an inpatient
hospital stay within the 14 days prior to a home health episode, has
decreased from 38.6 percent in CY 2008 to 34.8 percent in CY 2017. The
percentage of first or only episodes with a post-acute admission
source, defined as episodes which had a stay at a skilled nursing
facility (SNF), inpatient rehabilitation facility (IRF), or long term
care hospital (LTCH) within 14 days prior to the home health episode,
has slightly increased from 16.4 percent in CY 2008 to 17.6 percent in
CY 2017. The percentage of first or only episodes with a community
admission source, defined as episodes which did not have an acute or
post-acute stay in the 14 days prior to the home health episode,
increased from 37.4 percent in CY 2008 to 41.5 percent in CY 2017. Our
findings on the trends in admission source show a similar pattern with
MedPAC's as outlined in their 2015 Report to the Congress.\6\ MedPAC
concluded that there has been tremendous growth in the use of home
health for patients residing in the community (that is, episodes not
preceded by a prior hospitalization) and that these episodes have more
than doubled since 2001. However, MedPAC examined admission source
trends from 2002 up through 2013 and included first and subsequent
episodes of care, whereas CMS analysis, as described above, included
``first or only'' episodes of care. Nonetheless, both analyses show a
trend of increasing episodes of care without a preceding inpatient
stay. MedPAC suggests there is significant potential for overuse,
particularly since Medicare does not currently require any cost sharing
for home health care.
---------------------------------------------------------------------------

\6\ Medicare Payment Advisory Commission (MedPAC). ``Home Health
Care Services.'' Report to the Congress: Medicare Payment Policy.
Washington, DC, March 2015. P. 214. Accessed on 3/28/2017 at: http:/
/www.medpac.gov/docs/default-source/reports/chapter-9-home-health-
care-services-march-2015-report-.pdf?sfvrsn=0.

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We will continue to monitor for potential impacts due to the
rebasing adjustments required by section 3131(a) of the Affordable Care
Act and other policy changes in the future. Independent effects of any
one policy may be difficult to discern in years where multiple policy
changes occur in any given year.

B. Proposed CY 2019 HH PPS Case-Mix Weights

In the CY 2015 HH PPS final rule (79 FR 66072), we finalized a
policy to annually recalibrate the HH PPS case-mix weights--adjusting
the weights relative to one another--using the most current, complete
data available. To recalibrate the HH PPS case-mix weights for CY 2018,
we will use the same methodology finalized in the CY 2008 HH PPS final
rule (72 FR 49762), the CY 2012 HH PPS final rule (76 FR 68526), and
the CY 2015 HH PPS final rule (79 FR 66032). Annual recalibration of
the HH PPS case-mix weights ensures that the case-mix weights reflect,
as accurately as possible, current home health resource use and changes
in utilization patterns.
To generate the proposed CY 2019 HH PPS case-mix weights, we used
CY 2017 home health claims data (as of March 2, 2018) with linked OASIS
data. These data are the most current and complete data available at
this time. We will use CY 2017 home health claims data (as of June 30,
2018 or later) with linked OASIS data to generate the CY 2019 HH PPS
case-mix weights in the CY 2019 HH PPS final rule. The process we used
to calculate the HH PPS case-mix weights are outlined below.
Step 1: Re-estimate the four-equation model to determine the
clinical and functional points for an episode using wage-weighted
minutes of care as our dependent variable for resource use. The wage-
weighted minutes of care are determined using the CY 2016 Bureau of
Labor Statistics national hourly wage plus fringe rates for the six
home health disciplines and the minutes per visit from the claim. The
points for each of the variables for each leg of the model, updated
with CY 2017 home health claims data, are shown in Table 5. The points
for the clinical variables are added together to determine an episode's
clinical score. The points for the functional variables are added
together to determine an episode's functional score.
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In updating the four-equation model for CY 2019, using 2017 home
health claims data (the last update to the four-equation model for CY
2018 used CY 2016 home health claims data), there were few changes to
the point values for the variables in the four-equation model. These
relatively minor changes reflect the change in the relationship between
the grouper variables and resource use between CY 2016 and CY 2017. The
CY 2019 four-equation model resulted in 113 point-giving variables
being used in the model (as compared to the 119 variables for the CY
2018 recalibration, which can be found in Table 2 of the CY 2018 HH PPS
final rule (82 FR 51684)). There were 7 variables that were added to
the model and 13 variables that were dropped from the model due to the
absence of additional resources associated with the variable. Of the
variables that were in both the four-equation model for CY 2019 and the
four-equation model for CY 2018, the points for 10 variables increased
in the CY 2019 four-equation model and the points for 67 variables
decreased in the CY 2019 4-equation model. There were 29 variables with
the same point values.
Step 2: Re-defining the clinical and functional thresholds so they
are reflective of the new points associated with the CY 2019 four-
equation model. After estimating the points for each of the variables
and summing the clinical and functional points for each episode, we
look at the distribution of the clinical score and functional score,
breaking the episodes into different steps. The categorizations for the
steps are as follows:
Step 1: First and second episodes, 0-13 therapy visits.
Step 2.1: First and second episodes, 14-19 therapy visits.
Step 2.2: Third episodes and beyond, 14-19 therapy visits.
Step 3: Third episodes and beyond, 0-13 therapy visits.
Step 4: Episodes with 20+ therapy visits.
We then divide the distribution of the clinical score for episodes
within a step such that a third of episodes are classified as low
clinical score, a third of episodes are classified as medium clinical
score, and a third of episodes are classified as high clinical score.
The same approach is then done looking at the functional score. It was
not always possible to evenly divide the episodes within each step into
thirds due to many episodes being clustered around one particular
score.\7\ Also, we looked at the average resource use associated with
each clinical and functional score and used that as a guide for setting
our thresholds. We grouped scores with similar average resource use
within the same level (even if it meant that more or less than a third
of episodes were placed within a level). The new thresholds, based off
the CY 2019 four-equation model points are shown in Table 6.
---------------------------------------------------------------------------

\7\ For Step 1, 41% of episodes were in the medium functional
level (All with score 13).
For Step 2.1, 86.7% of episodes were in the low functional level
(Most with scores 6 to 7).
For Step 2.2, 81.5% of episodes were in the low functional level
(Most with score 0).
For Step 3, 46.7% of episodes were in the medium functional
level (Most with score 9).
For Step 4, 29.9% of episodes were in the medium functional
level (Most with score 6).

Table 6--Proposed CY 2019 Clinical and Functional Thresholds
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1st and 2nd Episodes 3rd+ Episodes All Episodes
----------------------------------------------------------------------------------------------------------------------------------------
0 to 13 therapy visits 14 to 19 therapy visits 0 to 13 therapy visits 14 to 19 therapy visits 20+ therapy visits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Grouping Step 1......................... 2......................... 3........................ 4........................ 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Equations used to calculate points 1......................... 2......................... 3........................ 4........................ (2&4)
(see Table 2)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dimension Severity Level .......................... .......................... ......................... ......................... .........................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Clinical.......................... C1................. 0 to 1.................... 0 to 1.................... 0 to 1................... 0 to 1................... 0 to 3.
C2................. 2 to 3.................... 2 to 7.................... 2........................ 2 to 9................... 4 to 16.
C3................. 4+........................ 8+........................ 3+....................... 10+...................... 17+.
Functional........................ F1................. 0 to 12................... 0 to 7.................... 0 to 6................... 0 to 2................... 0 to 2.
F2................. 13........................ 8 to 12................... 7 to 10.................. 3 to 7................... 3 to 6.
F3................. 14+....................... 13+....................... 11+...................... 8+....................... 7+.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Step 3: Once the clinical and functional thresholds are determined
and each episode is assigned a clinical and functional level, the
payment regression is estimated with an episode's wage-weighted minutes
of care as the dependent variable. Independent variables in the model
are indicators for the step of the episode as well as the clinical and
functional levels within each step of the episode. Like the four-
equation model, the payment regression model is also estimated with
robust standard errors that are clustered at the beneficiary level.
Table 7 shows the regression coefficients for the variables in the
payment regression model updated with CY 2017 home

[[Page 32357]]

health claims data. The R-squared value for the payment regression
model is 0.5508 (an increase from 0.5095 for the CY 2018
recalibration).

Table 7--Payment Regression Model
------------------------------------------------------------------------
Payment
regression
from 4-
equation model
for CY 2019
------------------------------------------------------------------------
Step 1, Clinical Score Medium........................... $21.81
Step 1, Clinical Score High............................. 54.06
Step 1, Functional Score Medium......................... 70.54
Step 1, Functional Score High........................... 99.78
Step 2.1, Clinical Score Medium......................... 50.90
Step 2.1, Clinical Score High........................... 118.77
Step 2.1, Functional Score Medium....................... 25.36
Step 2.1, Functional Score High......................... 31.96
Step 2.2, Clinical Score Medium......................... 48.03
Step 2.2, Clinical Score High........................... 187.73
Step 2.2, Functional Score Medium....................... 50.06
Step 2.2, Functional Score High......................... 0.00
Step 3, Clinical Score Medium........................... 18.05
Step 3, Clinical Score High............................. 83.67
Step 3, Functional Score Medium......................... 56.10
Step 3, Functional Score High........................... 81.90
Step 4, Clinical Score Medium........................... 70.97
Step 4, Clinical Score High............................. 245.97
Step 4, Functional Score Medium......................... 4.60
Step 4, Functional Score High........................... 17.77
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits. 515.04
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits........ 510.26
Step 3, 3rd+ Episodes, 0-13 Therapy Visits.............. -60.34
Step 4, All Episodes, 20+ Therapy Visits................ 895.79
Intercept............................................... 375.32
------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before
December 31, 2017 (as of March 2, 2018) for which we had a linked
OASIS assessment.

Step 4: We use the coefficients from the payment regression model
to predict each episode's wage-weighted minutes of care (resource use).
We then divide these predicted values by the mean of the dependent
variable (that is, the average wage-weighted minutes of care across all
episodes used in the payment regression). This division constructs the
weight for each episode, which is simply the ratio of the episode's
predicted wage-weighted minutes of care divided by the average wage-
weighted minutes of care in the sample. Each episode is then aggregated
into one of the 153 home health resource groups (HHRGs) and the ``raw''
weight for each HHRG was calculated as the average of the episode
weights within the HHRG.
Step 5: The raw weights associated with 0 to 5 therapy visits are
then increased by 3.75 percent, the weights associated with 14-15
therapy visits are decreased by 2.5 percent, and the weights associated
with 20+ therapy visits are decreased by 5 percent. These adjustments
to the case-mix weights were finalized in the CY 2012 HH PPS final rule
(76 FR 68557) and were done to address MedPAC's concerns that the HH
PPS overvalues therapy episodes and undervalues non-therapy episodes
and to better align the case-mix weights with episode costs estimated
from cost report data.\8\
---------------------------------------------------------------------------

\8\ Medicare Payment Advisory Commission (MedPAC), Report to the
Congress: Medicare Payment Policy. March 2011, P. 176.
---------------------------------------------------------------------------

Step 6: After the adjustments in step 5 are applied to the raw
weights, the weights are further adjusted to create an increase in the
payment weights for the therapy visit steps between the therapy
thresholds. Weights with the same clinical severity level, functional
severity level, and early/later episode status were grouped together.
Then within those groups, the weights for each therapy step between
thresholds are gradually increased. We do this by interpolating between
the main thresholds on the model (from 0-5 to 14-15 therapy visits, and
from 14-15 to 20+ therapy visits). We use a linear model to implement
the interpolation so the payment weight increase for each step between
the thresholds (such as the increase between 0-5 therapy visits and 6
therapy visits and the increase between 6 therapy visits and 7-9
therapy visits) are constant. This interpolation is identical to the
process finalized in the CY 2012 HH PPS final rule (76 FR 68555).
Step 7: The interpolated weights are then adjusted so that the
average case-mix for the weights is equal to 1.0000.\9\ This last step
creates the proposed CY 2019 case-mix weights shown in Table 8.
---------------------------------------------------------------------------

\9\ When computing the average, we compute a weighted average,
assigning a value of one to each normal episode and a value equal to
the episode length divided by 60 for PEPs.

[[Page 32358]]

Table 8--Proposed Cy 2019 Case-Mix Payment Weights
----------------------------------------------------------------------------------------------------------------
Clinical and functional Proposed
Pay group Description levels (1 = low; 2 = medium; weights for CY
3 = high) 2019
----------------------------------------------------------------------------------------------------------------
10111........................ 1st and 2nd Episodes, 0 to 5 C1F1S1 0.5459
Therapy Visits.
10112........................ 1st and 2nd Episodes, 6 Therapy C1F1S2 0.6801
Visits.
10113........................ 1st and 2nd Episodes, 7 to 9 C1F1S3 0.8143
Therapy Visits.
10114........................ 1st and 2nd Episodes, 10 Therapy C1F1S4 0.9485
Visits.
10115........................ 1st and 2nd Episodes, 11 to 13 C1F1S5 1.0828
Therapy Visits.
10121........................ 1st and 2nd Episodes, 0 to 5 C1F2S1 0.6485
Therapy Visits.
10122........................ 1st and 2nd Episodes, 6 Therapy C1F2S2 0.7691
Visits.
10123........................ 1st and 2nd Episodes, 7 to 9 C1F2S3 0.8897
Therapy Visits.
10124........................ 1st and 2nd Episodes, 10 Therapy C1F2S4 1.0104
Visits.
10125........................ 1st and 2nd Episodes, 11 to 13 C1F2S5 1.1310
Therapy Visits.
10131........................ 1st and 2nd Episodes, 0 to 5 C1F3S1 0.6910
Therapy Visits.
10132........................ 1st and 2nd Episodes, 6 Therapy C1F3S2 0.8049
Visits.
10133........................ 1st and 2nd Episodes, 7 to 9 C1F3S3 0.9189
Therapy Visits.
10134........................ 1st and 2nd Episodes, 10 Therapy C1F3S4 1.0328
Visits.
10135........................ 1st and 2nd Episodes, 11 to 13 C1F3S5 1.1467
Therapy Visits.
10211........................ 1st and 2nd Episodes, 0 to 5 C2F1S1 0.5776
Therapy Visits.
10212........................ 1st and 2nd Episodes, 6 Therapy C2F1S2 0.7194
Visits.
10213........................ 1st and 2nd Episodes, 7 to 9 C2F1S3 0.8612
Therapy Visits.
10214........................ 1st and 2nd Episodes, 10 Therapy C2F1S4 1.0030
Visits.
10215........................ 1st and 2nd Episodes, 11 to 13 C2F1S5 1.1448
Therapy Visits.
10221........................ 1st and 2nd Episodes, 0 to 5 C2F2S1 0.6802
Therapy Visits.
10222........................ 1st and 2nd Episodes, 6 Therapy C2F2S2 0.8084
Visits.
10223........................ 1st and 2nd Episodes, 7 to 9 C2F2S3 0.9366
Therapy Visits.
10224........................ 1st and 2nd Episodes, 10 Therapy C2F2S4 1.0648
Visits.
10225........................ 1st and 2nd Episodes, 11 to 13 C2F2S5 1.1930
Therapy Visits.
10231........................ 1st and 2nd Episodes, 0 to 5 C2F3S1 0.7227
Therapy Visits.
10232........................ 1st and 2nd Episodes, 6 Therapy C2F3S2 0.8442
Visits.
10233........................ 1st and 2nd Episodes, 7 to 9 C2F3S3 0.9657
Therapy Visits.
10234........................ 1st and 2nd Episodes, 10 Therapy C2F3S4 1.0872
Visits.
10235........................ 1st and 2nd Episodes, 11 to 13 C2F3S5 1.2087
Therapy Visits.
10311........................ 1st and 2nd Episodes, 0 to 5 C3F1S1 0.6245
Therapy Visits.
10312........................ 1st and 2nd Episodes, 6 Therapy C3F1S2 0.7755
Visits.
10313........................ 1st and 2nd Episodes, 7 to 9 C3F1S3 0.9264
Therapy Visits.
10314........................ 1st and 2nd Episodes, 10 Therapy C3F1S4 1.0774
Visits.
10315........................ 1st and 2nd Episodes, 11 to 13 C3F1S5 1.2284
Therapy Visits.
10321........................ 1st and 2nd Episodes, 0 to 5 C3F2S1 0.7271
Therapy Visits.
10322........................ 1st and 2nd Episodes, 6 Therapy C3F2S2 0.8645
Visits.
10323........................ 1st and 2nd Episodes, 7 to 9 C3F2S3 1.0019
Therapy Visits.
10324........................ 1st and 2nd Episodes, 10 Therapy C3F2S4 1.1392
Visits.
10325........................ 1st and 2nd Episodes, 11 to 13 C3F2S5 1.2766
Therapy Visits.
10331........................ 1st and 2nd Episodes, 0 to 5 C3F3S1 0.7696
Therapy Visits.
10332........................ 1st and 2nd Episodes, 6 Therapy C3F3S2 0.9003
Visits.
10333........................ 1st and 2nd Episodes, 7 to 9 C3F3S3 1.0310
Therapy Visits.
10334........................ 1st and 2nd Episodes, 10 Therapy C3F3S4 1.1617
Visits.
10335........................ 1st and 2nd Episodes, 11 to 13 C3F3S5 1.2923
Therapy Visits.
21111........................ 1st and 2nd Episodes, 14 to 15 C1F1S1 1.2170
Therapy Visits.
21112........................ 1st and 2nd Episodes, 16 to 17 C1F1S2 1.3756
Therapy Visits.
21113........................ 1st and 2nd Episodes, 18 to 19 C1F1S3 1.5342
Therapy Visits.
21121........................ 1st and 2nd Episodes, 14 to 15 C1F2S1 1.2516
Therapy Visits.
21122........................ 1st and 2nd Episodes, 16 to 17 C1F2S2 1.4008
Therapy Visits.
21123........................ 1st and 2nd Episodes, 18 to 19 C1F2S3 1.5499
Therapy Visits.
21131........................ 1st and 2nd Episodes, 14 to 15 C1F3S1 1.2607
Therapy Visits.
21132........................ 1st and 2nd Episodes, 16 to 17 C1F3S2 1.4126
Therapy Visits.
21133........................ 1st and 2nd Episodes, 18 to 19 C1F3S3 1.5646
Therapy Visits.
21211........................ 1st and 2nd Episodes, 14 to 15 C2F1S1 1.2866
Therapy Visits.
21212........................ 1st and 2nd Episodes, 16 to 17 C2F1S2 1.4535
Therapy Visits.
21213........................ 1st and 2nd Episodes, 18 to 19 C2F1S3 1.6204
Therapy Visits.
21221........................ 1st and 2nd Episodes, 14 to 15 C2F2S1 1.3212
Therapy Visits.
21222........................ 1st and 2nd Episodes, 16 to 17 C2F2S2 1.4786
Therapy Visits.
21223........................ 1st and 2nd Episodes, 18 to 19 C2F2S3 1.6361
Therapy Visits.
21231........................ 1st and 2nd Episodes, 14 to 15 C2F3S1 1.3302
Therapy Visits.
21232........................ 1st and 2nd Episodes, 16 to 17 C2F3S2 1.4905
Therapy Visits.
21233........................ 1st and 2nd Episodes, 18 to 19 C2F3S3 1.6508
Therapy Visits.
21311........................ 1st and 2nd Episodes, 14 to 15 C3F1S1 1.3793
Therapy Visits.
21312........................ 1st and 2nd Episodes, 16 to 17 C3F1S2 1.5930
Therapy Visits.
21313........................ 1st and 2nd Episodes, 18 to 19 C3F1S3 1.8067
Therapy Visits.
21321........................ 1st and 2nd Episodes, 14 to 15 C3F2S1 1.4140
Therapy Visits.
21322........................ 1st and 2nd Episodes, 16 to 17 C3F2S2 1.6182
Therapy Visits.

[[Page 32359]]

21323........................ 1st and 2nd Episodes, 18 to 19 C3F2S3 1.8224
Therapy Visits.
21331........................ 1st and 2nd Episodes, 14 to 15 C3F3S1 1.4230
Therapy Visits.
21332........................ 1st and 2nd Episodes, 16 to 17 C3F3S2 1.6300
Therapy Visits.
21333........................ 1st and 2nd Episodes, 18 to 19 C3F3S3 1.8371
Therapy Visits.
22111........................ 3rd+ Episodes, 14 to 15 Therapy C1F1S1 1.2104
Visits.
22112........................ 3rd+ Episodes, 16 to 17 Therapy C1F1S2 1.3713
Visits.
22113........................ 3rd+ Episodes, 18 to 19 Therapy C1F1S3 1.5321
Visits.
22121........................ 3rd+ Episodes, 14 to 15 Therapy C1F2S1 1.2789
Visits.
22122........................ 3rd+ Episodes, 16 to 17 Therapy C1F2S2 1.4189
Visits.
22123........................ 3rd+ Episodes, 18 to 19 Therapy C1F2S3 1.5589
Visits.
22131........................ 3rd+ Episodes, 14 to 15 Therapy C1F3S1 1.2789
Visits.
22132........................ 3rd+ Episodes, 16 to 17 Therapy C1F3S2 1.4248
Visits.
22133........................ 3rd+ Episodes, 18 to 19 Therapy C1F3S3 1.5706
Visits.
22211........................ 3rd+ Episodes, 14 to 15 Therapy C2F1S1 1.2761
Visits.
22212........................ 3rd+ Episodes, 16 to 17 Therapy C2F1S2 1.4465
Visits.
22213........................ 3rd+ Episodes, 18 to 19 Therapy C2F1S3 1.6169
Visits.
22221........................ 3rd+ Episodes, 14 to 15 Therapy C2F2S1 1.3445
Visits.
22222........................ 3rd+ Episodes, 16 to 17 Therapy C2F2S2 1.4942
Visits.
22223........................ 3rd+ Episodes, 18 to 19 Therapy C2F2S3 1.6438
Visits.
22231........................ 3rd+ Episodes, 14 to 15 Therapy C2F3S1 1.3445
Visits.
22232........................ 3rd+ Episodes, 16 to 17 Therapy C2F3S2 1.5000
Visits.
22233........................ 3rd+ Episodes, 18 to 19 Therapy C2F3S3 1.6555
Visits.
22311........................ 3rd+ Episodes, 14 to 15 Therapy C3F1S1 1.4670
Visits.
22312........................ 3rd+ Episodes, 16 to 17 Therapy C3F1S2 1.6515
Visits.
22313........................ 3rd+ Episodes, 18 to 19 Therapy C3F1S3 1.8360
Visits.
22321........................ 3rd+ Episodes, 14 to 15 Therapy C3F2S1 1.5355
Visits.
22322........................ 3rd+ Episodes, 16 to 17 Therapy C3F2S2 1.6992
Visits.
22323........................ 3rd+ Episodes, 18 to 19 Therapy C3F2S3 1.8629
Visits.
22331........................ 3rd+ Episodes, 14 to 15 Therapy C3F3S1 1.5355
Visits.
22332........................ 3rd+ Episodes, 16 to 17 Therapy C3F3S2 1.7050
Visits.
22333........................ 3rd+ Episodes, 18 to 19 Therapy C3F3S3 1.8746
Visits.
30111........................ 3rd+ Episodes, 0 to 5 Therapy C1F1S1 0.4581
Visits.
30112........................ 3rd+ Episodes, 6 Therapy Visits.. C1F1S2 0.6086
30113........................ 3rd+ Episodes, 7 to 9 Therapy C1F1S3 0.7591
Visits.
30114........................ 3rd+ Episodes, 10 Therapy Visits. C1F1S4 0.9095
30115........................ 3rd+ Episodes, 11 to 13 Therapy C1F1S5 1.0600
Visits.
30121........................ 3rd+ Episodes, 0 to 5 Therapy C1F2S1 0.5397
Visits.
30122........................ 3rd+ Episodes, 6 Therapy Visits.. C1F2S2 0.6876
30123........................ 3rd+ Episodes, 7 to 9 Therapy C1F2S3 0.8354
Visits.
30124........................ 3rd+ Episodes, 10 Therapy Visits. C1F2S4 0.9832
30125........................ 3rd+ Episodes, 11 to 13 Therapy C1F2S5 1.1310
Visits.
30131........................ 3rd+ Episodes, 0 to 5 Therapy C1F3S1 0.5772
Visits.
30132........................ 3rd+ Episodes, 6 Therapy Visits.. C1F3S2 0.7176
30133........................ 3rd+ Episodes, 7 to 9 Therapy C1F3S3 0.8579
Visits.
30134........................ 3rd+ Episodes, 10 Therapy Visits. C1F3S4 0.9982
30135........................ 3rd+ Episodes, 11 to 13 Therapy C1F3S5 1.1385
Visits.
30211........................ 3rd+ Episodes, 0 to 5 Therapy C2F1S1 0.4844
Visits.
30212........................ 3rd+ Episodes, 6 Therapy Visits.. C2F1S2 0.6427
30213........................ 3rd+ Episodes, 7 to 9 Therapy C2F1S3 0.8011
Visits.
30214........................ 3rd+ Episodes, 10 Therapy Visits. C2F1S4 0.9594
30215........................ 3rd+ Episodes, 11 to 13 Therapy C2F1S5 1.1178
Visits.
30221........................ 3rd+ Episodes, 0 to 5 Therapy C2F2S1 0.5660
Visits.
30222........................ 3rd+ Episodes, 6 Therapy Visits.. C2F2S2 0.7217
30223........................ 3rd+ Episodes, 7 to 9 Therapy C2F2S3 0.8774
Visits.
30224........................ 3rd+ Episodes, 10 Therapy Visits. C2F2S4 1.0331
30225........................ 3rd+ Episodes, 11 to 13 Therapy C2F2S5 1.1888
Visits.
30231........................ 3rd+ Episodes, 0 to 5 Therapy C2F3S1 0.6035
Visits.
30232........................ 3rd+ Episodes, 6 Therapy Visits.. C2F3S2 0.7517
30233........................ 3rd+ Episodes, 7 to 9 Therapy C2F3S3 0.8999
Visits.
30234........................ 3rd+ Episodes, 10 Therapy Visits. C2F3S4 1.0481
30235........................ 3rd+ Episodes, 11 to 13 Therapy C2F3S5 1.1963
Visits.
30311........................ 3rd+ Episodes, 0 to 5 Therapy C3F1S1 0.5798
Visits.
30312........................ 3rd+ Episodes, 6 Therapy Visits.. C3F1S2 0.7573
30313........................ 3rd+ Episodes, 7 to 9 Therapy C3F1S3 0.9347
Visits.
30314........................ 3rd+ Episodes, 10 Therapy Visits. C3F1S4 1.1122
30315........................ 3rd+ Episodes, 11 to 13 Therapy C3F1S5 1.2896
Visits.
30321........................ 3rd+ Episodes, 0 to 5 Therapy C3F2S1 0.6614
Visits.
30322........................ 3rd+ Episodes, 6 Therapy Visits.. C3F2S2 0.8362

[[Page 32360]]

30323........................ 3rd+ Episodes, 7 to 9 Therapy C3F2S3 1.0110
Visits.
30324........................ 3rd+ Episodes, 10 Therapy Visits. C3F2S4 1.1858
30325........................ 3rd+ Episodes, 11 to 13 Therapy C3F2S5 1.3607
Visits.
30331........................ 3rd+ Episodes, 0 to 5 Therapy C3F3S1 0.6989
Visits.
30332........................ 3rd+ Episodes, 6 Therapy Visits.. C3F3S2 0.8662
30333........................ 3rd+ Episodes, 7 to 9 Therapy C3F3S3 1.0336
Visits.
30334........................ 3rd+ Episodes, 10 Therapy Visits. C3F3S4 1.2009
30335........................ 3rd+ Episodes, 11 to 13 Therapy C3F3S5 1.3682
Visits.
40111........................ All Episodes, 20+ Therapy Visits. C1F1S1 1.6929
40121........................ All Episodes, 20+ Therapy Visits. C1F2S1 1.6990
40131........................ All Episodes, 20+ Therapy Visits. C1F3S1 1.7165
40211........................ All Episodes, 20+ Therapy Visits. C2F1S1 1.7874
40221........................ All Episodes, 20+ Therapy Visits. C2F2S1 1.7935
40231........................ All Episodes, 20+ Therapy Visits. C2F3S1 1.8110
40311........................ All Episodes, 20+ Therapy Visits. C3F1S1 2.0204
40321........................ All Episodes, 20+ Therapy Visits. C3F2S1 2.0266
40331........................ All Episodes, 20+ Therapy Visits. C3F3S1 2.0441
----------------------------------------------------------------------------------------------------------------

To ensure the changes to the HH PPS case-mix weights are
implemented in a budget neutral manner, we then apply a case-mix budget
neutrality factor to the proposed CY 2019 national, standardized 60-day
episode payment rate (see section III.C.3. of this proposed rule). The
case-mix budget neutrality factor is calculated as the ratio of total
payments when the CY 2019 HH PPS case-mix weights (developed using CY
2017 home health claims data) are applied to CY 2017 utilization
(claims) data to total payments when CY 2018 HH PPS case-mix weights
(developed using CY 2016 home health claims data) are applied to CY
2017 utilization data. This produces a case-mix budget neutrality
factor for CY 2019 of 1.0163.

C. CY 2019 Home Health Payment Rate Update

1. Rebasing and Revising of the Home Health Market Basket
a. Background
Section 1895(b)(3)(B) of the Act requires that the standard
prospective payment amounts for CY 2019 be increased by a factor equal
to the applicable home health market basket update for those HHAs that
submit quality data as required by the Secretary. Effective for cost
reporting periods beginning on or after July 1, 1980, we developed and
adopted an HHA input price index (that is, the home health ``market
basket''). Although ``market basket'' technically describes the mix of
goods and services used to produce home health care, this term is also
commonly used to denote the input price index derived from that market
basket. Accordingly, the term ``home health market basket'' used in
this document refers to the HHA input price index.
The percentage change in the home health market basket reflects the
average change in the price of goods and services purchased by HHAs in
providing an efficient level of home health care services. We first
used the home health market basket to adjust HHA cost limits by an
amount that reflected the average increase in the prices of the goods
and services used to furnish reasonable cost home health care. This
approach linked the increase in the cost limits to the efficient
utilization of resources. For a greater discussion on the home health
market basket, see the notice with comment period published in the
February 15, 1980 Federal Register (45 FR 10450, 10451), the notice
with comment period published in the February 14, 1995 Federal Register
(60 FR 8389, 8392), and the notice with comment period published in the
July 1, 1996 Federal Register (61 FR 34344, 34347). Beginning with the
FY 2002 HHA PPS payments, we used the home health market basket to
update payments under the HHA PPS. We last rebased the home health
market basket effective with the CY 2013 update (77 FR 67081).
The home health market basket is a fixed-weight, Laspeyres-type
price index. A Laspeyres-type price index measures the change in price,
over time, of the same mix of goods and services purchased in the base
period. Any changes in the quantity or mix of goods and services (that
is, intensity) purchased over time are not measured.
The index itself is constructed in three steps. First, a base
period is selected (in this proposed rule, we are proposing to use 2016
as the base period) and total base period expenditures are estimated
for a set of mutually exclusive and exhaustive spending categories,
with the proportion of total costs that each category represents being
calculated. These proportions are called ``cost weights'' or
``expenditure weights.'' Second, each expenditure category is matched
to an appropriate price or wage variable, referred to as a ``price
proxy.'' In almost every instance, these price proxies are derived from
publicly available statistical series that are published on a
consistent schedule (preferably at least on a quarterly basis).
Finally, the expenditure weight for each cost category is multiplied by
the level of its respective price proxy. The sum of these products
(that is, the expenditure weights multiplied by their price index
levels) for all cost categories yields the composite index level of the
market basket in a given period. Repeating this step for other periods
produces a series of market basket levels over time. Dividing an index
level for a given period by an index level for an earlier period
produces a rate of growth in the input price index over that timeframe.
As noted previously, the market basket is described as a fixed-
weight index because it represents the change in price over time of a
constant mix (quantity and intensity) of goods and services needed to
provide HHA services. The effects on total expenditures resulting from
changes in the mix of goods and services purchased

[[Page 32361]]

subsequent to the base period are not measured. For example, a HHA
hiring more nurses to accommodate the needs of patients would increase
the volume of goods and services purchased by the HHA, but would not be
factored into the price change measured by a fixed-weight home health
market basket. Only when the index is rebased would changes in the
quantity and intensity be captured, with those changes being reflected
in the cost weights. Therefore, we rebase the market basket
periodically so that the cost weights reflect recent changes in the mix
of goods and services that HHAs purchase (HHA inputs) to furnish
inpatient care between base periods.
b. Rebasing and Revising the Home Health Market Basket
We believe that it is desirable to rebase the home health market
basket periodically so that the cost category weights reflect changes
in the mix of goods and services that HHAs purchase in furnishing home
health care. We based the cost category weights in the current home
health market basket on CY 2010 data. We are proposing to rebase and
revise the home health market basket to reflect 2016 Medicare cost
report (MCR) data, the latest available and most complete data on the
actual structure of HHA costs.
The terms ``rebasing'' and ``revising,'' while often used
interchangeably, denote different activities. The term ``rebasing''
means moving the base year for the structure of costs of an input price
index (that is, in this exercise, we are proposing to move the base
year cost structure from CY 2010 to CY 2016) without making any other
major changes to the methodology. The term ``revising'' means changing
data sources, cost categories, and/or price proxies used in the input
price index.
For this proposed rebasing and revising, we are rebasing the
detailed wages and salaries and benefits cost weights to reflect 2016
BLS Occupational Employment Statistics (OES) data on HHAs. The 2010-
based home health market basket used 2010 BLS OES data on HHAs. We are
also proposing to break out the All Other (residual) cost category
weight into more detailed cost categories, based on the 2007 Benchmark
U.S. Department of Commerce, Bureau of Economic Analysis (BEA) Input-
Output (I-O) Table for HHAs. The 2010-based home health market basket
used the 2002 I-O data. Finally, due to its small weight, we are
proposing to eliminate the cost category `Postage' and include these
expenses in the `All Other Services' cost weight.
c. Derivation of the Proposed 2016-Based Home Health Market Basket Cost
Weights
The major cost weights for this proposed revised and rebased home
health market basket are derived from the Medicare Cost Reports (MCR;
CMS Form 1728-94) data for freestanding HHAs whose cost reporting
period began on or after October 1, 2015 and before October 1, 2016. Of
the 2016 Medicare cost reports for freestanding HHAs, approximately 84
percent of the reports had a begin date on January 1, 2016,
approximately 6 percent had a begin date on July 1, 2016, and
approximately 4 percent had a begin date on October 1, 2015. Using this
methodology allowed our sample to include HHAs with varying cost report
years including, but not limited to, the Federal fiscal or calendar
year. We refer to the market basket as a calendar year market basket
because the base period for all price proxies and weights are set to CY
2016.
We propose to maintain our policy of using data from freestanding
HHAs, which account for over 90 percent of HHAs (82 FR 35383), because
we have determined that they better reflect HHAs' actual cost
structure. Expense data for hospital-based HHAs can be affected by the
allocation of overhead costs over the entire institution.
We are proposing to derive eight major expense categories (Wages
and Salaries, Benefits, Contract Labor, Transportation, Professional
Liability Insurance (PLI), Fixed Capital, Movable Capital, and a
residual ``All Other'') from the 2016 Medicare HHA cost reports. Due to
its small weight, we are proposing to eliminate the cost category
`Postage' and include these expenses in the ``All Other (residual)''
cost weight. These major expense categories are based on those cost
centers that are reimbursable under the HHA PPS, specifically Skilled
Nursing Care, Physical Therapy, Occupational Therapy, Speech Pathology,
Medical Social Services, Home Health Aide, and Supplies. These are the
same cost centers that were used in the 2014 base payment rebasing (78
FR 72276), which are described in the Abt Associates Inc. June 2013,
Technical Paper, ``Analyses In Support of Rebasing and Updating
Medicare Home Health Payment Rates'' (https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Analyses-in-
Support-of-Rebasing-and-Updating-the-Medicare-Home-Health-Payment-
Rates-Technical-Report.pdf). Total costs for the HHA PPS reimbursable
services reflect overhead allocation. We provide detail on the
calculations for each major expense category.
(1) Wages and Salaries: Wages and Salaries costs reflect direct
patient care wages and salaries costs as well as wages and salaries
costs associated with Plant Operations and Maintenance, Transportation,
and Administrative and General. Specifically, we are proposing to
calculate Wages and Salaries by summing costs from Worksheet A, column
1, lines 3 through 12 and subtracting line 5.03 (A&G Nonreimbursable
costs).
(2) Benefits: Benefits costs reflect direct patient care benefit
costs as well as benefit costs associated with Plant Operations and
Maintenance, Transportation, and Administrative and General.
Specifically, we are proposing to calculate Benefits by summing costs
from Worksheet A, column 2, lines 3 through 12 and subtracting line
5.03 (A&G Nonreimbursable costs).
(3) Direct Patient Care Contract Labor: Contract Labor costs
reflect direct patient care contract labor. Specifically, we are
proposing to calculate Contract Labor by summing costs from Worksheet
A, column 4, lines 6 through 11.
(4) Transportation: Transportation costs reflect direct patient
care costs as well as transportation costs associated with Capital
Expenses, Plant Operations and Maintenance, and Administrative and
General. Specifically, we are proposing to calculate Transportation by
summing costs from Worksheet A, column 3, lines 1 through 12 and
subtracting line 5.03 (A&G Nonreimbursable costs).
(5) Professional Liability Insurance: Professional Liability
Insurance reflects premiums, paid losses, and self-insurance costs.
Specifically we are proposing to calculate Professional Liability
Insurance by summing costs from Worksheet S2, lines 27.01, 27.02 and
27.03.
(6) Fixed Capital: Fixed Capital-related costs reflect the portion
of Medicare-allowable costs reported in ``Capital Related Buildings and
Fixtures'' (Worksheet A, column 5, line 1). We calculate this Medicare
allowable portion by first calculating a ratio for each provider that
reflects fixed capital costs as a percentage of HHA reimbursable
services. Specifically this ratio is calculated as the sum of costs
from Worksheet B, column 1, lines 6 through 12 divided by the sum of
costs from Worksheet B, column 1, line 1 minus lines 3 through 5. This
percentage is then applied to the sum of the costs from Worksheet A,
column 5, line 1.

[[Page 32362]]

(7) Movable Capital: Movable Capital-related costs reflect the
portion of Medicare-allowable costs reported in ``Capital Related
Moveable Equipment'' (Worksheet A, column 5, line 2). We calculate this
Medicare allowable portion by first calculating a ratio for each
provider that reflects movable capital costs as a percentage of HHA
reimbursable services. Specifically this ratio is calculated as the sum
of costs from Worksheet B, column 2, lines 6 through 12 divided by the
sum of costs from Worksheet B, column 2, line 2 minus lines 3 through
5. This percentage is then applied to the sum of the costs from
Worksheet A, column 5, line 2.
(8) All Other (residual): The ``All Other'' cost weight is a
residual, calculated by subtracting the major cost weight percentages
(Wages and Salaries, Benefits, Direct Patient Care Contract Labor,
Transportation, Professional Liability Insurance, Fixed Capital, and
Movable Capital) from 1.
As prescription drugs and DME are not payable under the HH PPS, we
continue to exclude those items from the home health market basket.
Totals within each of the major cost categories were edited to remove
reports where the data were deemed unreasonable (for example, when
total costs were not greater than zero). We then determined the
proportion of total Medicare allowable costs that each category
represents. For all of the major cost categories except the
``residual'' All Other cost weight, we then removed those providers
whose derived cost weights fall in the top and bottom five percent of
provider-specific cost weights to ensure the removal of outliers. After
the outliers were removed, we summed the costs for each category across
all remaining providers. We then divided this by the sum of total
Medicare allowable costs across all remaining providers to obtain a
cost weight for the proposed 2016-based home health market basket for
the given category.
Table 9 shows the major cost categories and their respective cost
weights as derived from the Medicare cost reports for this proposed
rule.

Table 9--Major Cost Categories as Derived From the Medicare Cost Reports
------------------------------------------------------------------------
Proposed 2016
Major cost categories 2010 based based
------------------------------------------------------------------------
Wages and Salaries (including allocated 66.3 65.1
direct patient care contract labor)....
Benefits (including allocated direct 12.2 10.9
patient care contract labor)...........
Transportation.......................... 2.5 2.6
Professional Liability Insurance 0.4 0.3
(Malpractice)..........................
Fixed Capital........................... 1.5 1.4
Moveable Capital........................ 0.6 0.6
``All Other'' residual.................. 16.5 19.0
------------------------------------------------------------------------
* Figures may not sum to 100.0 due to rounding.

The decrease in the wages and salaries cost weight of 1.2
percentage points and the decrease in the benefits cost weight of 1.3
percentage points is attributable to both employed compensation and
direct patient care contract labor costs as reported on the MCR data.
Our analysis of the MCR data shows that the decrease in the
compensation cost weight of 2.4 percentage points (calculated by
combining wages and salaries and benefits) from 2010 to 2016 occurred
among for-profit, nonprofit, and government providers and among
providers serving only rural beneficiaries, only urban beneficiaries,
or both rural and urban beneficiaries.
Over the 2010 to 2016 time period, the average number of FTEs per
provider decreased considerably. This corresponds with the HHA claims
analysis published on page 35279 of the CY 2018 proposed rule (https://
www.gpo.gov/fdsys/pkg/FR-2017-07-28/pdf/2017-15825.pdf), which shows
that the number of visits per 60-day episode has decreased from 19.8
visits in 2010 to 17.9 visits in 2016 for Medicare PPS. Medicare visits
account for approximately 60 percent of total visits.
The direct patient care contract labor costs are contract labor
costs for skilled nursing, physical therapy, occupational therapy,
speech therapy, and home health aide cost centers. We allocated these
direct patient care contract labor costs to the Wages and Salaries and
Benefits cost categories based on each provider's relative proportions
of both employee wages and salaries and employee benefits costs. For
example, the direct patient care contract labor costs that are
allocated to wages and salaries is equal to: (A) The employee wages and
salaries costs as a percent of the sum of employee wages and salaries
costs and employee benefits costs times; and (B) direct patient care
contract labor costs. Nondirect patient care contract labor costs (such
as contract labor costs reported in the Administrative and General cost
center of the MCR) are captured in the ``All Other'' residual cost
weight and later disaggregated into more detail as described below.
This is a similar methodology that was implemented for the 2010-based
home health market basket.
We further divide the ``All Other'' residual cost weight estimated
from the 2016 Medicare cost report data into more detailed cost
categories. To divide this cost weight we are proposing to use the 2007
Benchmark I-O ``Use Tables/Before Redefinitions/Purchaser Value'' for
NAICS 621600, Home Health Agencies, published by the BEA. These data
are publicly available at https://www.bea.gov/industry/io_annual.htm.
The BEA Benchmark I-O data are generally scheduled for publication
every five years. The most recent data available at the time of
rebasing was for 2007. The 2007 Benchmark I-O data are derived from the
2007 Economic Census and are the building blocks for BEA's economic
accounts. Therefore, they represent the most comprehensive and complete
set of data on the economic processes or mechanisms by which output is
produced and distributed.\10\ Besides Benchmark I-O estimates, BEA also
produces Annual I-O estimates. While based on a similar methodology,
the Annual I-O estimates reflect less comprehensive and less detailed
data sources and are subject to revision when benchmark data become
available. Instead of using the less detailed Annual I-O data, we are
proposing to inflate the detailed 2007 Benchmark I-O data forward to
2016 by applying the annual price changes from the respective price
proxies to the appropriate market basket cost categories that are
obtained from the 2007 Benchmark I-O data. We repeated this practice
for each year. We then calculated the cost shares that each cost

[[Page 32363]]

category represents of the 2007 data inflated to 2016. These resulting
2016 cost shares were applied to the ``All Other'' residual cost weight
to obtain the detailed cost weights for the proposed 2016-based home
health market basket. For example, the cost for Operations and
Maintenance represents 8.0 percent of the sum of the ``All Other'' 2007
Benchmark I-O HHA Expenditures inflated to 2016. Therefore, the
Operations and Maintenance cost weight represents 8.0 percent of the
proposed 2016-based home health market basket's ``All Other'' cost
category (19.0 percent), yielding an Operations and Maintenance
proposed cost weight of 1.5 percent in the proposed 2016-based home
health market basket (0.080 x 19.0 percent = 1.5 percent). For the
2010-based home health market basket, we used the same methodology
utilizing the 2002 Benchmark I-O data (aged to 2010).
---------------------------------------------------------------------------

\10\ https://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
---------------------------------------------------------------------------

Using this methodology, we are proposing to derive nine detailed
cost categories from the proposed 2016-based home health market basket
``All Other'' residual cost weight (19.0 percent). These categories
are: (1) Operations and Maintenance; (2) Administrative Support; (3)
Financial Services; (4) Medical Supplies; (5) Rubber and Plastics; (6)
Telephone; (7) Professional Fees; (8) Other Products; and (9) Other
Services. The 2010-based home health market basket included a separate
cost category for Postage; however, due to its small weight for the
2016-based home health market basket, we propose to eliminate the
stand-alone cost category for Postage and include these expenses in the
Other Services cost category.
Table 10 lists the proposed 2016-based home health market basket
cost categories, cost weights, and price proxies.

Table 10--Cost Categories, Weights, and Price Proxies
in Proposed 2016-Based Home Health Market Basket
------------------------------------------------------------------------
Cost categories Weight Price proxy
------------------------------------------------------------------------
Compensation, including 76.1 .........................
allocated contract services'
labor.
Wages and Salaries, 65.1 Proposed Home Health
including allocated Blended Wages and
contract services' labor. Salaries Index (2016).
Benefits, including 10.9 Proposed Home Health
allocated contract Blended Benefits Index
services' labor. (2016).
Operations & Maintenance..... 1.5 CPI-U for Fuel and
utilities.
Professional Liability 0.3 CMS Physician
Insurance. Professional Liability
Insurance Index.
Administrative & General & 17.4 .........................
Other Expenses including
allocated contract services'
labor.
Administrative Support... 1.0 ECI for Total
compensation for Private
industry workers in
Office and
administrative support.
Financial Services....... 1.9 ECI for Total
compensation for Private
industry workers in
Financial activities.
Medical Supplies......... 0.9 PPI Commodity data for
Medical, surgical &
personal aid devices.
Rubber & Plastics........ 1.6 PPI Commodity data for
Rubber and plastic
products.
Telephone................ 0.7 CPI-U for Telephone
services.
Professional Fees........ 5.3 ECI for Total
compensation for Private
industry workers in
Professional and
related.
Other Products........... 2.8 PPI Commodity data for
Finished goods less
foods and energy.
Other Services........... 3.2 ECI for Total
compensation for Private
industry workers in
Service occupations.
Transportation............... 2.6 CPI-U for Transportation.
Capital-Related.............. 2.1 .........................
Fixed Capital............ 1.4 CPI-U for Owners'
equivalent rent of
residences.
Movable Capital.......... 0.6 PPI Commodity data for
Machinery and equipment.
----------------
Total.................... * 100.0 .........................
------------------------------------------------------------------------
* Figures may not sum due to rounding.

d. Proposed 2016-Based Home Health Market Basket Price Proxies
After we computed the CY 2016 cost category weights for the
proposed rebased home health market basket, we selected the most
appropriate wage and price indexes to proxy the rate of change for each
expenditure category. With the exception of the price index for
Professional Liability Insurance costs, the proposed price proxies are
based on Bureau of Labor Statistics (BLS) data and are grouped into one
of the following BLS categories:
Employment Cost Indexes--Employment Cost Indexes (ECIs)
measure the rate of change in employee wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. They are not affected by shifts in skill mix. ECIs
are superior to average hourly earnings as price proxies for input
price indexes for two reasons: (a) They measure pure price change; and
(b) they are available by occupational groups, not just by industry.
Consumer Price Indexes--Consumer Price Indexes (CPIs)
measure change in the prices of final goods and services bought by the
typical consumer. Consumer price indexes are used when the expenditure
is more similar to that of a purchase at the retail level rather than
at the wholesale level, or if no appropriate Producer Price Indexes
(PPIs) were available.
Producer Price Indexes--PPIs measures average changes in
prices received by domestic producers for their goods and services.
PPIs are used to measure price changes for goods sold in other than
retail markets. For example, a PPI for movable equipment is used rather
than a CPI for equipment. PPIs in some cases are preferable price
proxies for goods that HHAs purchase at wholesale levels. These fixed-
weight indexes are a measure of price change

[[Page 32364]]

at the producer or at the intermediate stage of production.
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance. Reliability indicates that the
index is based on valid statistical methods and has low sampling
variability. Widely accepted statistical methods ensure that the data
were collected and aggregated in way that can be replicated. Low
sampling variability is desirable because it indicates that sample
reflects the typical members of the population. (Sampling variability
is variation that occurs by chance because a sample was surveyed rather
than the entire population.) Timeliness implies that the proxy is
published regularly, preferably at least once a quarter. The market
baskets are updated quarterly and therefore it is important the
underlying price proxies be up-to-date, reflecting the most recent data
available. We believe that using proxies that are published regularly
helps ensure that we are using the most recent data available to update
the market basket. We strive to use publications that are disseminated
frequently because we believe that this is an optimal way to stay
abreast of the most current data available. Availability means that the
proxy is publicly available. We prefer that our proxies are publicly
available because this will help ensure that our market basket updates
are as transparent to the public as possible. In addition, this enables
the public to be able to obtain the price proxy data on a regular
basis. Finally, relevance means that the proxy is applicable and
representative of the cost category weight to which it is applied. The
CPIs, PPIs, and ECIs selected by us to be proposed in this regulation
meet these criteria. Therefore, we believe that they continue to be the
best measure of price changes for the cost categories to which they
would be applied.
As part of the revising and rebasing of the home health market
basket, we are proposing to rebase the home health blended Wages and
Salaries index and the home health blended Benefits index. We propose
to use these blended indexes as price proxies for the Wages and
Salaries and the Benefits portions of the proposed 2016-based home
health market basket, as we did in the 2010-based home health market
basket. A more detailed discussion is provided below.
Wages and Salaries: For measuring price growth in the
2016-based home health market basket, we are proposing to apply six
price proxies to six occupational subcategories within the Wages and
Salaries component, which would reflect the HHA occupational mix. This
is the same approach used for the 2010-based index. We use a blended
wage proxy because there is not a published wage proxy specific to the
home health industry.
We are proposing to continue to use the National Industry-Specific
Occupational Employment and Wage estimates for North American
Industrial Classification System (NAICS) 621600, Home Health Care
Services, published by the BLS Office of Occupational Employment
Statistics (OES) as the data source for the cost shares of the home
health blended wage and benefits proxy. This is the same data source
that was used for the 2010-based HHA blended wage and benefit proxies;
however, we are proposing to use the May 2016 estimates in place of the
May 2010 estimates. Detailed information on the methodology for the
national industry-specific occupational employment and wage estimates
survey can be found at https://www.bls.gov/oes/current/oes_tec.htm.
The needed data on HHA expenditures for the six occupational
subcategories (Health-Related Professional and Technical, Non Health-
Related Professional and Technical, Management, Administrative, Health
and Social Assistance Service, and Other Service Workers) for the wages
and salaries component were tabulated from the May 2016 OES data for
NAICS 621600, Home Health Care Services. Table 11 compares the proposed
2016 occupational assignments to the 2010 occupational assignments of
the six CMS designated subcategories. If an OES occupational
classification does not exist in the 2010 or 2016 data we use ``n/a.''

Table 11--Proposed 2016 Occupational Assignments Compared to 2010
Occupational Assignments for CMS Home Health Wages and Salaries Blend
------------------------------------------------------------------------
2016 proposed occupational 2010 occupational groupings
groupings ------------------------------------
------------------------------------
Health-related Health-related
Group 1 professional Group 1 professional
and technical and technical
------------------------------------------------------------------------
n/a............... n/a............ 29-1021........... Dentists,
General.
29-1031........... Dietitians and 29-1031........... Dietitians and
Nutritionists. Nutritionists.
29-1051........... Pharmacists.... 29-1051........... Pharmacists.
29-1062........... Family and 29-1062........... Family and
General General
Practitioners. Practitioners.
29-1063........... Internists, 29-1063........... Internists,
General. General.
29-1065........... Pediatricians, n/a............... n/a.
General.
29-1066........... Psychiatrists.. n/a............... n/a.
29-1069........... Physicians and 29-1069........... Physicians and
Surgeons, All Surgeons, All
Other. Other.
29-1071........... Physician 29-1071........... Physician
Assistants. Assistants.
n/a............... n/a............ 29-1111........... Registered
Nurses.
29-1122........... Occupational 29-1122........... Occupational
Therapists. Therapists.
29-1123........... Physical 29-1123........... Physical
Therapists. Therapists.
29-1125........... Recreational 29-1125........... Recreational
Therapists. Therapists.
29-1126........... Respiratory 29-1126........... Respiratory
Therapists. Therapists.
29-1127........... Speech-Language 29-1127........... Speech-Language
Pathologists. Pathologists.
29-1129........... Therapists, All 29-1129........... Therapists, All
Other. Other.
29-1141........... Registered n/a............... n/a.
Nurses.
29-1171........... Nurse n/a............... n/a.
Practitioners.
29-1199........... Health 29-1199........... Health
Diagnosing and Diagnosing and
Treating Treating
Practitioners, Practitioners,
All Other. All Other.
------------------------------------------------------------------------
------------------------------------------------------------------------

[[Page 32365]]

------------------------------------------------------------------------
2016 proposed occupational groups 2010 occupational groupings
------------------------------------------------------------------------
Non health Non health
related related
Group 2 professional & Group 2 professional &
technical technical
------------------------------------------------------------------------
13-0000........... Business and 13-0000........... Business and
Financial Financial
Operations Operations
Occupations. Occupations.
15-0000........... Computer and 15-0000........... Computer and
Mathematical Mathematical
Occupations. Science
Occupations.
n/a............... n/a............ 17-0000........... Architecture
and
Engineering
Occupations.
19-0000........... Life, Physical, 19-0000........... Life, Physical,
and Social and Social
Science Science
Occupations. Occupations.
n/a............... n/a............ 23-0000........... Legal
Occupations.
25-0000........... Education, 25-0000........... Education,
Training, and Training, and
Library Library
Occupations. Occupations.
27-0000........... Arts, Design, 27-0000........... Arts, Design,
Entertainment, Entertainment,
Sports, and Sports, and
Media Media
Occupations. Occupations.
------------------------------------------------------------------------
Group 3 Management Group 3 Management
------------------------------------------------------------------------
11-0000........... Management 11-0000........... Management
Occupations. Occupations.
------------------------------------------------------------------------
Group 4 Administrative Group 4 Administrative
------------------------------------------------------------------------
43-0000........... Office and 43-0000........... Office and
Administrative Administrative
Support Support
Occupations. Occupations.
------------------------------------------------------------------------
Group 5 Health and Group 5 Health and
social social
assistance assistance
services services
------------------------------------------------------------------------
21-0000........... Community and 21-0000........... Community and
Social Service Social
Occupations. Services
Occupations.
29-2011........... Medical and 29-2011........... Medical and
Clinical Clinical
Laboratory Laboratory
Technologists. Technologists.
29-2012........... Medical and 29-2012........... Medical and
Clinical Clinical
Laboratory Laboratory
Technicians. Technicians.
29-2021........... Dental 29-2021........... Dental
Hygienists. Hygienists.
29-2032........... Diagnostic 29-2032........... Diagnostic
Medical Medical
Sonographers. Sonographers.
29-2034........... Radiologic 29-2034........... Radiologic
Technologists. Technologists
and
Technicians.
29-2041........... Emergency 29-2041........... Emergency
Medical Medical
Technicians Technicians
and Paramedics. and
Paramedics.
29-2051........... Dietetic 29-2051........... Dietetic
Technicians. Technicians.
29-2052........... Pharmacy 29-2052........... Pharmacy
Technicians. Technicians.
29-2053........... Psychiatric n/a............... n/a.
Technicians.
29-2054........... Respiratory 29-2054........... Respiratory
Therapy Therapy
Technicians. Technicians.
29-2055........... Surgical n/a............... n/a.
Technologists.
29-2061........... Licensed 29-2061........... Licensed
Practical and Practical and
Licensed Licensed
Vocational Vocational
Nurses. Nurses.
29-2071........... Medical Records 29-2071........... Medical Records
and Health and Health
Information Information
Technicians. Technicians.
29-2099........... Health 29-2099........... Health
Technologists Technologists
and and
Technicians, Technicians,
All Other. All Other.
n/a............... n/a............ 29-9012........... Occupational
Health and
Safety
Technicians.
29-9099........... Healthcare 29-9099........... Healthcare
Practitioners Practitioner
and Technical and Technical
Workers, All Workers, All
Other. Other.
31-0000........... Healthcare 31-0000........... Healthcare
Support Support
Occupations. Occupations.
------------------------------------------------------------------------
Group 6 Other service Group 6 Other service
workers workers
------------------------------------------------------------------------
33-0000........... Protective 33-0000........... Protective
Service Service
Occupations. Occupations.
35-0000........... Food 35-0000........... Food
Preparation Preparation
and Serving and Serving
Related Related
Occupations. Occupations.
37-0000........... Building and 37-0000........... Building and
Grounds Grounds
Cleaning and Cleaning and
Maintenance Maintenance
Occupations. Occupations.
39-0000........... Personal Care 39-0000........... Personal Care
and Service and Service
Occupations. Occupations.
41-0000........... Sales and 41-0000........... Sales and
Related Related
Occupations. Occupations.
47-0000........... Construction n/a............... n/a.
and Extraction
Occupations.
49-0000........... Installation, 49-0000........... Installation,
Maintenance, Maintenance,
and Repair and Repair
Occupations. Occupations.
51-0000........... Production 51-0000........... Production
Occupations. Occupations.
53-0000........... Transportation 53-0000........... Transportation
and Material and Material
Moving Moving
Occupations. Occupations.
------------------------------------------------------------------------

Total expenditures by occupation were calculated by taking the OES
number of employees multiplied by the OES annual average salary for
each subcategory, and then calculating the proportion of total wage
costs that each subcategory represents. The proportions listed in Table
12 represent the Wages and Salaries blend weights.

Table 12--Comparison of the Proposed 2016-Based Home Health Wages and Salaries Blend and the 2010-Based Home
Health Wages and Salaries Blend
----------------------------------------------------------------------------------------------------------------
Proposed 2016
Cost subcategory weight 2010 weight Price proxy BLS series ID
----------------------------------------------------------------------------------------------------------------
Health-Related Professional and 33.7 33.4 ECI for Wages and CIU1026220000000I.
Technical. salaries for All
Civilian workers
in Hospitals.
Non Health-Related Professional 2.3 2.3 ECI for Wages and CIU2025400000000I.
and Technical. salaries for
Private industry
workers in
Professional,
scientific, and
technical
services.
Management..................... 7.6 8.3 ECI for Wages and CIU2020000110000I.
salaries for
Private industry
workers in
Management,
business, and
financial.

[[Page 32366]]

Administrative................. 6.7 7.7 ECI for Wages and CIU2020000220000I.
salaries for
Private industry
workers in
Office and
administrative
support.
Health and Social Assistance 35.3 35.8 ECI for Wages and CIU1026200000000I.
Services. salaries for All
Civilian workers
in Health care
and social
assistance.
Other Service Occupations...... 14.4 12.6 ECI for Wages and CIU2020000300000I.
salaries for
Private industry
workers in
Service
occupations.
--------------------------------
Total *.................... 100.0 100.0
----------------------------------------------------------------------------------------------------------------
* Totals may not sum due to rounding.

A comparison of the yearly changes from CY 2016 to CY 2019 for the
2010-based home health Wages and Salaries blend and the proposed 2016-
based home health Wages and Salaries blend is shown in Table 13. The
annual increases in the two price proxies are the same when rounded to
one decimal place.

Table 13--Annual Growth in Proposed 2016 and 2010 Home Health Wages and Salaries Blend
----------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019
----------------------------------------------------------------------------------------------------------------
Wage Blend 2016................................. 2.3 2.5 2.6 3.0
Wage Blend 2010................................. 2.3 2.5 2.6 3.0
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Insight Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017.

Benefits: For measuring Benefits price growth in the
proposed 2016-based home health market basket, we are proposing to
apply applicable price proxies to the six occupational subcategories
that are used for the Wages and Salaries blend. The proposed six
categories in Table 14 are the same as those in the 2010-based home
health market basket and include the same occupational mix as listed in
Table 14.

Table 14--Comparison of the Proposed 2016-Based Home Health Benefits Blend and 2010-Based Home Health Benefits
Blend
----------------------------------------------------------------------------------------------------------------
Proposed 2016
Cost category weight 2010 weight Price proxy
----------------------------------------------------------------------------------------------------------------
Health-Related Professional and Technical..... 33.9 33.5 ECI for Benefits for All
Civilian workers in Hospitals.
Non Health-Related Professional and Technical. 2.3 2.2 ECI for Benefits for Private
industry workers in
Professional, scientific, and
technical services.
Management.................................... 7.3 8.0 ECI for Benefits for Private
industry workers in Management,
business, and financial.
Administrative................................ 6.7 7.8 ECI for Benefits for Private
industry workers in Office and
administrative support.
Health and Social Assistance Services......... 35.5 35.9 ECI for Benefits for All
Civilian workers in Health care
and social assistance.
Other Service Workers......................... 14.2 12.5 ECI for Benefits for Private
industry workers in Service
occupations.
--------------------------------
Total *................................... 100.0 100.0
----------------------------------------------------------------------------------------------------------------
* Totals may not sum due to rounding.

There is no available data source that exists for benefit
expenditures by occupation for the home health industry. Thus, to
construct weights for the home health benefits blend we calculated the
ratio of benefits to wages and salaries for CY 2016 for the six ECI
series we are proposing to use in the blended `wages and salaries' and
`benefits' indexes. To derive the relevant benefits weight, we applied
the benefit-to-wage ratios to each of the six occupational
subcategories from the 2016 OES wage and salary weights, and
normalized. For example, the ratio of benefits to wages from the 2016
home health wages and salaries blend and the benefits blend for the
management category is 0.984. We apply this ratio to the 2016 OES
weight for wages and salaries for management, 7.6 percent, and then
normalize those weights relative to the other five benefit occupational
categories to obtain a benefit weight for management of 7.3 percent.
A comparison of the yearly changes from CY 2016 to CY 2019 for the
2010-based home health Benefits blend and the proposed 2016-based home
health Benefits blend is shown in Table 15. With the exception of a 0.1
percentage point difference in 2019, the annual increases in the two
price proxies are the same when rounded to one decimal place.

[[Page 32367]]

Table 15--Annual Growth in the Proposed 2016 Home Health Benefits Blend and the 2010 Home Health Benefits Blend
----------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019
----------------------------------------------------------------------------------------------------------------
Benefits Blend 2016............................. 1.7 1.9 2.4 3.0
Benefits Blend 2010............................. 1.7 1.9 2.4 2.9
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Insight Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017.

Operations and Maintenance: We are proposing to use CPI
U.S. city average for Fuel and utilities (BLS series code
#CUUR0000SAH2) to measure price growth of this cost category. The same
proxy was used for the 2010-based home health market basket.
Professional Liability Insurance: We are proposing to use
the CMS Physician Professional Liability Insurance price index to
measure price growth of this cost category. The same proxy was used for
the 2010-based home health market basket.
To accurately reflect the price changes associated with physician
PLI, each year we collect PLI premium data for physicians from a
representative sample of commercial carriers and publically available
rate filings as maintained by each State's Association of Insurance
Commissioners. As we require for our other price proxies, the PLI price
proxy is intended to reflect the pure price change associated with this
particular cost category. Thus, the level of liability coverage is held
constant from year to year. To accomplish this, we obtain premium
information from a sample of commercial carriers for a fixed level of
coverage, currently $1 million per occurrence and a $3 million annual
limit. This information is collected for every State by physician
specialty and risk class. Finally, the State-level, physician-specialty
data are aggregated to compute a national total, using counts of
physicians by State and specialty as provided in the AMA publication,
Physician Characteristics and Distribution in the U.S.
Administrative and Support: We are proposing to use the
ECI for Total compensation for Private industry workers in Office and
administrative support (BLS series code #CIU2010000220000I) to measure
price growth of this cost category. The same proxy was used for the
2010-based home health market basket.
Financial Services: We are proposing to use the ECI for
Total compensation for Private industry workers in Financial activities
(BLS series code #CIU201520A000000I) to measure price growth of this
cost category. The same proxy was used for the 2010-based home health
market basket.
Medical Supplies: We are proposing to use the PPI
Commodity data for Miscellaneous products-Medical, surgical & personal
aid devices (BLS series code #WPU156) to measure price growth of this
cost category. The same proxy was used for the 2010-based home health
market basket.
Rubber and Plastics: We are proposing to use the PPI
Commodity data for Rubber and plastic products (BLS series code #WPU07)
to measure price growth of this cost category. The same proxy was used
for the 2010-based home health market basket.
Telephone: We are proposing to use CPI U.S. city average
for Telephone services (BLS series code #CUUR0000SEED) to measure price
growth of this cost category. The same proxy was used for the 2010-
based home health market basket.
Professional Fees: We are proposing to use the ECI for
Total compensation for Private industry workers in Professional and
related (BLS series code #CIS2010000120000I) to measure price growth of
this category. The same proxy was used for the 2010-based home health
market basket.
Other Products: We are proposing to use the PPI Commodity
data for Final demand-Finished goods less foods and energy (BLS series
code #WPUFD4131) to measure price growth of this category. The same
proxy was used for the 2010-based home health market basket.
Other Services: We are proposing to use the ECI for Total
compensation for Private industry workers in Service occupations (BLS
series code #CIU2010000300000I) to measure price growth of this
category. The same proxy was used for the 2010-based home health market
basket.
Transportation: We are proposing to use the CPI U.S. city
average for Transportation (BLS series code #CUUR0000SAT) to measure
price growth of this category. The same proxy was used for the 2010-
based home health market basket.
Fixed capital: We are proposing to use the CPI U.S. city
average for Owners' equivalent rent of residences (BLS series code
#CUUS0000SEHC) to measure price growth of this cost category. The same
proxy was used for the 2010-based home health market basket.
Movable Capital: We are proposing to use the PPI Commodity
data for Machinery and equipment (BLS series code #WPU11) to measure
price growth of this cost category. The same proxy was used for the
2010-based home health market basket.
e. Rebasing Results
A comparison of the yearly changes from CY 2014 to CY 2021 for the
2010-based home health market basket and the proposed 2016-based home
health market basket is shown in Table 16.

Table 16--Comparison of the 2010-Based Home Health Market Basket and the Proposed 2016-Based Home Health Market
Basket, Percent Change, 2014-2021
----------------------------------------------------------------------------------------------------------------
Proposed home Difference
Home health health market (proposed 2016-
market basket, basket, 2016- based less
2010-based based 2010-based)
----------------------------------------------------------------------------------------------------------------
Historical data:
CY 2014..................................................... 1.6 1.6 0.0
CY 2015..................................................... 1.6 1.5 -0.1
CY 2016..................................................... 2.0 2.0 0.0
CY 2017..................................................... 2.3 2.3 0.0

[[Page 32368]]

Average CYs 2014-2017................................... 1.9 1.9 0.0
Forecast:
CY 2018..................................................... 2.5 2.5 0.0
CY 2019..................................................... 2.8 2.8 0.0
CY 2020..................................................... 3.0 3.0 0.0
CY 2021..................................................... 3.0 3.0 0.0
Average CYs 2018-2021................................... 2.8 2.8 0.0
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Inc. 1st Quarter 2018 forecast with historical data through 4th Quarter 2017.

Table 16 shows that the forecasted rate of growth for CY 2019 for
the proposed 2016-based home health market basket is 2.8 percent, the
same rate of growth as estimated using the 2010-based home health
market basket; other forecasted years also show a similar increase.
Similarly, the historical estimates of the growth in the 2016-based and
2010-based home health market basket are the same except for CY 2015
where the 2010-based home health market basket is 0.1 percentage point
higher. We note that if more recent data are subsequently available
(for example, a more recent estimate of the market basket), we would
use such data to determine the market basket increases in the final
rule.
f. Labor-Related Share
Effective for CY 2019, we are proposing to revise the labor-related
share to reflect the proposed 2016-based home health market basket
Compensation (Wages and Salaries plus Benefits) cost weight. The
current labor-related share is based on the Compensation cost weight of
the 2010-based home health market basket. Based on the proposed 2016-
based home health market basket, the labor-related share would be 76.1
percent and the proposed non-labor-related share would be 23.9 percent.
The labor-related share for the 2010-based home health market basket
was 78.5 percent and the non-labor-related share was 21.5 percent. As
explained earlier, the decrease in the compensation cost weight of 2.4
percentage points is attributable to both employed compensation (wages
and salaries and benefits for employees) and direct patient care
contract labor costs as reported in the MCR data. Table 17 details the
components of the labor-related share for the 2010-based and proposed
2016-based home health market baskets.

Table 17--Labor-Related Share of Current and Proposed Home Health Market
Baskets
------------------------------------------------------------------------
2010-based Proposed 2016-
Cost category market basket based market
weight basket weight
------------------------------------------------------------------------
Wages and Salaries...................... 66.3 65.1
Employee Benefits....................... 12.2 11.0
Total Labor-Related..................... 78.5 76.1
Total Non Labor-Related................. 21.5 23.9
------------------------------------------------------------------------

We propose to implement the proposed revision to the labor-related
share of 76.1 percent in a budget neutral manner. This proposal would
be consistent with our policy of implementing the annual recalibration
of the case-mix weights and update of the home health wage index in a
budget neutral manner.
g. Multifactor Productivity
In the CY 2015 HHA PPS final rule (79 FR 38384 through 38384), we
finalized our methodology for calculating and applying the MFP
adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of
the Act, requires that, in CY 2015 (and in subsequent calendar years,
except CY 2018 (under section 411(c) of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 16,
2015)), the market basket percentage under the HHA prospective payment
system as described in section 1895(b)(3)(B) of the Act be annually
adjusted by changes in economy-wide productivity. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment to
be equal to the 10-year moving average of change in annual economy-wide
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, calendar year, cost reporting period, or other annual
period) (the ``MFP adjustment''). The Bureau of Labor Statistics (BLS)
is the agency that publishes the official measure of private nonfarm
business MFP. Please see https://www.bls.gov/mfp, to obtain the BLS
historical published MFP data.
Based on IHS Global Inc.'s (IGI's) first quarter 2018 forecast with
history through the fourth quarter of 2017, the projected MFP
adjustment (the 10-year moving average of MFP for the period ending
December 31, 2019) for CY 2019 is 0.7 percent. IGI is a nationally
recognized economic and financial forecasting firm that contracts with
CMS to forecast the components of the market baskets. We note that if
more recent data are subsequently available (for example, a more recent
estimate of the MFP adjustment), we would use such data to determine
the MFP adjustment in the final rule.

[[Page 32369]]

2. Proposed CY 2019 Market Basket Update for HHAs
Using IGI's first quarter 2018 forecast, the MFP adjustment for CY
2019 is projected to be 0.7 percent. In accordance with section
1895(b)(3)(B)(iii) of the Act, we propose to base the CY 2019 market
basket update, which is used to determine the applicable percentage
increase for HHA payments, on the most recent estimate of the proposed
2016-based home health market basket. Based on IGI's first quarter 2018
forecast with history through the fourth quarter of 2017, the projected
increase of the proposed 2016-based home health market basket for CY
2019 is 2.8 percent. We propose to then reduce this percentage increase
by the current estimate of the MFP adjustment for CY 2019 of 0.7
percentage point in accordance with 1895(b)(3)(B)(vi) of the Act.
Therefore, the current estimate of the CY 2019 HHA payment update is
2.1 percent (2.8 percent market basket update, less 0.7 percentage
point MFP adjustment). Furthermore, we note that if more recent data
are subsequently available (for example, a more recent estimate of the
market basket and MFP adjustment), we would use such data to determine
the CY 2019 market basket update and MFP adjustment in the final rule.
Section 1895(b)(3)(B)(v) of the Act requires that the home health
update be decreased by 2 percentage points for those HHAs that do not
submit quality data as required by the Secretary. For HHAs that do not
submit the required quality data for CY 2019, the home health payment
update will be 0.1 percent (2.1 percent minus 2 percentage points).
3. CY 2019 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. Since
the inception of the HH PPS, we have used inpatient hospital wage data
in developing a wage index to be applied to HH payments. We propose to
continue this practice for CY 2019, as we continue to believe that, in
the absence of HH-specific wage data that accounts for area
differences, using inpatient hospital wage data is appropriate and
reasonable for the HH PPS. Specifically, we propose to continue to use
the pre-floor, pre-reclassified hospital wage index as the wage
adjustment to the labor portion of the HH PPS rates. For CY 2019, the
updated wage data are for hospital cost reporting periods beginning on
or after October 1, 2014, and before October 1, 2015 (FY 2015 cost
report data). We apply the appropriate wage index value to the labor
portion of the HH PPS rates based on the site of service for the
beneficiary (defined by section 1861(m) of the Act as the beneficiary's
place of residence).
To address those geographic areas in which there are no inpatient
hospitals, and thus, no hospital wage data on which to base the
calculation of the CY 2019 HH PPS wage index, we propose to continue to
use the same methodology discussed in the CY 2007 HH PPS final rule (71
FR 65884) to address those geographic areas in which there are no
inpatient hospitals. For rural areas that do not have inpatient
hospitals, we propose to use the average wage index from all contiguous
Core Based Statistical Areas (CBSAs) as a reasonable proxy. Currently,
the only rural area without a hospital from which hospital wage data
could be derived is Puerto Rico. However, for rural Puerto Rico, we do
not apply this methodology due to the distinct economic circumstances
that exist there (for example, due to the close proximity to one
another of almost all of Puerto Rico's various urban and non-urban
areas, this methodology would produce a wage index for rural Puerto
Rico that is higher than that in half of its urban areas). Instead, we
propose to continue to use the most recent wage index previously
available for that area. For urban areas without inpatient 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 2019, the
only urban area without inpatient hospital wage data is Hinesville, GA
(CBSA 25980).
On February 28, 2013, OMB issued Bulletin No. 13-01, announcing
revisions to the delineations of MSAs, Micropolitan Statistical Areas,
and CBSAs, and guidance on uses of the delineation of these areas. In
the CY 2015 HH PPS final rule (79 FR 66085 through 66087), we adopted
the OMB's new area delineations using a 1-year transition.
On August 15, 2017, OMB issued Bulletin No. 17-01 in which it
announced that one Micropolitan Statistical Area, Twin Falls, Idaho,
now qualifies as a Metropolitan Statistical Area. The new CBSA (46300)
comprises the principal city of Twin Falls, Idaho in Jerome County,
Idaho and Twin Falls County, Idaho. The CY 2019 HH PPS wage index value
for CBSA 46300, Twin Falls, Idaho, will be 0.8335. Bulletin No. 17-01
is available at https://www.whitehouse.gov/sites/whitehouse.gov/files/
omb/bulletins/2017/b-17-01.pdf.\11\
---------------------------------------------------------------------------

\11\ ``Revised Delineations of Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas, and
Guidance on Uses of the Delineations of These Areas''. OMB BULLETIN
NO. 17-01. August 15, 2017. https://www.whitehouse.gov/sites/
whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf.
---------------------------------------------------------------------------

The most recent OMB Bulletin (No. 18-03) was published on April 10,
2018 and is available at https://www.whitehouse.gov/wp-content/uploads/
2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.\12\ The revisions contained
in OMB Bulletin No. 18-03 have no impact on the geographic area
delineations that are used to wage adjust HH PPS payments.
---------------------------------------------------------------------------

\12\ ``Revised Delineations of Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas, and
Guidance on Uses of the Delineations of These Areas''. OMB BULLETIN
NO. 18-03. April 10, 2018. https://www.whitehouse.gov/wp-content/
uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.
---------------------------------------------------------------------------

The CY 2019 wage index is available on the CMS website at https://
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/
Home-Health-Prospective-Payment-System-Regulations-and-Notices.html.
4. CY 2019 Annual Payment Update
a. Background
The Medicare HH PPS has been in effect since October 1, 2000. As
set forth in the July 3, 2000 final rule (65 FR 41128), the base unit
of payment under the Medicare HH PPS is a national, standardized 60-day
episode payment rate. As set forth in Sec. 484.220, we adjust the
national, standardized 60-day episode payment rate by a case-mix
relative weight 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 differences, we apply
the appropriate wage index value to the labor portion of the HH PPS
rates. As discussed in section III.C.1 of this proposed rule, based on
the proposed 2016-based home health market basket, the proposed labor-
related share would be 76.1 percent and the proposed non-labor-related
share would be 23.9 percent for CY 2019. The CY 2019 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 will be adjusted as
described in section III.B of this proposed rule. The following are the
steps we take to compute the case-mix

[[Page 32370]]

and wage-adjusted 60-day episode rate for CY 2019:
Multiply the national 60-day episode rate by the patient's
applicable case-mix weight.
Divide the case-mix adjusted amount into a labor (76.1
percent) and a non-labor portion (23.9 percent).
Multiply the labor portion by the applicable wage index
based on the site of service of the beneficiary.
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, we propose 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 2
percentage points. Any reduction of the percentage change would apply
only to the calendar year involved and would not be considered in
computing the prospective payment amount for a subsequent calendar
year.
Medicare pays the national, standardized 60-day case-mix and wage-
adjusted episode payment on a split percentage payment approach. The
split percentage payment approach includes an initial percentage
payment and a final percentage payment as set forth in Sec.
484.205(b)(1) and (b)(2). We 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 will 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 adjustment (LUPA) is provided on
a per-visit basis as set forth in Sec. Sec. 484.205(c) and 484.230.
A partial episode payment (PEP) adjustment as set forth in
Sec. Sec. 484.205(d) and 484.235.
An outlier payment as set forth in Sec. Sec. 484.205(e)
and 484.240.
b. CY 2019 National, Standardized 60-Day Episode Payment Rate
Section 1895(b)(3)(A)(i) of the Act requires that the 60-day
episode base rate and other applicable amounts be standardized in a
manner that eliminates the effects of variations in relative case-mix
and area wage adjustments among different home health agencies in a
budget neutral manner. To determine the CY 2019 national, standardized
60-day episode payment rate, we apply a wage index budget neutrality
factor and a case-mix budget neutrality factor described in section
III.B of this proposed rule; and the home health payment update
percentage discussed in section III.C.2 of this proposed rule.
To calculate the wage index budget neutrality factor, we simulated
total payments for non-LUPA episodes using the CY 2019 wage index
(including the application of the proposed labor-related share of 76.1
percent and the proposed non-labor-related share of 23.9 percent) and
compared it to our simulation of total payments for non-LUPA episodes
using the CY 2018 wage index and CY 2018 (including the application of
the current labor-related share of 78.535 percent and the non-labor-
related of 21.465). By dividing the total payments for non-LUPA
episodes using the CY 2019 wage index by the total payments for non-
LUPA episodes using the CY 2018 wage index, we obtain a wage index
budget neutrality factor of 0.9991. We would apply the wage index
budget neutrality factor of 0.9991 to the calculation of the CY 2019
national, standardized 60-day episode payment rate.
As discussed in section III.B of this proposed rule, to ensure the
changes to the case-mix weights are implemented in a budget neutral
manner, we propose to apply a case-mix weight budget neutrality factor
to the CY 2019 national, standardized 60-day episode payment rate. The
case-mix weight budget neutrality factor is calculated as the ratio of
total payments when CY 2019 case-mix weights are applied to CY 2017
utilization (claims) data to total payments when CY 2018 case-mix
weights are applied to CY 2017 utilization data. The case-mix budget
neutrality factor for CY 2019 is 1.0163 as described in section III.B
of this proposed rule.
Next, we would update the payment rates by the CY 2019 home health
payment update percentage of 2.1 percent as described in section
III.C.2 of this proposed rule. The CY 2019 national, standardized 60-
day episode payment rate is calculated in Table 18.

Table 18--CY 2019 60-Day National, Standardized 60-Day Episode Payment Amount
----------------------------------------------------------------------------------------------------------------
CY 2019
Wage index Case-mix National,
CY 2018 national, standardized 60-day budget weights budget CY 2019 HH standardized 60-
episode payment neutrality neutrality payment update day episode
factor factor payment
----------------------------------------------------------------------------------------------------------------
$3,039.64................................... x 0.9991 x 1.0163 x 1.021 $3,151.22
----------------------------------------------------------------------------------------------------------------

The CY 2019 national, standardized 60-day episode payment rate for
an HHA that does not submit the required quality data is updated by the
CY 2019 home health payment update of 2.1 percent minus 2 percentage
points and is shown in Table 19.

[[Page 32371]]

Table 19--CY 2019 National, Standardized 60-Day Episode Payment Amount for HHAs That Do Not Submit the Quality
Data
----------------------------------------------------------------------------------------------------------------
CY 2019 HH CY 2019
Wage index Case-mix payment update National,
CY 2018 national, standardized 60-day budget weights budget minus 2 standardized 60-
episode payment neutrality neutrality percentage day episode
factor factor points payment
----------------------------------------------------------------------------------------------------------------
$3,039.64................................... x 0.9991 x 1.0163 x 1.001 $3,089.49
----------------------------------------------------------------------------------------------------------------

c. CY 2019 National Per-Visit Rates
The national per-visit rates are used to pay LUPAs (episodes with
four or fewer visits) and are also used to compute imputed costs in
outlier calculations. The per-visit rates are paid by type of visit or
HH discipline. The six HH disciplines are as follows:
Home health aide (HH aide).
Medical Social Services (MSS).
Occupational therapy (OT).
Physical therapy (PT).
Skilled nursing (SN).
Speech-language pathology (SLP).
To calculate the CY 2019 national per-visit rates, we started with
the CY 2018 national per-visit rates. Then we applied a wage index
budget neutrality factor to ensure budget neutrality for LUPA per-visit
payments. We calculated the wage index budget neutrality factor by
simulating total payments for LUPA episodes using the CY 2019 wage
index and comparing it to simulated total payments for LUPA episodes
using the CY 2018 wage index. By dividing the total payments for LUPA
episodes using the CY 2019 wage index by the total payments for LUPA
episodes using the CY 2018 wage index, we obtained a wage index budget
neutrality factor of 1.0000. We apply the wage index budget neutrality
factor of 1.0000 in order to calculate the CY 2019 national per-visit
rates.
The LUPA per-visit rates are not calculated using case-mix weights.
Therefore, no case-mix weights budget neutrality factor is needed to
ensure budget neutrality for LUPA payments. Lastly, the per-visit rates
for each discipline are updated by the CY 2019 home health payment
update percentage of 2.1 percent. The national per-visit rates are
adjusted by the wage index based on the site of service of the
beneficiary. The per-visit payments for LUPAs are separate from the
LUPA add-on payment amount, which is paid for episodes that occur as
the only episode or initial episode in a sequence of adjacent episodes.
The CY 2019 national per-visit rates for HHAs that submit the required
quality data are updated by the CY 2019 HH payment update percentage of
2.1 percent and are shown in Table 20.

Table 20--CY 2019 National Per-Visit Payment Amounts for HHAs That Do Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Wage index
CY 2018 per- budget CY 2019 HH CY 2019 per-
HH Discipline visit payment neutrality payment update visit payment
factor
----------------------------------------------------------------------------------------------------------------
Home Health Aide............................ $64.94 x 1.0000 x 1.021 $66.30
Medical Social Services..................... 229.86 x 1.0000 x 1.021 234.69
Occupational Therapy........................ 157.83 x 1.0000 x 1.021 161.14
Physical Therapy............................ 156.76 x 1.0000 x 1.021 160.05
Skilled Nursing............................. 143.40 x 1.0000 x 1.021 146.41
Speech-Language Pathology................... 170.38 x 1.0000 x 1.021 173.96
----------------------------------------------------------------------------------------------------------------

The CY 2019 per-visit payment rates for HHAs that do not submit the
required quality data are updated by the CY 2019 HH payment update
percentage of 2.1 percent minus 2 percentage points and are shown in
Table 21.

Table 21--CY 2019 National Per-Visit Payment Amounts for HHAs That Do Not Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
CY 2019 HH
Wage index payment update
HH Discipline CY 2018 per- budget minus 2 CY 2019 per-
visit rates neutrality percentage visit rates
factor points
----------------------------------------------------------------------------------------------------------------
Home Health Aide............................ $64.94 x 1.0000 x 1.001 $65.00
Medical Social Services..................... 229.86 x 1.0000 x 1.001 230.09
Occupational Therapy........................ 157.83 x 1.0000 x 1.001 157.99
Physical Therapy............................ 156.76 x 1.0000 x 1.001 156.92
Skilled Nursing............................. 143.40 x 1.0000 x 1.001 143.54
Speech-Language Pathology................... 170.38 x 1.0000 x 1.001 170.55
----------------------------------------------------------------------------------------------------------------

[[Page 32372]]

d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
LUPA episodes that occur as the only episode or as an initial
episode in a sequence of adjacent episodes are adjusted by applying an
additional amount to the LUPA payment before adjusting for area wage
differences. In the CY 2014 HH PPS final rule (78 FR 72305), we changed
the methodology for calculating the LUPA add-on amount by finalizing
the use of three LUPA add-on factors: 1.8451 for SN; 1.6700 for PT; and
1.6266 for SLP. We multiply the per-visit payment amount for the first
SN, PT, or SLP visit in LUPA episodes that occur as the only episode or
an initial episode in a sequence of adjacent episodes by the
appropriate factor to determine the LUPA add-on payment amount. For
example, in the case of HHAs that do submit the required quality data,
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 will be $270.14 (1.8451 multiplied by
$146.41), subject to area wage adjustment.
e. CY 2019 Non-Routine Medical Supply (NRS) Payment Rates
All medical supplies (routine and nonroutine) must be provided by
the HHA while the patient is under a home health plan of care. Examples
of supplies that can be considered non-routine include dressings for
wound care, I.V. supplies, ostomy supplies, catheters, and catheter
supplies. Payments for NRS are computed by multiplying the relative
weight for a particular severity level by the NRS conversion factor. To
determine the CY 2019 NRS conversion factor, we updated the CY 2018 NRS
conversion factor ($53.03) by the CY 2019 home health payment update
percentage of 2.1 percent. We did 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 2019 is shown in
Table 22.

Table 22--CY 2019 NRS Conversion Factor for HHAs That Do Submit the
Required Quality Data
------------------------------------------------------------------------
CY 2019 NRS
CY 2018 NRS conversion factor CY 2019 HH conversion
payment update factor
------------------------------------------------------------------------
$53.03................................ x 1.021 $54.14
------------------------------------------------------------------------

Using the CY 2019 NRS conversion factor, the payment amounts for
the six severity levels are shown in Table 23.

Table 23--CY 2019 NRS Payment Amounts for HHAs That Do Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Points CY 2019 NRS
Severity level (scoring) Relative weight payment amounts
----------------------------------------------------------------------------------------------------------------
1............................................................ 0 0.2698 $ 14.61
2............................................................ 1 to 14 0.9742 52.74
3............................................................ 15 to 27 2.6712 144.62
4............................................................ 28 to 48 3.9686 214.86
5............................................................ 49 to 98 6.1198 331.33
6............................................................ 99+ 10.5254 569.85
----------------------------------------------------------------------------------------------------------------

For HHAs that do not submit the required quality data, we updated
the CY 2018 NRS conversion factor ($53.03) by the CY 2019 home health
payment update percentage of 2.1 percent minus 2 percentage points. The
proposed CY 2019 NRS conversion factor for HHAs that do not submit
quality data is shown in Table 24.

Table 24--CY 2019 NRS Conversion Factor for HHAs That Do Not Submit the
Required Quality Data
------------------------------------------------------------------------
CY 2019 HH
payment update
percentage CY 2019 NRS
CY 2018 NRS conversion factor minus 2 conversion
percentage factor
points
------------------------------------------------------------------------
$53.03................................ x 1.001 $53.08
------------------------------------------------------------------------

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 25.

[[Page 32373]]

Table 25--CY 2019 NRS Payment Amounts for HHAs That Do Not Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Points CY 2019 NRS
Severity level (scoring) Relative weight payment amounts
----------------------------------------------------------------------------------------------------------------
1............................................................ 0 0.2698 $ 14.32
2............................................................ 1 to 14 0.9742 51.71
3............................................................ 15 to 27 2.6712 141.79
4............................................................ 28 to 48 3.9686 210.65
5............................................................ 49 to 98 6.1198 324.84
6............................................................ 99+ 10.5254 558.69
----------------------------------------------------------------------------------------------------------------

D. Proposed Rural Add-On Payments for CYs 2019 Through 2022

1. Background
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 210 of the MACRA amended section 421(a) of the MMA to
extend the rural add-on by providing an increase of 3 percent of the
payment amount otherwise made under section 1895 of the Act for HH
services provided in a rural area (as defined in section 1886(d)(2)(D)
of the Act), for episodes and visits ending before January 1, 2018.
Section 50208(a) of the Bipartisan Budget Act of 2018 amended
section 421(a) of the MMA to extend the rural add-on by providing an
increase of 3 percent of the payment amount otherwise made under
section 1895 of the Act for HH services provided in a rural area (as
defined in section 1886(d)(2)(D) of the Act), for episodes and visits
ending before January 1, 2019. This extension of the rural add-on
payments was implemented as described in CMS Transmittal 2047 published
on March 20, 2018.
2. Proposed Rural Add-On Payments for CYs 2019 Through 2022
Section 50208(a)(1)(D) of the BBA of 2018 adds a new subsection (b)
to section 421 of the MMA to provide rural add-on payments for episodes
and visits ending during CYs 2019 through 2022 . It also mandates
implementation of a new methodology for applying those payments. Unlike
previous rural add-ons, which were applied to all rural areas
uniformly, the extension provides varying add-on amounts depending on
the rural county (or equivalent area) classification by classifying
each rural county (or equivalent area) into one of three distinct
categories.
Specifically, section 421(b)(1) of the MMA, as amended by section
50208 of the BBA of 2018, provides that rural counties (or equivalent
areas) would be placed into one of three categories for purposes of HH
rural add-on payments: (1) Rural counties and equivalent areas in the
highest quartile of all counties and equivalent areas based on the
number of Medicare home health episodes furnished per 100 individuals
who are entitled to, or enrolled for, benefits under part A of Medicare
or enrolled for benefits under part B of Medicare only, but not
enrolled in a Medicare Advantage plan under part C of Medicare, as
provided in section 421(b)(1)(A) of the MMA (the ``High utilization''
category); (2) rural counties and equivalent areas with a population
density of 6 individuals or fewer per square mile of land area and are
not included in the category provided in section 421(b)(1)(A) of the
MMA, as provided in section 421(b)(1)(B) of the MMA (the Low population
density'' category); and (3) rural counties and equivalent areas not in
the categories provided in either sections 421(b)(1)(A) or 421(b)(1)(B)
of the MMA, as provided in section 421(b)(1)(C) of the MMA (the ``All
other'' category). The list of counties and equivalent areas used in
our analysis is based on the CY 2015 HH PPS wage index file, which
includes the names of the constituent counties for each rural and urban
area designation. We used the 2015 HH PPS wage index file as the basis
for our analysis because the 2015 HH PPS wage index file already
included SSA state and county codes not normally included on the HH PPS
wage index files, but were included in the 2015 HH PPS wage index file
due to the transition to new OMB geographic area delineations that
year. The CY 2015 HH PPS wage index file is available for download at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-
Notices-Items/CMS-1611-F.html. This file includes 3,246 counties and
equivalent areas and their urban and rural status and uses the OMB's
geographic area delineations, as described in section III.C.3 of this
proposed rule. We updated the information contained in this file to
include any revisions to the geographic area delineations as published
by the OMB in their publicly available bulletins that would reflect a
change in urban and rural status. The states, the District of Columbia,
and the U.S. territories of Guam, Puerto Rico, and the U.S. Virgin
Islands are included in the analysis file containing 3,246 counties and
equivalent areas. Of the 3,246 total counties and equivalent areas that
were used in our analysis, 2,006 of these are considered rural for
purposes of determining HH rural add-on payments. We identify
equivalent areas based on the definition of equivalent entities as
defined by the OMB in their most recent bulletin (No. 18-03) available
at https://www.whitehouse.gov/wp-content/uploads/2018/04/OMB-BULLETIN-
NO.-18-03-Final.pdf.\13\ We consider boroughs and a municipality in
Alaska, parishes in Louisiana, municipios in Puerto Rico, and
independent cities in

[[Page 32374]]

Maryland, Missouri, Nevada, and Virginia as equivalent areas.
---------------------------------------------------------------------------

\13\ ``Revised Delineations of Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas, and
Guidance on Uses of the Delineations of These Areas''. OMB BULLETIN
NO. 18-03. April 10, 2018. https://www.whitehouse.gov/wp-content/
uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.
---------------------------------------------------------------------------

Under section 421(b)(1)(A) of the MMA, one category of rural
counties and equivalent areas for purposes of the HH rural add-on
payment is a category comprised of rural counties or equivalent areas
that are in the highest quartile of all counties or equivalent areas
based on the number of Medicare home health episodes furnished per 100
Medicare beneficiaries. Section 421(b)(2)(B)(i) of the MMA requires the
use of data from 2015 to determine which counties or equivalent areas
are in the highest quartile of home health utilization for the category
described under section 421(b)(1)(A) of the MMA, that is, the ``High
utilization'' category. Section 421(b)(2)(B)(ii) of the MMA requires
that data from the territories are to be excluded in determining which
counties or equivalent areas are in the highest quartile of home health
utilization and requires that the territories be excluded from the
category described by section 421(b)(1)(A) of the MMA. Under section
421(b)(2)(B)(iii) of the MMA, the Secretary may exclude data from
counties or equivalent areas in rural areas with a low volume of home
health episodes in determining which counties or equivalent areas are
in the highest quartile of home health utilization. If data is excluded
for a county or equivalent area, section 421(b)(2)(B)(iii) of the MMA
requires that the county or equivalent area be excluded from the
category described by section 421(b)(1)(A) of the MMA (the ``High
utilization'' category).
We used CY 2015 claims data and 2015 data from the Medicare
Beneficiary Summary File to classify rural counties and equivalent
areas into the ``High utilization'' category. We propose to classify a
rural county or equivalent area into this category if the county or
equivalent area is in the highest quartile (top 25th percentile) of all
(urban and rural) counties and equivalent areas based on the ratio of
Medicare home health episodes furnished per 100 Medicare enrollees. The
Medicare Beneficiary Summary File contained information on the Social
Security Administration (SSA) state and county code of the
beneficiary's mailing address and information on enrollment in Medicare
Part A, B, and C during 2015. The claims data and information from the
Medicare Beneficiary Summary File were pulled from the Chronic
Condition Warehouse Virtual Research Data Center during December 2017.
We used the claims data to determine how many home health episodes
(excluding Requests for Anticipated Payments (RAPs) and zero payment
episodes) occurred in each state and county or equivalent area. We
assigned each home health episode to the state and county code of the
beneficiary's mailing address. As stipulated by section
421(b)(2)(B)(ii) of the MMA, we excluded any data from the territories
of Guam, Puerto Rico, and the U.S. Virgin Islands for determining which
rural counties and equivalent areas belong in the ``High utilization''
category. We note that the territories of American Samoa and the
Northern Mariana Islands were not included in the CY 2015 HH PPS wage
index file to identify counties or equivalent areas for these
territories so no data from these territories were included in
determining the ``High utilization'' category. As we are not aware of
any Medicare home health services being furnished in these two
territories in recent years, we will address any application of home
health rural add-on payments for these territories in the future should
Medicare home health services be furnished in them. Therefore, counties
and equivalent areas in the territories of American Samoa, Guam, the
Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands are
not included in the ``High utilization'' category, as required by
section 421(b)(2)(B)(ii) of the MMA. In addition, under the authority
granted to the Secretary (by section 421(b)(2)(B)(iii) of the MMA) to
exclude data from counties or equivalent areas in rural areas with a
low volume of home health episodes, we excluded data from rural
counties and equivalent areas that had 10 or fewer episodes during 2015
for determining which counties and equivalent areas belong in the
``High utilization'' category. We believe that using a threshold of 10
or fewer episodes is a reasonable threshold for defining low volume, in
accordance with section 421(b)(2)(B)(iii) of the MMA. After excluding
data from (1) the territories of Guam, Puerto Rico, and the U.S. Virgin
Islands and (2) counties and equivalent areas that had 10 or fewer
episodes during 2015, we determined the number of home health episodes
furnished per 100 enrollees for the remaining counties and equivalent
areas. We determined that the counties or equivalent areas in the
highest quartile have a ratio of episodes to beneficiaries that is at
or above 17.72487. The highest quartile consisted of 778 counties or
equivalent areas. Of those 778 counties or equivalent areas, 510 are
rural and, therefore, we propose to classify these 510 rural counties
or equivalent areas into the ``High utilization'' category.
Under section 421(b)(1)(B) of the MMA, another category of rural
counties and equivalent areas for purposes of the HH rural add-on
payment is a category comprised of rural counties or equivalent areas
with a population density of 6 individuals or fewer per square mile of
land area and that are not included in the ``High utilization''
category. Section 421(b)(2)(C) of the MMA requires that data from the
2010 decennial Census be used for purposes of determining population
density with respect to the category provided under section
421(b)(1)(B) of the MMA, that is, the ``Low population density''
category.
We used 2010 Census data gathered from the tables provided at:
https://factfinder.census.gov/bkmk/table/1.0/en/DEC/10_SF1/
GCTPH1.US05PR and https://www.census.gov/data/tables/time-series/dec/
cph-series/cph-t/cph-t-8.html to determine which counties and
equivalent areas have a population density of six individuals or fewer
per square mile of land area.\14\ \15\ In examining the rural counties
and equivalent areas that were not already classified into the ``High
utilization'' category, we identified each rural county or equivalent
area that had a population density of six individuals or fewer per
square mile of land area. As a result of that analysis, we determined
there are 334 rural counties or equivalent areas that have a population
density of six individuals or fewer per square mile of land area and
that are not already classified into the ``High utilization'' category.
We propose to classify 334 rural counties or equivalent areas into the
``Low population density'' category.
---------------------------------------------------------------------------

\14\ ``Population, Housing Units, Area, and Density: 2010--
United States--County by State; and for Puerto Rico 2010 Census
Summary File 1''. https://factfinder.census.gov/bkmk/table/1.0/en/
DEC/10_SF1/GCTPH1.US05PR.
\15\ ``Population, Housing Units, Land Area, and Density for
U.S. Island Areas: 2010 (CPH-T-8)''. 10/28/2013. https://
www.census.gov/data/tables/time-series/dec/cph-series/cph-t/cph-t-
8.html.
---------------------------------------------------------------------------

Lastly, section 421(b)(1)(C) of the MMA provides for a category
comprised of rural counties or equivalent areas that are not included
in either the ``High utilization'' or the ``Low population density''
category. After determining which rural counties and equivalent areas
should be classified into the ``High utilization'' and ``Low population
density'' categories, we have determined that there are 1,162 remaining
rural counties and equivalent areas that do not meet the criteria for
inclusion in the ``High utilization'' or ``Low population density''
categories. We propose to classify these 1,162 rural counties and

[[Page 32375]]

equivalent areas into the ``All other'' category.
Section 421(b)(1) of the MMA specifies varying rural add-on payment
percentages and varying durations of rural add-on payments for home
health services furnished in a rural county or equivalent area
according to which category described in section 421(b)(1)(A),
421(b)(1)(B), or 421(b)(1)(C) of the MMA that the rural county or
equivalent area is classified into. The rural add-on payment
percentages and duration of rural add-on payments are shown in Table
26. The national standardized 60-day episode payment rate, the national
per-visit rates, and the NRS conversion factor will be increased by the
rural add-on payment percentages as noted in Table 26 when services are
provided in rural areas. The HH Pricer module, located within CMS'
claims processing system, will increase the base payment rates provided
in Tables 18 through 25 by the appropriate rural add-on percentage
prior to applying any case-mix and wage index adjustments.

Table 26--HH PPS Rural Add-On Percentages, CYs 2019-2022
----------------------------------------------------------------------------------------------------------------
Category CY 2019 (%) CY 2020 (%) CY 2021 (%) CY 2022 (%)
----------------------------------------------------------------------------------------------------------------
High utilization................................ 1.5 0.5 .............. ..............
Low population density.......................... 4.0 3.0 2.0 1.0
All other....................................... 3.0 2.0 1.0 ..............
----------------------------------------------------------------------------------------------------------------

Section 421(b)(2)(A) of the MMA provides that the Secretary shall
make a determination only for a single time as to which category under
sections 421(b)(1)(A), 421(b)(1)(B), or 421(b)(1)(C) of the MMA that a
rural county or equivalent area is classified into, and that the
determination applies for the entire duration of the period for which
rural add-on payments are in place under section 421(b) of the MMA. We
propose that our proposed classifications of rural counties and
equivalent areas in the ``High utilization'', ``Low population
density'', and ``All other'' categories would be applicable throughout
the period of rural add-on payments established under section 421(b) of
the MMA and there would be no changes in classifications. This would
mean that a rural county or equivalent area classified into the ``High
utilization'' category would remain in that category through CY 2022
even after rural add-on payments for that category ends after CY 2020.
Similarly, a rural county or equivalent area classified into the ``All
other'' category would remain in that category through CY 2022 even
after rural add-on payments for that category ends after CY 2021. A
rural county or equivalent area classified into the ``Low population
density'' category would remain in that category through CY 2022.
Section 421(b)(3) of the MMA provides that there shall be no
administrative or judicial review of the classification determinations
made for the rural add-on payments under section 421(b)(1) of the MMA.
Section 50208(a)(2) of the Bipartisan Budget Act of 2018 amended
section 1895(c) of the Act by adding a new requirement set out at
section 1895(c)(3) of the Act. This requirement states that no claim
for home health services may be paid unless ``in the case of home
health services furnished on or after January 1, 2019, the claim
contains the code for the county (or equivalent area) in which the home
health service was furnished.'' This information will be necessary in
order to calculate the rural add-on payments. We are proposing that
HHAs enter the FIPS state and county code, rather than the SSA state
and county code, on the claim. Many HHAs are more familiar with using
FIPS state and county codes since HHAs in a number of States are
already using FIPS state and county codes for State-mandated reporting
programs. Our analysis is based entirely on the SSA state and county
codes as these are the codes that are included in the Medicare
Beneficiary Summary File. We cross-walked the SSA state and county
codes used in our analysis to the FIPS state and county codes in order
to provide HHAs with the corresponding FIPS state and county codes that
should be reported on their claims.
The data used to categorize each county or equivalent area is
available in the Downloads section associated with the publication of
this proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-
Regulations-and-Notices-Items/CMS-1689-P.html. In addition, an Excel
file containing the rural county or equivalent area names, their FIPS
state and county codes, and their designation into one of the three
rural add-on categories is available for download.
We are soliciting comments regarding our application of the
methodology specified by section 50208 of the Bipartisan Budget Act of
2018.

E. Proposed Payments for High-Cost Outliers Under the HH PPS

1. Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the home health payment amount otherwise made
in the case of outliers because of unusual variations in the type or
amount of medically necessary care. Under the HH PPS, outlier payments
are made for episodes whose estimated costs exceed a threshold amount
for each Home Health Resource Group (HHRG). The episode's estimated
cost was established as the sum of the national wage-adjusted per-visit
payment amounts delivered during the episode. The outlier threshold for
each case-mix group or Partial Episode Payment (PEP) adjustment is
defined as the 60-day episode payment or PEP adjustment for that group
plus a fixed-dollar loss (FDL) amount. For the purposes of the HH PPS,
the FDL amount is calculated by multiplying the HH FDL ratio by a
case's wage-adjusted national, standardized 60-day episode payment
rate, which yields an FDL dollar amount for the case. The outlier
threshold amount is the sum of the wage and case-mix adjusted PPS
episode amount and wage-adjusted FDL amount. The outlier payment is
defined to be a proportion of the wage-adjusted estimated cost beyond
the wage-adjusted threshold. The proportion of additional costs over
the outlier threshold amount paid as outlier payments is referred to as
the loss-sharing ratio.
As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act, and required the Secretary to reduce the HH
PPS payment rates such that aggregate HH PPS payments were

[[Page 32376]]

reduced by 5 percent. In addition, section 3131(b)(2) of the Affordable
Care Act amended section 1895(b)(5) of the Act by redesignating the
existing language as section 1895(b)(5)(A) of the Act, and revising the
language to state that the total amount of the additional payments or
payment adjustments for outlier episodes could not exceed 2.5 percent
of the estimated total HH PPS payments for that year. Section
3131(b)(2)(C) of the Affordable Care Act also added section
1895(b)(5)(B) of the Act which capped outlier payments as a percent of
total payments for each HHA at 10 percent.
As such, beginning in CY 2011, 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 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.
In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through
43742 and 81 FR 76702), we described our concerns regarding patterns
observed in home health outlier episodes. Specifically, we noted that
the methodology for calculating home health outlier payments may have
created a financial incentive for providers to increase the number of
visits during an episode of care in order to surpass the outlier
threshold; and simultaneously created a disincentive for providers to
treat medically complex beneficiaries who require fewer but longer
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR
76702), we finalized changes to the methodology used to calculate
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate
payment for outlier episodes, accounting for both the number of visits
during an episode of care and also the length of the visits provided.
Using this approach, we now convert the national per-visit rates into
per 15-minute unit rates. These per 15-minute unit rates are used to
calculate the estimated cost of an episode to determine whether the
claim will receive an outlier payment and the amount of payment for an
episode of care. In conjunction with our finalized policy to change to
a cost-per-unit approach to estimate episode costs and determine
whether an outlier episode should receive outlier payments, in the CY
2017 HH PPS final rule we also finalized the implementation of a cap on
the amount of time per day that would be counted toward the estimation
of an episode's costs for outlier calculation purposes (81 FR 76725).
Specifically, we limit the amount of time per day (summed across the
six disciplines of care) to 8 hours (32 units) per day when estimating
the cost of an episode for outlier calculation purposes.
We plan to publish the cost-per-unit amounts for CY 2019 in the
rate update change request, which is issued after the publication of
the CY 2019 HH PPS final rule. We note that in the CY 2017 HH PPS final
rule (81 FR 76724), we stated that we did not plan to re-estimate the
average minutes per visit by discipline every year. Additionally, we
noted that the per-unit rates used to estimate an episode's cost will
be updated by the home health update percentage each year, meaning we
would start with the national per-visit amounts for the same calendar
year when calculating the cost-per-unit used to determine the cost of
an episode of care (81 FR 76727). We note that we will continue to
monitor the visit length by discipline as more recent data become
available, and we may propose to update the rates as needed in the
future.
2. Proposed Fixed Dollar Loss (FDL) Ratio
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of episodes that can receive outlier
payments, but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for qualifying outlier
episodes. Alternatively, a lower FDL ratio means that more episodes can
qualify for outlier payments, but outlier payments per episode must
then be lower.
The FDL ratio and the loss-sharing ratio must be selected so that
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.
Simulations based on CY 2015 claims data (as of June 30, 2016)
completed for the CY 2017 HH PPS final rule showed that outlier
payments were estimated to represent approximately 2.84 percent of
total HH PPS payments in CY 2017, and as such, we raised the FDL ratio
from 0.45 to 0.55. We stated that raising the FDL ratio to 0.55, while
maintaining a loss-sharing ratio of 0.80, struck an effective balance
of compensating for high-cost episodes while still meeting the
statutory requirement to target up to, but no more than, 2.5 percent of
total payments as outlier payments (81 FR 76726). The national,
standardized 60-day episode payment amount is multiplied by the FDL
ratio. That amount is wage-adjusted to derive the wage-adjusted FDL
amount, which is added to the case-mix and wage-adjusted 60-day episode
payment amount to determine the outlier threshold amount that costs
have to exceed before Medicare would pay 80 percent of the additional
estimated costs.
For this proposed rule, simulating payments using preliminary CY
2017 claims data (as of March 2, 2018) and the CY 2018 HH PPS payment
rates (82 FR 51676), we estimate that outlier payments in CY 2018 would
comprise 2.30 percent of total payments. Based on simulations using CY
2017 claims data (as of March 2, 2018) and the proposed CY 2019 payment
rates presented in section III.C.4 of this proposed rule, we estimate
that outlier payments would constitute approximately 2.32 percent of
total HH PPS payments in CY 2019. Our simulations show that the FDL
ratio would need to be changed from 0.55 to 0.51 to pay up to, but no
more than, 2.5 percent of total payments as outlier payments in CY
2019.
Given the statutory requirement that total outlier payments not
exceed 2.5 percent of the total payments estimated to be made based
under the HH PPS, we are proposing to lower the FDL ratio for CY 2019
from 0.55 to 0.51 to better approximate the 2.5 percent statutory
maximum. However, we note that we are not proposing a change to the
loss-sharing ratio (0.80) for the HH PPS to remain consistent with
payment for high-cost outliers in other Medicare payment systems (for
example, IRF PPS, IPPS, etc.). We note that in the final rule, we will
update our estimate of outlier payments as a percent of total HH PPS
payments using the most current and complete year of HH PPS data (CY
2017 claims data as of June 30, 2018 or later) and therefore, we may
adjust the final FDL ratio accordingly. We invite public comments on
the

[[Page 32377]]

proposed change to the FDL ratio for CY 2019.
3. Home Health Outlier Payments: Clinical Example
In recent months, concerns regarding the provision of home health
care for Medicare patients with chronic, complex conditions have been
raised by stakeholders as well as the press.^{16 17 18 19} News
stories and anecdotal reports indicate that Medicare patients with
chronic conditions may be encountering difficulty in accessing home
health care if the goal of home health care is to maintain or prevent
further decline of the patient's condition rather than improvement of
the patient's condition. While patients must require skilled care to be
eligible to receive services under the Medicare home health benefit, as
outlined in regulation at 42 CFR 409.42(c), we note that coverage does
not turn on the presence or absence of an individual's potential for
improvement, but rather on the beneficiary's need for skilled care.
Skilled care is covered where such services are necessary to maintain
the patient's current condition or prevent or slow further
deterioration so long as the beneficiary requires skilled care for the
services to be safely and effectively provided. Additionally, there
appears to be confusion among the HHA provider community regarding
possible Medicare payment through the HH PPS, as it appears that some
perceive that payment is somewhat fixed and not able to account for
home health stays with higher costs.
---------------------------------------------------------------------------

\16\ https://www.npr.org/sections/health-shots/2018/01/17/
578423012/home-care-agencies-often-wrongly-deny-medicare-help-to-
the-chronically-ill.
\17\ https://www.alsa.org/als-care/resources/fyi/medicare-and-
home-health-care.html.
\18\ https://patientworthy.com/2018/01/31/chronically-ill-are-
being-denied-medicare-coverage-by-home-care-agencies/.
\19\ https://alsnewstoday.com/2018/05/09/als-medicare-cover-
home-healthcare/.
---------------------------------------------------------------------------

The news stories referenced an individual with amyotrophic lateral
sclerosis (ALS), also known as Lou Gehrig's disease, and the
difficulties encountered in finding Medicare home health care. Below we
describe a clinical example of how care for a patient with ALS could
qualify for an additional outlier payment, which would serve to offset
unusually high costs associated with providing home health to a patient
with unusual variations in the amount of medically necessary care. This
example, using payment policies in place for CY 2018, is provided for
illustrative purposes only. We hope that in providing the example
below, which illustrates how HHAs could be paid by Medicare for
providing care to patients with higher resource use in their homes, and
by reiterating that the patient's condition does not need to improve
for home health services to be covered by Medicare, that there will be
a better understanding of Medicare coverage policies and how outlier
payments promote access to home health services for such patients under
the HH PPS.
a. Clinical Scenario
Amyotrophic Lateral Sclerosis (ALS) is a progressive neuromuscular
degenerative disease. The incidence rates of ALS have been increasing
over the last few decades, and the peak incidence rate occurs at age
75.\20\ The prevalence rate of ALS in the United States is 4.3 per
100,000 population.\21\ Half of all people affected with ALS live at
least 3 or more years after diagnosis. Twenty percent live 5 years or
more; up to 10 percent will live more than 10 years.\22\ Because of the
progressive nature of this disease, care needs change and generally
intensify as different body systems are affected. As such, patients
with ALS often require a multidisciplinary approach to meet their care
needs.
---------------------------------------------------------------------------

\20\ Worms PM, The epidemiology of motor neuron diseases: A
review of recent studies. J Neurol Sci. 2001;191(1-2):3.
\21\ Mehta P, Prevalence of Amyotrophic Lateral Sclerosis--
United States, 2012-2013. MMWR Surveill Summ. 2016;65(8):1. Epub
2016 Aug 5.
\22\ https://www.alsa.org.
---------------------------------------------------------------------------

The clinical care of a beneficiary with ALS typically includes the
ongoing assessment of and treatment for many impacts to the body
systems. As a part of a home health episode, a skilled nurse could
assess the patient for shortness of breath, mucus secretions,
sialorrhea, pressure sores, and pain. From these assessments, the nurse
could speak with the doctor about changes to the care plan. A nurse's
aide could provide assistance with bathing, dressing, toileting, and
transferring. Physical therapy services could also help the patient
with range of motion exercises, adaptive transfer techniques, and
assistive devices in order to maintain a level of function.
The following is a description of how the provision of services per
the home health plan of care could emerge for a beneficiary with ALS
who qualifies for the Medicare home health benefit. We note that this
example is provided for illustrative purposes only and does not
constitute a specific Medicare payment scenario.
b. Example One: Home Health Episodes 1 and 2
A beneficiary with ALS may be assessed by a physician in the
community and subsequently be deemed to require home health services
for skilled nursing, physical therapy, occupational therapy, and a home
health aide. The beneficiary could receive skilled nursing twice a week
for 45 minutes to assess dyspnea when transferring to a bedside
commode, stage two pressure ulcer at the sacrum, and pain status. In
addition, a home health aide could provide services for three hours in
the morning and three hours in the afternoon on Monday, Wednesday, and
Friday and two and a half hours in the morning and 2.5 hours in the
afternoon on Tuesday and Thursdays to assist with bathing, dressing,
and transferring. Physical therapy services twice a week for 45 minutes
could be provided for adaptive transfer techniques, and occupational
therapy services could be supplied twice a week for 45 minutes for
assessment and teaching of assistive devices for activities of daily
living to prevent or slow deterioration of the patient's condition.
Given the patient's clinical presentation, for the purpose of this
specific example, we will assign the patient payment group 40331
(C3F3S1 with 20+ therapy visits).
For the purposes of this example, we assume that services are
rendered per week for a total of 8 weeks per home health episode. For
both the first and second home health episodes of care, the calculation
to determine outlier payment utilizing payment amounts and case mix
weights for CY 2018, as described in the CY 2018 HH PPS final rule (82
FR 51676), would be as follows, per 60-day episode:

Table 27--Clinical Scenario Calculation Table: Episodes 1 and 2
----------------------------------------------------------------------------------------------------------------
HH outlier--CY 2018 illustrative values Value Operation Adjuster Equals Output
----------------------------------------------------------------------------------------------------------------
National, Standardized 60-day Episode Payment Rate $3,039.64 ........... .......... ........... ..........

[[Page 32378]]

Case-Mix Weight for Payment Group 4.0331 (for 2.1359 ........... .......... ........... ..........
C3F3S1 for 20+ therapy ).........................
Case-Mix Adjusted Episode Payment Amount.......... 3,039.64 * 2.1359 = 6,492.37
Labor Portion of the Case-Mix Adjusted Episode 6,492.37 * 0.78535 - 5,098.78
Payment Amount...................................
Non-Labor Portion of the Case-Mix Adjusted Episode 6,492.37 * 0.21465 = 1,393.59
Payment Amount...................................
Wage Index Value (Beneficiary resides in 31084, 1.2781 ........... .......... ........... ..........
Los Angeles-Long Beach-Glendale, CA).............
Wage-Adjusted Labor Portion of the Case-Mix 5,098.78 * 1.2781 = 6,516.75
Adjusted Episode Payment Amount..................
NRS Payment Amount (Severity Level 2)............. 51.66 ........... .......... = 51.66
-------------------------------------------------------------
Total Case-Mix and Wage-Adjusted Episode .......... ........... .......... = 7,962.00
Payment Amount (Wage-Adjusted Labor Portion
plus Non-Labor Portion of the Case-Mix
Adjusted Episode Payment Amount plus the NRS
Amount)......................................
Total Wage-Adjusted Fixed Dollar Loss Amount:
Fixed Dollar Loss Amount (National, 3,039.64 * 0.55 = 1,671.80
Standardized 60-day Episode Payment Rate *
FDL Ratio)...................................
Labor Portion of the Fixed Dollar Loss Amount. 1,671.80 * 0.78535 = 1,312.95
Non-Labor Amount of the Fixed Dollar Loss 1,671.80 * 0.21465 = 358.85
Amount.......................................
Wage-Adjusted Fixed Dollar Loss Amount........ 1,312.95 * 1.2781 = 1,678.08
-------------------------------------------------------------
Total Wage-Adjusted Fixed Dollar Loss 1,678.08 + 358.85 = 2,036.93
Amount (Wage-Adjusted Labor Portion plus
Non-Labor Portion of the Case-Mix
Adjusted Fixed Dollar Loss Amount).......
Total Wage-Adjusted Imputed Cost Amount:
National Per-Unit Payment Amount--Skilled 48.01 ........... .......... ........... ..........
Nursing......................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed Skilled Nursing Visit Costs (National 48.01 * 48 = 2,304.48
Per-Unit Payment Amount * Number of Units)...
National Per-Unit Payment Amount--Home Health 15.46 ........... .......... ........... ..........
Aide.........................................
Number of 15-minute units (28 hours per week = 896 ........... .......... ........... ..........
112 units per week for 8 weeks)..............
Imputed Home Health Aide Costs (National Per- 15.46 * 896 = 13,852.16
Unit Payment Amount * Number of Units).......
National Per-Unit Payment Amount--Occupational 50.26 ........... .......... ........... ..........
Therapy (OT).................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed OT Visit Costs (National Per-Unit 50.26 * 48 = 2,412.48
Payment Amount * Number of Units)............
National Per-Unit Payment Amount--Physical 50.46 ........... .......... ........... ..........
Therapy (PT).................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed PT Visit Costs (National Per-Unit 50.46 * 48 = 2,422.08
Payment Amount * Number of Units)............
-------------------------------------------------------------
Total Imputed Cost Amount for all .......... ........... .......... = 20,991.20
Disciplines..............................
Labor Portion of the Imputed Costs for All 20,991.20 * 0.78535 = 16,485.44
Disciplines..................................
Non-Labor Portion of Imputed Cost Amount for 20,991.20 * 0.21465 = 4,505.76
All Disciplines..............................
CBSA Wage Index (Beneficiary resides in 31084, 1.2781 ........... .......... ........... ..........
Los Angeles-Long Beach-Glendale, CA).........
Wage-Adjusted Labor Portion of the Imputed 16,485.44 * 1.2781 = 21,070.04
Cost Amount for All Disciplines..............
-------------------------------------------------------------
Total Wage-Adjusted Imputed Cost Amount 21,070.04 + 4,505.76 = 25,575.80
(Wage-Adjusted Labor Portion of the
Imputed Cost Amount plus Non-Labor
Portion of the Imputed Cost Amount)......
Total Payment Per 60-Day Episode:
Outlier Threshold Amount (Total Wage-Adjusted 2,036.93 + 7,962.00 = 9,998.93
Fixed Dollar Loss Amount + Total Case-Mix and
Wage-Adjusted Episode Payment Amount)........
Total Wage-Adjusted Imputed Cost Amount-- 25,575.80 - 9,998.93 = 15,576.87
Outlier Threshold Amount (Total Wage-Adjusted
Fixed Dollar Loss Amount + Total Case-Mix and
Wage-Adjusted Episode Payment Amount)........
Outlier Payment = Imputed Costs Greater Than 15,576.87 * 0.80 = 12,461.50
the Outlier Threshold * Loss-Sharing Ratio
(0.80).......................................
-------------------------------------------------------------
Total Payment Per 60-Day Episode = Total 7,962.00 + 12,461.50 = 20,423.49
Case-Mix and Wage-Adjusted Episode
Payment Amount + Outlier Payment.........
----------------------------------------------------------------------------------------------------------------

[[Page 32379]]

For Episodes 1 and 2 of this clinical scenario, the preceding
calculation illustrates how HHAs are paid by Medicare for providing
care to patients with higher resource use in their homes.
c. Example Two: Home Health Episodes 3 and 4
ALS is a progressive disease such that the patient would most
likely need care beyond a second 60-day HH episode. A beneficiary's
condition could become more complex, such that the patient could
require a gastrostomy tube, which could be placed during a hospital
stay. The patient could be discharged to home for enteral nutrition to
maintain weight and continuing care for his/her stage two pressure
ulcer. Given the complexity of the beneficiary's condition in this
example, the episode could remain at the highest level of care C3F3S1
and would now fit into equation 4.
For the purposes of this example, we assume that services are
rendered per week for a total of 8 weeks per home health episode. For
both the third and fourth home health episodes of care, the calculation
to determine outlier payment utilizing payment amounts and case mix
weights for CY 2018 as described in as described in the CY 2018 HH PPS
final rule (82 FR 51676) would be as follows, per 60-day episode:

Table 28--Clinical Scenario Calculation: Episodes 3 and 4
----------------------------------------------------------------------------------------------------------------
HH outlier--CY 2018 illustrative values Value Operation Adjuster Equals Output
----------------------------------------------------------------------------------------------------------------
National, Standardized 60-day Episode Payment Rate $3,039.64 ........... .......... ........... ..........
Case-Mix Weight for Payment Group 4.0331 (for 2.1359 ........... .......... ........... ..........
C3F3S1 for 20+ therapy)..........................
Case-Mix Adjusted Episode Payment Amount.......... 3,039.64 * 2.1359 = $6,492.37
Labor Portion of the Case-Mix Adjusted Episode 6,492.37 * 0.78535 = 5,098.78
Payment Amount...................................
Non-Labor Portion of the Case-Mix Adjusted Episode 6,492.37 * 0.21465 = 1,393.59
Payment Amount...................................
Wage Index Value (Beneficiary resides in 31084, 1.2781 ........... .......... ........... ..........
Los Angeles-Long Beach-Glendale, CA).............
Wage-Adjusted Labor Portion of the Case-Mix 5,098.78 * 1.2781 = 6,516.75
Adjusted Episode Payment Amount..................
NRS Payment Amount (Severity Level 2)............. 324.53 ........... .......... = 324.53
-------------------------------------------------------------
Total Case-Mix and Wage-Adjusted Episode .......... ........... .......... = 8,234.87
Payment Amount (Wage-Adjusted Labor Portion
plus Non-Labor Portion of the Case-Mix
Adjusted Episode Payment Amount plus the NRS
Amount)......................................
Total Wage-Adjusted Fixed Dollar Loss Amount:
Fixed Dollar Loss Amount (National, 3,039.64 * 0.55 = 1,671.80
Standardized 60-day Episode Payment Rate *
FDL Ratio)...................................
Labor Portion of the Fixed Dollar Loss Amount. 1,671.80 * 0.78535 = 1,312.95
Non-Labor Amount of the Fixed Dollar Loss 1,671.80 * 0.21465 = 358.85
Amount.......................................
Wage-Adjusted Fixed Dollar Loss Amount........ 1,312.95 * 1.2781 = 1,678.08
-------------------------------------------------------------
Total Wage-Adjusted Fixed Dollar Loss 1,678.08 + 358.85 = 2,036.93
Amount (Wage-Adjusted Labor Portion plus
Non-Labor Portion of the Case-Mix
Adjusted Fixed Dollar Loss Amount).......
Total Wage-Adjusted Imputed Cost Amount:
National Per-Unit Payment Amount--Skilled 48.01 ........... .......... ........... ..........
Nursing......................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed Skilled Nursing Visit Costs (National 48.01 * 48 = 2,304.48
Per-Unit Payment Amount * Number of Units)...
National Per-Unit Payment Amount--Home Health 15.46 ........... .......... ........... ..........
Aide.........................................
Number of 15-minute units (28 hours per week = 896 ........... .......... ........... ..........
112 units per week for 8 weeks)..............
Imputed Home Health Aide Costs (National Per- 15.46 * 896 = 13,852.16
Unit Payment Amount * Number of Units).......
National Per-Unit Payment Amount--Occupational 50.26 ........... .......... ........... ..........
Therapy (OT).................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed OT Visit Costs (National Per-Unit 50.26 * 48 = 2,412.48
Payment Amount * Number of Units)............
National Per-Unit Payment Amount--Physical 50.46 ........... .......... ........... ..........
Therapy (PT).................................
Number of 15-minute units (45 minutes = 3 48 ........... .......... ........... ..........
units twice per week for 8 weeks)............
Imputed PT Visit Costs (National Per-Unit 50.46 * 48 = 2,422.08
Payment Amount * Number of Units)............
-------------------------------------------------------------
Total Imputed Cost Amount for all .......... ........... .......... = 20,991.20
Disciplines..............................
Labor Portion of the Imputed Costs for All 20,991.20 * 0.78535 = 16,485.44
Disciplines..................................
Non-Labor Portion of Imputed Cost Amount for 20,991.20 * 0.21465 = 4,505.76
All Disciplines..............................
CBSA Wage Index (Beneficiary resides in 31084, 1.2781 ........... .......... ........... ..........
Los Angeles-Long Beach-Glendale, CA).........
Wage-Adjusted Labor Portion of the Imputed 16,485.44 * 1.2781 = 21,070.04
Cost Amount for All Disciplines..............
-------------------------------------------------------------
Total Wage-Adjusted Imputed Cost Amount 21,070.04 + 4,505.76 = 25,575.80
(Wage-Adjusted Labor Portion of the
Imputed Cost Amount plus Non-Labor
Portion of the Imputed Cost Amount)......
Total Payment Per 60-Day Episode:

[[Page 32380]]

Outlier Threshold Amount (Total Wage-Adjusted 2,036.93 + 8,234.87 = 10,271.80
Fixed Dollar Loss Amount + Total Case-Mix and
Wage-Adjusted Episode Payment Amount)........
Total Wage-Adjusted Imputed Cost Amount- 25,575.80 - 10,271.80 = 15,304.00
Outlier Threshold Amount (Total Wage-Adjusted
Fixed Dollar Loss Amount + Total Case-Mix and
Wage-Adjusted Episode Payment Amount)........
Outlier Payment = Imputed Costs Greater Than 15,304.00 * 0.80 = 12,243.20
the Outlier Threshold * Loss-Sharing Ratio
(0.80).......................................
-------------------------------------------------------------
Total Payment Per 60-Day Episode = Total 12,243.20 + 8,234.87 = 20,478.07
Case-Mix and Wage-Adjusted Episode
Payment Amount + Outlier Payment.........
----------------------------------------------------------------------------------------------------------------

For Episodes 3 and 4 of this clinical scenario, the above
calculation demonstrates how outlier payments could be made for
patients with chronic, complex conditions under the HH PPS. We
reiterate that outlier payments could provide payment to HHAs for those
patients with higher resource use and that the patient's condition does
not need to improve for home health services to be covered by Medicare.
We appreciate the feedback we have received from the public on the
outlier policy under the HH PPS and look forward to ongoing
collaboration with stakeholders on any further refinements that may be
warranted. We note that this example is presented for illustrative
purposes only, and is not intended to suggest that all diagnoses of ALS
should receive the grouping assignment or number of episodes described
here. The CMS Grouper assigns these groups based on information in the
OASIS.

F. Implementation of the Patient-Driven Groupings Model (PDGM) for CY
2020

1. Background and Legislation, Overview, Data, and File Construction
a. Background and Legislation
In the CY 2018 HH PPS proposed rule, we proposed an alternative
case mix-adjustment methodology (known as the Home Health Groupings
Model or HHGM), to be implemented for home health periods of care
beginning on or after January 1, 2019. Ultimately this proposed
alternative case-mix adjustment methodology, including a proposed
change in the unit of payment from 60 days to 30 days, was not
finalized in the CY 2018 HH PPS final rule in order to allow us
additional time to consider public comments for potential refinements
to the methodology (82 FR 51676).
On February 9, 2018, the Bipartisan Budget Act of 2018 (BBA of
2018) (Pub. L. 115-123) was signed into law. Section 51001(a)(1) of the
BBA of 2018 amended section 1895(b)(2) of the Act by adding a new
subparagraph (B) to require the Secretary to apply a 30-day unit of
service for purposes of implementing the HH PPS, effective January 1,
2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new subclause
(iv) under section 1895(b)(3)(A) of the Act, requiring the Secretary to
calculate a standard prospective payment amount (or amounts) for 30-day
units of service that end during the 12-month period beginning January
1, 2020 in a budget neutral manner such that estimated aggregate
expenditures under the HH PPS during CY 2020 are equal to the estimated
aggregate expenditures that otherwise would have been made under the HH
PPS during CY 2020 in the absence of the change to a 30-day unit of
service. Section 1895(b)(3)(A)(iv) of the Act requires that the
calculation of the standard prospective payment amount (or amounts) for
CY 2020 be made before, and not affect the application of, the
provisions of section 1895(b)(3)(B) of the Act. Section
1895(b)(3)(A)(iv) of the Act additionally requires that in calculating
the standard prospective payment amount (or amounts), the Secretary
must make assumptions about behavioral changes that could occur as a
result of the implementation of the 30-day unit of service under
section 1895(b)(2)(B) of the Act and case-mix adjustment factors
established under section 1895(b)(4)(B) of the Act. Section
1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide
a description of the behavioral assumptions made in notice and comment
rulemaking.
Section 51001(a)(2)(B) of the BBA of 2018 also added a new
subparagraph (D) to section 1895(b)(3) of the Act. Section
1895(b)(3)(D)(i) of the Act requires the Secretary to annually
determine the impact of differences between assumed behavior changes as
described in section 1895(b)(3)(A)(iv) of the Act, and actual behavior
changes on estimated aggregate expenditures under the HH PPS with
respect to years beginning with 2020 and ending with 2026. Section
1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a
manner determined appropriate, through notice and comment rulemaking,
provide for one or more permanent increases or decreases to the
standard prospective payment amount (or amounts) for applicable years,
on a prospective basis, to offset for such increases or decreases in
estimated aggregate expenditures, as determined under section
1895(b)(3)(D)(i) of the Act. Additionally, 1895(b)(3)(D)(iii) of the
Act requires the Secretary, at a time and in a manner determined
appropriate, through notice and comment rulemaking, to provide for one
or more temporary increases or decreases to the payment amount for a
unit of home health services for applicable years, on a prospective
basis, to offset for such increases or decreases in estimated aggregate
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act.
Such a temporary increase or decrease shall apply only with respect to
the year for which such temporary increase or decrease is made, and the
Secretary shall not take into account such a temporary increase or
decrease in computing the payment amount for a unit of home health
services for a subsequent year.
Section 51001(a)(3) of the BBA of 2018 amends section 1895(b)(4)(B)
of the Act by adding a new clause (ii) to require the Secretary to
eliminate the use of therapy thresholds in the case-mix system for 2020
and subsequent years. Lastly, section 51001(b)(4) of the BBA of 2018
requires the Secretary to pursue notice and comment rulemaking no later
than December 31, 2019 on a revised case-mix system for payment of home
health services under the HH PPS
b. Overview
To meet the requirement under section 51001(b)(4) of the BBA of
2018 to engage in notice and comment rulemaking on a HH PPS case-mix
system and to better align payment with

[[Page 32381]]

patient care needs and better ensure that clinically complex and ill
beneficiaries have adequate access to home health care, we are
proposing case-mix methodology refinements through the implementation
of the Patient-Driven Groupings Model (PDGM). The proposed PDGM shares
many of the features included in the alternative case mix-adjustment
methodology proposed in the CY 2018 HH PPS proposed rule. We propose to
implement the PDGM for home health periods of care beginning on or
after January 1, 2020. The implementation of the PDGM will require
provider education and training, updating and revising relevant
manuals, and changing claims processing systems. Implementation
starting in CY 2020 would provide opportunity for CMS, its contractors,
and the agencies themselves to prepare. This patient-centered model
groups periods of care in a manner consistent with how clinicians
differentiate between patients and the primary reason for needing home
health care. As required by section 1895(b)(2)(B) of the Act, we
propose to use 30-day periods rather than the 60-day episode used in
the current payment system. In addition, section 1895(b)(4)(B)(ii) of
the Act eliminates the use of therapy thresholds in the case-mix
adjustment for determining payment. The proposed PDGM does not use the
number of therapy visits in determining payment. The change from the
current case-mix adjustment methodology for the HH PPS, which relies
heavily on therapy thresholds as a major determinant for payment and
thus provides a higher payment for a higher volume of therapy provided,
to the PDGM would remove the financial incentive to overprovide therapy
in order to receive a higher payment. The PDGM would base case-mix
adjustment for home health payment solely on patient characteristics, a
more patient-focused approach to payment. Finally, the PDGM relies more
heavily on clinical characteristics and other patient information (for
example, diagnosis, functional level, comorbid conditions, admission
source) to place patients into clinically meaningful payment
categories. In total, there are 216 different payment groups in the
PDGM.
Costs during an episode/period of care are estimated based on the
concept of resource use, which measures the costs associated with
visits performed during a home health episode/period. For the current
HH PPS case-mix weights, we use Wage Weighted Minutes of Care (WWMC),
which uses data from the Bureau of Labor Statistics (BLS) reflecting
the Home Health Care Service Industry. For the PDGM, we propose
shifting to a Cost-Per-Minute plus Non-Routine Supplies (CPM + NRS)
approach, which uses information from the Medicare Cost Report. The CPM
+ NRS approach incorporates a wider variety of costs (such as
transportation) compared to the BLS estimates and the costs are
available for individual HHA providers while the BLS costs are
aggregated for the Home Health Care Service industry.
Similar to the current payment system, 30-day periods under the
PDGM would be classified as ``early'' or ``late'' depending on when
they occur within a sequence of 30-day periods. Under the current HH
PPS, the first two 60-day episodes of a sequence of adjacent 60-day
episodes are considered early, while the third 60-day episode of that
sequence and any subsequent episodes are considered late. Under the
PDGM, the first 30-day period is classified as early. All subsequent
30-day periods in the sequence (second or later) are classified as
late. We propose to adopt this timing classification for 30-day periods
with the implementation of the PDGM for CY 2020. Similar to the current
payment system, we propose that a 30-day period could not be considered
early unless there was a gap of more than 60 days between the end of
one period and the start of another. The comprehensive assessment would
still be completed within 5 days of the start of care date and
completed no less frequently than during the last 5 days of every 60
days beginning with the start of care date, as currently required by
Sec. 484.55, Condition of participation: Comprehensive assessment of
patients. In addition, the plan of care would still be reviewed and
revised by the HHA and the physician responsible for the home health
plan of care no less frequently than once every 60 days, beginning with
the start of care date, as currently required by Sec. 484.60(c),
Condition of participation: Care planning, coordination of services,
and quality of care.
Under the PDGM, we propose that each period would be classified
into one of two admission source categories --community or
institutional-- depending on what healthcare setting was utilized in
the 14 days prior to home health. The 30-day period would be
categorized as institutional if an acute or post-acute care stay
occurred in the 14 days prior to the start of the 30-day period of
care. The 30-day period would be categorized as community if there was
no acute or post-acute care stay in the 14 days prior to the start of
the 30-day period of care.
The PDGM would group 30-day periods into categories based on a
variety of patient characteristics. We propose grouping periods into
one of six clinical groups based on the principal diagnosis. The
principal diagnosis reported would provide information to describe the
primary reason for which patients are receiving home health services
under the Medicare home health benefit. The proposed six clinical
groups, are as follows:
Musculoskeletal Rehabilitation.
Neuro/Stroke Rehabilitation.
Wounds--Post-Op Wound Aftercare and Skin/Non-Surgical
Wound Care.
Complex Nursing Interventions.
Behavioral Health Care (including Substance Use
Disorders).
Medication Management, Teaching and Assessment (MMTA).
Under the PDGM, we propose that each 30-day period would be placed
into one of three functional levels. The level would indicate if, on
average, given its responses on certain functional OASIS items, a 30-
day period is predicted to have higher costs or lower costs. We are
proposing to assign roughly 33 percent of periods within each clinical
group to each functional level. The criteria for assignment to each of
the three functional levels may differ across each clinical group. The
proposed functional level assignment under the PDGM is very similar to
the functional level assignment in the current payment system. Finally,
the PDGM includes a comorbidity adjustment category based on the
presence of secondary diagnoses. We propose that, depending on a
patient's secondary diagnoses, a 30-day period may receive ``no''
comorbidity adjustment, a ``low'' comorbidity adjustment, or a ``high''
comorbidity adjustment. For low-utilization payment adjustments (LUPAs)
under the PDGM, we propose that the LUPA threshold would vary for a 30-
day period under the PDGM depending on the PDGM payment group to which
it is assigned. For each payment group, we propose to use the 10th
percentile value of visits to create a payment group specific LUPA
threshold with a minimum threshold of at least 2 for each group.
Figure BBB1 represents how each 30-day period of care would be
placed into one of the 216 home health resource groups (HHRGs) under
the proposed PDGM for CY 2020.
BILLING CODE 4210-01-P

[[Page 32382]]

[GRAPHIC] [TIFF OMITTED] TP12JY18.003

BILLING CODE 4210-01-C
c. Data and File Construction
To create the PDGM proposed model and related analyses, a data file
based on home health episodes of care as reported in Medicare home
health claims was utilized. The claims data provide episode-level data
(for example, episode From and Through Dates, total number of visits,
HHRG, diagnoses), as well as visit-level data (visit date, visit length
in 15-minute units, discipline of the staff, etc.). The claims also
provide data on whether NRS was provided during the episode and total
charges for NRS.
The core file for most of the analyses for this proposed rule
includes 100 percent of home health episode claims with Through Dates
in Calendar Year (CY) 2017, processed by March 2, 2018, accessed via
the Chronic Conditions Data Warehouse (CCW). Original or adjustment
claims processed after March 2, 2018, would not be reflected in the
core file. The claims-based file was supplemented with additional
variables that were obtained from the CCW, such as information
regarding other Part A and Part B utilization.
The data were cleaned by processing any remaining adjustments and
by

[[Page 32383]]

excluding duplicates and claims that were Requests for Anticipated
Payment (RAP). In addition, visit-level variables needed for the
analysis were extracted from the revenue center trailers (that is, the
line items that describe the visits) and downloaded as a separate
visit-level file, with selected episode-level variables merged onto the
records for visits during those episodes. To account for potential data
entry errors, the visit-level variables for visit length were top-
censored at 8 hours.\23\
---------------------------------------------------------------------------

\23\ Less than 0.1 percent of all visits were recorded as having
greater than 8 hours of service.
---------------------------------------------------------------------------

A set of data cleaning exclusions were applied to the episode-level
file, which resulted in the exclusion of the following:
Episodes that were RAPs.
Episodes with no covered visits.
Episodes with any missing units or visit data.
Episodes with zero payments.
Episodes with no charges.
Non-LUPA episodes missing an HHRG.
The analysis file also includes data on patient characteristics
obtained from the OASIS assessments conducted by home health agency
(HHA) staff at the start of each episode. The assessment data are
electronically submitted by HHAs to a central CMS repository. In
constructing the core data file, 100 percent of the OASIS assessments
submitted October 2016 through December 2017 from the CMS repository
were uploaded by CMS to the CCW. A CCW-derived linking key (Bene ID)
was used to match the OASIS data with CY 2017 episodes of care.
Episodes that could not be linked with an OASIS assessment were
excluded from the analysis file, as they included insufficient patient-
level data to create the PDGM.
To construct measures of resource use, a variety of data sources
were used (see section III.F.2 of this proposed rule for the proposed
methodology used to calculate the cost of care under the PDGM). First,
BLS data on average wages and fringe benefits were used to produce
wage-weighted minutes of care (WWMC), the approach used in the current
system to calculate the cost of care. The wage data are for North
American Industry Classification System (NAICS) 621600--Home Health
Care Services (see Table 29).

Table 29--BLS Standard Occupation Classification (SOC) Codes for Home
Health Providers
------------------------------------------------------------------------
Standard Occupation Code (SOC) No. Occupation title
------------------------------------------------------------------------
29-1141............................... Registered Nurses.
29-2061............................... Licensed Practical and Licensed
Vocational Nurses.
29-1123............................... Physical Therapists.
31-2021............................... Physical Therapist Assistants.
31-2022............................... Physical Therapist Aides.
29-1122............................... Occupational Therapists.
31-2011............................... Occupational Therapist
Assistants.
31-2012............................... Occupational Therapist Aides.
29-1127............................... Speech-Language Pathologists.
21-1022............................... Medical and Public Health Social
Workers.
21-1023............................... Mental Health and Substance
Abuse Social Workers.
31-1011............................... Home Health Aides.
------------------------------------------------------------------------

The WWMC approach determines resource use for each episode by
multiplying utilization (in terms of the number of minutes of direct
patient care provided by each discipline) by the corresponding
opportunity cost of that care (represented by wage and fringe benefit
rates from the BLS).\24\ Table 30 shows the occupational titles and
corresponding mean hourly wage rates from the BLS. The employer cost
per hour worked shown in the fifth column is calculated by adding
together the mean hourly wage rates and the fringe benefit rates from
the BLS. For home health disciplines that include multiple occupations
(such as skilled nursing), the opportunity cost is generated by
weighting the employer cost by the proportions of the labor mix.\25\
Otherwise, the opportunity cost is the same as the employer cost per
hour.
---------------------------------------------------------------------------

\24\ Opportunity costs represent the foregone resources from
providing each minute of care versus using the resources for another
purpose (the next best alternative). Generally, opportunity costs
represent more than the monetary costs, but in these analyses, they
are proxied using hourly wage rates.
\25\ Labor mix represents the percentage of employees with a
particular occupational title (as obtained from claims) within a
home health discipline. Physical therapist aides and occupational
therapist aides were not included in the labor mix.

Table 30--Occupational Employment and Wages Provided by the Federal Bureau of Labor Statistics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimate of Estimated
National Mean hourly benefits as employer Labor Opportunity
Occupation title employment wage a % of cost per mix Home health discipline cost
counts wages hour worked
--------------------------------------------------------------------------------------------------------------------------------------------------------
Registered Nurses.......................... 179,280 $33.34 43.85 $47.96 0.66 Skilled Nursing............... $42.42
Licensed Practical and Licensed Vocational 85,410 22.03 43.85 31.69 0.34
Nurses.
Physical Therapists........................ 24,810 47.23 40.92 66.55 0.66 Physical Therapy.............. 58.55
Physical Therapist Assistants.............. 7,330 31.43 35.79 42.68 0.34
Occupational Therapists.................... 10,760 45.27 40.92 63.79 0.79 Occupational Therapy.......... 59.97
Occupational Therapist Assistants.......... 2,270 33.83 35.79 45.94 0.21
Speech-Language Pathologists............... 5,360 47.08 40.92 66.34 ....... Speech Therapy................ 66.34
Medical and Public Health Social Workers... 18,930 28.76 40.92 40.53 0.97 Medical Social Service........ 40.42
Mental Health and Substance Abuse Social 500 25.85 40.92 36.43 0.03
Workers.
Home Health Aides.......................... 408,920 11.25 35.79 15.28 ....... Home Health Aide.............. 15.28
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: May 2016 National Industry-Specific Occupational Employment and Wage Estimates--NAICS 621600--Home Health Care Services.

[[Page 32384]]

Home Health Agency Medicare Cost Report (MCR) data for FY 2016 were
also used to construct a measure of resource use after trimming out
HHAs whose costs were outliers (see section III.F.2 of this proposed
rule). These data are used to provide a representation of the average
costs of visits provided by HHAs in the six Medicare home health
disciplines: Skilled nursing; physical therapy; occupational therapy;
speech-language pathology; medical social services; and home health
aide services. Cost report data are publicly available at: https://
www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-
Use-Files/Cost-Reports/. More details regarding how HHA MCR data were
used in constructing the CPM+NRS measure of resource use can be found
in section III.F.2 of this proposed rule.
A comment submitted in response to the CY 2018 HH PPS proposed rule
questioned the trimming process for the Medicare cost report data used
to calculate the cost-per-minute plus non-routine supplies (CPM+NRS)
methodology used to estimate resource use (outlined in section III.F.2
of this rule). The commenter stated that for rebasing, CMS audited 100
cost reports and the findings of such audits found that costs were
overstated by 8 percent and that finding was attributed to the entire
population of HHA Medicare cost reports. The commenter questioned if
CMS applied the 8 percent ``adjustment factor'' in last year's proposed
rule, requested CMS provide the number of cost reports used for the
proposed rule, asked if only cost reports of freestanding HHAs were
used, and requested that CMS describe what percentage of cost reports
did not list any costs for NRS, yet listed NRS charges.
For the calculations in the CY 2018 HH PPS proposed rule, CMS
applied the trimming methodology described in detail in the ``Analyses
in Support of Rebasing & Updating Medicare Home Health Payment Rates''
Report available at: https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/HomeHealthPPS/Downloads/Analyses-in-Support-of-
Rebasing-and-Updating-the-Medicare-Home-Health-Payment-Rates-Technical-
Report.pdf. This is also the trimming methodology outlined in the CY
2014 HH PPS proposed rule (78 FR 40284). Of note, for each discipline
and for NRS, we also followed the methodology laid out in the
``Rebasing Report'' by trimming out values that fell in the top or
bottom 1 percent of the distribution across all HHAs. This included the
cost-per-visit values for each discipline and NRS cost-to-charge ratios
that fell in the top or bottom 1 percent of the distribution across all
HHAs. For this proposed rule, we applied the same trimming methodology.
We included both freestanding and facility-based HHA Medicare cost
report data in our rebasing calculations as outlined in the CY 2014 HH
PPS proposed and final rules and in our analysis of FY 2015 HHA
Medicare cost report data for the CY 2018 HH PPS proposed rule. We
similarly included both freestanding and facility-based HHA Medicare
cost report data in our analysis of FY 2016 cost report data for this
proposed rule. We note that although we found an 8 percent
overstatement of costs from the Medicare cost reports audits performed
to support the rebasing adjustments, we did not apply an 8 percent
adjustment to HHA costs in the CY 2014 HH PPS proposed or final rules.
We also did not apply an 8 percent adjustment to the costs in the CY
2018 HH PPS proposed rule or in this proposed rule. The 8 percent
overstatement was determined using a small sample size of HHA Medicare
cost reports and the CY 2014 HH PPS proposed rule included this
information as illustrative only. The information was not used in any
cost calculations past or present.
Before trimming, there were 10,394 cost reports for FY 2016. In
this proposed rule, we used 7,458 cost reports. Of the 7,458 cost
reports, 5,447 (73.4 percent) had both NRS charges and costs, 1,672
(22.4 percent) had neither NRS charges or costs, and 339 (4.5 percent)
had NRS charges but no NRS costs. There were no cost reports with NRS
costs, but no NRS charges.
The initial 2017 analytic file included 6,771,059 episodes. Of
these, 959,410 (14.2 percent) were excluded because they could not be
linked to OASIS assessments or because of the claims data cleaning
process reasons listed above. This yielded a final analytic file that
included 5,811,649 episodes. Those episodes are 60-day episodes under
the current payment system, but for the PDGM those 60-day episodes were
converted into two 30-day periods. This yielded a final PDGM analytic
file that included 10,160,226, 30-day periods. Certain 30-day periods
were excluded for the following reasons:
Inability to merge to certain OASIS items to create the
episode's functional level that is used for risk adjustment. For all
the periods in the analytic file, there was a look-back through CY 2016
for a period with a Start of Care or Resumption of Care assessment that
preceded the period being analyzed and was in the same sequence of
periods. If such an assessment was found, it was used to impute
responses for OASIS items that were not included in the follow-up
assessment. Periods that were linked to a follow-up assessment which
did not link to a Start of Care or Resumption of Care assessment using
the process described above were dropped (after exclusions, n =
9,471,529).
No nursing visits or therapy visits (after exclusions, n =
9,287,622).
LUPAs were excluded from the analysis. Periods that are
identified as LUPAs in the current payment system were excluded in the
creation of the functional score. Following the creation of the score
(and the corresponding levels), case-mix group specific LUPA thresholds
were created and episodes/periods were excluded that were below the new
LUPA threshold when computing the case-mix weights.\26\ Therefore, the
final analytic sample included 8,624,776 30-day periods that were used
for the analyses in the PDGM.
---------------------------------------------------------------------------

\26\ The case-mix group specific LUPA thresholds were determined
using episodes that were considered LUPAs under the current payment
system.
---------------------------------------------------------------------------

In response to the CY 2018 HH PPS proposed rule, we received many
comments stating there was limited involvement with the industry in the
development of the alternative case-mix adjustment methodology.
Commenters also stated that they were unable to obtain the necessary
data in order to replicate and model the effects on their business. We
note that, through notice and comment rulemaking and other processes,
stakeholders always have the opportunity to reach out to CMS and
provide suggestions for improvement in the payment methodology under
the HH PPS. In the CY 2014 HH PPS final rule, we noted that we were
continuing to work on improvements to our case-mix adjustment
methodology and welcomed suggestions for improving the case-mix
adjustment methodology as we continued in our case-mix research (78 FR
72287). The analyses and the ultimate development of an alternative
case-mix adjustment methodology was shared with stakeholders via
technical expert panels, clinical workgroups, and special open door
forums. We also provided high-level summaries on our case-mix
methodology refinement work in the HH PPS proposed rules for CYs 2016
and 2017 (80 FR 39839, and 81 FR 76702). A detailed technical report
was posted on the CMS website in December of 2016, additional technical
expert panel and clinical workgroup webinars were held after the
posting of the technical report, and a National Provider call occurred
in January 2017

[[Page 32385]]

to further solicit feedback from stakeholders and the general
public.\27\ \28\ As noted above, the CY 2018 HH PPS proposed rule
further solicited comments on an alternative case-mix adjustment
methodology. Ultimately the proposed alternative case-mix adjustment
methodology, including a proposed change in the unit of payment from 60
days to 30 days, was not finalized in the CY 2018 HH PPS final rule in
order to allow CMS additional time to consider public comments for
potential refinements to the model (82 FR 51676).
---------------------------------------------------------------------------

\27\ Abt Associates. ``Overview of the Home Health Groupings
Model.'' Medicare Home Health Prospective Payment System: Case-Mix
Methodology Refinements. Cambridge, MA, November 18, 2016. Available
at https://downloads.cms.gov/files/
hhgm%20technical%20report%20120516%20sxf.pdf.
\28\ Centers for Medicare & Medicaid Services (CMS).
``Certifying Patients for the Medicare Home Health Benefit.'' MLN
Connects^TM National Provider Call. Baltimore, MD,
December 16, 2016. Slides, examples, audio recording and transcript
available at https://www.cms.gov/Outreach-and-Education/Outreach/
NPC/National-Provider-Calls-and-Events-Items/2017-01-18-Home-
Health.html?DLPage=2&DLEntries=10&DLSort=0&DLSortDir=descending.
---------------------------------------------------------------------------

On February 1, 2018, CMS convened another TEP, to gather
perspectives and identify and prioritize recommendations from industry
leaders, clinicians, patient representatives, and researchers with
experience with home health care and/or experience in home health
agency management regarding the case-mix adjustment methodology
refinements described in the CY 2018 HH PPS proposed rule (82 FR
35270), and alternative case-mix models submitted during 2017 as
comments to the CY 2018 HH PPS proposed rule. During the TEP, there was
a description and solicitation of feedback on the components of the
proposed case-mix methodology refinement, such as resource use, 30-day
periods, clinical groups, functional levels, comorbidity groups, and
other variables used to group periods into respective case-mix groups.
Also discussed were the comments received from the CY 2018 HH PPS
proposed rule, the creation of case-mix weights, and an open discussion
to solicit feedback and recommendations for next steps. This TEP
satisfied the requirement set forth in section 51001(b)(1) of the BBA
of 2018, which requires that at least one session of such a TEP be held
between January 1, 2018 and December 31, 2018. Lastly, section
51001(b)(3) of the BBA of 2018 requires the Secretary to issue a report
to the Committee on Ways and Means and Committee on Energy and Commerce
of the House of Representatives and the Committee on Finance of the
Senate on the recommendations from the TEP members, no later than April
1, 2019. This report is available on the CMS HHA Center web page at:
https://www.cms.gov/center/provider-Type/home-Health-Agency-HHA-
Center.html and satisfies the requirement of section 51001(b)(3) of the
BBA of 2018.
Finally, with respect to comments regarding the availability of
data to replicate and model the effects of the PDGM on HHAs, we note
that generally the data needed to replicate and model the effects of
the proposed PDGM are available by request through the CMS Data Request
Center.\29\ Although claims data for home health are available on a
quarterly and annual basis as Limited Data Set (LDS) files and Research
Identifiable Files (RIFs); we note that assessment data (OASIS) are not
available as LDS files through the CMS Data Request Center. While CMS
is able to provide LDS files in a more expedited manner, it may take
several months for CMS to provide RIFs. Therefore, we will provide upon
request a Home Health Claims-OASIS LDS file to accompany the CY 2019 HH
PPS proposed and final rules. We believe that in making a Home Health
Claims-OASIS LDS file available upon request in conjunction with the CY
2019 HH PPS proposed and final rules, this would address concerns from
stakeholders regarding data access and transparency in annual
ratesetting.
---------------------------------------------------------------------------

\29\ https://www.resdac.org/cms-data/request/cms-data-request-
center.
---------------------------------------------------------------------------

The Home Health Claims-OASIS LDS file can be requested by following
the instructions on the following CMS website: https://www.cms.gov/
Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-
Data-Agreements/DUA_-_NewLDS.html and a file layout will be available.
This file will contain information from claims data matched with
assessment data for CY 2017, both obtained from the Chronic Conditions
Data Warehouse (CCW), and each observation in the file will represent a
30-day period of care with variables created that provide information
corresponding to both the 30-day period of care and the 60-day episode
of care. The file will also contain variables that show the case-mix
group that a particular claim would be grouped into under both the new
PDGM case-mix methodology and the current case-mix adjustment
methodology as well as variables for all the assessment items used for
grouping the claim into its appropriate case-mix group under the PDGM
and variables used for calculating resource use. Because this Home
Health Claims-OASIS LDS file includes variables used for calculating
resource use, this file will also include publically available data
from home health cost reports and the BLS. Some of the cost data in
this file is trimmed and imputed before being used as outlined above.
We note that much of the content of the Home Health Claims-OASIS LDS
file will be derived from CMS data sources. That is, many elements of
claims or elements of OASIS will not be copied to the LDS file as is.
For example, we will have variables in the data files that will record
the aggregated number of visits and minutes of service by discipline
type. We will need to create those aggregates from the line item data
available on the claims data. Because we will be taking data from
different sources (claims, OASIS, and cost reports/BLS), we will match
the data across those sources. Information from claims and costs
reports will be linked using the CCN. OASIS assessment data will be
linked to those sources using information available both on the claim
and OASIS. As noted earlier in this section, any episodes that could
not be linked with an OASIS assessment were excluded from the analysis
file, as they included insufficient patient-level data to re-group such
episodes into one of the 216 case-mix groups under the PDGM.
In addition, similar to the CY 2018 HH PPS proposed rule, we will
again provide a PDGM Grouper Tool in conjunction with this proposed
rule on CMS' HHA Center web page to allow HHAs to replicate the PDGM
methodology using their own internal data.\30\ In addition, in
conjunction with this proposed rule, we will post a file on the HHA
Center web page that contains estimated Home Health Agency-level
impacts as a result of the proposed PDGM.
---------------------------------------------------------------------------

\30\ https://www.cms.gov/center/provider-Type/home-Health-
Agency-HHA-Center.html.
---------------------------------------------------------------------------

2. Methodology Used To Calculate the Cost of Care
To construct the case-mix weights for the PDGM proposal, the costs
of providing care needed to be determined. A Wage-Weighted Minutes of
Care (WWMC) approach is used in the current payment system based on
data from the BLS. However, we are proposing to adopt a Cost-per-Minute
plus Non-Routine Supplies (CPM + NRS) approach, which uses information
from HHA Medicare Cost Reports and Home Health Claims.
Home Health Medicare Cost Report Data: All Medicare-
certified HHAs must report their own costs through publicly-

[[Page 32386]]

available home health cost reports maintained by the Healthcare Cost
Report Information System (HCRIS). Freestanding HHAs report using a
HHA-specific cost report while HHAs that are hospital-based report
using the HHA component of the hospital cost reports. These cost
reports enable estimation of the cost per visit by provider and the
estimated NRS cost to charge ratios. To obtain a more robust estimate
of cost, a trimming process was applied to remove cost reports with
missing or questionable data and extreme values.\31\
---------------------------------------------------------------------------

\31\ The trimming methodology is described in the report
``Analyses in Support of Rebasing & Updating Medicare Home Health
Payment Rates'' (Morefield, Christian, and Goldberg 2013). See
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
HomeHealthPPS/Downloads/Analyses-in-Support-of-Rebasing-and-
Updating-the-Medicare-Home-Health-Payment-Rates-Technical-
Report.pdf.
---------------------------------------------------------------------------

Home Health Claims Data: Medicare home health claims data
are used in both the previous WWMC approach and in the CPM+NRS method
to obtain minutes of care by discipline of care.
Under the proposed PDGM, we group 30-day periods of care into their
case-mix groups taking into account admission source, timing, clinical
group, functional level, and comorbidity adjustment. From there, the
average resource use for each case-mix group dictates the group's case-
mix weight. We propose that resource use be estimated with the cost of
visits recorded on the home health claim plus the cost of NRS recorded
on the claims. The cost of NRS is generated by taking NRS charges on
claims and converting them to costs using a NRS cost to charge ratio
that is specific to each HHA. NRS costs are then added to the resource
use estimates. That overall resource use estimate is then used to
establish the case-mix weights. Similar to the current system, NRS
would still be paid prospectively under the PDGM, but the PDGM
eliminates the separate case-mix adjustment model for NRS.
Under the proposed alternative case-mix methodology discussed in
the CY 2018 HH PPS proposed rule, we proposed to calculate resource use
using the CPM+NRS approach (82 FR 35270). In response to the CY 2018 HH
PPS proposed rule, several commenters expressed support for the
proposed change to the CPM+NRS methodology used to measure resource
use, noting that such an approach incorporates a wider variety of costs
(such as transportation) compared to the current WWMC approach.
Alternatively, other commenters responding to last year's proposed rule
objected to using Medicare cost report data rather than Wage-Weighted
Minutes of Care (WWMC) to calculate resource use. The commenters
indicated that the strength and utility of period-specific cost depends
on the accuracy and consistency of agencies' reported charges, cost-to-
charge ratios, and period minutes and indicated that they believe there
are no incentives for ensuring the accuracy of HHA cost reports, which
they believe may result in erroneous data. Several commenters also
indicated that the use of cost report data in lieu of WWMC favors
facility-based agencies because they believe that facility-based
agencies have the ability to allocate indirect overhead costs from
their parent facilities to their service cost and argued that the
proposed alternative case-mix methodology would reward inefficient HHAs
with historically high costs. A few commenters stated that Non-Routine
Supplies (NRS) should not be incorporated into the base rate and then
wage-index adjusted (as would be the case if CMS were to use the
CPM+NRS approach to estimate resource use). The commenters stated that
HHAs' supply costs are approximately the same nationally, regardless of
rural or urban locations and regardless of the wage-index, and
including NRS in the base rate will penalize rural providers and
unnecessarily overpay for NRS in high wage-index areas. We note that in
accordance with the requirement of section 51001 of the BBA of 2018, a
Technical Expert Panel (TEP) convened in February 2018 to solicit
feedback and identify and prioritize recommendations from a wide
variety of industry experts and patient representatives regarding the
public comments received on the proposed alternative case-mix
adjustment methodology. We received similar comments on the approach to
calculating resource use using the CPM+NRS approach, versus the WWMC
approach, bothin response to the CY 2018 HH PPS proposed rule and those
provided by the TEP participants.
We believe that using HHA Medicare cost report data, through the
CPM+NRS approach, to calculate the costs of providing care better
reflects changes in utilization, provider payments, and supply amongst
Medicare-certified HHAs. Using the BLS average hourly wage rates for
the entire home health care service industry does not reflect changes
in Medicare home health utilization that impact costs, such as the
allocation of overhead costs when Medicare home health visit patterns
change. Utilizing data from HHA Medicare cost reports better represents
the total costs incurred during a 30-day period (including, but not
limited to, direct patient care contract labor, overhead, and
transportation costs), while the WWMC method provides an estimate of
only the labor costs (wage and fringe benefit costs) related to direct
patient care from patient visits that are incurred during a 30-day
period. With regards to accuracy, we note that each HHA Medicare cost
report is required to be certified by the Officer or Director of the
home health agency as being true, correct, and complete with potential
penalties should any information in the cost report be a
misrepresentation or falsification of information.
As noted above, and in the CY 2018 HH PPS proposed rule, we applied
the trimming methodology described in detail in the ``Analyses in
Support of Rebasing & Updating Medicare Home Health Payment Rates''
Report. This is also the trimming methodology outlined in the CY 2014
HH PPS proposed rule (78 FR 40284) in determining the rebased national,
standardized 60-day episode payment amount. For each discipline and for
NRS used in calculating resource use using the CPM+NRS approach, we
also followed the methodology laid out in the ``Rebasing Report'' by
trimming out values that fall in the top or bottom 1 percent of the
distribution across all HHAs. This included the cost per visit values
for each discipline and NRS cost-to-charge ratios that fall in the top
or bottom 1 percent of the distribution across all HHAs. Normalizing
data by trimming out missing or extreme values is a widely accepted
methodology both within CMS and amongst the health research community
and provides a more robust measure of average costs per visit that is
reliable for the purposes of establishing base payment amounts and
case-mix weights under the HH PPS. Using HHA Medicare cost report data
to establish the case-mix weight aligns with the use of this data in
determining the national, standardized 60-day episode payment amount
under the HH PPS.
In response to commenters' concerns regarding the allocation of
overhead costs by facility-based HHAs, we note that a single HHA's
costs impact only a portion of the calculation of the weights and costs
are blended together across all HHAs. The payment regression was
estimated using 8,624,776 30-day periods from 10,480 providers. On
average, each provider contributed 823 30-day periods to the payment
regression, which is only 0.010 percent of all 30-day periods.
Therefore, including or excluding any single HHA, on average, would not
dramatically

[[Page 32387]]

impact the results of the payment regression. Further, facility-based
HHAs are only 8 percent of HHAs whereas 92 percent of HHAs are
freestanding, and coincidentally the percentage of 30-day periods
furnished by facility-based versus freestanding HHAs is also 8 and 92
percent, respectively. Additionally, in the PDGM, we estimate the
payment regression using provider-level fixed effects; therefore we are
looking at the within provider variation in resource use.
In the CY 2008 HH PPS final rule, CMS noted that use of non-routine
medical supplies is unevenly distributed across episodes of care in
home health. In addition, the majority of episodes do not incur any NRS
costs and, at that time, the current payment system overcompensated for
episodes with no NRS costs. In the CY 2008 HH PPS proposed rule, we
stated that patients with certain conditions, many of them related to
skin conditions, were more likely to require high non-routine medical
supply utilization (72 FR 49850), and that we would continue to look
for ways to improve our approach to account for NRS costs and payments
in the future (72 FR 25428). We believe that the proposed PDGM offers
an alternative method for accounting for NRS costs and payments by
grouping patients more likely to require high NRS utilization. For
example, while the Wound group and Complex Nursing Interventions groups
comprise about 9 percent and 4 percent of all 30-day periods of care,
respectively; roughly 27 percent of periods where NRS was supplied were
assigned to the Wound and Complex Nursing Interventions groups and 44
percent of NRS costs fall into the Wound and Complex Nursing groups. We
note that CY 2017 claims data indicates that about 60 percent of 60-day
episodes did not provide any NRS.
In using the CPM + NRS approach to calculate the cost of proving
care (resource use), NRS costs are reflected in the average resource
use that drives the case-mix weights. If there is a high amount of NRS
cost for all periods in a particular group (holding all else equal),
the resource use for those periods will be higher relative to the
overall average and the case-mix weight will correspondingly be higher.
Similar to the current system, NRS would still be paid prospectively
under the PDGM, but the PDGM eliminates the separate case-mix
adjustment model for NRS. Incorporating the NRS cost into the measure
of overall resource use (that is, the dependent variable of the payment
model) requires adjusting the NRS charges submitted on claims based on
the NRS cost-to-charge ratio from cost report data.
The following steps would be used to generate the measure of
resource use under this CPM + NRS approach:
(1) From the cost reports, obtain total costs for each of the six
home health disciplines for each HHA.
(2) From the cost reports, obtain the number of visits by each of
the six home health disciplines for each HHA.
(3) Calculate discipline-specific cost per visit values by dividing
total costs [1] by number of visits [2] for each discipline for each
HHA. For HHAs that did not have a cost report available (or a cost
report that was trimmed from the sample), imputed values were used as
follows:
A state-level mean was used if the HHA was not hospital-
based. The state-level mean was computed using all non-hospital based
HHAs in each state.
An urban nationwide mean was used for all hospital-based
HHAs located in a Core-based Statistical Area (CBSA). The urban nation-
wide mean was computed using all hospital-based HHAs located in any
CBSA.
A rural nationwide mean was used for all hospital-based
HHAs not in a CBSA. The rural nation-wide mean was computed using all
hospital-based HHAs not in a CBSA.
(4) From the home health claims data, obtain the average number of
minutes of care provided by each discipline across all episodes for a
HHA.
(5) From the home health claims data, obtain the average number of
visits provided by each discipline across all episodes for each HHA.
(6) Calculate a ratio of average visits to average minutes by
discipline by dividing average visits provided [5] by average minutes
of care [4] by discipline for each HHA.
(7) Calculate costs per minute by multiplying the HHA's cost per
visit [3] by the ratio of average visits to average minutes [6] by
discipline for each HHA.
(8) Obtain 30-day period costs by multiplying costs per minute [7]
by the total number of minutes of care provided during a 30-day period
by discipline. Then, sum these costs across the disciplines for each
period.
This approach accounts for variation in the length of a visit by
discipline. NRS costs are added to the resource use calculated in [8]
in the following way:
(9) From the cost reports, determine the NRS cost-to-charge ratio
for each HHA. The NRS ratio is trimmed if the value falls in the top or
bottom 1 percent of the distribution across all HHAs from the trimmed
sample. Imputation for missing or trimmed values is done in the same
manner as it was done for cost per visit (see [3] above).
(10) From the home health claims data, obtain NRS charges for each
period.
(11) Obtain NRS costs for each period by multiplying charges from
the home health claims data [10] by the cost-to-charge ratio from the
cost reports [9] for each HHA.
Resource use is then obtained by:
(12) Summing costs from [8] with NRS costs from [11] for each 30-
day period.
Table 31 shows these costs for 30-day periods in CY 2017 (n =
8,624,776). On average, total 30-day period costs as measured by
resource use are $1,570.68. The distribution ranges from a 5th
percentile value of $296.66 to a 95th percentile value of $3,839.91.

Table 31--Distribution of Average Resource Use Using CPM + NRS Approach
[30 Day periods]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
5th 10th 25th 50th 75th 90th 95th
Statistics Mean N Percentile Percentile Percentile Percentile Percentile Percentile Percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Average Resource Use (CPM + NRS).................................. $1,570.68 8,624,776 $296.66 $394.31 $679.12 $1,272.18 $2,117.47 $3,107.93 $3,839.91
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The distributions and magnitude of the estimates of costs for the
CPM + NRS method versus the WWMC method are very different. The
differences arise because the CPM + NRS method incorporates HHA-
specific costs that represent the total costs incurred during a 30-day
period (including overhead costs), while the WWMC method provides an
estimate of only the labor costs (wage + fringe) related to direct
patient care from patient visits that are incurred during a 30-day
period. Those costs are not HHA-specific and do not account for any
non-labor costs (such as

[[Page 32388]]

transportation costs) or the non-direct patient care labor costs (such
as, administration and general labor costs). Because the costs
estimated using the two approaches are measuring different items, they
cannot be directly compared. However, if the total cost of a 30-day
period is correlated with the labor that is provided during visits, the
two approaches should be highly correlated. The correlation coefficient
(estimated by comparing a 30-day period's CPM + NRS resource use to the
same period's WWMC resource use) between the two approaches to
calculating resource use is equal to 0.8512 (n = 8,624,776). Therefore,
the relationship in relative costs is similar between the two methods.
Using cost report data to develop case-mix weights more evenly
weights skilled nursing services and therapy services than the BLS
data. Table 32 shows the ratios between the estimated costs per hour
for each of the home health disciplines compared with skilled nursing
resulting from the CPM + NRS versus WWMC methods. Under the CPM + NRS
methodology, the ratio for physical therapy costs per hour to skilled
nursing is 1.14 compared with 1.36 using the WWMC method.

Table 32--Relative Values in Costs per Hour by Discipline
[Skilled nursing is base]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Skilled Physical Occupational Medical social Home health
Estimated cost per hour nursing therapy therapy Speech therapy service aide
--------------------------------------------------------------------------------------------------------------------------------------------------------
CPM + NRS............................................... 1.00 1.14 1.15 1.25 1.39 0.40
WWMC.................................................... 1.00 1.36 1.38 1.56 0.94 0.35
--------------------------------------------------------------------------------------------------------------------------------------------------------

In response to the CY 2018 HH PPS proposed rule (82 FR 35270), a
few commenters, stated that based on their operational experiences with
clinical staffing labor costs, HHA cost report data suggests more
parity exists between skilled nursing (``SN'') versus physical
therapist (``PT'') costs than in fact exists. Commenters stated that
BLS data showing a 40 percent difference between SN and PT costs are
more reflective of the human resources experiences in the markets where
they operate. As such, commenters believe the use of cost report data
would cause the proposed alternative case-mix methodology to overpay
for nursing services and underpay for therapy services, although it was
not clear from the comments why the relative relationship in cost
between disciplines would necessarily mean that nursing would be
overpaid or underpaid relative to therapy.
We note that the HHA Medicare cost report data reflects all labor
costs, including contract labor costs. The BLS data only reflects
employed staff. This may partially explain why a 40 percent variation
between SN and PT costs is not evident in the cost report data.
However, the comparison is somewhat inappropriate because the BLS data
only reflects labor costs whereas the HHA Medicare cost report data
includes labor and non-labor costs. As noted earlier in Table 32, there
is only a 14 percent variation using the CPM + NRS methodology.
Moreover, in aggregate, about 15 percent of compensation costs are
contract labor costs and this varies among the disciplines with
contract labor costs accounting for a much higher proportion of therapy
visit costs compared to skilled nursing visit costs. Utilization also
varies among freestanding providers with smaller providers having a
higher proportion of contract labor costs, particularly for therapy
services compared to larger providers. The decision of whether to/or
what proportion of contract labor to use is at the provider's
discretion. Finally, we note that in order to be eligible for Medicare
HH PPS payments, providers must complete the HHA Medicare cost report
and certify the report by the Officer or Director of the home health
agency as being true, correct, and complete; therefore, such data can
and should be used to calculate the cost of care.
We have determined that using cost report data to calculate the
cost of home health care better aligns the case-mix weights with the
total relative cost for treating various patients. In addition, using
cost report data allows us to incorporate NRS into the case-mix system,
rather than maintaining a separate payment system. Therefore, we are
re-proposing to calculate the cost of a 30-day period of home health
care under the proposed PDGM using the cost per minute plus non-routine
supplies (CPM + NRS) approach outlined above, as also outlined in the
CY 2018 proposed rule. We invite comments on the proposed methodology
for calculating the cost of a 30-day period of care under the PDGM.
3. Change From a 60-Day to a 30-Day Unit of Payment
a. Background
Currently, HHAs are paid for each 60-day episode of home health
care provided. In the CY 2018 HH PPS proposed rule, CMS proposed a
change from making payment based on 60-day episodes to making payment
based on 30-day periods, effective for January 1, 2019. Examination of
the resources used within a 60-day episode of care identified
differences in resources used between the first 30-day period within a
60-day episode and the second 30-day period within a 60-day episode.
Episodes have more visits, on average, during the first 30 days
compared to the last 30 days and costs are much higher earlier in the
episode and lesser later on; therefore, dividing a single 60-day
episode into two 30-day periods more accurately apportioned payments.
In addition, with the proposed removal of therapy thresholds from the
case-mix adjustment methodology under the HH PPS, a shorter period of
care reduced the variation and improved the accuracy of the case-mix
weights generated under the PDGM. CMS did not finalize the
implementation of a 30-day unit of payment in the CY 2018 HH PPS final
rule (82 FR 51676).
Section 1895(b)(2)(B) of the Act, as added by section 51001(a)(1)
of the BBA of 2018, requires the Secretary to apply a 30-day unit of
service for purposes of implementing the HH PPS, effective January 1,
2020. We note that we interpret the term ``unit of service'' to be
synonymous with ``unit of payment'' and will henceforth refer to ``unit
of payment'' in this proposed rule with regards to payment under the HH
PPS. We propose to make HH payments based on a 30-day unit of payment
effective January 1, 2020. While we are proposing to change to a 30-day
unit of payment, we note that the comprehensive assessment would still
be completed within 5 days of the start of care date and completed no
less frequently than during the last 5 days of every 60 days beginning
with the start of care date, as currently required by Sec. 484.55,
Condition of participation: Comprehensive assessment of patients.

[[Page 32389]]

In addition, the plan of care would still be reviewed and revised by
the HHA and the physician responsible for the home health plan of care
no less frequently than once every 60 days, beginning with the start of
care date, as currently required by Sec. 484.60(c), Condition of
participation: Care planning, coordination of services, and quality of
care.
b. 30-Day Unit of Payment
Under section 1895(b)(3)(A)(iv) of the Act, we are required to
calculate a 30-day payment amount for CY 2020 in a budget neutral
manner such that estimated aggregate expenditures under the HH PPS
during CY 2020 are equal to the estimated aggregate expenditures that
otherwise would have been made under the HH PPS during CY 2020 in the
absence of the change to a 30-day unit of payment. Furthermore, as also
required by section 1895(b)(3)(A)(iv) of the Act, to calculate a 30-day
payment amount in a budget-neutral manner, we are required to make
assumptions about behavior changes that could occur as a result of the
implementation of the 30-day unit of payment. In addition, in
calculating a 30-day payment amount in a budget-neutral manner, we must
take into account behavior changes that could occur as a result of the
case-mix adjustment factors that are implemented in CY 2020. We are
also required to calculate a budget-neutral 30-day payment amount
before the provisions of section 1895(b)(3)(B) of the Act are applied,
that is, the home health applicable percentage increase, the adjustment
for case-mix changes, the adjustment if quality data is not reported,
and the productivity adjustment.
In calculating the budget-neutral 30-day payment amount, we propose
to make three assumptions about behavior change that could occur in CY
2020 as a result of the implementation of the 30-day unit of payment
and the implementation of the PDGM case-mix adjustment methodology
outlined in this proposed rule:
Clinical Group Coding: A key component of determining
payment under the PDGM is the 30-day period's clinical group
assignment, which is based on the principal diagnosis code for the
patient as reported by the HHA on the home health claim. Therefore, we
assume that HHAs will change their documentation and coding practices
and would put the highest paying diagnosis code as the principal
diagnosis code in order to have a 30-day period be placed into a
higher-paying clinical group. While we do not support or condone coding
practices or the provision of services solely to maximize payment, we
often take into account expected behavioral effects of policy changes
related to the implementation of the proposed rule.
Comorbidity Coding: The PDGM further adjusts payments
based on patients' secondary diagnoses as reported by the HHA on the
home health claim. While the OASIS only allows HHAs to designate 1
primary diagnosis and 5 secondary diagnoses, the home health claim
allows HHAs to designate 1 principal diagnosis and 24 secondary
diagnoses. Therefore, we assume that by taking into account additional
ICD-10-CM diagnosis codes listed on the home health claim (beyond the 6
allowed on the OASIS), more 30-day periods of care will receive a
comorbidity adjustment than periods otherwise would have received if we
only used the OASIS diagnosis codes for payment. The comorbidity
adjustment in the PDGM can increase payment by up to 20 percent.
LUPA Threshold: Rather than being paid the per-visit
amounts for a 30-day period of care subject to the low-utilization
payment adjustment (LUPA) under the proposed PDGM, we assume that for
one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold
HHAs will provide 1 to 2 extra visits to receive a full 30-day
payment.\32\ LUPAs are paid when there are a low number of visits
furnished in a 30-day period of care. Under the PDGM, the LUPA
threshold ranges from 2-6 visits depending on the case-mix group
assignment for a particular period of care (see section F.9 of this
proposed rule for the LUPA thresholds that correspond to the 216 case-
mix groups under the PDGM).
---------------------------------------------------------------------------

\32\ Current data suggest that what would be about \1/3\ of the
LUPA episodes with visits near the LUPA threshold move up to become
non-LUPA episodes. We assume this experience will continue under the
PDGM, with about \1/3\ of those episodes 1 or 2 visits below the
thresholds moving up to become non-LUPA episodes.
---------------------------------------------------------------------------

Table 33 includes estimates of what the 30-day payment amount would
be for CY 2019 (using CY 2017 home health utilization data) in order to
achieve budget neutrality both with and without behavioral assumptions
and including the application of the proposed home health payment
update percentage of 2.1 percent outlined in section C.2 of this
proposed rule. We note that these are only estimates to illustrate the
30-day payment amount if we had proposed to implement the 30-day unit
of payment and the proposed PDGM for CY 2019. However, because we are
proposing to implement the 30-day unit of payment and proposed PDGM for
CY 2020, we would propose the actual 30-day payment amount in the CY
2020 HH PPS proposed rule calculated using CY 2018 home health
utilization data, and we would calculate this amount before application
of the proposed home health update percentage required for CY 2020 (as
required by section 1895(b)(3)(iv) of the Act). In order to calculate
the budget neutral 30-day payment amounts in this proposed rule, both
with and without behavioral assumptions, we first calculated the total,
aggregate amount of expenditures that would occur under the current
case-mix adjustment methodology (as described in section III.B. of this
rule) and the 60-day episode unit of payment using the proposed CY 2019
payment parameters (e.g., proposed 2019 payment rates, proposed 2019
case-mix weights, and outlier fixed-dollar loss ratio). That resulted
in a total aggregate expenditures target amount of $16.1 billion.\33\
We then calculated what the 30-day payment amount would need to be set
at in CY 2019, with and without behavior assumptions, while taking into
account needed changes to the outlier fixed-dollar loss ratio under the
PDGM in order to pay out no more than 2.5 percent of total HH PPS
payments as outlier payments (refer to section III.F.12 of this
proposed rule) and in order for Medicare to pay out $16.1 billion in
total expenditures in CY 2019 with the application of a 30-day unit of
payment under the PDGM.
---------------------------------------------------------------------------

\33\ The initial 2017 analytic file included 6,771,059 60-day
episodes ($18.2 billion in total expenditures). Of these, 959,410
(14.2 percent) were excluded because they could not be linked to
OASIS assessments or because of the claims data cleaning process
reasons listed in section III.F.1 of this proposed rule. We note
that of the 959,410 claims excluded, 620,336 were excluded because
they were RAPs without a final claim or they were claims with zero
payment amounts, resulting in $17.4 billion in total expenditures.
After removing all 959,410 excluded claims, the 2017 analytic file
consisted of 5,811,649 60-day episodes ($16.4 billion in total
expenditures). 60-day episodes of duration longer than 30 days were
divided into two 30-day periods in order to calculate the 30-day
payment amounts. As noted in section III.F.1 of this proposed rule,
there were instances where 30-day periods were excluded from the
2017 analytic file (for example, we could not match the period to a
start of care or resumption of care OASIS to determine the
functional level under the PDGM, the 30-day period did not have any
skilled visits, or because information necessary to calculate
payment was missing from claim record). The final 2017 analytic file
used to calculate budget neutrality consisted of 9,285,210 30-day
periods ($16.1 billion in total expenditures) drawn from 5,456,216
60-day episodes.

[[Page 32390]]

Table 33--Estimates of 30-Day Budget-Neutral Payment Amounts
------------------------------------------------------------------------
30-day budget Percent change
neutral (BN) from no
Behavioral assumption standard behavioral
amount assumptions
------------------------------------------------------------------------
No Behavioral Assumptions............... $1,873.91 ..............
LUPA Threshold (\1/3\ of LUPAs 1-2 1,841.05 -1.75
visits away from threshold get extra
visits and become case-mix adjusted)...
Clinical Group Coding (among available 1,793.69 -4.28
diagnoses, one leading to highest
payment clinical grouping
classification designated as principal)
Comorbidity Coding (assigns comorbidity 1,866.76 -0.38
level based on comorbidities appearing
on HHA claims and not just OASIS)......
Clinical Group Coding + Comorbidity 1,786.54 -4.66
Coding.................................
Clinical Group Coding + Comorbidity 1,753.68 -6.42
Coding + LUPA Threshold................
------------------------------------------------------------------------

If no behavioral assumptions were made, we estimate that the 30-day
payment amount needed to achieve budget neutrality would be $1,873.91.
The clinical group and comorbidity coding assumptions would result in
the need to decrease the budget-neutral 30-day payment amount to
$1,786.54 (a 4.66 percent decrease from $1,873.91). Adding the LUPA
assumption would require us to further decrease that amount to
$1,753.68 (a 6.42 percent decrease from $1,873.91).
We note that we are also required under section 1895(b)(3)(D)(i) of
the Act, as added by section 51001(a)(2)(B) of the BBA of 2018, to
analyze data for CYs 2020 through 2026, after implementation of the 30-
day unit of payment and new case-mix adjustment methodology, to
annually determine the impact of differences between assumed behavior
changes and actual behavior changes on estimated aggregate
expenditures. We interpret actual behavior change to encompass both
behavior changes that were outlined above, as assumed by CMS when
determining the budget-neutral 30-day payment amount for CY 2020, and
other behavior changes not identified at the time the 30-day payment
amount for CY 2020 is determined. The data from CYs 2020 through 2026
will be available to determine whether a prospective adjustment
(increase or decrease) is needed no earlier than in years 2022 through
2028 rulemaking. As noted previously, under section 1895(b)(3)(D)(ii)
of the Act, we are required to provide one or more permanent
adjustments to the 30-day payment amount on a prospective basis, if
needed, to offset increases or decreases in estimated aggregate
expenditures as calculated under section 1895(b)(3)(D)(i) of the Act.
Clause (iii) of section 1895(b)(3)(D) of the Act requires the Secretary
to make temporary adjustments to the 30-day payment amount, on a
prospective basis, in order to offset increases or decreases in
estimated aggregate expenditures, as determined under clause (i) of
such section. The temporary adjustments allow us to recover excess
spending or give back the difference between actual and estimated
spending (if actual is less than estimated) not addressed by permanent
adjustments. For instance, if expenditures are estimated to be $18
billion in CY 2020, but expenditures are actually $18.25 billion in CY
2020, then we can reduce payments (temporarily) in the future to
recover the $250 million.
As noted above, section 1895(b)(3)(A)(iv) of the Act requires the
Secretary to calculate a budget-neutral 30-day payment amount to be
paid for home health units of service that are furnished and end during
the 12-month period beginning January 1, 2020. For implementation
purposes, we propose that the 30-day payment amount would be paid for
home health services that start on or after January 1, 2020. More
specifically, for 60-day episodes that begin on or before December 31,
2019 and end on or after January 1, 2020 (episodes that would span the
January 1, 2020 implementation date), payment made under the Medicare
HH PPS would be the CY 2020 national, standardized 60-day episode
payment amount. For home health units of service that begin on or after
January 1, 2020, the unit of service would now be a 30-day period and
payment made under the Medicare HH PPS would be the CY 2020 national,
standardized prospective 30-day payment amount. For home health units
of service that begin on or after December 2, 2020 through December 31,
2020 and end on or after January 1, 2021, the HHA would be paid the CY
2021 national, standardized prospective 30-day payment amount.
We are soliciting comments on our proposals, including the proposed
behavior change assumptions outlined above to be used in determining
the 30-day payment amount for CY 2020 and the corresponding regulation
text changes outlined in section III.F.13 and IX. of this proposed
rule.
c. Split Percentage Payment Approach for a 30-Day Unit of Payment
In the current HH PPS, there is a split percentage payment approach
to the 60-day episode. The first bill, a Request for Anticipated
Payment (RAP), is submitted at the beginning of the initial episode for
60 percent of the anticipated final claim payment amount. The second,
final bill is submitted at the end of the 60-day episode for the
remaining 40 percent. For all subsequent episodes for beneficiaries who
receive continuous home health care, the episodes are paid at a 50/50
percentage payment split.
In the CY 2018 HH PPS proposed rule (82 FR 35270), we solicited
comments as to whether the split payment approach would still be needed
for HHAs to maintain adequate cash flow if the unit of payment changes
from 60-day episodes to 30-day periods of care. In addition, we
solicited comments on ways to phase-out the split percentage payment
approach in the future. Specifically, we solicited comments on reducing
the percentage of the upfront payment over a period of time and if in
the future the split percentage approach was eliminated, we solicited
comments on the need for HHAs to submit a notice of admission (NOA)
within 5 days of the start of care to assure being established as the
primary HHA for the beneficiary and so that the claims processing
system is alerted that a beneficiary is under a HH period of care to
enforce the consolidating billing edits as required by law. Commenters
generally expressed support for continuing the split percentage payment
approach in the future under the proposed alternative case-mix model.
While we solicited comments on the possibility of phasing-out the split
percentage payment approach in the future and the need for a NOA,
commenters did not provide suggestions for a phase-out approach, but
stated that they did not agree with requiring a NOA given the

[[Page 32391]]

experience with such a process under the Medicare hospice benefit.
While CMS did not finalize the implementation of a 30-day unit of
payment in the CY 2018 HH PPS final rule (82 FR 51676), the BBA of 2018
now requires a change to the unit of payment from a 60-day episode to a
30-day period of care, as outlined in section F.3.b above, effective
January 1, 2020. We continue to believe that as a result of the reduced
timeframe for the unit of payment, that a split percentage approach to
payment may not be needed for HHAs to maintain adequate cash flow.
Currently, about 5 percent of requests for anticipated payment are not
submitted until the end of a 60-day episode of care and the median
length of days for RAP submission is 12 days from the start of the 60-
day episode. As such, we are reevaluating the necessity of RAPs for
existing and newly-certified HHAs versus the risks they pose to the
Medicare program.
RAP payments can result in program integrity vulnerabilities. For
example, a final claim was never submitted for $321 million worth of
RAP payments between July 1, 2015 and July 31, 2016. While CMS
typically can recoup RAP overpayments from providers that continue to
submit final claims to the Medicare program, some fraud schemes have
involved collecting these RAP payments, never submitting final claims,
and closing the HHA before Medicare can take action. Below are two
examples of HHAs that were identified for billing large amounts of RAPs
with no final claim:
Provider 1 is a Home Health Agency located in Michigan. It
was identified for submitting home health claims for beneficiaries
located in California and Florida. Further analysis found that the HHA
was submitting RAPs with no final claims. CMS discovered that the
address on record for the HHA was vacant for an extended period of
time. In addition, CMS determined that although Provider 1 had
continued billing and receiving payments for RAP claims, it had not
submitted a final claim in 10 months. Ultimately, the HHA submitted a
total of $50,234,430.36 in RAP payments and received $37,204,558.80 in
RAP payments. In addition to the large amount of money paid to the HHA,
Medicare beneficiaries were also impacted by the HHA's billing
behavior. For example, a Florida beneficiary who needed home health
services was unable to receive the care required due to the RAP
submission by this Provider.
Provider 2 is a Home Health Agency that is also located in
Michigan that submitted a significant number of RAPs with no final
claim. While the majority of these beneficiaries were located in
Michigan, data analysis identified beneficiaries who were not likely
homebound or qualified for home health services. CMS discovered that
the address on record for the HHA was vacant. Provider 2 had not
submitted any final claims in more than one year and was no longer
billing the Medicare program. However, the HHA was paid a total of
$5,765,261.04 in RAP payments that had no final claim.
Given the program integrity concerns outlined above and the reduced
timeframe for the unit of payment (30-days rather than 60-days), we are
proposing not to allow newly-enrolled HHAs, that is HHAs certified for
participation in Medicare effective on or after January 1, 2019, to
receive RAP payments beginning in CY 2020. This would allow newly-
enrolled HHAs to structure their operations without becoming dependent
on a partial, advanced payment and take advantage of receiving full
payments for every 30-day period of care. We are proposing that HHAs,
that are certified for participation in Medicare effective on or after
January 1, 2019, would still be required to submit a ``no pay'' RAP at
the beginning of care in order to establish the home health episode, as
well as every 30-days thereafter. RAP submissions are currently
operationally significant as the RAP establishes the HHA as the primary
HHA for the beneficiary during that timeframe and alerts the claims
processing system that a beneficiary is under the care of an HHA to
enforce the consolidating billing edits required by law under section
1842(b)(6)(F) of the Act. Without such notification, there would be an
increase in denials of claims subject to the home health consolidated
billing edits that are prevented when an episode/period is established
in the common working file (CWF) by the RAP, potentially resulting in
increases in appeals, and increases in situations where other
providers, including other HHAs, would not have easy information on
whether a patient was already being served by an HHA. CMS invites
comments on whether the burden of submitting a ``no-pay'' RAP by newly-
enrolled HHAs outweighs the risks to the Medicare program and providers
associated with not submitting them.
We propose that existing HHAs, that is HHAs certified for
participation in Medicare with effective dates prior to January 1,
2019, would continue to receive RAP payments upon implementation of the
30-day unit of payment and the proposed PDGM case-mix adjustment
methodology in CY 2020. However, we are again soliciting comments on
ways to phase-out the split percentage payment approach in the future
given that CMS is required to implement a 30-day unit of payment
beginning on January 1, 2020 as outlined above. Specifically, we are
soliciting comments on reducing the percentage of the upfront payment
incrementally over a period of time. If in the future the split
percentage approach was eliminated, we are also soliciting comments on
the need for HHAs to submit a NOA within 5 days of the start of care to
assure being established as the primary HHA for the beneficiary during
that timeframe and so that the claims processing system is alerted that
a beneficiary is under a HH period of care to enforce the consolidating
billing edits as required by law. As outlined above, there are
significant drawbacks to both Medicare and providers of not
establishing a NOA process upon elimination of RAPs.
In summary, we invite comments on the change in the unit of payment
from a 60-day episode of care to a 30-day period of care; the proposed
calculation of the 30-day payment amount in a budget-neutral manner and
behavior change assumptions for CY 2020; the proposed interpretation of
the statutory language regarding actual behavior change; the proposal
not to allow newly-enrolled HHAs (HHAs certified for participation in
Medicare effective on or after January 1, 2019) to receive RAP payments
upon implementation of the 30-day unit of payment in CY 2020, yet still
require the submission of a ``no pay'' RAP at the beginning of care;
the proposal to maintain the split percentage payment approach for
existing HHAs and applying such policy to 30-day periods of care; and
the associated regulations text changes outlined in section III.F.13
and IX of this proposed rule. We are also soliciting comments on ways
the split percentage payment approach could be phased-out and whether
to implement a NOA process if the split percentage payment approach is
eliminated in the future.
4. Timing Categories
In the CY 2018 HH PPS proposed rule, we described analysis showing
the impact of timing on home health resource use and proposed to
classify the 30-day periods under the proposed alternative case-mix
adjustment methodology as ``early'' or ``late'' depending on when they
occur within a sequence of 30-day periods (82 FR 35307). Under the
current HH PPS, the first two 60-day episodes of a sequence of adjacent
60-day episodes are considered early, while the third 60-day

[[Page 32392]]

episode of that sequence and any subsequent episodes are considered
late. Under the alternative case-mix adjustment methodology, we
proposed that the first 30-day period would be classified as early and
all subsequent 30-day periods in the sequence (second or later) would
be classified as late. Similar to the current payment system, we
proposed that a 30-day period could not be considered early unless
there was a gap of more than 60 days between the end of one period and
the start of another, or it was the first period in a sequence of
periods in which there was no more than 60 days between the end of that
period and the start of the next period.
In response to the CY 2018 HH PPS proposed rule, several commenters
were supportive of the inclusion of the timing category in the
alternative case-mix adjustment methodology, stating that this
differentiation would reflect that HHA costs are typically highest
during the first 30 days of care. However, other commenters expressed
concerns regarding timing, stating that HHAs may modify the ways in
which they provide care, that the change would cause a decrease in
overall payment to HHAs and an increase in hospital readmissions, and
that the categories would not account for increased costs in the later
periods of care. Several commenters described concerns regarding the
potential for problematic provider behavior due to financial incentives
as well as the potential for problems with operational aspects of the
timing element of the alternative case-mix adjustment methodology.
Additionally, some commenters suggested that we modify the definition
of an ``early'' 30-day period to either the first two 30-day periods or
the first four 30-days of care, stating that those definitions would
more closely mirror the current payment system's definition of
``early'' and that HHAs would otherwise experience a payment decrease
when compared to the current 60-day episode payment amount.
As described in detail in the CY 2018 HH PPS proposed rule, our
proposal regarding the timing element of the alternative case-mix
adjustment methodology was intended to refine and to better fit costs
incurred by agencies for patients with differing characteristics and
needs under the HH PPS (82 FR 35270). Analysis of home health data
demonstrates that under the current payment system, when analyzed by
30-day periods, HHAs provide more resources in the first 30-day period
of home health (``early'') than in later periods of care. The
differences in the average resource use during early and late home
health episodes when divided into 30-day periods are presented in Table
34, and shows the first 30-day periods in a home health sequence have
significantly higher average resource use at $2,113.66 as compared with
subsequent 30-day periods. Specifically, the later 30-day periods
showed an average resource use of $1,311.73, a difference of more than
$800 or a 38 percent decrease. Table 34 also shows a significant
difference between the early and late median values of resource use.
The median for the first 30-day period is $1,866.79, while the median
for subsequent 30-day periods is $987.94, a difference of more than
$878 or an approximately 47 percent decrease.

Table 34--Average Resource Use by Timing
[30-Day periods]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Average Frequency Percent of deviation percentile Median percentile
Timing resource of periods periods of resource of resource resource of resource
use use use use use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Early 30-Day Periods......................................... $2,113.66 2,785,039 32.3 $1,236.30 $1,232.23 $1,866.79 $2,707.04
Late 30-Day Periods.......................................... 1,311.73 5,839,737 67.7 1,125.44 534.82 987.94 1,735.69
------------------------------------------------------------------------------------------
Total.................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018).

There is significant difference in the resource utilization between
early and late 30-day periods as demonstrated in Table 34. Moreover,
the predictive power of the proposed PDGM in terms of estimating
resource utilization improved when separating episodes into 30-day
periods rather than 60-day periods (that is, the first and second 30-
day periods). We believe that a PDGM that accounts for the demonstrated
increase in resource utilization in the first 30-day period better
captures the variations in resource utilization and further promotes
the goal of payment accuracy within the HH PPS.
Moreover, we note that the resource cost estimates are derived from
a very large, representative dataset. Therefore, we expect that the
proposal reflects agencies' average costs for all home health service
delivered in the period examined. We have constructed the revised case-
mix adjustment model based upon the actual resources expended by home
health agencies for Medicare beneficiaries, which show that typically
HHAs provide more visits during the first 30 days of care and utilize
less resources thereafter. We reiterate that the timing categories are
reflective of the utilization patterns observed in the data analyzed
for the purposes of constructing the PDGM. The weights of the two
timing categories are driven by the mix of services provided, the costs
of services provided as determined by cost report data, the length of
the visits, and the number of visits provided. The categorization of
30-day periods as ``early'' and ``late'' serves to better align
payments with already existing resource use patterns. This alignment of
payment with resource use is not to be interpreted as placing a value
judgment on particular care patterns or patient populations. Our goal
in developing the PDGM is to provide an appropriate payment based on
the identified resource use of different patient groups, not to
encourage, discourage, value, or devalue one type of skilled care over
another.
For the reasons described above, we are proposing to classify the
30-day periods under the proposed PDGM as ``early'' or ``late''
depending on when they occur within a sequence of 30-day periods. For
the purposes of defining ``early'' and ``late'' periods for the
proposed PDGM, we are proposing that only the first 30-day period in a
sequence of periods be defined as ``early'' and all other subsequent
30-day periods would be considered ``late''. Additionally, we are
proposing that the definition of a ``home health sequence'' (as
currently described in Sec. 484.230) will remain unchanged relative to
the current system, that is, 30-day periods are considered to be in the
same sequence as long as no more than 60 days pass between the end of
one period and the start of the next, which is consistent with the
definition of a ``home health spell of illness'' described at section
1861(tt)(2) of the Act. We note

[[Page 32393]]

that because section 1861(tt)(2) of the Act is a definition related to
eligibility for home health services as described at section 1812(a)(3)
of the Act, it does not affect or restrict our ability to implement a
30-dayunit of payment.
At this time, the data do not support the notion that the first two
30-day periods should be defined as early, as only the first 30-day
period presents marked increase in resource use. We believe the PDGM's
definition of ``early'' as the first 30-day period most accurately
reflects agencies' average costs for patients with characteristics
measured on the OASIS and used in defining payment groups and supports
the shift from the current ``early'' category as defined by two 60-day
episodes. We continue to believe that a PDGM that accounts for the
actual, demonstrated increase in resource utilization in the first 30-
day period better captures the variations in resource utilization.
Additionally, in our CY 2008 HH PPS final rule, we implemented an
``early'' and ``late'' distinction in the HH PPS in which the late
episode groupings were weighted more heavily than those episodes
designated as early due to heavier resource use during later episodes
(72 FR 49770). At that time, commenters expressed concerns that this
heavier weighting for later episodes could lead to gaming by providers,
with patients on service longer than would be appropriate, and
providers not discharging patients when merited. During our analysis in
support of subsequent refinements to the HH PPS in 2015, we analyzed
the utilization patterns observed in the CY 2013 claims data and
observed that the resource use for later episodes had indeed shifted
such that later episodes had less resource use than earlier periods,
which was the opposite of the pattern observed prior to CY 2008.
Furthermore, in its 2016 Report to Congress, MedPAC noted that, between
2002 and 2014, a pattern in home health emerged where the number of
episodes of care provided to home health beneficiaries trended upwards,
with the average number of episodes per user increasing by 18 percent,
rising from 1.6 to 1.9 episodes per user.\34\ MedPAC noted that this
upward trajectory coincided with, among other changes, higher payments
for the third and later episodes in a consecutive spell of home health
episodes. Given the longitudinal variation in terms of resource
provision during home health episodes, we believe that restricting the
``early'' definition to the first 30-day period is most appropriate for
this facet of the PDGM. Our analysis of home health resource use as
well as comments from the public that confirm that more resources are
provided in the first 30 days provide compelling evidence to limit the
definition of early to the first 30-day period.
---------------------------------------------------------------------------

\34\ https://www.medpac.gov/docs/default-source/reports/chapter-
8-home-health-care-services-march-2016-report-.pdf.
---------------------------------------------------------------------------

Moreover, the public comments we received in response to the CY
2018 HH PPS proposed rule presented conflicting predictions regarding
anticipated provider behavior in response to the implementation of the
alternative case-mix adjustment methodology. Several commenters stated
that they expected providers to discharge patients after the first 30-
days of care, given that the case-mix weights are, on average, higher
for the first 30-days of care. Other commenters expressed concern that
providers may attempt to keep home health beneficiaries on service for
as long as possible. Additionally, meeting the requirement of section
51001 of the BBA of 2018, a Technical Expert Panel (TEP) was convened
in February 2018 to solicit feedback and identify and prioritize
recommendations from a wide variety of industry experts and patient
representatives regarding the public comments received on the proposed
alternative case-mix adjustment methodology. Comments on the timing
categories and suggestions for refinement to this adjustment were very
similar between those received on the CY 2018 HH PPS proposed rule and
those made by the TEP participants. We note the PDGM case-mix weights
reflect existing patterns of resource use observed in our analyses of
CY 2016 home health claims data. Since we propose to recalibrate the
PDGM case-mix weights on an annual basis to ensure that the case-mix
weights reflect the most recent utilization data available at the time
of rulemaking, future recalibrations of the PDGM case-mix weights may
result in changes to the case-mix weights for early versus late 30-day
periods of care as a result of changes in utilization patterns.
Several commenters responding to the CY 2018 HH PPS proposed rule
suggested that we revise the model such that a readmission to home
health within the 60-day gap period results in an ``early'' instead of
a ``late'' 30-day period. However, we note that the PDGM also includes
a category determined specifically by source of admission, which would
account for any readmission to home health. Under the PDGM we already
account for whether the patient was admitted to home health care from
the community or following an institutional stay, including inpatient
stays that occur after the commencement of a home health care. For
example, if the original home health stay was categorized as community
and subsequently the patient experienced an inpatient stay, the
subsequent home health stay would reset to institutional upon discharge
from the inpatient setting. Similarly, we note that for the purposes of
the timing component of the PDGM, an intervening hospital stay would
not trigger re-categorization to an ``early'' period unless there were
a 60-day gap in home health care. Therefore, we do not believe that the
timing element of the PDGM would create a financial incentive to
inappropriately encourage the admission of home health patients to an
acute care setting in order to receive a subsequent home health
referral in the higher-paid ``early'' category. Our proposal was
intended to refine and to better fit costs incurred by agencies for
patients with differing characteristics and needs under the prospective
payment system. Therefore, we expect that the addition of both the
source of admission, as well as the timing categories do reflect
agencies' average costs for home health patients and used in defining
payment groups. We believe that crafting a multi-pronged case-mix
adjustment model, which includes adjustments based both on timing
within a home health sequence as well as the source of the beneficiary
admission, will serve to more accurately account for resources required
for Medicare beneficiaries and similarly provide a differentiated
payment amount for care.
Several commenters responding to the CY 2018 HH PPS proposed rule
expressed concern regarding the operational aspects of the timing
element of the alternative case-mix adjustment methodology. As we
described in the CY 2018 HH PPS proposed rule, and as we are proposing
in this rule, we would use Medicare claims data and not the OASIS
assessment in order to determine if a 30-day period is considered
``early'' or ``late'' (82 FR 35309). We have developed claims
processing procedures to reduce the amount of administrative burden
associated with the implementation of the PDGM. Providers would not
have to determine whether a 30-day period is early (the first 30-day
period) or later (all adjacent 30-day periods beyond the first 30-day
period) if they choose not to. Information from Medicare systems would
be used during claims processing to automatically assign the
appropriate timing category.

[[Page 32394]]

To identify the first 30-day period within a sequence, the Medicare
claims processing system would verify that the claim ``From date'' and
``Admission date'' match. If this condition were to be met, our systems
would send the ``early'' indicator to the HH Grouper for the 30-day
period of care. When the claim was received by CMS's Common Working
File (CWF), the system would look back 60 days to ensure there was not
a prior, related 30-day period. If not, the claim would continue to be
paid as ``early.'' If another related 30-day period were to be
identified, that is an earlier 30-day period in the sequence, the claim
would be flagged as ``late'' and returned to the shared systems for
subsequent regrouping and re-pricing. Those periods that are not the
first 30-day period in a sequence of adjacent periods, separated by no
more than a 60 day gap, would be categorized as ``late'' periods and
placed in corresponding PDGM categories.
Early 30-day periods are defined as the initial 30-day period in a
sequence of adjacent 30-day periods. Late 30-day periods are defined as
all subsequent adjacent periods beyond the first 30-day period. Periods
are considered to be adjacent if they are contiguous, meaning that they
are separated by no more than a 60-day period between 30-day periods of
care. In determining a gap, we only consider whether the beneficiary
was receiving home health care from traditional fee-for-service
Medicare.
For example, if the beneficiary has not received home health care
through traditional Medicare for at least 60 days, and then receives
home health care from agency A, that is an early 30-day period. If that
30-day period receives a PEP adjustment and agency B recertifies the
beneficiary for a second 30-day period, that second 30-day period is
now considered a late 30-day period. However, the beneficiary could
have received home health care from other traditional Medicare
providers within 60 days before coming to agency A. The designation of
early or late would depend upon how many adjacent periods of care were
received prior to coming to agency A. The CWF will examine claims upon
receipt in comparison to all previously processed 30-day period to
verify that the period is correctly designated as early or later.
The 60-day period to determine a gap that will begin a new sequence
of 30-day periods will be counted in most instances from the calculated
end date of the 30-day period. That is, in most cases CWF will count
from ``day 30'' of a 30-day period without regard to an earlier
discharge date. The exception to this is for 30-day periods that were
subject to PEP adjustment. In PEP cases, CWF will count 60 days from
the date of the last billable home health visit provided. Under the
current HH PPS, the partial episode payment (PEP) adjustment is a
proportion of the episode payment that is based on the span of days,
including the start-of-care date or first billable service date,
through and including the last billable service date under the original
plan of care, before the intervening event in a home health
beneficiary's care, which is defined as: A beneficiary elected
transfer, or a discharge and return to home health that would warrant,
for purposes of payment, a new OASIS assessment, physician
certification of eligibility, and a new plan of care. Because PEPs are
paid based upon the last billable service date and not necessarily
based on the last day of a 60-day episode, we would consider the end of
the PEP HH episode as the last billable home health visit provided and
begin the count of gap days from the date of the last billable home
health visit and not ``day 30'' of a 30-day period.
Regarding PEP adjustments, consider the following example: A 30-day
period is opened on January 1, 2020 which would normally span until
January 30, 2020. If this 30-day period were not subject to a PEP
adjustment, any 30-day period beginning within 60 days following
January 30, 2020 would be considered an adjacent 30-day period. In the
case of a PEP adjustment, the determination of an adjacent 30-day
period would no longer be based on day 60, but would instead be based
on the latest billable visit in the 30-day period. Assume in the
example, the patient is transferred to another HHA (triggering the PEP
adjustment) on January 15, 2020 but the last billable visit is provided
on January 13, 2020. In this case, any 30-day period beginning within
60 days following the January 13, 2020 visit would be considered an
adjacent 30-day period.
Intervening stays in inpatient facilities will not create any
special considerations in counting the 60-day gap. If an inpatient stay
occurred within a period, it would not be a part of the gap, as
counting would begin at ``day 60'' which in this case would be later
than the inpatient discharge date. If an inpatient stay occurred within
the time after the end of the HH period and before the beginning of the
next one, those days would be counted as part of the gap just as any
other days would.
If periods are received after a particular claim is paid that
change the sequence initially assigned to the paid period (for example,
by service dates falling earlier than those of the paid period, or by
falling within a gap between paid periods), Medicare systems will
initiate automatic adjustments to correct the payment of any necessary
periods.
Upon receipt of a HH period coded to represent the early 30-day
period in a sequence, Medicare systems will search the period history
records that are maintained for each beneficiary. If an existing 30-day
period is found on that history, the claim for the new period will be
recoded to represent its sequence correctly and paid according to the
changed code. In addition, when any new 30-day period is added to those
history records for each beneficiary, the coding representing period
sequence on previously paid periods will be checked to see if the
presence of the newly added period causes the need for changes to those
periods. If the need for changes is found, Medicare systems will
initiate automatic adjustments to those previously paid periods.
For example, a given 30-day period is initially determined to be
and paid as the early period in a sequence of periods. After some
amount of time, a claim is submitted by another HHA that occurs before
the previously designated first period in the sequence of adjacent
periods and is less than 60 days before the beginning of that
previously designated first period. In such a case, the 30-day period
corresponding to the newly submitted claim becomes the first 30-day
period of this sequence of adjacent 30-day periods and thus is
considered to be an early period. The 30-day period previously
designated as the first 30-day period in the sequence of periods now
becomes the second 30-day period in the sequence of adjacent periods,
thus changing its status from that of an early period to that of a late
period.
We plan to develop materials regarding timing categories, including
such topics as claims adjustments and resolution of claims processing
issues. We will also update guidance in the Medicare Claims Processing
Manual, as well as the Medicare Benefit Manual as appropriate with
detailed procedures. We will also work with our Medicare Administrative
Contractors (MACs) to address any concerns regarding the processing of
home health claims as well as develop training materials to facilitate
all aspects of the transition the PDGM, including the unique aspects of
the timing categories.
Several commenters responding to the CY 2018 HH PPS proposed rule
had concerns regarding the potential for problematic provider behavior
due to financial incentives. We note that we

[[Page 32395]]

fully intend to monitor provider behavior in response to the new PDGM.
As we receive and evaluate new data related to the provision of
Medicare home health care under the PDGM, we will reassess the
appropriateness of the payment levels for ``early'' and ``late''
periods in a sequence of periods. Additionally, we will share any
concerning behavior or patterns with the Medicare Administrative
Contracts (MACs) as well as our Center for Program Integrity. We plan
to monitor for and identify any variations in the patterns of care
provided to home health patients, including both increased and
decreased provision of care to Medicare beneficiaries. We note that an
increase in the volume of Medicare beneficiaries receiving home health
care may, in fact, represent a positive outcome of the PDGM, signaling
increased access to care for the Medicare population, so long as said
increase in volume of beneficiaries is appropriate and in keeping with
eligibility guidelines for the Medicare home health benefit.
We invite public comments on the timing categories in the proposed
PDGM and the associated regulations text changes outlined in section
III.F.13. of this proposed rule.
5. Admission Source Category
In the CY 2018 HH PPS proposed rule, we described analysis showing
the impact of the source of admission on home health resource use and
proposed to classify periods into one of two admission source
categories--community or institutional--depending on what healthcare
setting was utilized in the 14 days prior to home health (82 FR 35309).
We proposed that a 30-day period would be categorized as institutional
if an acute or post-acute care (PAC) stay occurred in the 14 days prior
to the start of the 30-day period of care. We also proposed that a 30-
day period would be categorized as community if there was no acute or
PAC stay in the 14 days prior to the start of the 30-day period of
care. We proposed to adopt this categorization by admission source with
the implementation of alternative case-mix adjustment methodology
refinements.
The proposed admission source category was discussed in detail in
the CY 2018 HH PPS proposed rule and we solicited public comments on
the admission source component of the proposed alternative case-mix
adjustment methodology. Several commenters expressed their support for
the admission categories within the framework of the alternative case-
mix adjustment methodology refinements, as they believe that these
groups would be meaningful and would more appropriately align the cost
of Medicare home health care with payments, thereby improving the
accuracy of the HH payment system under the alternative case-mix
adjustment methodology refinements. Commenters also expressed a variety
of concerns regarding admission source, stating that the source of a
home health admission may not always correspond with home health
beneficiary needs and associated provider costs, that the categories
would discourage the admission of community entrants due to lower
reimbursement, that the differentiation may encourage HHAs to favor
hospitalization during an episode of home health care, that agencies'
ability to provide the care for beneficiaries in the community would be
reduced, and that small HHAs with no hospital affiliation would be
negatively impacted. Several commenters recommended that CMS consider
incorporating other clinical settings into the definition of the
institutional category, including hospices and outpatient facilities.
Several commenters also expressed concern regarding the operational
aspects of the admission source category, requesting guidance for
retroactive adjustments, plans for the claims readjustment process due
to institutional claim issues, definitions for timely filing, and
guidance regarding when occurrence codes may be utilized. Moreover, in
accordance with the requirement of section 51001 of the BBA of 2018, a
Technical Expert Panel (TEP) convened in February 2018 to solicit
feedback and identify and prioritize recommendations from a wide
variety of industry experts and patient representatives regarding the
public comments received on the proposed alternative case-mix
adjustment methodology. Comments on the admission source categories and
suggestions for refinement to this element of the alternative case-mix
system were very similar between those received in response to the CY
2018 HH PPS proposed rule and those provided by the TEP participants.
We appreciate commenters' feedback regarding the admission source
element of the alternative case-mix adjustment methodology. The
intention of the proposal included in the CY 2018 HH PPS proposed rule,
including the admission source component, was to refine and to better
fit costs incurred by agencies for patients with differing
characteristics and needs under the HH prospective payment system, and
we believe that the differing weights for source of admission will
serve to promote appropriate alignment between costs and payment within
the HH PPS.
As described in the CY 2018 HH PPS proposed rule, our analytic
findings demonstrate that institutional admissions have higher average
resource use when compared with community admissions, which ultimately
led to the inclusion of the admission source category within the
framework of the alternative case-mix adjustment methodology
refinements (82 FR 35309). The differences in care needs during home
health based on admission source are illustrated in the resource
utilization figures presented in Table 35, which shows the distribution
of admission sources as well as average resource use for 30-day periods
by admission source.

Table 35--Average Resource Use by Admission Source (14 Day Look-Back; 30 Day Periods) Admission Source, Community and Institutional Only
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Average Frequency Percent of deviation percentile Median percentile
resource of periods periods of resource of resource resource of resource
use use use use use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Community.................................................... $1,363.11 6,408,805 74.3 $1,119.20 $570.26 $1,062.05 $1,817.75
Institutional................................................ 2,171.00 2,215,971 25.7 1,303.24 1,246.05 1,920.06 2,791.91
------------------------------------------------------------------------------------------
Total.................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018).

Institutional admissions have significantly higher average resource
use at $2,171.00 compared with community admissions at $1,363.11, a
difference of $807.89. Median values of resource use also show a
significant difference

[[Page 32396]]

between sources of admission, with institutional resource use at
$1,920.06 while community resource use is at $1,062.05, a difference of
$858.01. The pattern of higher resource use for institutional
admissions as compared to community admissions remains consistent for
the 25th and 75th percentiles, with a difference of approximately $675
and $974, respectively.
Additionally, we note that we do not show preference to any
particular patient profile, but rather aim to better align home health
payment with the costs associated with providing care. As discussed in
our CY 2018 HH PPS proposed rule, current research around those
patients who are discharged from acute and PAC settings shows that
these beneficiaries tend to be sicker upon admission, are being
discharged rapidly back to the community, and are more likely to be re-
hospitalized after discharge due to the acute nature of their
illness.\35\ Additionally, as further described in the CY 2018 HH PPS
proposed rule, research studies indicate that patients admitted to home
health from institutional settings are vulnerable to adverse effects
and injury because of the functional decline that occurs due to their
institutional stay, indicating that the patient population referred
from an institutional setting requires more concentrated resources and
supports to account for and mitigate this functional decline.\36\
Moreover, as described in the CY 2018 HH PPS proposed rule, research
suggests that the reduction in monitoring from the level typically
experienced in an inpatient facility to that in the home environment
can potentially cause gaps in care and consequently increased risk for
adverse events for the newly-admitted home health beneficiary, and any
negative impacts of the transition to the home setting can be reduced
by an appropriate increase in care for the beneficiary, particularly
through more frequent assessment of their condition and ongoing
monitoring once transferred to the home environment.\37\ Furthermore,
research discussed in our CY 2018 HH PPS proposed rule shows that
beneficiaries discharged from institutional settings are more
vulnerable because of, among other factors, the need to manage new
health care issues, major modifications to medication interventions,
and the coordination of follow-up appointments, which could lead to the
risk for adverse drug events, for errors in a beneficiary's medication
regimen, and for the need to readmit to the hospital due to
deterioration of the patient's condition.\38\ Additionally, we note
that the goal of the admission source variable is not to identify or
evaluate for increases in re-hospitalization in the home health
beneficiary population but rather to align payment with the costs of
providing home health care. Other CMS initiatives such as the HH QRP as
well as the HH VBP demonstration take into account readmissions, among
other measures of quality. However, because this population is at
higher risk for possible readmission to an institutional setting, we
believe that more intensive supports, partnered with differentiated
payment weights, are appropriate in crafting a payment system that
better reflects the costs incurred by HHAs while also promoting the
delivery of quality care to the Medicare population. In summary,
clinical research continues to indicate that the needs of the
institutional population are intensive. Likewise, our analysis of home
health data shows that costs sustained by home health agencies for
those beneficiaries admitted from institutional settings are higher
than community entrants. Therefore, we believe that accounting for
these material differences in the care needs of the beneficiary
population admitted from institutional settings and their resultant,
differentiated resource use, will serve to better align payments with
actual costs incurred by HHAs when caring for Medicare beneficiaries.
---------------------------------------------------------------------------

\35\ O'Connor, M. (2012, February). Hospitalization Among
Medicare-Reimbursed Skilled Home Health Recipients. Retrieved March
02, 2017, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4690459.
\36\ Rosati, R. J., Huang, L., Navaie-Waliser, M., & Feldman, P.
H. (2003). Risk Factors for Repeated Hospitalizations Among Home
Healthcare Recipients. Journal For Healthcare Quality, 25(2), 4-11.
doi:10.1111/j.1945-1474.2003.tb01038.x.
\37\ Forster, A. J. (2003). The Incidence and Severity of
Adverse Events Affecting Patients after Discharge from the Hospital.
Annals of Internal Medicine, 138(3), 161. doi:10.7326/0003-4819-138-
3-200302040-00007.
\38\ Meyers, A. G., Salanitro, A., Wallston, K. A., Cawthon, C.,
Vasilevskis, E. E., Goggins, K. M., . . . Kripalani, S. (2014).
Determinants of health after hospital discharge: Rationale and
design of the Vanderbilt Inpatient Cohort Study (VICS). BMC Health
Services Research, 14(1). doi:10.1186/1472-6963-14-10.
---------------------------------------------------------------------------

We expect that HHAs will continue to provide the most appropriate
care to Medicare home health beneficiaries, regardless of admission
source or any other category related to home health payment. As we
noted in the CY 2018 HH PPS proposed rule, the primary goal of home
health care is to provide restorative care when improvement is
expected, maintain function and health status if improvement is not
expected, slow the rate of functional decline to avoid
institutionalization in an acute or post-acute care setting, and/or
facilitate transition to end-of-life care as appropriate (82 FR 35348).
The primary goal of the HH PPS is to align payment with the costs of
providing home health care. Furthermore, in our CY 2000 HH PPS final
rule, commenters asserted that patients admitted to home health from
the hospital were often more acutely ill and resource-intensive than
other patients, particularly when compared with beneficiaries who had
no institutional care prior to admission (64 FR 41147). We appreciate
the concerns expressed in response to the CY 2018 HH PPS proposed rule
regarding possible behavioral changes by providers given the perceived
incentives created by the admission source categories within the
alternative case-mix adjustment methodology. However, we continue to
expect that HHAs will provide the appropriate care needed by all
beneficiaries who are eligible for the home health benefit, including
those beneficiaries with medically-complex conditions who are admitted
from the community. We will carefully monitor the outcomes of the
proposed change, including any impacts to community entrants, and make
further refinements as necessary.
Regarding the incorporation of other clinical settings into the
definition of the institutional category under the alternative case-mix
adjustment methodology that some commenters raised in response to the
CY 2018 HH PPS proposed rule, such as emergency department (ED) use and
observational stays, we propose to only include those stays that are
considered institutional stays in other Medicare settings. For example,
observational stays do not count towards the 3-day window for an
admission to a SNF because they are not categorized as inpatient.
Additionally, in our analysis of 2017 HH claims data, we identified
those HH stays that, within the 14 days prior to admission to HH, had
been preceded by ED visits or outpatient observational stays and
isolated these stays from stays that would otherwise be grouped into
the community admission source category. As demonstrated in Table 36,
30-day periods of care for beneficiaries with a preceding ED visit
(which would otherwise be grouped into the community admission source
category) do not show higher resource use when compared to those
beneficiaries entering from acute or PAC settings, with an average
resource use at $1,660.64 per home health period as compared to
$2,171.00 for institutional admits. When compared with those patients
admitted from the community, admissions from

[[Page 32397]]

the ED show somewhat higher resource use at $1,660.64 per home health
period as compared to $1,337.73 for community admits. We note that the
volume of patients with preceding ED visits is relatively low, at about
5.8 percent of total home health periods.

Table 36--Average Resource Use by Admission Source (14 Day Look-Back, 30 Day Periods) Admission Source: Community, Institutional, and Emergency
Department
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Average Number of Percent of deviation percentile Median percentile
resource 30-day 30-day of resource of resource resource of resource
use periods periods use use use use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Community.................................................... $1,337.73 5,905,217 68.5 $1,108.57 $558.54 $1,035.34 $1,779.73
Institutional................................................ 2,171.00 2,215,971 25.7 1,303.24 1,246.05 1,920.06 2,791.91
Emergency Department......................................... 1,660.64 503,588 5.8 1,197.60 782.63 1,396.50 2,225.38
------------------------------------------------------------------------------------------
Total.................................................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------

Similarly, 30-day periods for beneficiaries with preceding
observational stays (which would otherwise be grouped into the
community admission source category) also do not show higher resource
use when compared to those beneficiaries entering from acute or PAC
settings, as described in Table 37, with average resource use at
$1,820.06 per home health period as compared to $2,171.00 for
institutional admits.

Table 37--Average Resource Use by Admission Source (14 Day Look-Back; 30 Day Periods) Admission Source: Community, Institutional, and Observational
Stays
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Average Number of Percent of deviation percentile Median percentile
resource 30-day 30-day of resource of resource resource of resource
use periods periods use use use use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Community.................................................... $1,350.90 6,242,043 72.4% $1,114.94 $564.31 $1,048.86 $1,799.27
Institutional................................................ 2,171.00 2,215,971 25.7% 1,303.24 1,246.05 1,920.06 2,791.91
Observational Stays.......................................... 1,820.06 166,762 1.9% 1,180.96 960.15 1,589.08 2,399.68
------------------------------------------------------------------------------------------
Total.................................................... 1,570.68 8,624,776 100.0% 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------

When compared with those patients admitted from the community,
admissions from observational stays show higher resource use at
$1,820.06 per home health period as compared to $1,350.90 for community
admits. However, the volume of patients with preceding observational
stays is very low, at about 2 percent of total home health periods.
In summary, home health stays with preceding observational stays
and ED visits show resource use that falls between that of the
institutional and community categories. However, the resource use is
not equivalent to that of the institutional settings; therefore, we do
not believe it appropriate to include observational stays and ED visits
in the institutional category for the purposes of the PDGM.
Additionally, including these stays in the institutional category would
lead to a small reduction in the overall average resource use and
related case mix weights for groups admitted from acute and PAC
settings. Moreover, including ED or observational stays with discharges
from acute care hospitals, LTCHs, IRFs and SNFs would be inconsistent
with section 1861(tt)(1) of the Act, which defines the term ``post-
institutional home health services'' as discharges from hospitals
(which include IRFs and LTCHs) and SNFs within 14 days of when home
health care is initiated.
We explored the option of creating a third admission source
category specifically for observational stays/ED visits. In order to
more fully understand the potential impact of a third category, we
analyzed the overall impact of the creation of such a category. For the
purposes of this analysis, in the event that a home health stay was
preceded by both an institutional stay and an observation stay or ED
visit, the case would be grouped into the institutional category. Our
findings indicate for those HH stays with a preceding outpatient
observational stay/ED visit, the overall payment weight for associated
groups for ``early'' 30-day periods (as defined in section III.F.4 of
this rule) would be approximately 6 percent higher than the community
admission counterparts, whereas institutional stays would see weights
that are approximately 19 percent higher than community admissions.
When examining the overall payment weights for ``late'' 30-day periods
(as defined in section III.F.4 of this rule), HH stays with a preceding
outpatient admission would observe weights that are approximately 10
percent higher than the community admission counterparts, whereas
institutional stays would see weights that are approximately 43 percent
higher than community admissions. However, we are concerned that a
third admission source category for observational stays and ED visits
could create an incentive for providers to encourage outpatient
encounters both prior to a 30-day period of care or within a 30-day
period of care within 14 days of the start of the next 30-day period,
thereby potentially inappropriately increasing costs to the Medicare
program overall. The clinical threshold for an observational stay or an
ED visit is not as high as that required for an institutional
admission, and we are concerned that home health agencies may encourage
beneficiaries to engage with emergency departments before initiating a
home health stay.
For example, in the FY 2014 IPPS/LTCH PPS final rule and also the
Medicare Benefit Policy Manual Chapter 1--Inpatient Hospital Services
Covered Under Part A, CMS clarified and specified in the regulations
that an individual becomes an inpatient of a hospital, including a long
term care hospital or a Critical Access Hospital, when formally
admitted as such pursuant to an order for inpatient admission by a
physician or other qualified practitioner described in the final
regulations (78 FR 50495). The

[[Page 32398]]

order is required for payment of hospital inpatient services under
Medicare Part A. CMS also specified that for those hospital stays in
which the physician expects the beneficiary to require care that
crosses two midnights and admits the beneficiary based upon that
expectation, Medicare Part A payment is generally appropriate.
Additionally, for the purposes of admissions to skilled nursing
facilities, the Medicare Benefit Policy Manual Chapter 8--Coverage of
Extended Care (SNF) Services Under Hospital Insurance states that in
order to qualify for post-hospital extended care services, the
individual must have been an inpatient of a hospital for a medically
necessary stay of at least three consecutive calendar days and that
time spent in observation or in the emergency room prior to (or in lieu
of) an inpatient admission to the hospital does not count toward the 3-
day qualifying inpatient hospital stay, as a person who appears at a
hospital's emergency room seeking examination or treatment or is placed
on observation has not been admitted to the hospital as an inpatient;
instead, the person receives outpatient services. Furthermore,
admission to an inpatient rehabilitation facility (IRF) requires that
for IRF care to be considered reasonable and necessary, the
documentation in the patient's IRF medical record must demonstrate a
reasonable expectation that the patient must require active and ongoing
intervention of multiple therapy disciplines, at least one of which
must be PT or OT; require an intensive rehabilitation therapy program,
generally consisting of 3 hours of therapy per day at least 5 days per
week; or in certain well-documented cases, at least 15 hours of
intensive rehabilitation therapy within a 7-consecutive day period,
beginning with the date of admission; reasonably be expected to
actively participate in, and benefit significantly from the intensive
rehabilitation therapy program; require physician supervision by a
rehabilitation physician, with face-to-face visits at least 3 days per
week to assess the patient both medically and functionally and to
modify the course of treatment as needed; and require an intensive and
coordinated interdisciplinary team approach to the delivery of
rehabilitative care, as described in detail in Medicare Benefit Policy
Manual, Chapter 1--Inpatient Hospital Services Covered Under Part A
110.2--Inpatient Rehabilitation Facility Medical Necessity Criteria.
Conversely, CMS specified that for hospital stays in which the
physician expects the patient to require care less than two midnights,
payment under Medicare Part A is generally inappropriate. (However, we
note that in the CY 2016 Outpatient Prospective Payment System final
rule, CMS adopted a policy such that for stays for which the physician
expects the patient to need less than two midnights of hospital care
(and the procedure is not on the inpatient-only list or otherwise
listed as a national exception), an inpatient admission may be payable
under Medicare Part A on a case-by-case basis based on the judgment of
the admitting physician (80 FR 70297).)
Regarding emergency department visits by Medicare beneficiaries,
services are generally covered by Medicare Part B in instances where a
beneficiary experiences an injury, a sudden illness, or an illness that
quickly worsens. In the case of observational stays, as described in
the Medicare Claims Processing Manual, Chapter 12, observation care is
a well-defined set of specific, clinically appropriate services, which
include ongoing short term treatment, assessment, and reassessment
before a decision can be made regarding whether patients will require
further treatment as hospital inpatients or if they are able to be
discharged from the hospital. As described in the Medicare Benefit
Policy Manual, Chapter 6--Hospital Services Covered Under Part B 20.6--
Outpatient Observation Services, observation services are commonly
ordered for patients who present to the emergency department and who
then require a significant period of treatment or monitoring in order
to make a decision concerning their admission or discharge. Moreover,
the Medicare Claims Processing Manual in Chapter 4--Part B Hospital,
290--Outpatient Observation Services states that observation services
are covered by Medicare only when provided by the order of a physician
or another individual authorized by state licensure law and hospital
staff bylaws to admit patients to the hospital or to order outpatient
tests. In the majority of cases, the decision whether to discharge a
patient from the hospital following resolution of the reason for the
observation care or to admit the patient as an inpatient can be made in
less than 48 hours, usually in less than 24 hours. In only rare and
exceptional cases do reasonable and necessary outpatient observation
services span more than 48 hours. In summary, the clinical thresholds
for coverage and payment for an admission to institutional settings are
higher when compared with ED visits and observational stays. Finally,
we note that the proportion of home health periods with admissions from
ED visits and observational stays is low relative to community and
institutional counterparts. Creating a third community admission source
category for observational stays and ED visits would potentially
introduce added complexity into the payment system for a small portion
of home health stays, which could lead to the creation of payment
groups that contain very few stays with very little difference in case-
mix weights across the landscape of groups.
For all of these reasons, we believe that incorporating HH stays
with preceding observational stays and ED visits into the community
admission category is most appropriate at this time. However, we note
that as we receive and evaluate new data related to the provision of
Medicare home health care under the PDGM, we will continue to assess
the appropriateness of the payment levels for admission source within a
home health period and give consideration to any cost differentiation
evidenced by the resources required by those home health patients with
a preceding outpatient event.
Regarding the operational aspects of the admission source category,
as described in the CY 2018 HH PPS proposed rule, we have developed
automated claims processing procedures with the goal of reducing the
amount of administrative burden associated with the admission source
category of the alternative case-mix adjustment methodology (82 FR
35309). For example, Medicare systems will automatically determine
whether a beneficiary has been discharged from an institutional setting
for which Medicare paid the claim, using information used during claims
processing to systematically identify admission source and address this
issue. When the Medicare claims processing system receives a Medicare
home health claim, the systems will check for the presence of a
Medicare acute or PAC claim for an institutional stay. If such an
institutional claim is found, and the institutional stay occurred
within 14 days of the home health admission, our systems will trigger
an automatic adjustment of the corresponding HH claim to the
appropriate institutional category. Similarly, when the Medicare claims
processing system receives a Medicare acute or PAC claim for an
institutional stay, the systems will check for the presence of a
subsequent HH claim with a community payment group. If such a HH claim
is found, and the institutional stay occurred within 14 days of the
home health admission, our systems will trigger an automatic

[[Page 32399]]

adjustment of the HH claim to the appropriate institutional category.
This process may occur any time within the 12-month timely filing
period for the acute or PAC claim. The OASIS assessment will not be
utilized in evaluating for admission source information.
Moreover, as we also proposed in the CY 2018 HH PPS proposed rule,
we propose in this rule that newly-created occurrence codes would also
be established, allowing HHAs to manually indicate on Medicare home
health claims that an institutional admission had occurred prior to the
processing of an acute or PAC Medicare claim, if any, in order to
receive the higher payment associated with the institutional admission
source sooner (82 FR 35312). However, the usage of the occurrence codes
is limited to situations in which the HHA has information about the
acute or PAC stay. We also noted that the use of these occurrence codes
would not be limited to home health beneficiaries for whom the acute or
PAC claims were paid by Medicare. HHAs would also use the occurrence
codes for beneficiaries with acute or PAC stays paid by other payers,
such as the Veterans Administration (VA).
If a HHA does not include on the HH claim the occurrence code
indicating that a home health patient had a previous institutional
stay, processed either by Medicare or other institutions such as the
VA, such an admission will be categorized as ``community'' and paid
accordingly. However, if later a Medicare acute or PAC claim for an
institutional stay occurring within 14 days of the home health
admission is submitted within the timely filing deadline and processed
by the Medicare systems, the HH claim would be automatically adjusted
and re-categorized as an institutional admission and appropriate
payment modifications would be made. If there was a non-Medicare
institutional stay occurring within 14 days of the home health
admission but the HHA was not aware of such a stay, upon learning of
such a stay, the HHA would be able to resubmit the HH claim that
included an occurrence code, subject to the timely filing deadline, and
payment adjustments would be made accordingly.
We note that the Medicare claims processing system will check for
the presence of an acute or PAC Medicare claim for an institutional
stay occurring within 14 days of the home health admission on an
ongoing basis and automatically assign the home health claim as
``community'' or ``institutional'' appropriately. As a result, with
respect to a HH claim with a Medicare institutional stay occurring
within 14 days of home health admission, we will not require the
submission of an occurrence code in order to appropriately categorize
the HH claim to the applicable admission source. With respect to a HH
claim with a non-Medicare institutional stay occurring with 14 days of
home health admission, a HHA would need to submit an occurrence code on
the HH claim in order to have the HH claim categorized as
``institutional'' and paid the associated higher amount. Additionally,
we plan to provide education and training regarding all aspects of the
admission source process and to develop materials for guidance on
claims adjustments, for resolution of claims processing issues, for
defining timely filing windows, and for appropriate usage of occurrence
codes through such resources as the Medicare Learning Network. We will
also update guidance in the Medicare Claims Processing Manual as well
as the Medicare Benefit Policy Manual as appropriate with detailed
procedures. We will also work with our Medicare Administrative
Contractors (MACs) to address any concerns regarding the processing of
home health claims as well as develop training materials to facilitate
all aspects of the transition to the PDGM, including the unique aspects
of the admission source categories.
With regards to the length of time for resubmission of home health
claims that reflect a non-Medicare institutional claim, all appropriate
Medicare rules regarding timely filing of claims will still apply.
Procedures required for the resubmission of home health claims will
apply uniformly for those claims that require editing due to the need
to add or remove occurrence codes. Details regarding the timely filing
guidelines for the Medicare program are available in the Medicare
Claims Processing Manual, Chapter 1--General Billing Requirements,
which is available at the following website: https://www.cms.gov/
Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c01.pdf.
Additionally, adjustments to any re-submitted home health claims will
be processed in the same manner as other edited Medicare home health
claims. Additionally, we plan to perform robust testing within the
Medicare claims processing system to optimize and streamline the
payment process.
Regarding the process by which HHAs should verify a non-Medicare
institutional stay, as we noted in in the CY 2018 HH PPS proposed rule,
we expect home health agencies would utilize discharge summaries from
all varieties of institutional providers (that is, Medicare and non-
Medicare) to inform the usage of these occurrence codes, and these
discharge documents should already be part of the beneficiary's home
health medical record used to support the certification of patient
eligibility as outlined in Sec. 424.22(c) (82 FR 35309). Providers
should utilize existing strategies and techniques for verification of
such stays and incorporate relevant clinical information into the plan
of care, as is already required by our Conditions of Participation.
Our evaluation process within the Medicare claims processing system
will check for the presence of an acute or PAC Medicare claim for an
institutional stay occurring within 14 days of the home health
admission on an ongoing basis. Under this approach, the Medicare
systems would only evaluate for whether an acute or PAC Medicare claim
for an institutional stay occurring within 14 days of the home health
admission was processed by Medicare, not whether it was paid.
Therefore, we do not expect that a home health claim will be denied due
to unpaid Medicare claims for preceding acute or PAC admissions.
Moreover, as previously stated above, we note that providers would have
the option to submit the occurrence code indicating a preceding
institutional stay in order to categorize the home health admission as
``institutional.'' In the case of a HHA submitting an occurrence code
because of a preceding Medicare institutional stay, if upon medical
review after finding no Medicare acute or PAC claims in the National
Claims History, and there is documentation of a Medicare acute or PAC
stay within the 14 days prior to the home health admission, but the
institutional setting did not submit its claim in a timely fashion, or
at all, we would permit the institutional categorization for the
payment of the home health claim through appropriate administrative
action. Similarly, in the case of a HHA submitting an occurrence code
because of a preceding non-Medicare institutional stay, if
documentation of a non-Medicare acute or PAC stay within the 14 days
prior to the home health admission, is found, we would permit the
categorization of the home health claim as ``institutional''.
However, if upon medical review after finding no acute or PAC
Medicare claims in the National Claims History, and there is no
documentation of an acute or PAC stay, either a Medicare or non-
Medicare stay, within 14 days of the home health admission, we would

[[Page 32400]]

correct the overpayment. If upon medical review after finding no
Medicare acute or PAC claims in the National Claims History and we find
that an HHA is systematically including occurrence codes that indicate
the patient's admission source was ``institutional,'' but no
documentation exists in the medical record of Medicare or non-Medicare
stays, we would refer the HHA to the zone program integrity contractor
(ZPIC) for further review. Moreover, we intend to consider targeted
approaches for medical review after the implementation of the admission
source element of the PDGM, including potentially identifying HHAs that
have claims that are consistently associated with acute or PAC denials,
whose utilization pattern of acute or PAC occurrence codes is aberrant
when compared with their peers, or other such metrics that would
facilitate any targeted reviews.
For all of the reasons described above, we are proposing to
establish two admission source categories for grouping 30-day periods
of care under the PDGM--institutional and community--as determined by
the healthcare setting utilized in the 14 days prior to home health
admission. We are proposing that 30-day periods for beneficiaries with
any inpatient acute care hospitalizations, skilled nursing facility
(SNF) stays, inpatient rehabilitation facility (IRF) stays, or long
term care hospital (LTCH) stays within the 14 days prior to a home
health admission would be designated as institutional admissions. We
are proposing that the institutional admission source category would
also include patients that had an acute care hospital stay during a
previous 30-day period of care and within 14 days prior to the
subsequent, contiguous 30-day period of care and for which the patient
was not discharged from home health and readmitted (that is, the
admission date and from date for the subsequent 30-day period of care
do not match) as we acknowledge that HHAs have discretion as to whether
they discharge the patient due to a hospitalization and then readmit
the patient after hospital discharge. However, we are proposing that we
would not categorize PAC stays (SNF, IRF, LTCH stays) that occur during
a previous 30-day period and within 14 days of a subsequent, contiguous
30-day period of care (that is, the admission date and from date for
the subsequent 30-day period of care do not match) as institutional, as
we would expect the HHA to discharge the patient if the patient
required PAC in a different setting and then readmitted the patient, if
necessary, after discharge from such setting. If the patient was
discharged and then readmitted to home health, the admission date and
``from'' date on the 30-day claim would match and the claims processing
system will look for an acute or a PAC stay within 14 days of the home
health admission date. This admission source designation process would
be applicable to institutional stays paid by Medicare or any other
payer. All other 30-day periods would be designated as community
admissions.
For the purposes of a RAP, we would only adjust the final home
health claim submitted for source of admission. For example, if a RAP
for a community admission was submitted and paid, and then an acute or
PAC Medicare claim was submitted for that patient before the final home
health claim was submitted, we would not adjust the RAP and would only
adjust the final home health claim so that it reflected an
institutional admission. Additionally, HHAs would only indicate
admission source occurrence codes on the final claim and not on any
RAPs submitted.
We invite public comments on the admission source component of the
proposed PDGM payment system.
6. Clinical Groupings
In the CY 2018 HH PPS proposed rule (82 FR 35307), we discussed the
findings of the Home Health Study Report to Congress, which indicates
that the current payment system may encourage HHAs to select certain
types of patients over others.\39\ Patients with a higher severity of
illness, including those receiving a greater level of skilled nursing
care; for example, patients with wounds, with ostomies, or who are
receiving total parenteral nutrition or mechanical ventilation were
associated with higher resource use and lower margins. This may have
produced a disincentive for providing care for patients with higher
clinical acuity, and thereby may have limited access of home health
services to these vulnerable patient populations.\40\ We noted that
payment should be predicated on resource use and proposed that
adjusting payment based on identified clinical characteristics and
associated services would better align payment with resource use.
---------------------------------------------------------------------------

\39\ Report to Congress. Medicare Home Health Study: An
Investigation on Access to Care and Payment for Vulnerable Patient
Populations. Available at https://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/HomeHealthPPS/Downloads/HH-Report-to-
Congress.pdf.
\40\ Report to the Congress: Medicare Payment Policy. (2015)Home
health care services: Assessing payment adequacy and updating
payments. Ch.9 https://www.medpac.gov/docs/default-source/reports/
chapter-9-home-health-care-services-march-2015-report-.pdf?sfvrsn=0.
---------------------------------------------------------------------------

For these reasons, we propose grouping 30-day periods of care into
six clinical groups: Musculoskeletal Rehabilitation, Neuro/Stroke
Rehabilitation, Wounds--Post-Op Wound Aftercare and Skin/Non-Surgical
Wound Care, Behavioral Health Care (including Substance Use Disorder),
Complex Nursing Interventions, Medication Management, Teaching and
Assessment (MMTA). These clinical groups are designed to capture the
most common types of care that HHAs provide. We propose placement of
each 30-day period of care into a specific clinical group based on the
primary reason the patient is receiving home health care as determined
by the principal diagnosis reported on the claim. Although the
principal diagnosis code is the basis for the clinical grouping,
secondary diagnosis codes and patient characteristics would then be
used to case-mix adjust the period further through the comorbidity
adjustment and functional level. A complete list of ICD-10-CM codes and
their assigned clinical groupings is posted on the CMS HHA Center web
page (https://www.cms.gov/center/provider-Type/home-Health-Agency-HHA-
Center.html). More information on the analysis and development of the
groupings can be found in the CY 2018 HH PPS proposed rule as well as
the HHGM technical report from December 2016, also available on the HHA
Center webpage.
In the CY 2018 HH PPS proposed rule, we solicited comments on the
clinical groups and the assigned clinical groupings of the ICD-10-CM
codes. Additionally, in February 2018, a Technical Expert Panel (TEP)
was held in order to gain insight from industry leaders, clinicians,
patient representatives, and researchers with experience in home health
care and/or experience in home health agency management. Many
commenters and TEP members supported the patient-centered approach to
grouping patients by clinical characteristics, and several commenters
felt that the clinical groupings did capture the majority of
characteristics of the home health population. Specifically, commenters
generally approved of the higher-weighted complex nursing and wound
groups, and agreed with the ``importance the HHGM places on these
complex patients through its proposed payment rate.'' One commenter
stated that ``the most complex and costly beneficiaries for a HHA are
those that require intensive nursing care, while

[[Page 32401]]

those that require intensive therapy produce a significant margin with
less cost.'' Additional comments on the clinical groups generally
included the following: Concern that some diagnosis codes are not used
to group claims into the six clinical groups; concern about reduced
therapy use in the clinical groups that aren't specifically for
musculoskeletal or neurological rehabilitation; concern that the groups
do not capture clinically complex patients that require multiple home
health disciplines; suggestions that the clinical groups should be
based on impairments rather than diagnoses; and concern that the MMTA
clinical group encompasses too many diagnosis codes. Several commenters
expressed concern that certain ICD 10-CM diagnosis codes were not used
for payment (for example, codes that were not used to group claims into
the six clinical groupings), which could possibly restrict access to
the benefit or force beneficiaries to seek care in institutional
settings. Others had concerns regarding specific diagnosis codes they
felt should be reassigned to different clinical groups.
As outlined in the HHGM technical report from December 2016 and in
the CY 2018 HH PPS proposed rule (82 FR 35314), there were several
reasons why a diagnosis code was not assigned to one of the six
clinical groups. These included if the diagnosis code was too vague,
meaning the code does not provide adequate information to support the
need for skilled home health services (for example H57.9, Unspecified
disorder of eye and adnexa); the code, based on ICD 10-CM, American
Hospital Association (AHA) Coding Clinic, or Medicare Code Edits (MCE)
would indicate a non-home health service (for example, dental codes);
the code is a manifestation code subject to a manifestation/etiology
convention, meaning that the etiology code must be reported as the
principal diagnosis, or the code is subject to a code first sequencing
convention (for example, G99.2 myelopathy in diseases classified
elsewhere); the code identifies a condition which would be unlikely to
require home health services (for example, L81.2, Freckles); the code
is restricted to the acute care setting per ICD 10-CM/AHA Coding
Clinic, or the diagnosis indicates death as the outcome (for example
S06.1X7A, Traumatic cerebral edema with loss of consciousness of any
duration with death due to brain injury prior to regaining
consciousness). We did, however, review and re-group certain codes
based on commenter feedback. For example, with regard to the
classification of N39.0, Urinary tract infection, site not specified as
an invalid code to group the home health period of care, we do agree
that absent definitive information provided by the referring physician,
a home health clinician would not know the exact site of a urinary
tract infection (UTI). As such, Urinary tract infection, site not
specified (N39.0) will be grouped under MMTA, as the home health
services required would most likely involve teaching about the
treatment for the UTI, as well as evaluating the effectiveness of the
medication regimen. We encourage HHAs to review the list of diagnosis
codes in the PDGM Grouping Tool posted on the HHA Center web page at:
https://www.cms.gov/center/provider-Type/home-Health-Agency-HHA-
Center.html. Additionally, the ICD-10-CM code set exceeds the ICD-9-CM
in the number of diagnoses and conditions and contains codes that are
much more granular. Therefore, we disagree that excluding certain codes
from payment will restrict access, considering the increase in
diagnoses potentially requiring home health.
With regard to commenter concern that the HHGM clinical groups did
not account for the need for therapy in home health periods that are
not specifically grouped into musculoskeletal or neurological
rehabilitation, we continue to expect the ordering physician, in
conjunction with the therapist to develop and follow a plan of care for
any home health patient, regardless of clinical group, as outlined in
the skilled service requirements at Sec. 409.44, when therapy is
deemed reasonable and necessary. Although the principal diagnosis is a
contributing factor in the PDGM and determines the clinical group, it
is not the only consideration in determining what home health services
are needed in a patient's plan of care. It is the responsibility of the
patient's treating physician to determine if and what type of therapy
the patient needs regardless of clinical grouping. In accordance with
Sec. 409.44(c)(1)(i), the therapy goals must be established by a
qualified therapist in conjunction with the physician when determining
the plan of care. As such, therapy may likely be included in the plan
of care for a patient in any of the six clinical groupings. Any therapy
indicated in the plan of care is expected to meet the requirements
outlined in Sec. 409.44, which states that all therapy services must
relate directly and specifically to a treatment regimen (established by
the physician, after any needed consultation with the qualified
therapist). Additional requirements dictate that the amount, frequency,
and duration of the services must be reasonable and necessary, as
determined by a qualified therapist and/or physician, using accepted
standards of clinical practice. One goal in developing the PDGM is to
provide an appropriate payment based on the identified resource use of
different patient groups, not to encourage, discourage, value, or
devalue one type of skilled care over another.
Likewise, for patients requiring two or three home health
disciplines, the PDGM takes into account the functional level and
comorbidities of the patient after the primary reason for the period is
captured by the clinical grouping. Decreasing functional status, as
indicated by a specific set of OASIS items, and the presence of certain
comorbid conditions, is associated with increased resource use. Here is
where, when combined with the clinical grouping, any multi-disciplinary
therapy patients would be captured. For instance, a patient grouped
into the Neuro-Rehabilitation clinical grouping with a high Functional
Level (meaning high functional impairment) indicates increased therapy
needs, potentially utilizing all skilled therapy disciplines.
Additionally, the comorbidity adjustment further case mixes the period
and increases payment to capture the additional resource use for a
patient regardless of whether the services are skilled nursing or
therapy based. Therefore, a patient with complex needs, including
multiple therapy disciplines and medical management, is captured by the
combination of the different levels of the PDGM. Furthermore, the
current case-mix adjustment methodology does not differentiate between
utilization of therapy disciplines and whether or not all three are
utilized for the same patient. We have determined that the PDGM's
functional level when combined with the clinical grouping and
comorbidity adjustment actually provides a much clearer picture of the
patient's needs, particularly in relation to therapy services.
Comments on the CY 2018 HH PPS proposed rule and at the 2018 TEP
indicated that diagnosis does not always correlate with need and that
impairments and functional limitations are better predictors of therapy
services. Additionally, some commenters stated that clinicians are more
likely to focus on impairments and functional limitations when
conceptualizing overall patient care, and suggested using them as the
basis for the clinical groups rather than diagnosis codes. We do agree
that diagnosis alone does not

[[Page 32402]]

provide the entire clinical picture of the home health patient;
however, in the same way the clinical group is one aspect of the PDGM,
therapy services are only one aspect of home health. In fact, the
multidisciplinary nature of the benefit is precisely the reason that
diagnosis should be an important aspect of the clinical groupings
model. The various home health disciplines have different but
overlapping roles in treating the patient; however, a diagnosis is used
across disciplines and has important implications for patient care. A
patient's diagnosis consists of a known set of signs and symptoms
agreed upon by the medical community. Each different healthcare
discipline uses these identifiable signs and symptoms to apply its own
approach and skill set to treat the patient. However, it remains a
patient centered approach.
Several commenters and TEP participants alike, stated that the MMTA
clinical group is too broad and should be divided into more clinical
groups or subgroups. One commenter questioned whether it made sense to
assign patients to different clinical groupings if roughly 60 percent
of 30-day periods will fall into the MMTA category. Others considered
it an ``other'' category that was counter to the goal of clarifying the
need for home health.
A significant goal of the PDGM is to clearly define what types of
services are provided in home health and accurately ascribe payment to
resource use. Our analysis showed that there are four very broad
categories of interventions frequently provided in the home that are
not attributable to one specific intervention or diagnosis: Health
teaching; guidance and counseling; case management; treatments and
procedures; and surveillance. These categories cross the spectrum of
diagnoses, medications, and interventions, which understandably is why
this clinical grouping represents the majority of home health episodes.
We believe that these four broad categories of interventions in MMTA
cannot be underestimated in importance. We stated in the CY 2018 HH PPS
proposed rule that many home health patients have multi-morbidity and
polypharmacy, making education and surveillance crucial in the
management of the home health patient in order to prevent medication
errors and adverse effects. However, the principal diagnosis
necessitating home care for these patients may not involve a complex
nursing intervention, behavioral health, rehabilitation, or wound care.
This group represents a broader, but no less important reason for home
care. We believe MMTA is not so much an ``other'' category as much as
it appears to represent the foundation of home health. Many commenters
highlighted the complexity of home health patients; pointing to multi-
morbidity, ``quicker and sicker'' discharges, and polypharmacy as
important factors in maintaining home health access. CMS agrees that
these issues alone are important reasons for ordering home health
services and necessitate their own clinical grouping.
When initially developing the model, we looked at breaking MMTA
into subgroups in order to account for differences amongst diagnoses
within the broader category of this group. We found that the variation
in resource use was similar across those subgroups and determined
separating diagnoses further would only serve to make the model more
complex and without significant variations in case-mix. However, in
response to public comments and the discussion at the 2018 TEP,\20\ we
performed further analysis on the division of MMTA into subgroups in
order to estimate the payment regression if these groups were separated
from MMTA. We conducted a thorough review of all the diagnosis codes
grouped into MMTA. We then grouped the codes into subgroups based on
feedback from public comments, which mainly focused on cardiac,
oncology, infectious, and respiratory diagnoses. We created the
additional subgroups (Surgical/Procedural Aftercare, Cardiac/
Circulatory, Endocrine, GI/GU, Infectious Diseases/Neoplasms,
Respiratory, and Other) based on data that showed above-average
resource use for the codes in those groups, and then combined certain
groups that had a minimal number of codes. Those results are shown in
Table 38.
---------------------------------------------------------------------------

\20\ https://www.cms.gov/center/provider-Type/home-Health-
Agency-HHA-Center.html.

Table 38--Distribution of Resource Use by 30-Day Periods
[MMTA subgroups]
----------------------------------------------------------------------------------------------------------------
Subgroup N Mean Median
----------------------------------------------------------------------------------------------------------------
Aftercare....................................................... 304,871 $1,605.43 $1,326.03
Cardiac/Circulatory............................................. 1,594,149 1,433.02 1,121.27
Endocrine....................................................... 425,077 1,524.45 1,062.41
GI/GU........................................................... 402,322 1,414.44 1,115.29
Infectious Diseases/Neoplasms/Blood-forming Diseases............ 347,755 1,400.65 1,077.58
Respiratory..................................................... 724,722 1,411.61 1,122.23
Other........................................................... 1,226,750 1,366.56 1,035.76
-----------------------------------------------
Total....................................................... 5,025,646 1,428.17 1,105.20
----------------------------------------------------------------------------------------------------------------

Table 39 shows the impact each MMTA variable has on case-mix
weight. The impact is calculated by taking the regression coefficient
for each variable (unreported here) and dividing by the average
resource use of the 30-day periods in the model. Model 1 shows the
result when MMTA clinical group is not separated into subgroups. Model
1 shows that all else equal, being in MMTA--Low Functional impairment
causes no increase in case-mix weight (for example, a 30-day period's
case-mix weight would be calculated with the coefficients from the
constant of the model plus the admission source/timing of the period
plus the comorbidity adjustment). A 30-day period in MMTA--Medium
Functional would increase the case-mix weight by 0.1560. A 30-day
period in MMTA--High Functional would increase the case-mix weight by
0.2731. Model 2 shows the same information but now includes the MMTA
subgroups. In any given functional level, many of the MMTA subgroups
have an impact on the case-mix weight that is similar to what is found
in Model 1. For example, a period in MMTA (Other)--Medium Functional

[[Page 32403]]

has an increase in case-mix of 0.1568 (which is very similar to the
0.1560 value found in Model 1). There are some groups like Aftercare,
Endocrine, and GI/GU which show different impacts than Model 1. Also,
to a lesser extent these differences also exist for the ``Infectious
Diseases/Neoplasms/Blood forming Diseases'' and ``Respiratory''
subgroups. Some of these differences are driven by periods which are
paid using an outlier adjustment. Model 3 removes outliers and the
corresponding results for the Endocrine subgroup are very similar to
Model 1. Some differences (for example in Aftercare) persist; however,
the change in case-mix weight remains similar to Model 1.

Table 39--Change in Case-Mix Weight Associated With MMTA Variables
----------------------------------------------------------------------------------------------------------------
Model 1 Model 2 Model 3
-------------------------------- (outliers
excluded)
Change in case- Change in case----------------
mix weight mix weight Change in case-
mix weight
----------------------------------------------------------------------------------------------------------------
Variable
MMTA--Low Functional........................................ 0.000 .............. ..............
MMTA--Medium Functional..................................... 0.1560 .............. ..............
MMTA--High Functional....................................... 0.2731 .............. ..............
MMTA (Other)--Low Functional................................ .............. 0.000 0.000
MMTA (Other)--Medium Functional............................. .............. 0.1568 0.1523
MMTA (Other)--High Functional............................... .............. 0.2896 0.2748
MMTA (Aftercare)--Low Functional............................ .............. -0.1082 -0.1196
MMTA (Aftercare)--Medium Functional......................... .............. 0.0798 0.0701
MMTA (Aftercare)--High Functional........................... .............. 0.2588 0.2491
MMTA (Cardiac/Circulatory)--Low Functional.................. .............. -0.0239 -0.0050
MMTA (Cardiac/Circulatory)--Medium Functional............... .............. 0.1371 0.1652
MMTA (Cardiac/Circulatory)--High Functional................. .............. 0.2737 0.2952
MMTA (Endocrine)--Low Functional............................ .............. 0.1105 0.0282
MMTA (Endocrine)--Medium Functional......................... .............. 0.2859 0.1833
MMTA (Endocrine)--High Functional........................... .............. 0.4071 0.3086
MMTA (GI/GU)--Low Functional................................ .............. -0.0751 -0.0639
MMTA (GI/GU)--Medium Functional............................. .............. 0.0997 0.1256
MMTA (GI/GU)--High Functional............................... .............. 0.1992 0.2231
MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)-- .............. -0.0452 -0.0472
Low Functional.............................................
MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)-- .............. 0.1068 0.1128
Medium Functional..........................................
MMTA (Infectious Diseases/Neoplasms/Blood forming Diseases)-- .............. 0.2281 0.2379
High Functional............................................
MMTA (Respiratory)--Low Functional.......................... .............. -0.0501 -0.0488
MMTA (Respiratory)--Medium Functional....................... .............. 0.1027 0.1163
MMTA (Respiratory)--High Functional......................... .............. 0.2241 0.2400
----------------------------------------------------------------------------------------------------------------

The results show that the change in case-mix weight was minimal for
the 30-day periods assigned to these subgroups compared to the case-mix
weights without the subgroups. Additionally, the impact of other
variables in the model (admission source/timing, comorbidity
adjustment) on the final case-mix weights were similar whether or not
MMTA subgroups were used.
Overall, using the MMTA subgroup model would result in more payment
groups but not dramatic differences in case-mix weights across those
groups. For this reason, we are not proposing to divide the MMTA
clinical group into subgroups and to leave them as is shown in Table
40. However, we are soliciting comments from the public on whether
there may be other compelling reasons why MMTA should be broken out
into subgroups as shown in Table 38, even if the additional subgroups
do not result in significant differences in case-mix weights across
those subgroups. We note that we also plan continue to examine trends
in reporting and resource utilization to determine if future changes to
the clinical groupings are needed after implementation of the PDGM.

Table 40--Proposed Clinical Groups Used in the PDGM
------------------------------------------------------------------------
The primary reason for the home
Clinical groups health encounter is to provide:
------------------------------------------------------------------------
Musculoskeletal Rehabilitation.... Therapy (physical, occupational or
speech) for a musculoskeletal
condition.
Neuro/Stroke Rehabilitation....... Therapy (physical, occupational or
speech) for a neurological
condition or stroke.
Wounds--Post-Op Wound Aftercare Assessment, treatment & evaluation
and Skin/Non-Surgical Wound Care. of a surgical wound(s); assessment,
treatment & evaluation of non-
surgical wounds, ulcers, burns, and
other lesions.
Behavioral Health Care............ Assessment, treatment & evaluation
of psychiatric conditions,
including substance use disorders.
Complex Nursing Interventions..... Assessment, treatment & evaluation
of complex medical & surgical
conditions including IV, TPN,
enteral nutrition, ventilator, and
ostomies.
Medication Management, Teaching Assessment, evaluation, teaching,
and Assessment (MMTA). and medication management for a
variety of medical and surgical
conditions not classified in one of
the above listed groups.
------------------------------------------------------------------------

[[Page 32404]]

7. Functional Levels and Corresponding OASIS Items
As part of the overall payment adjustment under an alternative
case-mix adjustment methodology, in the CY 2018 Home Health Prospective
Payment System proposed rule (82 FR 35317), we proposed including a
functional level adjustment to account for the resource costs
associated with providing home health care to those patients with
functional impairments. Research has shown a relationship exists
between functional status, rates of hospital readmission, and the
overall costs of health care services.\42\ Functional status is defined
in a number of ways, but generally, functional status reflects an
individual's ability to carry out activities of daily living (ADLs) and
to participate in various life situations and in society.\43\ CMS
currently requires the collection of data on functional status in home
health through a standardized assessment instrument: The Outcome and
Assessment Information Set (OASIS). Under the current HH PPS, a
functional status score is derived from the responses to those items
and this score contributes to the overall case-mix adjustment for a
home health episode payment.
---------------------------------------------------------------------------

\42\ Burke, R. MD, MS, Whitfield, E. Ph.D., Hittle, D. Ph.D.,
Min, S. Ph.D., Levy, C. MD, Ph.D., Prochazka, A. MD, MS, Coleman, E.
MD, MPH, Schwartz, R. MD, Ginde, A. (2016). ``Hospital Readmission
From Post-Acute Care Facilities: Risk Factors, Timing, and
Outcomes''. The Journal of Post-Acute Care and Long Term Care
Medicine. (17), 249-255.
\43\ Clauser, S. Ph.D., and Arlene S. Bierman, M.D., M.S.
(2003). ``Significance of Functional Status Data for Payment and
Quality''. Health Care Financing Review. 24(3), 1-12.
---------------------------------------------------------------------------

Including functional status in the case-mix adjustment methodology
allows for higher payment for those patients with higher service needs.
As functional status is commonly used for risk adjustment in various
payment systems, including in the current HH PPS, we proposed that the
alternative case-mix adjustment methodology would also adjust payments
based on responses to selected functional OASIS items that have
demonstrated higher resource use. Therefore, we examined every OASIS
item for potential inclusion in the alternative case-mix adjustment
methodology including those items associated with functional status.
Generally, worsening functional status is associated with higher
resource use, indicating that the responses to functional OASIS items
may be useful as adjustors to construct case-mix weights for an
alternative case-mix adjustment methodology. However, due to the lack
of variation in resource use across certain responses and because
certain responses were infrequently chosen, we combined some responses
into larger response categories to better capture the relationship
between worsening functional status and resource use. The resulting
combinations of responses for these OASIS items are found at Exhibit 7-
2 in the HHGM technical report, ``Overview of the Home Health Groupings
Model,'' on the HHA Center web page.\44\
---------------------------------------------------------------------------

\44\ https://downloads.cms.gov/files/
hhgm%20technical%20report%20120516%20sxf.pdf.
---------------------------------------------------------------------------

Each OASIS item included in the final model has a positive
relationship with resource use, meaning as functional status declines
(as measured by a higher response category), periods have more resource
use, on average. As such, in the CY 2018 HH PPS proposed rule, we
proposed that the following OASIS items would be included as part of
the functional level adjustment under an alternative case-mix
adjustment methodology:
M1800: Grooming.
M1810: Current Ability to Dress Upper Body.
M1820: Current Ability to Dress Lower Body.
M1830: Bathing.
M1840: Toilet Transferring.
M1850: Transferring.
M1860: Ambulation/Locomotion.
M1033 Risk of Hospitalization (at least four responses
checked, excluding responses #8, #9, and #10).\45\
---------------------------------------------------------------------------

\45\ Exclusions of the OASIS C-1 Item M1033 include, response
#8: ``currently reports exhaustion''; response #9: ``other risk(s)
not listed in 1-8; response #10: None of the above.
---------------------------------------------------------------------------

In the CY 2018 HH PPS proposed rule, we discussed how under the
HHGM a home health period of care receives points based on each of the
responses associated with the proposed functional OASIS items which are
then converted into a table of points corresponding to increased
resource use. That is, the higher the points, the higher the functional
impairment. The sum of all of these points' results in a functional
impairment score which is used to group home health periods into a
functional level with similar resource use. We proposed three
functional impairment levels of low, medium, and high with
approximately one third of home health periods from each of the
clinical groups within each level. This means home health periods in
the low impairment level have responses for the proposed functional
OASIS items that are associated with the lowest resource use on
average. Home health periods in the high impairment level have
responses for the proposed functional OASIS items that are associated
with the highest resource use on average. We also proposed that the
functional impairment level thresholds would vary between the clinical
groups to account for the patient characteristics within each clinical
group associated with increased resource costs affected by functional
impairment. We provided a detailed analysis of the development of the
functional points and the functional impairment level thresholds by
clinical group in the HHGM technical report \46\ and in Tables 36 and
37 in the CY 2018 HH PPS proposed rule (82 FR 35321).
---------------------------------------------------------------------------

\46\ ``Medicare Home Health Prospective Payment System: Case-Mix
Methodology Refinements Overview of the Home Health Groupings
Model'' located at https://downloads.cms.gov/files/
hhgm%20technical%20report%20120516%20sxf.pdf.
---------------------------------------------------------------------------

In the CY 2018 HH PPS proposed rule, we solicited comments on the
proposed functional OASIS items, the associated points, and the
thresholds by clinical group used to group patients into three
functional impairment levels under the HHGM, as outlined above. The
majority of comments received were from physical therapists, physical
therapy assistants, occupational therapists, and national physical,
occupational, and speech-language pathology associations. Likewise, a
Technical Expert Panel (TEP) was convened in February 2018 to collect
perspectives, feedback, and identify and prioritize recommendations
from a wide variety of industry experts and patient representatives
regarding the public comments received on the proposed HHGM. Comments
were very similar between those received on the CY 2018 HH PPS proposed
rule and those made by the TEP participants.
Most commenters agreed that the level of functional impairment
should be included as part of the overall case-mix adjustment in a
revised case-mix model. Likewise, commenters were generally supportive
of the OASIS items selected to be used in the functional level payment
adjustment. Commenters noted that the role of patient characteristics
and functional status as an indicator of resource use is a well-
established principle in rehabilitation care. Some commenters stated
that adopting a similar component in the home health payment system
will help to remove the incentive to provide unnecessary therapy
services to reach higher classifications for payment but will also move
the HH PPS toward greater consistency with other post-acute care
prospective payment systems. Other comments received on the functional
impairment level adjustment

[[Page 32405]]

encompassed several common themes: The effect of the IMPACT Act
provisions on the HHGM; adequacy of the functional impairment
thresholds and corresponding payment adjustments; potential HHA
behavioral changes to the provision of home health services; the impact
of the removal of therapy thresholds on HHAs; and recommendations for
the inclusion of other OASIS items into the functional impairment level
adjustment.
We note that the analysis presented in the CY 2018 HH PPS proposed
rule was based on CY 2016 home health episodes using version OASIS-C1/
ICD-10 data set, which did not include the aforementioned IMPACT Act
functional items. To accommodate new data being collected for the Home
Health Quality Reporting Program in support of the IMPACT Act, CMS has
proposed to add the functional items, Section GG, ``Functional
Abilities and Goals'', to the OASIS data set effective January 1, 2019.
Because these GG functional items are not required to be collected on
the OASIS until January 1, 2019, we do not have the data to determine
the effect, if any, of these newly added items on resource costs during
a home health period of care. However, if the alternative case-mix
adjustment methodology, is implemented in CY 2020, we would continue to
examine the effects of all OASIS items, including the ``GG'' functional
items, on resource use to determine if any refinements are warranted.
Addressing those comments regarding the use and adequacy of the
functional impairment thresholds to adjust payment, we remind
commenters that the structure of categorizing functional impairment
into Low, Medium, and High levels has been part of the home health
payment structure since the implementation of the HH PPS. The current
HH PPS groups' scores are based on functional OASIS items with similar
average resource use within the same functional level, with
approximately a third of episodes classified as low functional score, a
third of episodes are classified as medium functional score, and a
third of episodes are classified as high functional score. Likewise,
the PDGM groups' scores would be based on functional OASIS items with
similar resource use and would have three levels of functional
impairment severity: Low, medium and high. However, the three
functional impairment thresholds vary between the clinical groups to
account for the patient characteristics within that clinical group
associated with increased resource costs affected by functional
impairment. This is to further ensure that payment is more accurately
aligned with actual patient resource needs. As such, we believe the
more granular structure of these functional levels provides the
information needed on functional impairment and allows greater
flexibility for clinicians to tailor a more patient-centered home
health plan of care to meet the individualized needs of their patients.
As HHA-reported OASIS information determines the functional impairment
levels, accurate reporting on the OASIS will help to ensure that the
case-mix adjustment is in alignment with the actual level of functional
impairment.
Concerns regarding HHAs changing the way they provide services to
eligible beneficiaries, specifically therapy services, should be
mitigated by the more granular functional impairment level adjustment
(for example, functional thresholds which vary between each of the
clinical groups). The functional impairment level case-mix payment
adjustment is reflective of the resource costs associated with these
reported OASIS items and therefore ensures greater payment accuracy
based on patient characteristics. We believe that this approach will
help to maintain and could potentially increase access to needed
therapy services. We remind HHAs that the provision of home health
services should be based on patient characteristics and identified care
needs. This could include those patients with complex and/or chronic
care needs, or those patients requiring home health services over a
longer period of time or for which there is no measureable or expected
improvement.
While the majority of commenters agreed that the elimination of
therapy thresholds is appropriate because of the financial incentive to
overprovide therapy services, some commenters indicated that the
reductions in payment for therapy visits could result in a decrease in
HHA viability and could force some HHAs to go out of business, such as
those HHAs that provide more therapy services than nursing. We note
that section 51001(a)(3) of the BBA of 2018 amended section
1894(b)(4)(B) of the Act to prohibit the use of therapy thresholds as
part of the overall case-mix adjustment for CY 2020 and subsequent
years. Consequently, we have no regulatory discretion in this matter.
Several commenters provided recommendations for additional OASIS
items for inclusion to account for functional impairment. Most notably,
commenters suggested adding OASIS items associated with cognition,
instrumental activities of daily living (IADLs), and caregiver support.
The current HH PPS does not use OASIS items associated with cognition,
IADLs, or caregiver support to case-mix adjust for payment.
Nonetheless, the relationship between cognition and functional status
is important and well-documented in health care literature so we
included them in our analysis because they generally have clinical
significance based on research and standards of practice. As described
in the CY 2018 HH PPS proposed rule and the technical report, we
examined every single OASIS item and its effect on costs. These
included those OASIS items associated with cognition, IADLs, and
caregiver support. Only those OASIS items associated with higher
resource costs were considered for inclusion in the functional level
adjustment in the HHGM. Despite commenters' recommendations, the
variables suggested were only minimally helpful in explaining or
predicting resource use and most reduced the amount of actual payment.
As such, we excluded variables associated with cognition, IADLs, and
caregiver support because they would decrease payment for a home health
period of care which is counter to the purpose of a case-mix adjustment
under the HHGM. The complete analysis of all of the OASIS items can be
found in the HHGM technical report on the HHA Center web page.\47\
---------------------------------------------------------------------------

\47\ https://downloads.cms.gov/files/
hhgm%20technical%20report%20120516%20sxf.pdf.
---------------------------------------------------------------------------

After careful consideration of all comments received on the
functional level adjustment as part of an alternative case-mix
adjustment methodology, we believe that the three PDGM functional
impairment levels in each of the six clinical groups are designed to
capture the level of functional impairment. We believe that the more
granular nature of the levels of functional impairment by clinical
group would encourage therapists to determine the appropriate services
for their patients in accordance with identified needs rather than an
arbitrary threshold of visits. While the functional level adjustment is
not meant to be a direct proxy for the therapy thresholds, the PDGM has
other case-mix variables to adjust payment for those patients requiring
multiple therapy disciplines or those chronically ill patients with
significant functional impairment. We believe that also accounting for
timing, source of admission, clinical group (meaning the primary reason
the patient requires home health services), and the presence of
comorbidities will provide the necessary adjustments to payment to
ensure that care needs are met based on

[[Page 32406]]

actual patient characteristics. Therefore, we continue to uphold that
the functional impairment level adjustment is sufficient and along with
the other case-mix adjustments, payment will better align with the
costs of providing services.
In summary, we are proposing that the OASIS items identified in the
CY 2018 HH PPS proposed rule would be included as part of the
functional impairment level payment adjustment under the proposed PDGM.
These items are:
M1800: Grooming.
M1810: Current Ability to Dress Upper Body.
M1820: Current Ability to Dress Lower Body.
M1830: Bathing.
M1840: Toilet Transferring.
M1850: Transferring.
M1860: Ambulation/Locomotion.
M1033: Risk of Hospitalization.\48\
---------------------------------------------------------------------------

\48\ In Version OASIS C-2 (effective 1/1/2018), three responses
are excluded: #8:``currently reports exhaustion'', #9: ``other risks
not listed in 1-8'', and #10: ``None of the above''.
---------------------------------------------------------------------------

We are proposing that a home health period of care receives points
based on each of the responses associated with the proposed functional
OASIS items which are then converted into a table of points
corresponding to increased resource use (See Table 41). The sum of all
of these points results in a functional score which is used to group
home health periods into a functional level with similar resource use.
We are proposing three functional levels of low impairment, medium
impairment, and high impairment with approximately one third of home
health periods from each of the clinical groups within each functional
impairment level (See Table 42). The CY 2018 HH PPS Proposed rule (82
FR 35320) and the technical report posted on the HHA Center web page
provide a more detailed explanation as to the construction of these
functional impairment levels using the proposed OASIS items.

Table 41--Oasis Points Table for Those Items Associated With Increased Resource Use Using a Reduced Set of Oasis
Items, CY 2017
----------------------------------------------------------------------------------------------------------------
Percent of
periods in
Response category Points (2017) 2017 with this
response
category
----------------------------------------------------------------------------------------------------------------
M1800: Grooming............................... 1............................... 4 56.9
M1810: Current Ability to Dress Upper Body.... 1............................... 6 60.0
M1820: Current Ability to Dress Lower Body.... 1............................... 5 59.3
2............................................. 11.............................. 20.9
M1830: Bathing................................ 1............................... 3 18.0
2............................... 13 53.1
3............................... 21 23.6
M1840: Toilet Transferring.................... 1............................... 4 32.1
M1850: Transferring........................... 1............................... 4 37.8
2............................... 8 59.2
M1860: Ambulation/Locomotion.................. 1............................... 11 25.2
2............................... 13 52.8
3............................... 25 14.8
M1033: Risk of Hospitalization................ 4 or more items checked......... 11 17.8
----------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017(as of March 2, 2018).

Table 42--Thresholds for Functional Levels by Clinical Group, CY 2017
------------------------------------------------------------------------
Points (2017
Clinical group Level of impairment data)
------------------------------------------------------------------------
MMTA.............................. Low................. 0-37
Medium.............. 38-53
High................ 54+
Behavioral Health................. Low................. 0-38
Medium.............. 39-53
High................ 54+
Complex Nursing Interventions..... Low................. 0-36
Medium.............. 37-57
High................ 58+
Musculoskeletal Rehabilitation.... Low................. 0-39
Medium.............. 40-53
High................ 54+
Neuro Rehabilitation.............. Low................. 0-45
Medium.............. 46-61
High................ 62+
Wound............................. Low................. 0-43
Medium.............. 44-63
High................ 64+
------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before
December 31, 2017 (as of March 2, 2018).

[[Page 32407]]

Table 43 shows the average resource use by clinical group and
functional level for CY 2017:

Table 43--Average Resource Use by Clinical Group and Functional Level, CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Mean resource Frequency of Percent of deviation of Percentile of Median Percentile of
use periods periods resource use resource use resource use resource use
--------------------------------------------------------------------------------------------------------------------------------------------------------
MMTA--Low............................... $1,236.05 1,650,146 19.1 $1,076.20 $511.06 $907.38 $1,632.74
MMTA--Medium............................ 1,487.24 1,709,484 19.8 1,162.37 628.29 1,202.12 2,020.73
MMTA--High.............................. 1,667.38 1,402,299 16.3 1,274.53 719.29 1,371.99 2,265.39
Behavioral Health--Low.................. 971.26 98,193 1.1 845.25 397.45 686.39 1,285.36
Behavioral Health--Medium............... 1,309.40 93,145 1.1 990.34 557.57 1,064.55 1,784.48
Behavioral Health--High................. 1,485.06 96,899 1.1 1,092.42 653.44 1,233.97 2,027.14
Complex--Low............................ 1,313.78 104,504 1.2 1,194.16 553.50 953.84 1,669.45
Complex--Medium......................... 1,668.06 104,717 1.2 1,415.99 694.35 1,275.32 2,202.65
Complex--High........................... 1,771.05 97,779 1.1 1,527.71 704.28 1,336.79 2,361.61
MS Rehab--Low........................... 1,545.07 587,873 6.8 1,048.07 779.96 1,323.12 2,055.60
MS Rehab--Medium........................ 1,731.15 536,444 6.2 1,111.26 931.97 1,527.46 2,293.96
MS Rehab--High.......................... 1,900.89 469,117 5.4 1,243.84 1,009.66 1,672.76 2,520.57
Neuro--Low.............................. 1,591.74 308,011 3.6 1,163.69 744.21 1,323.86 2,127.18
Neuro--Medium........................... 1,833.25 287,788 3.3 1,271.31 900.27 1,568.22 2,467.92
Neuro--High............................. 1,945.49 303,787 3.5 1,420.56 899.47 1,618.16 2,629.54
Wound--Low.............................. 1,663.25 275,383 3.2 1,271.45 790.83 1,328.52 2,152.26
Wound--Medium........................... 1,893.35 238,063 2.8 1,370.79 927.26 1,550.78 2,475.29
Wound--High............................. 2,044.09 261,144 3.0 1,520.35 975.19 1,644.10 2,669.06
Total............................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018).

Like the annual recalibration of the case-mix weights under the
current HH PPS, we expect that annual recalibrations would also be made
to the PDGM case-mix weights. If the PDGM is finalized for CY 2020, we
will update the functional points and thresholds using the most current
claims data available. Likewise, we would continue to analyze all of
the components of the case-mix adjustment, including adjustment for
functional status, and would make refinements as necessary to ensure
that payment for home health periods are in alignment with the costs of
providing care. We invite comments on the proposed OASIS items and the
associated points and thresholds used to group patients into three
functional impairment levels under the PDGM, as outlined above.
8. Comorbidity Adjustment
The alternative case-mix adjustment methodology proposed in the CY
2018 HH PPS proposed rule, groups home health periods based on the
primary reason for home health care (principal diagnosis), functional
level, admission source, and timing. To further account for differences
in resource use based on patient characteristics, in the CY 2018 HH PPS
proposed rule, we proposed to use the presence of comorbidities as part
of the overall case-mix adjustment under the alternative case-mix
adjustment methodology. Specifically, we proposed a home health
specific list of comorbidities further refined into broader, body
system-based categories and more granular subcategories to capture
those conditions that affect resource costs during a home health period
of care. The proposed comorbidities included those conditions that
represent more than 0.1 percent of periods and had at least as high as
the median resource use as they indicate a direct relationship between
the comorbidity and resource utilization.
Specifically, we proposed a list based on the principles of patient
assessment by body systems and their associated diseases, conditions,
and injuries to develop larger categories of conditions that identified
clinically relevant relationships associated with increased resource
use. The broad, body system-based categories we proposed to use to
group comorbidities within the HHGM included the following:

Heart Disease
Respiratory Disease
Circulatory Disease and Blood Disorders
Cerebral Vascular Disease
Gastrointestinal Disease
Neurological Disease and Associated Conditions
Endocrine Disease
Neoplasms
Genitourinary and Renal Disease
Skin Disease
Musculoskeletal Disease or Injury
Behavioral Health (including Substance Use Disorders)
Infectious Disease

These broad categories used to group comorbidities within the
alternative case-mix adjustment methodology were further refined by
grouping similar diagnoses within the broad categories into
statistically and clinically significant subcategories which would
receive the comorbidity adjustment in the alternative case-mix
adjustment methodology (for example, Heart Disease 1; Cerebral Vascular
Disease 4). All of the comorbidity diagnoses grouped into the
aforementioned categories and subcategories are posted on the Home
Health Agency web page and listed in the HHGM technical report at the
following link: https://www.cms.gov/Center/Provider-Type/Home-Health-
Agency-HHA-Center.html.
We originally proposed that if a 30-day period of care had at least
one secondary diagnosis reported on the home health claim that fell
into one of the subcategories, that 30-day period of care would receive
a comorbidity adjustment to account for higher costs associated with
the comorbidity. Therefore, the payment adjustment for comorbidities
would be predicated on the presence of one of the identified diagnoses
within the subcategories associated with increased resource use at or
above the median. The comorbidity adjustment amount would be the same

[[Page 32408]]

across all of the subcategories. A 30-day period of care would receive
only one comorbidity adjustment regardless of the number of secondary
diagnoses reported on the home health claim that fell into one of the
subcategories associated with higher resource use. If there is no
reported diagnosis that meets the comorbidity adjustment criteria, the
30-day period of care would not qualify for the payment adjustment.
We solicited comments on the proposed comorbidity adjustment in the
CY 2018 HH PPS proposed rule, including the proposed comorbidity
diagnoses and their associated subcategories, as part of the overall
alternative case-mix adjustment methodology. While all commenters
supported the inclusion of a comorbidity adjustment, most commenters
said that a single comorbidity payment amount as part of the overall
case-mix adjustment is insufficient to fully capture the home health
needs and resource costs associated with the presence of comorbidities.
Meeting the requirement of section 51001 of the BBA of 2018, a
Technical Expert Panel (TEP) was convened in February 2018 to collect
perspectives, feedback, and identify and prioritize recommendations
from a wide variety of industry experts and patient representatives
regarding the public comments received on the proposed alternative
case-mix adjustment methodology. Comments on the comorbidity adjustment
and suggestions for refinement to this adjustment were very similar
between those received on the CY 2018 HH PPS proposed rule and those
made by the TEP participants. Specifically, the majority of commenters
stated that the presence of multiple comorbidities has more of an
effect on home health resource use than a single comorbidity and that
any case-mix adjustment should account for multiple comorbidities.
There was general agreement that most home health patients have
multiple conditions which increase the complexity of their care and
affects the ability to care for one's self at home. Several suggested
that CMS should let the data help determine how many comorbidity
adjustment levels there should be and what percentage of 30-day periods
should be in each level. Some commenters stated they preferred
specificity and complexity over simplicity if the complexity improved
accuracy. Others suggested including interactions between comorbidities
in the model, specifically interactions of comorbid conditions with the
principal diagnosis and with other comorbidities. Commenters and TEP
members alike focused on those conditions they saw as most impactful on
the provision of care to home health beneficiaries. These conditions
included chronic respiratory and cardiac conditions, as well as
psychological and diabetes-related conditions. Most encouraged CMS to
continue to develop a system to allow for appropriate changes to be
made over time to the list of comorbidity subcategories that would
assign a comorbidity adjustment to a 30-day period of care.
We agree with commenters that the relationship between
comorbidities and resource use can be complex and that a single
adjustment, regardless of the type or number of comorbidities, may be
insufficient to fully capture the resource use of a varied population
of home health beneficiaries. However, we also recognize that adjusting
payment based on the number of reported comorbidities may encourage
HHAs to inappropriately report comorbid conditions in order to increase
payment, regardless of any true impact on the home health plan of care.
Currently, OASIS instructions state that clinicians must list each
diagnosis for which the patient is receiving home care and to enter the
level of highest specificity as required by ICD-10 CM coding
guidelines. These instructions state that clinicians should list
diagnoses in the order that best reflects the seriousness of each
condition and supports the disciplines and services provided.\49\ We
also note that CMS currently uses interaction items as part of the HH
PPS case-mix adjustments. In the CY 2008 HH PPS final rule (72 FR
49772), we added secondary diagnoses and their interactions with the
principal diagnosis as part of the clinical dimension in the overall
case-mix adjustment. However, analysis since then has shown that
nominal case-mix growth became an ongoing issue resulting from the
incentive in the current HH PPS to code only those conditions
associated with clinical points even though the data did not show an
associated increase in resource utilization. Likewise, when we looked
at a multi-morbidity approach to the overall case-mix adjustment to a
home health period of care, for the CY 2018 HH PPS proposed rule our
analysis showed that the reporting of secondary diagnoses on home
health claims was not robust enough to support a payment adjustment
based on the presence of multiple comorbidities. This means that the
data did not show significant variations in resource use with an
increase in reported comorbidities.
---------------------------------------------------------------------------

\49\ ``Outcome and Assessment I OASIS Information Set C2
Guidance Manual Effective January 1, 2018 accessed at https://
www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/HomeHealthQualityInits/Downloads/OASIS-C2-Guidance-
Manual-Effective_1_1_18.pdf.
---------------------------------------------------------------------------

In spite of concerns of potential manipulation of coding patterns
to increase payment due to the comorbidity adjustment, the results of
our most recent analyses for this proposed rule show compelling
evidence that patients with certain comorbidities and interactions of
certain comorbid conditions (as described later in this section) have
home health episodes with higher resource use than home health episodes
without those comorbidities or interactions. The goal of our analyses
was to identify those clinically and statistically significant
comorbidities and interactions that could be used to further case-mix
adjust a 30-day home health period of care. As a result of these
analyses, we identified that there were certain individual comorbidity
subgroups and interactions of the comorbidity subgroups (for example,
having diagnoses associated with two of the comorbidity subgroups)
which could be used as part of the comorbidity case-mix adjustment in
the PDGM.
To identify these relationships with resource utilization, we
looked at all diagnoses reported on the OASIS (M1021, M1023, and M1025)
for each 30-day period of care. These fields represent 18 different
diagnoses which could be reported on the OASIS. In the PDGM, the
principal diagnosis assigns each 30-day period of care into a clinical
group which identifies the primary reason the patient requires home
health services. During our analysis, this usually was the reported
principal diagnosis, but in cases where the diagnosis did not link to a
clinical group (for example, the diagnosis could not be reported as a
principal diagnosis in accordance with ICD-10 CM coding guidelines), we
used a secondary diagnosis to assign the 30-day period of care into a
clinical group. Any other diagnoses, except the one used to link the
30-day period of care into a clinical group, were considered
comorbidities. However, if one of those comorbid diagnoses was in the
same ICD-10 CM block of codes as the diagnosis used to place the 30-day
period of care into a clinical group, then that comorbid diagnosis was
excluded (for example, if the reported principal diagnosis was I63.432,
Cerebral infarction due to embolism of left post cerebral artery, and
the reported secondary diagnosis was I65.01, Occlusion and stenosis of
right vertebral artery, I65.01 would be excluded as a comorbidity as
both codes are in the same block of ICD-10

[[Page 32409]]

diagnosis codes, Cerebrovascular Diseases, and both would group into
the Neuro clinical group if reported as the principal diagnosis). Then,
we checked those reported comorbid diagnoses against the home health-
specific comorbidity subgroup list to see if any reported secondary
diagnoses are listed in a subgroup (for example, if a reported
secondary diagnosis was I50.9, Heart Failure, unspecified, this
diagnosis is found in the Heart 11 subgroup).
We went through the following steps to determine which individual
comorbidity subgroups would be used as part of the comorbidity
adjustment:
After dropping the comorbidity subgroups with a small
number of 30-day periods of care (for example, those that made up fewer
than 0.1 percent of 30-day periods of care), this left 59 different
comorbidity subgroups.
Of those, there are 56 comorbidity subgroups with a p-
value less than or equal to 0.05.
Of those 56 subgroups, there are 22 comorbidity subgroups
that have a positive coefficient when regressing resource use on the
comorbidity subgroups (and the interactions as described below) and
indicators for the clinical group, functional level, admission source,
and timing. We determine the median coefficient of those 22 comorbidity
subgroups to be $60.67.
There are 11 comorbidity subgroups with coefficients that
are at or above the median (for example, $60.67 or above). This is a
decrease from the 15 subgroups presented in the CY 2018 HH PPS proposed
rule. Potential reasons for this decrease include the use of CY 2017
data in this analysis, whereas the 2018 HH PPS proposed rule used CY
2016 data; the combination and/or addition of comorbidity groups; and
the inclusion of the interactions between the comorbidities.
Those 11 individual comorbidity subgroups that are statistically
and clinically significant for potential inclusion in the comorbidity
case-mix adjustment are listed below in Table 44:

Table 44--Individual Subgroups for Comorbidity Adjustment
------------------------------------------------------------------------
Comorbidity subgroup Description Coefficient
------------------------------------------------------------------------
Neuro 11..................... Includes diabetic $61.23
retinopathy and other
blindness.
Neuro 10..................... Includes diabetic 67.98
neuropathies.
Circulatory 9................ Includes acute and 86.62
chronic embolisms and
thrombosis.
Heart 11..................... Includes heart failure... 101.57
Cerebral 4................... Includes sequelae of 128.78
cerebrovascular diseases.
Neuro 5...................... Includes Parkinson's 144.99
Disease.
Skin 1....................... Includes cutaneous 174.93
abscess, cellulitis, and
lymphangitis.
Neuro 7...................... Includes hemiplegia, 204.42
paraplegia, and
quadriplegia.
Circulatory 10............... Includes varicose veins 215.67
with ulceration.
Skin 3....................... Include diseases of 365.78
arteries, arterioles and
capillaries with
ulceration and non-
pressure chronic ulcers.
Skin 4....................... Includes stages Two-Four 484.83
and unstageable pressure
ulcers by site.
------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before
December 31, 2017 (as of March 2, 2018).

Next, we examined the impact of interactions between the various
comorbidity subgroups on resource use. The following steps show how we
identified which interactions (for example, diagnoses from two
different comorbidity subgroups) had a clinically and statistically
significant relationship with increased resource utilization and could
be used for the comorbidity adjustment:
After dropping the combinations of comorbidity subgroups
and interactions with a small number of 30-day periods of care (that
is, those that made up fewer than 0.1 percent of 30-day periods of
care), there are 343 different comorbidity subgroup interactions (for
example, comorbidity subgroup interaction Skin 1 plus Skin 3). As
mentioned previously, we regressed resource use on the comorbidity
subgroups, the interactions, and indicators for the clinical group,
functional level, admission source, and timing.
From that regression, we found 187 comorbidity subgroup
interactions with a p-value less than or equal to 0.05.
Of those 187 comorbidity subgroup interactions, there are
27 comorbidity subgroup interactions where the coefficient on the
comorbidity subgroup interaction term plus the coefficients on both
single comorbidity variables equals a value that exceeds $150. We used
$150 as the inclusion threshold as this amount is approximately three
times that of the median value for the individual comorbidity subgroups
and we believe is appropriate to reflect the increased resource use
associated with comorbidity interactions. The 27 comorbidity subgroup
interactions that are statistically and clinically significant for
potential inclusion in the comorbidity adjustment are listed in Table
45.

Table 45--Comorbidity Subgroup Interactions for Comorbidity Adjustment
----------------------------------------------------------------------------------------------------------------
Sum of
interaction
Comorbidity Comorbidity Comorbidity term plus
subgroup subgroup Description subgroup Description single
interaction comorbidity
coefficients
----------------------------------------------------------------------------------------------------------------
1............... Circulatory 4...... Hypertensive Neuro 11........... Includes diabetic $151.98
Chronic Kidney retinopathy and
Disease. other blindness.
2............... Endocrine 3........ Diabetes with Neuro 7............ Includes 162.35
Complications. hemiplegia,
paraplegia, and
quadriplegia.
3............... Neuro 3............ Dementia in Skin 3............. Diseases of 190.30
diseases arteries,
classified arterioles and
elsewhere. capillaries with
ulceration and
non-pressure
chronic ulcers.
4............... Circulatory 4...... Hypertensive Skin 1............. Cutaneous abscess, 193.33
Chronic Kidney cellulitis, and
Disease. lymphangitis.
5............... Cerebral 4......... Sequelae of Heart 11........... Heart Failure..... 195.55
Cerebrovascular
Diseases.
6............... Neuro 7............ Includes Renal 3............ Nephrogenic 202.44
hemiplegia, Diabetes
paraplegia, and Insipidus.
quadriplegia.
7............... Circulatory 10..... Includes varicose Endocrine 3........ Diabetes with 205.52
veins with Complications.
ulceration.
8............... Heart 11........... Heart Failure..... Neuro 5............ Parkinson's 212.88
Disease.

[[Page 32410]]

9............... Heart 12........... Other Heart Skin 3............. Diseases of 260.83
Diseases. arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
10.............. Neuro 3............ Dementia in Skin 4............. Stages Two-Four 274.16
diseases and unstageable
classified pressure ulcers
elsewhere. by site.
11.............. Behavioral 2....... Mood Disorders.... Skin 3............. Diseases of 287.42
arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
12.............. Circulatory 10..... Includes varicose Heart 11........... Heart Failure..... 292.39
veins with
ulceration.
13.............. Circulatory 4...... Hypertentive Skin 3............. Diseases of 296.70
Chronic Kidney arteries,
Disease. arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
14.............. Renal 1............ Chronic kidney Skin 3............. Diseases of 300.31
disease and ESRD. arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
15.............. Respiratory 5...... COPD and Asthma... Skin 3............. Diseases of 306.63
arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
16.............. Skin 1............. Cutaneous abscess, Skin 3............. Diseases of 390.47
cellulitis, and arteries,
lymphangitis. arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
17.............. Renal 3............ Nephrogenic Skin 4............. Stages Two-Four 422.34
Diabetes and unstageable
Insipidus. pressure ulcers
by site.
18.............. Heart 11........... Heart Failure..... Skin 3............. Diseases of 422.20
arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
19.............. Heart 12........... Other Heart Skin 4............. Stages Two-Four 423.08
Diseases. and unstageable
pressure ulcers
by site.
20.............. Respiratory 5...... COPD and Asthma... Skin 4............. Stages Two-Four 428.02
and unstageable
pressure ulcers
by site.
21.............. Circulatory 7...... Atherosclerosis... Skin 3............. Diseases of 432.46
arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
22.............. Renal 1............ Chronic kidney Skin 4............. Stages Two-Four 436.39
disease and ESRD. and unstageable
pressure ulcers
by site.
23.............. Endocrine 3........ Diabetes with Skin 4............. Stages Two-Four 487.96
Complications. and unstageable
pressure ulcers
by site.
24.............. Endocrine 3........ Diabetes with Skin 3............. Diseases of 504.54
Complications. arteries,
arterioles and
capillaries with
ulceration and
non-pressure
chronic ulcers.
25.............. Circulatory 4...... Hypertensive Skin 4............. Stages Two-Four 509.63
Chronic Kidney and unstageable
Disease. pressure ulcers
by site.
26.............. Heart 11........... Heart Failure..... Skin 4............. Stages Two-Four 529.47
and unstageable
pressure ulcers
by site.
27.............. Skin 3............. Diseases of Skin 4............. Stages Two-Four 750.85
arteries, and unstageable
arterioles and pressure ulcers
capillaries with by site.
ulceration and
non-pressure
chronic ulcers.
----------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018).

In order to be considered a comorbidity subgroup interaction, at
least two reported diagnoses, must occur in the above corresponding
combinations, as shown in Table 45. For example, one diagnosis from
Heart 11 must be reported along with at least one diagnosis from Neuro
5 in order to qualify for comorbidity subgroup interaction 8. In other
words, the comorbidity subgroups are not interchangeable between the
interaction groups (for example, reported conditions from the Renal 1
and Respiratory 5 subgroups would not be considered an interaction for
purposes of the comorbidity adjustment).
For illustrative purposes, this would mean that if a 30-day period
of care had the following secondary diagnoses reported, I50.22, chronic
systolic (congestive) heart failure and G20, Parkinson's Disease (these
diagnoses fall under comorbidity subgroups Heart 11 and Neuro 5
respectively and are in the same comorbidity subgroup interaction),
this interaction of comorbid conditions results in a higher level of
resource use than just having a comorbid diagnosis classified in Heart
11 or in Neuro 5. There will be an updated PDGM Grouper Tool posted on
the HHA Center web page that HHAs can access to simulate the HIPPS code
and case-mix weight under the PDGM.\50\ This Grouper Tool allows
providers to fill in information, including the comorbidities, to
determine whether a home health period of care would receive a
comorbidity adjustment under the PDGM.
---------------------------------------------------------------------------

\50\ https://www.cms.gov/Center/Provider-Type/Home-Health-
Agency-HHA-Center.html.
---------------------------------------------------------------------------

The comorbidity interactions identify subgroup combinations of
comorbidities that are associated with higher levels of resource use.
As such, we believe that the comorbidity adjustment payment should be
dependent on whether the 30-day period of care has an individual
comorbidity subgroup associated with higher resource use or there is a
comorbidity subgroup interaction resulting in higher resource use.
Therefore, we propose to have three levels in the PDGM comorbidity
case-mix adjustment: No Comorbidity Adjustment, Low Comorbidity
Adjustment, and High Comorbidity Adjustment. This means that depending
on if and which secondary diagnoses are reported, a 30-day period of
care may receive no comorbidity adjustment (meaning, no secondary
diagnoses exist or do not meet the criteria for a comorbidity
adjustment), a ``low'' comorbidity adjustment, or a ``high''
comorbidity adjustment. We propose that home health 30-day periods of
care can receive a comorbidity payment adjustment under the following
circumstances:
Low comorbidity adjustment: There is a reported secondary
diagnosis that falls within one of the home-health specific individual
comorbidity subgroups, as listed in Table 44, (for example, Heart
Disease 11, Cerebral Vascular Disease 4, etc.) associated with higher
resource use, or;
High comorbidity adjustment: There are two or more
secondary diagnoses reported that fall within the

[[Page 32411]]

same comorbidity subgroup interaction, as listed in Table 45, (for
example, Heart 11 plus Neuro 5) that are associated with higher
resource use.
Under the PDGM, a 30-day period of care can receive payment for a
low comorbidity adjustment or a high comorbidity adjustment, but not
both. A 30-day period of care can receive only one low comorbidity
adjustment regardless of the number of secondary diagnoses reported on
the home health claim that fell into one of the individual comorbidity
subgroups or one high comorbidity adjustment regardless of the number
of comorbidity group interactions, as applicable. The low comorbidity
adjustment amount would be the same across all 11 individual
comorbidity subgroups. Similarly, the high comorbidity adjustment
amount would be the same across all 27 comorbidity subgroup
interactions. See Table 48 in section III.F.10 of this proposed rule
for the coefficient amounts associated with both the low and high
comorbidity adjustment, as well as for all of the case-mix variables in
the PDGM. If a 30-day home health period of care does not have any
reported comorbidities that fall into one of the payment adjustments
described above, there would be no comorbidity adjustment applied.
Table 46 illustrates the average resource use for each of the
comorbidity levels as described in this section.

Table 46--Average Resource Use by Comorbidity Adjustment, CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard 25th 75th
Mean resource Frequency of Percent of deviation of percentile of Median percentile of
use periods periods resource use resource use resource use resource use
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Comorbidity Adjustment............... $1,539.92 5,402,694 62.6 $1,183.86 $673.27 $1,253.95 $2,078.68
Comorbidity Adjustment--Has at least one 1,575.12 2,721,969 31.6 1,248.71 658.77 1,262.47 2,131.92
comorbidity from comorbidity list, no
interaction from interaction list......
Comorbidity Adjustment--Has at least one 1,878.84 500,113 5.8 1,412.06 880.07 1,523.87 2,469.93
interaction from interaction list......
---------------------------------------------------------------------------------------------------------------
Total............................... 1,570.68 8,624,776 100.0 1,221.38 679.12 1,272.18 2,117.47
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 (as of March 2, 2018).

Changing to three comorbidity levels results in 216 possible case-
mix groups for the purposes of adjusting payment in the PDGM. While
this is more case-mix groups than the 144 case-mix groups proposed in
the CY 2018 HH PPS proposed rule, this change is responsive to the
comments received regarding refinements to the comorbidity adjustment
without being unduly complex. We believe that this method for adjusting
payment for the presence of comorbidities is more robust, reflective of
patient characteristics, better aligns payment with actual resource
use, and addresses comments received from the CY 2018 HH PPS proposed
rule and recommendations from TEP members. The comorbidity payment
adjustment takes into account the presence of individual comorbid
conditions, as well as the interactions between multiple comorbid
conditions, and reflects the types of conditions most commonly seen in
home health patients. Similar to monitoring of nominal case-mix growth
under the current HH PPS, upon implementation of the PDGM, CMS will
monitor the reporting of secondary diagnoses to determine whether
adjustments to payment based on the number of reported comorbidities is
resulting in HHAs inappropriately reporting comorbid conditions solely
for the purpose of increased payment and appropriate program integrity
actions will be taken.
As mentioned previously in this section, there will be an updated
PDGM Grouper Tool posted on the HHA Center web page which will be key
to understanding whether a 30-day home health period of care would
receive a no, low, or high comorbidity adjustment under the PDGM. If
implemented, we would continue to examine the relationship of reported
comorbidities on resource utilization and make the appropriate payment
refinements to help ensure that payment is in alignment with the actual
costs of providing care. We invite comments on the change to the
comorbidity case-mix adjustment in the PDGM including the three
comorbidity levels: No Comorbidity, Low Comorbidity, and High
Comorbidity Adjustment. We also invite comments on the payment
associated with the Low Comorbidity and High Comorbidity Adjustment to
account for increased resource utilization resulting from the presence
of certain comorbidities and comorbidity interactions.
9. Change in the Low-Utilization Payment Adjustment (LUPA) Threshold
Currently, a 60-day episode with four or fewer visits is paid the
national per visit amount by discipline, adjusted by the appropriate
wage index based on the site of service of the beneficiary, instead of
the full 60-day episode payment amount. Such payment adjustments are
called Low Utilization Payment Adjustments (LUPAs). While the
alternative case-mix model proposed in the CY 2018 HH PPS proposed rule
still included LUPAs, the approach to calculating the LUPA thresholds
needed to change due to the proposed change in the unit of payment to
30-day periods of care from 60-day episodes. The 30-day periods of care
have substantially more episodes with four or fewer visits than 60-day
episodes. To create LUPA thresholds we proposed in the CY 2018 HH PPS
proposed rule to set the LUPA threshold at the 10th percentile value of
visits or 2, whichever is higher, for each payment group, (82 FR
35324).
We received comments in response to the CY 2018 HH PPS proposed
rule on maintaining the use of a single LUPA threshold instead of
varying the thresholds at the subgroup level. Other commenters
expressed concern that the variable LUPA thresholds will add

[[Page 32412]]

additional administrative burden and create additional opportunity for
error. After analyzing the data to evaluate the potential impact, we
believe that the change to a 30-day period of care under the proposed
PDGM from the current 60-day episode warrants variable LUPA thresholds
depending on the payment group to which it is assigned. We believe that
the proposed LUPA thresholds that vary based on the case-mix assignment
for the 30-day period of care in the proposed PDGM is an improvement
over the current 5 visit threshold that does not vary by case-mix
assignment. This is the same approach proposed in the CY 2018 proposed
rule where LUPA thresholds would vary by case-mix group. LUPA
thresholds that vary by case-mix group take into account different
resource use patterns based on beneficiaries' clinical characteristics.
Additionally, we do not believe that the case-mix-specific LUPA
thresholds would result in additional administrative burden as LUPA
visits are billed the same as non-LUPA periods. Likewise, the PDGM will
not be implemented until January 1, 2020, giving HHAs and vendors
sufficient time to make necessary changes to their systems and to
ensure that appropriate quality checks are in place to minimize any
claims errors. Therefore, we propose to vary the LUPA threshold for a
30-day period of care under the PDGM depending on the PDGM payment
group to which it is assigned.
We note that in the current payment system, approximately 8 percent
of episodes are LUPAs. Under the PDGM, consistent with the CY 2018 HH
PPS proposed rule, we propose the 10th percentile value of visits or 2
visits, whichever is higher, in order to target approximately the same
percentage of LUPAs (approximately 7.1 percent of 30-day periods would
be LUPAs (assuming no behavior change)). For example, for episodes in
the payment group corresponding to ``MMTA- Functional Level Medium--
Early Timing--Institutional Admission--No Comorbidity'' (HIPPS code
2AB1 in Table 47), the threshold is four visits. If a home health 30-
day period of care is assigned to that particular payment group had
three or fewer visits the HHA would be paid using the national per-
visit rates in section III.C.4 of this proposed rule instead of the
case-mix adjusted 30-day period of care payment amount. The LUPA
thresholds for the PDGM payment group with the corresponding HIPPS code
is listed in Table 47.

Table 47--Proposed LUPA Thresholds for the Proposed PDGM Payment Groups
----------------------------------------------------------------------------------------------------------------
Comorbidity
adjustment (0 = Visit threshold
HIPPS Clinical group and Timing and admission none, 1 = single (10th percentile
functional level source comorbidity, 2 = or 2--whichever
interaction) is higher)
----------------------------------------------------------------------------------------------------------------
1AA11...................... MMTA--Low............. Early--Community..... 0 4
1AA21...................... MMTA--Low............. Early--Community..... 1 4
1AA31...................... MMTA--Low............. Early--Community..... 2 4
1AB11...................... MMTA--Medium.......... Early--Community..... 0 4
1AB21...................... MMTA--Medium.......... Early--Community..... 1 4
1AB31...................... MMTA--Medium.......... Early--Community..... 2 5
1AC11...................... MMTA--High............ Early--Community..... 0 4
1AC21...................... MMTA--High............ Early--Community..... 1 4
1AC31...................... MMTA--High............ Early--Community..... 2 4
1BA11...................... Neuro--Low............ Early--Community..... 0 4
1BA21...................... Neuro--Low............ Early--Community..... 1 5
1BA31...................... Neuro--Low............ Early--Community..... 2 5
1BB11...................... Neuro--Medium......... Early--Community..... 0 5
1BB21...................... Neuro--Medium......... Early--Community..... 1 5
1BB31...................... Neuro--Medium......... Early--Community..... 2 5
1BC11...................... Neuro--High........... Early--Community..... 0 4
1BC21...................... Neuro--High........... Early--Community..... 1 5
1BC31...................... Neuro--High........... Early--Community..... 2 5
1CA11...................... Wound--Low............ Early--Community..... 0 4
1CA21...................... Wound--Low............ Early--Community..... 1 4
1CA31...................... Wound--Low............ Early--Community..... 2 4
1CB11...................... Wound--Medium......... Early--Community..... 0 5
1CB21...................... Wound--Medium......... Early--Community..... 1 5
1CB31...................... Wound--Medium......... Early--Community..... 2 5
1CC11...................... Wound--High........... Early--Community..... 0 4
1CC21...................... Wound--High........... Early--Community..... 1 5
1CC31...................... Wound--High........... Early--Community..... 2 4
1DA11...................... Complex--Low.......... Early--Community..... 0 3
1DA21...................... Complex--Low.......... Early--Community..... 1 2
1DA31...................... Complex--Low.......... Early--Community..... 2 4
1DB11...................... Complex--Medium....... Early--Community..... 0 3
1DB21...................... Complex--Medium....... Early--Community..... 1 3
1DB31...................... Complex--Medium....... Early--Community..... 2 4
1DC11...................... Complex--High......... Early--Community..... 0 3
1DC21...................... Complex--High......... Early--Community..... 1 3
1DC31...................... Complex--High......... Early--Community..... 2 3
1EA11...................... MS Rehab--Low......... Early--Community..... 0 5
1EA21...................... MS Rehab--Low......... Early--Community..... 1 5
1EA31...................... MS Rehab--Low......... Early--Community..... 2 5
1EB11...................... MS Rehab--Medium...... Early--Community..... 0 5
1EB21...................... MS Rehab--Medium...... Early--Community..... 1 5
1EB31...................... MS Rehab--Medium...... Early--Community..... 2 5

[[Page 32413]]

1EC11...................... MS Rehab--High........ Early--Community..... 0 5
1EC21...................... MS Rehab--High........ Early--Community..... 1 5
1EC31...................... MS Rehab--High........ Early--Community..... 2 5
1FA11...................... Behavioral Health--Low Early--Community..... 0 3
1FA21...................... Behavioral Health--Low Early--Community..... 1 3
1FA31...................... Behavioral Health--Low Early--Community..... 2 3
1FB11...................... Behavioral Health-- Early--Community..... 0 4
Medium.
1FB21...................... Behavioral Health-- Early--Community..... 1 4
Medium.
1FB31...................... Behavioral Health-- Early--Community..... 2 4
Medium.
1FC11...................... Behavioral Health-- Early--Community..... 0 4
High.
1FC21...................... Behavioral Health-- Early--Community..... 1 4
High.
1FC31...................... Behavioral Health-- Early--Community..... 2 4
High.
2AA11...................... MMTA--Low............. Early--Institutional. 0 3
2AA21...................... MMTA--Low............. Early--Institutional. 1 4
2AA31...................... MMTA--Low............. Early--Institutional. 2 4
2AB11...................... MMTA--Medium.......... Early--Institutional. 0 4
2AB21...................... MMTA--Medium.......... Early--Institutional. 1 5
2AB31...................... MMTA--Medium.......... Early--Institutional. 2 5
2AC11...................... MMTA--High............ Early--Institutional. 0 4
2AC21...................... MMTA--High............ Early--Institutional. 1 4
2AC31...................... MMTA--High............ Early--Institutional. 2 4
2BA11...................... Neuro--Low............ Early--Institutional. 0 5
2BA21...................... Neuro--Low............ Early--Institutional. 1 5
2BA31...................... Neuro--Low............ Early--Institutional. 2 5
2BB11...................... Neuro--Medium......... Early--Institutional. 0 6
2BB21...................... Neuro--Medium......... Early--Institutional. 1 6
2BB31...................... Neuro--Medium......... Early--Institutional. 2 6
2BC11...................... Neuro--High........... Early--Institutional. 0 5
2BC21...................... Neuro--High........... Early--Institutional. 1 5
2BC31...................... Neuro--High........... Early--Institutional. 2 5
2CA11...................... Wound--Low............ Early--Institutional. 0 4
2CA21...................... Wound--Low............ Early--Institutional. 1 4
2CA31...................... Wound--Low............ Early--Institutional. 2 4
2CB11...................... Wound--Medium......... Early--Institutional. 0 5
2CB21...................... Wound--Medium......... Early--Institutional. 1 5
2CB31...................... Wound--Medium......... Early--Institutional. 2 5
2CC11...................... Wound--High........... Early--Institutional. 0 4
2CC21...................... Wound--High........... Early--Institutional. 1 5
2CC31...................... Wound--High........... Early--Institutional. 2 4
2DA11...................... Complex--Low.......... Early--Institutional. 0 3
2DA21...................... Complex--Low.......... Early--Institutional. 1 3
2DA31...................... Complex--Low.......... Early--Institutional. 2 4
2DB11...................... Complex--Medium....... Early--Institutional. 0 4
2DB21...................... Complex--Medium....... Early--Institutional. 1 4
2DB31...................... Complex--Medium....... Early--Institutional. 2 5
2DC11...................... Complex--High......... Early--Institutional. 0 4
2DC21...................... Complex--High......... Early--Institutional. 1 4
2DC31...................... Complex--High......... Early--Institutional. 2 4
2EA11...................... MS Rehab--Low......... Early--Institutional. 0 5
2EA21...................... MS Rehab--Low......... Early--Institutional. 1 5
2EA31...................... MS Rehab--Low......... Early--Institutional. 2 5
2EB11...................... MS Rehab--Medium...... Early--Institutional. 0 6
2EB21...................... MS Rehab--Medium...... Early--Institutional. 1 6
2EB31...................... MS Rehab--Medium...... Early--Institutional. 2 6
2EC11...................... MS Rehab--High........ Early--Institutional. 0 6
2EC21...................... MS Rehab--High........ Early--Institutional. 1 6
2EC31...................... MS Rehab--High........ Early--Institutional. 2 6
2FA11...................... Behavioral Health--Low Early--Institutional. 0 3
2FA21...................... Behavioral Health--Low Early--Institutional. 1 3
2FA31...................... Behavioral Health--Low Early--Institutional. 2 4
2FB11...................... Behavioral Health-- Early--Institutional. 0 4
Medium.
2FB21...................... Behavioral Health-- Early--Institutional. 1 4
Medium.
2FB31...................... Behavioral Health-- Early--Institutional. 2 5
Medium.
2FC11...................... Behavioral Health-- Early--Institutional. 0 4
High.
2FC21...................... Behavioral Health-- Early--Institutional. 1 4
High.
2FC31...................... Behavioral Health-- Early--Institutional. 2 5
High.
3AA11...................... MMTA--Low............. Late--Community...... 0 2
3AA21...................... MMTA--Low............. Late--Community...... 1 2

[[Page 32414]]

3AA31...................... MMTA--Low............. Late--Community...... 2 3
3AB11...................... MMTA--Medium.......... Late--Community...... 0 2
3AB21...................... MMTA--Medium.......... Late--Community...... 1 2
3AB31...................... MMTA--Medium.......... Late--Community...... 2 3
3AC11...................... MMTA--High............ Late--Community...... 0 2
3AC21...................... MMTA--High............ Late--Community...... 1 2
3AC31...................... MMTA--High............ Late--Community...... 2 3
3BA11...................... Neuro--Low............ Late--Community...... 0 2
3BA21...................... Neuro--Low............ Late--Community...... 1 2
3BA31...................... Neuro--Low............ Late--Community...... 2 2
3BB11...................... Neuro--Medium......... Late--Community...... 0 2
3BB21...................... Neuro--Medium......... Late--Community...... 1 2
3BB31...................... Neuro--Medium......... Late--Community...... 2 3
3BC11...................... Neuro--High........... Late--Community...... 0 2
3BC21...................... Neuro--High........... Late--Community...... 1 2
3BC31...................... Neuro--High........... Late--Community...... 2 2
3CA11...................... Wound--Low............ Late--Community...... 0 2
3CA21...................... Wound--Low............ Late--Community...... 1 3
3CA31...................... Wound--Low............ Late--Community...... 2 3
3CB11...................... Wound--Medium......... Late--Community...... 0 3
3CB21...................... Wound--Medium......... Late--Community...... 1 3
3CB31...................... Wound--Medium......... Late--Community...... 2 3
3CC11...................... Wound--High........... Late--Community...... 0 3
3CC21...................... Wound--High........... Late--Community...... 1 3
3CC31...................... Wound--High........... Late--Community...... 2 3
3DA11...................... Complex--Low.......... Late--Community...... 0 2
3DA21...................... Complex--Low.......... Late--Community...... 1 2
3DA31...................... Complex--Low.......... Late--Community...... 2 2
3DB11...................... Complex--Medium....... Late--Community...... 0 2
3DB21...................... Complex--Medium....... Late--Community...... 1 2
3DB31...................... Complex--Medium....... Late--Community...... 2 2
3DC11...................... Complex--High......... Late--Community...... 0 2
3DC21...................... Complex--High......... Late--Community...... 1 2
3DC31...................... Complex--High......... Late--Community...... 2 2
3EA11...................... MS Rehab--Low......... Late--Community...... 0 2
3EA21...................... MS Rehab--Low......... Late--Community...... 1 2
3EA31...................... MS Rehab--Low......... Late--Community...... 2 2
3EB11...................... MS Rehab--Medium...... Late--Community...... 0 2
3EB21...................... MS Rehab--Medium...... Late--Community...... 1 2
3EB31...................... MS Rehab--Medium...... Late--Community...... 2 3
3EC11...................... MS Rehab--High........ Late--Community...... 0 2
3EC21...................... MS Rehab--High........ Late--Community...... 1 2
3EC31...................... MS Rehab--High........ Late--Community...... 2 3
3FA11...................... Behavioral Health--Low Late--Community...... 0 2
3FA21...................... Behavioral Health--Low Late--Community...... 1 2
3FA31...................... Behavioral Health--Low Late--Community...... 2 2
3FB11...................... Behavioral Health-- Late--Community...... 0 2
Medium.
3FB21...................... Behavioral Health-- Late--Community...... 1 2
Medium.
3FB31...................... Behavioral Health-- Late--Community...... 2 2
Medium.
3FC11...................... Behavioral Health-- Late--Community...... 0 2
High.
3FC21...................... Behavioral Health-- Late--Community...... 1 2
High.
3FC31...................... Behavioral Health-- Late--Community...... 2 2
High.
4AA11...................... MMTA--Low............. Late--Institutional.. 0 3
4AA21...................... MMTA--Low............. Late--Institutional.. 1 3
4AA31...................... MMTA--Low............. Late--Institutional.. 2 3
4AB11...................... MMTA--Medium.......... Late--Institutional.. 0 3
4AB21...................... MMTA--Medium.......... Late--Institutional.. 1 3
4AB31...................... MMTA--Medium.......... Late--Institutional.. 2 4
4AC11...................... MMTA--High............ Late--Institutional.. 0 3
4AC21...................... MMTA--High............ Late--Institutional.. 1 3
4AC31...................... MMTA--High............ Late--Institutional.. 2 4
4BA11...................... Neuro--Low............ Late--Institutional.. 0 3
4BA21...................... Neuro--Low............ Late--Institutional.. 1 4
4BA31...................... Neuro--Low............ Late--Institutional.. 2 3
4BB11...................... Neuro--Medium......... Late--Institutional.. 0 4
4BB21...................... Neuro--Medium......... Late--Institutional.. 1 4
4BB31...................... Neuro--Medium......... Late--Institutional.. 2 5
4BC11...................... Neuro--High........... Late--Institutional.. 0 4

[[Page 32415]]

4BC21...................... Neuro--High........... Late--Institutional.. 1 4
4BC31...................... Neuro--High........... Late--Institutional.. 2 4
4CA11...................... Wound--Low............ Late--Institutional.. 0 3
4CA21...................... Wound--Low............ Late--Institutional.. 1 3
4CA31...................... Wound--Low............ Late--Institutional.. 2 3
4CB11...................... Wound--Medium......... Late--Institutional.. 0 4
4CB21...................... Wound--Medium......... Late--Institutional.. 1 4
4CB31...................... Wound--Medium......... Late--Institutional.. 2 4
4CC11...................... Wound--High........... Late--Institutional.. 0 3
4CC21...................... Wound--High........... Late--Institutional.. 1 4
4CC31...................... Wound--High........... Late--Institutional.. 2 4
4DA11...................... Complex--Low.......... Late--Institutional.. 0 2
4DA21...................... Complex--Low.......... Late--Institutional.. 1 3
4DA31...................... Complex--Low.......... Late--Institutional.. 2 3
4DB11...................... Complex--Medium....... Late--Institutional.. 0 3
4DB21...................... Complex--Medium....... Late--Institutional.. 1 3
4DB31...................... Complex--Medium....... Late--Institutional.. 2 4
4DC11...................... Complex--High......... Late--Institutional.. 0 3
4DC21...................... Complex--High......... Late--Institutional.. 1 3
4DC31...................... Complex--High......... Late--Institutional.. 2 3
4EA11...................... MS Rehab--Low......... Late--Institutional.. 0 3
4EA21...................... MS Rehab--Low......... Late--Institutional.. 1 3
4EA31...................... MS Rehab--Low......... Late--Institutional.. 2 3
4EB11...................... MS Rehab--Medium...... Late--Institutional.. 0 4
4EB21...................... MS Rehab--Medium...... Late--Institutional.. 1 4
4EB31...................... MS Rehab--Medium...... Late--Institutional.. 2 4
4EC11...................... MS Rehab--High........ Late--Institutional.. 0 4
4EC21...................... MS Rehab--High........ Late--Institutional.. 1 4
4EC31...................... MS Rehab--High........ Late--Institutional.. 2 4
4FA11...................... Behavioral Health--Low Late--Institutional.. 0 2
4FA21...................... Behavioral Health--Low Late--Institutional.. 1 2
4FA31...................... Behavioral Health--Low Late--Institutional.. 2 2
4FB11...................... Behavioral Health-- Late--Institutional.. 0 3
Medium.
4FB21...................... Behavioral Health-- Late--Institutional.. 1 3
Medium.
4FB31...................... Behavioral Health-- Late--Institutional.. 2 3
Medium.
4FC11...................... Behavioral Health-- Late--Institutional.. 0 3
High.
4FC21...................... Behavioral Health-- Late--Institutional.. 1 3
High.
4FC31...................... Behavioral Health-- Late--Institutional.. 2 4
High.
----------------------------------------------------------------------------------------------------------------

In summary, we propose to vary the LUPA threshold for a 30-day
period of care under the PDGM depending on the PDGM payment group to
which it is assigned. We also propose that the LUPA thresholds for each
PDGM payment group would be re-evaluated every year based on the most
current utilization data available. We invite public comments on the
LUPA threshold methodology proposed for the PDGM and the associated
regulations text changes in section III.F.13 of this proposed rule.
10. HH PPS Case-Mix Weights Under the PDGM
Section 1895(b)(4)(B) requires the Secretary to establish
appropriate case mix adjustment factors for home health services in a
manner that explains a significant amount of the variation in cost
among different units of services. In the CY 2018 HH PPS proposed rule
(82 FR 35270), we proposed an alternative case-mix adjustment
methodology to better align payment with patient care needs. The
proposed alternative case-mix adjustment methodology places patients
into meaningful payment categories based on patient characteristics
(principal diagnosis, functional level, comorbid conditions, referral
source and timing). We did not finalize the alternative case-mix
adjustment methodology in the CY 2018 final rule in order to consider
comments and feedback for any potential refinements to the model.
Refinements were made to the comorbidity case-mix adjustment while all
other variables remain as proposed in the CY 2018 HH PPS proposed rule
(for example, clinical group, functional level, admission source, and
episode timing). As outlined in previous sections of this proposed
rule, we are again proposing an alternative case-mix adjustment
methodology, called the PDGM, but this methodology now results in 216
unique case-mix groups. These 216 unique case-mix payment groups are
called Home Health Resource Groups (HHRGs). In accordance with the BBA
of 2018, the proposed PDGM will be implemented in a budget neutral
manner.
To generate PDGM case-mix weights, we utilized a data file based on
home health episodes of care, as reported in Medicare home health
claims. The claims data provide episode-level data as well as visit-
level data. The claims also provide data on whether non-routine
supplies (NRS) was provided during the episode and the total charges
for NRS. We used CY 2017 home health claims data with linked OASIS
assessment data to obtain patient characteristics. We determined the
case-mix weight for each of the different PDGM payment groups by
regressing

[[Page 32416]]

resource use on a series of indicator variables for each of the
categories using a fixed effects model. The regression measures
resource use with the Cost per Minute (CPM) + NRS approach outlined in
section III.F.2 of this proposed rule. The model used in the PDGM
payment regression generates outcomes that are statistically
significant and consistent with findings.
We received comments in response to the proposed alternative case-
mix adjustment methodology in the CY 2018 HH PPS proposed rule on the
standards for subsequent case-mix weight recalibration (nature and
timing). Similar to the annual recalibration of the case-mix weights
under the current HH PPS, annual recalibration will be made to the PDGM
case-mix weights. We will make refinements as necessary to ensure that
payment for home health periods are in alignment with costs. We note
that this includes a re-calculation of the proposed PDGM case-mix
weights for CY 2020 in the CY 2020 HH PPS proposed rule using CY 2018
home health claims data linked with OASIS assessment data. In other
words, the table below represents the PDGM case-mix weights if we were
to implement the PDGM in CY 2019. However, since we are proposing to
implement the PDGM on January 1, 2020, the actual PDGM case-mix weights
for CY 2020 will be updated in the CY 2020 HH PPS proposed rule. We
also received a comment from MedPAC about the development of
alternative case-mix adjustment methodology using the regression
approach, which is a statistical estimate of the cost associated with a
payment group instead of the actual cost. MedPAC stated that this
approach results in estimated payments that may not equal the actual
costs experienced by HHAs. As noted, CMS has used a regression approach
since the inception of the HH PPS in 2000. The regression smoothens
weights compared to a system where each payment group receives a weight
that is based solely on the average resource use of all 30-day periods
in a payment group compared to the overall average resource use across
all 30 day periods. Smoothing the weights helps to see relationships
between variables and foresee trends. In addition, using a regression
approach to calculate case-mix weights allows CMS to use a fixed
effects model, which will estimate the variation observed within
individual HHAs and opposed to estimating the variation across HHAs.
With the fixed effects, the coefficients should better estimate the
relationship the regression variables have with resource use compared
to not accounting for fixed effects. We continue to believe that using
a regression approach for the calculation of the HH PPS case-mix
weights is most appropriate.
After best fitting the model on home health episodes from 2017
data, we used the estimated coefficients of the model to predict the
expected average resource use of each episode based on the five PDGM
categories. In order to normalize the results, we have divided the
regression predicted resource use of each episode by the overall
average resource use of all episodes used to estimate the model in
order to calculate the case mix weight of all episodes within a
particular payment group, where each payment group is defined as the
unique combination of the subgroups within the five PDGM categories
(admission source, timing of the 30-day period, clinical grouping,
functional level, and comorbidity adjustment). The case-mix weight is
then used to adjust the base payment rate to determine each period's
payment. Table 48 shows the coefficients of the payment regression used
to generate the weights, and the coefficients divided by average
resource use. Information can be found in section III.F.6 of this rule
for the clinical groups, section III.F.7 of this rule for the
functional levels, section III.F.5 for admission source, section
III.F.4 for timing, and section III.F.8 for the comorbidity adjustment.

Table 48--Coefficient of Payment Regression and Coefficient Divided by
Average Resource Use for PDGM Payment Group
------------------------------------------------------------------------
Coefficient
divided by
Variable Coefficient average
resource use
------------------------------------------------------------------------
Clinical Group and Functional Level (MMTA--Low is excluded)
------------------------------------------------------------------------
MMTA--Medium Functional................. $237.83 0.1514
MMTA--High Functional................... 416.75 0.2653
Behavioral Health--Low Functional....... -116.39 -0.0741
Behavioral Health--Medium Functional.... 169.86 0.1081
Behavioral Health--High Functional...... 309.97 0.1974
Complex--Low Functional................. -27.39 -0.0174
Complex--Medium Functional.............. 331.88 0.2113
Complex--High Functional................ 476.69 0.3035
MS Rehab--Low Functional................ 141.37 0.0900
MS Rehab--Medium Functional............. 338.96 0.2158
MS Rehab--High Functional............... 558.95 0.3559
Neuro--Low Functional................... 329.19 0.2096
Neuro--Medium Functional................ 593.98 0.3782
Neuro--High Functional.................. 711.48 0.4530
Wound--Low Functional................... 368.43 0.2346
Wound--Medium Functional................ 628.37 0.4001
Wound--High Functional.................. 822.84 0.5239
------------------------------------------------------------------------
Referral Source With Timing (Community Early excluded)
------------------------------------------------------------------------
Community--Late......................... -646.84 -0.4118
Institutional--Early.................... 278.85 0.1775
Institutional--Late..................... 45.71 0.0291
------------------------------------------------------------------------

[[Page 32417]]

Comorbidity Adjustment (No Comorbidity Adjustment Group is excluded)
------------------------------------------------------------------------
Comorbidity Adjustment--Has at least one 92.44 0.0589
comorbidity from comorbidity list, no
interaction from interaction list......
Comorbidity Adjustment--Has at least one 345.20 0.2198
interaction from interaction list......
------------------------------------------------------------------------

------------------------------------------------------------------------
Constant............................... $1,560.37 0.9934
Average Resource Use.................... $1,570.68 ..............
N....................................... 8,624,776 ..............
Adj. R-Squared.......................... 0.2925 ..............
------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before
December 31, 2017 (as of March 2, 2018) for which we had a linked
OASIS assessment. LUPA episodes, outlier episodes, and episodes with
PEP adjustments were excluded.

Table 49 presents the case-mix weight for each HHRG in the
regression model (Table 48). LUPA episodes, outlier episodes, and
episodes with PEP adjustments were excluded. Please find LUPA
information in section III.F.9 of this rule. Weights are determined by
first calculating the predicted resource use for episodes with a
particular combination of admission source, episode timing, clinical
grouping, functional level, and comorbidity adjustment. This
combination specific calculation is then divided by the average
resource use of all the episodes that were used to estimate the
standard 30-day payment rate, which is $1,570.68. The resulting ratio
represents the case-mix weight for that particular combination of a
HHRG payment group. The adjusted R-squared value for this model is
0.2925 which is slightly higher than the adjusted R-squared value of
0.2704 that we proposed in CY 2018 by using the CY 2016 claims data.
The adjusted R-squared value provides a measure of how well observed
outcomes are replicated by the model, based on the proportion of total
variation of outcomes explained by the model.
As noted above, there are 216 different HHRG payment groups under
the PDGM. There are 15 HHRG payment groups that represent roughly 50.2
percent of the total episodes. There are 61 HHRG payment groups that
represent roughly 1.0 percent of total episodes. The HHRG payment group
with the smallest weight has a weight of 0.5075 (community admitted,
late, behavioral health, low functional impairment level, with no
comorbidity adjustment). The HHRG payment group with the largest weight
has a weight of 1.9146 (institutional admitted, early, wound, high
functional impairment level, with interactive comorbidity adjustment).

Table 49--Case Mix Weights for Each HHRG Payment Group
----------------------------------------------------------------------------------------------------------------
Clinical group and Timing and admission Comorbidity Proposed CY
HIPPS functional level source adjustment 2019 weight
----------------------------------------------------------------------------------------------------------------
1AA11..................... MMTA--Low................ Early--Community......... 0 0.9934
1AA21..................... MMTA--Low................ Early--Community......... 1 1.0523
1AA31..................... MMTA--Low................ Early--Community......... 2 1.2132
1AB11..................... MMTA--Medium............. Early--Community......... 0 1.1449
1AB21..................... MMTA--Medium............. Early--Community......... 1 1.2037
1AB31..................... MMTA--Medium............. Early--Community......... 2 1.3646
1AC11..................... MMTA--High............... Early--Community......... 0 1.2588
1AC21..................... MMTA--High............... Early--Community......... 1 1.3176
1AC31..................... MMTA--High............... Early--Community......... 2 1.4785
1BA11..................... Neuro--Low............... Early--Community......... 0 1.2030
1BA21..................... Neuro--Low............... Early--Community......... 1 1.2619
1BA31..................... Neuro--Low............... Early--Community......... 2 1.4228
1BB11..................... Neuro--Medium............ Early--Community......... 0 1.3716
1BB21..................... Neuro--Medium............ Early--Community......... 1 1.4305
1BB31..................... Neuro--Medium............ Early--Community......... 2 1.5914
1BC11..................... Neuro--High.............. Early--Community......... 0 1.4464
1BC21..................... Neuro--High.............. Early--Community......... 1 1.5053
1BC31..................... Neuro--High.............. Early--Community......... 2 1.6662
1CA11..................... Wound--Low............... Early--Community......... 0 1.2280
1CA21..................... Wound--Low............... Early--Community......... 1 1.2869
1CA31..................... Wound--Low............... Early--Community......... 2 1.4478
1CB11..................... Wound--Medium............ Early--Community......... 0 1.3935
1CB21..................... Wound--Medium............ Early--Community......... 1 1.4523
1CB31..................... Wound--Medium............ Early--Community......... 2 1.6133
1CC11..................... Wound--High.............. Early--Community......... 0 1.5173
1CC21..................... Wound--High.............. Early--Community......... 1 1.5762
1CC31..................... Wound--High.............. Early--Community......... 2 1.7371
1DA11..................... Complex--Low............. Early--Community......... 0 0.9760

[[Page 32418]]

1DA21..................... Complex--Low............. Early--Community......... 1 1.0348
1DA31..................... Complex--Low............. Early--Community......... 2 1.1958
1DB11..................... Complex--Medium.......... Early--Community......... 0 1.2047
1DB21..................... Complex--Medium.......... Early--Community......... 1 1.2636
1DB31..................... Complex--Medium.......... Early--Community......... 2 1.4245
1DC11..................... Complex--High............ Early--Community......... 0 1.2969
1DC21..................... Complex--High............ Early--Community......... 1 1.3558
1DC31..................... Complex--High............ Early--Community......... 2 1.5167
1EA11..................... MS Rehab--Low............ Early--Community......... 0 1.0834
1EA21..................... MS Rehab--Low............ Early--Community......... 1 1.1423
1EA31..................... MS Rehab--Low............ Early--Community......... 2 1.3032
1EB11..................... MS Rehab--Medium......... Early--Community......... 0 1.2092
1EB21..................... MS Rehab--Medium......... Early--Community......... 1 1.2681
1EB31..................... MS Rehab--Medium......... Early--Community......... 2 1.4290
1EC11..................... MS Rehab--High........... Early--Community......... 0 1.3493
1EC21..................... MS Rehab--High........... Early--Community......... 1 1.4082
1EC31..................... MS Rehab--High........... Early--Community......... 2 1.5691
1FA11..................... Behavioral Health--Low... Early--Community......... 0 0.9193
1FA21..................... Behavioral Health--Low... Early--Community......... 1 0.9782
1FA31..................... Behavioral Health--Low... Early--Community......... 2 1.1391
1FB11..................... Behavioral Health--Medium Early--Community......... 0 1.1016
1FB21..................... Behavioral Health--Medium Early--Community......... 1 1.1604
1FB31..................... Behavioral Health--Medium Early--Community......... 2 1.3214
1FC11..................... Behavioral Health--High.. Early--Community......... 0 1.1908
1FC21..................... Behavioral Health--High.. Early--Community......... 1 1.2496
1FC31..................... Behavioral Health--High.. Early--Community......... 2 1.4106
2AA11..................... MMTA--Low................ Early--Institutional..... 0 1.1710
2AA21..................... MMTA--Low................ Early--Institutional..... 1 1.2298
2AA31..................... MMTA--Low................ Early--Institutional..... 2 1.3907
2AB11..................... MMTA--Medium............. Early--Institutional..... 0 1.3224
2AB21..................... MMTA--Medium............. Early--Institutional..... 1 1.3812
2AB31..................... MMTA--Medium............. Early--Institutional..... 2 1.5422
2AC11..................... MMTA--High............... Early--Institutional..... 0 1.4363
2AC21..................... MMTA--High............... Early--Institutional..... 1 1.4951
2AC31..................... MMTA--High............... Early--Institutional..... 2 1.6561
2BA11..................... Neuro--Low............... Early--Institutional..... 0 1.3805
2BA21..................... Neuro--Low............... Early--Institutional..... 1 1.4394
2BA31..................... Neuro--Low............... Early--Institutional..... 2 1.6003
2BB11..................... Neuro--Medium............ Early--Institutional..... 0 1.5491
2BB21..................... Neuro--Medium............ Early--Institutional..... 1 1.6080
2BB31..................... Neuro--Medium............ Early--Institutional..... 2 1.7689
2BC11..................... Neuro--High.............. Early--Institutional..... 0 1.6239
2BC21..................... Neuro--High.............. Early--Institutional..... 1 1.6828
2BC31..................... Neuro--High.............. Early--Institutional..... 2 1.8437
2CA11..................... Wound--Low............... Early--Institutional..... 0 1.4055
2CA21..................... Wound--Low............... Early--Institutional..... 1 1.4644
2CA31..................... Wound--Low............... Early--Institutional..... 2 1.6253
2CB11..................... Wound--Medium............ Early--Institutional..... 0 1.5710
2CB21..................... Wound--Medium............ Early--Institutional..... 1 1.6299
2CB31..................... Wound--Medium............ Early--Institutional..... 2 1.7908
2CC11..................... Wound--High.............. Early--Institutional..... 0 1.6948
2CC21..................... Wound--High.............. Early--Institutional..... 1 1.7537
2CC31..................... Wound--High.............. Early--Institutional..... 2 1.9146
2DA11..................... Complex--Low............. Early--Institutional..... 0 1.1535
2DA21..................... Complex--Low............. Early--Institutional..... 1 1.2124
2DA31..................... Complex--Low............. Early--Institutional..... 2 1.3733
2DB11..................... Complex--Medium.......... Early--Institutional..... 0 1.3823
2DB21..................... Complex--Medium.......... Early--Institutional..... 1 1.4411
2DB31..................... Complex--Medium.......... Early--Institutional..... 2 1.6020
2DC11..................... Complex--High............ Early--Institutional..... 0 1.4745
2DC21..................... Complex--High............ Early--Institutional..... 1 1.5333
2DC31..................... Complex--High............ Early--Institutional..... 2 1.6942
2EA11..................... MS Rehab--Low............ Early--Institutional..... 0 1.2610
2EA21..................... MS Rehab--Low............ Early--Institutional..... 1 1.3198
2EA31..................... MS Rehab--Low............ Early--Institutional..... 2 1.4807
2EB11..................... MS Rehab--Medium......... Early--Institutional..... 0 1.3868
2EB21..................... MS Rehab--Medium......... Early--Institutional..... 1 1.4456
2EB31..................... MS Rehab--Medium......... Early--Institutional..... 2 1.6065
2EC11..................... MS Rehab--High........... Early--Institutional..... 0 1.5268
2EC21..................... MS Rehab--High........... Early--Institutional..... 1 1.5857

[[Page 32419]]

2EC31..................... MS Rehab--High........... Early--Institutional..... 2 1.7466
2FA11..................... Behavioral Health--Low... Early--Institutional..... 0 1.0969
2FA21..................... Behavioral Health--Low... Early--Institutional..... 1 1.1557
2FA31..................... Behavioral Health--Low... Early--Institutional..... 2 1.3166
2FB11..................... Behavioral Health--Medium Early--Institutional..... 0 1.2791
2FB21..................... Behavioral Health--Medium Early--Institutional..... 1 1.3380
2FB31..................... Behavioral Health--Medium Early--Institutional..... 2 1.4989
2FC11..................... Behavioral Health--High.. Early--Institutional..... 0 1.3683
2FC21..................... Behavioral Health--High.. Early--Institutional..... 1 1.4272
2FC31..................... Behavioral Health--High.. Early--Institutional..... 2 1.5881
3AA11..................... MMTA--Low................ Late--Community.......... 0 0.5816
3AA21..................... MMTA--Low................ Late--Community.......... 1 0.6405
3AA31..................... MMTA--Low................ Late--Community.......... 2 0.8014
3AB11..................... MMTA--Medium............. Late--Community.......... 0 0.7330
3AB21..................... MMTA--Medium............. Late--Community.......... 1 0.7919
3AB31..................... MMTA--Medium............. Late--Community.......... 2 0.9528
3AC11..................... MMTA--High............... Late--Community.......... 0 0.8469
3AC21..................... MMTA--High............... Late--Community.......... 1 0.9058
3AC31..................... MMTA--High............... Late--Community.......... 2 1.0667
3BA11..................... Neuro--Low............... Late--Community.......... 0 0.7912
3BA21..................... Neuro--Low............... Late--Community.......... 1 0.8500
3BA31..................... Neuro--Low............... Late--Community.......... 2 1.0110
3BB11..................... Neuro--Medium............ Late--Community.......... 0 0.9598
3BB21..................... Neuro--Medium............ Late--Community.......... 1 1.0186
3BB31..................... Neuro--Medium............ Late--Community.......... 2 1.1796
3BC11..................... Neuro--High.............. Late--Community.......... 0 1.0346
3BC21..................... Neuro--High.............. Late--Community.......... 1 1.0934
3BC31..................... Neuro--High.............. Late--Community.......... 2 1.2544
3CA11..................... Wound--Low............... Late--Community.......... 0 0.8162
3CA21..................... Wound--Low............... Late--Community.......... 1 0.8750
3CA31..................... Wound--Low............... Late--Community.......... 2 1.0360
3CB11..................... Wound--Medium............ Late--Community.......... 0 0.9817
3CB21..................... Wound--Medium............ Late--Community.......... 1 1.0405
3CB31..................... Wound--Medium............ Late--Community.......... 2 1.2015
3CC11..................... Wound--High.............. Late--Community.......... 0 1.1055
3CC21..................... Wound--High.............. Late--Community.......... 1 1.1643
3CC31..................... Wound--High.............. Late--Community.......... 2 1.3253
3DA11..................... Complex--Low............. Late--Community.......... 0 0.5642
3DA21..................... Complex--Low............. Late--Community.......... 1 0.6230
3DA31..................... Complex--Low............. Late--Community.......... 2 0.7840
3DB11..................... Complex--Medium.......... Late--Community.......... 0 0.7929
3DB21..................... Complex--Medium.......... Late--Community.......... 1 0.8518
3DB31..................... Complex--Medium.......... Late--Community.......... 2 1.0127
3DC11..................... Complex--High............ Late--Community.......... 0 0.8851
3DC21..................... Complex--High............ Late--Community.......... 1 0.9440
3DC31..................... Complex--High............ Late--Community.......... 2 1.1049
3EA11..................... MS Rehab--Low............ Late--Community.......... 0 0.6716
3EA21..................... MS Rehab--Low............ Late--Community.......... 1 0.7305
3EA31..................... MS Rehab--Low............ Late--Community.......... 2 0.8914
3EB11..................... MS Rehab--Medium......... Late--Community.......... 0 0.7974
3EB21..................... MS Rehab--Medium......... Late--Community.......... 1 0.8563
3EB31..................... MS Rehab--Medium......... Late--Community.......... 2 1.0172
3EC11..................... MS Rehab--High........... Late--Community.......... 0 0.9375
3EC21..................... MS Rehab--High........... Late--Community.......... 1 0.9963
3EC31..................... MS Rehab--High........... Late--Community.......... 2 1.1573
3FA11..................... Behavioral Health--Low... Late--Community.......... 0 0.5075
3FA21..................... Behavioral Health--Low... Late--Community.......... 1 0.5664
3FA31..................... Behavioral Health--Low... Late--Community.......... 2 0.7273
3FB11..................... Behavioral Health--Medium Late--Community.......... 0 0.6898
3FB21..................... Behavioral Health--Medium Late--Community.......... 1 0.7486
3FB31..................... Behavioral Health--Medium Late--Community.......... 2 0.9095
3FC11..................... Behavioral Health--High.. Late--Community.......... 0 0.7790
3FC21..................... Behavioral Health--High.. Late--Community.......... 1 0.8378
3FC31..................... Behavioral Health--High.. Late--Community.......... 2 0.9987
4AA11..................... MMTA--Low................ Late--Institutional...... 0 1.0225
4AA21..................... MMTA--Low................ Late--Institutional...... 1 1.0814
4AA31..................... MMTA--Low................ Late--Institutional...... 2 1.2423
4AB11..................... MMTA--Medium............. Late--Institutional...... 0 1.1740
4AB21..................... MMTA--Medium............. Late--Institutional...... 1 1.2328
4AB31..................... MMTA--Medium............. Late--Institutional...... 2 1.3937

[[Page 32420]]

4AC11..................... MMTA--High............... Late--Institutional...... 0 1.2879
4AC21..................... MMTA--High............... Late--Institutional...... 1 1.3467
4AC31..................... MMTA--High............... Late--Institutional...... 2 1.5076
4BA11..................... Neuro--Low............... Late--Institutional...... 0 1.2321
4BA21..................... Neuro--Low............... Late--Institutional...... 1 1.2910
4BA31..................... Neuro--Low............... Late--Institutional...... 2 1.4519
4BB11..................... Neuro--Medium............ Late--Institutional...... 0 1.4007
4BB21..................... Neuro--Medium............ Late--Institutional...... 1 1.4595
4BB31..................... Neuro--Medium............ Late--Institutional...... 2 1.6205
4BC11..................... Neuro--High.............. Late--Institutional...... 0 1.4755
4BC21..................... Neuro--High.............. Late--Institutional...... 1 1.5344
4BC31..................... Neuro--High.............. Late--Institutional...... 2 1.6953
4CA11..................... Wound--Low............... Late--Institutional...... 0 1.2571
4CA21..................... Wound--Low............... Late--Institutional...... 1 1.3160
4CA31..................... Wound--Low............... Late--Institutional...... 2 1.4769
4CB11..................... Wound--Medium............ Late--Institutional...... 0 1.4226
4CB21..................... Wound--Medium............ Late--Institutional...... 1 1.4814
4CB31..................... Wound--Medium............ Late--Institutional...... 2 1.6424
4CC11..................... Wound--High.............. Late--Institutional...... 0 1.5464
4CC21..................... Wound--High.............. Late--Institutional...... 1 1.6053
4CC31..................... Wound--High.............. Late--Institutional...... 2 1.7662
4DA11..................... Complex--Low............. Late--Institutional...... 0 1.0051
4DA21..................... Complex--Low............. Late--Institutional...... 1 1.0639
4DA31..................... Complex--Low............. Late--Institutional...... 2 1.2249
4DB11..................... Complex--Medium.......... Late--Institutional...... 0 1.2338
4DB21..................... Complex--Medium.......... Late--Institutional...... 1 1.2927
4DB31..................... Complex--Medium.......... Late--Institutional...... 2 1.4536
4DC11..................... Complex--High............ Late--Institutional...... 0 1.3260
4DC21..................... Complex--High............ Late--Institutional...... 1 1.3849
4DC31..................... Complex--High............ Late--Institutional...... 2 1.5458
4EA11..................... MS Rehab--Low............ Late--Institutional...... 0 1.1125
4EA21..................... MS Rehab--Low............ Late--Institutional...... 1 1.1714
4EA31..................... MS Rehab--Low............ Late--Institutional...... 2 1.3323
4EB11..................... MS Rehab--Medium......... Late--Institutional...... 0 1.2383
4EB21..................... MS Rehab--Medium......... Late--Institutional...... 1 1.2972
4EB31..................... MS Rehab--Medium......... Late--Institutional...... 2 1.4581
4EC11..................... MS Rehab--High........... Late--Institutional...... 0 1.3784
4EC21..................... MS Rehab--High........... Late--Institutional...... 1 1.4373
4EC31..................... MS Rehab--High........... Late--Institutional...... 2 1.5982
4FA11..................... Behavioral Health--Low... Late--Institutional...... 0 0.9484
4FA21..................... Behavioral Health--Low... Late--Institutional...... 1 1.0073
4FA31..................... Behavioral Health--Low... Late--Institutional...... 2 1.1682
4FB11..................... Behavioral Health--Medium Late--Institutional...... 0 1.1307
4FB21..................... Behavioral Health--Medium Late--Institutional...... 1 1.1895
4FB31..................... Behavioral Health--Medium Late--Institutional...... 2 1.3505
4FC11..................... Behavioral Health--High.. Late--Institutional...... 0 1.2199
4FC21..................... Behavioral Health--High.. Late--Institutional...... 1 1.2787
4FC31..................... Behavioral Health--High.. Late--Institutional...... 2 1.4397
----------------------------------------------------------------------------------------------------------------
Source: CY 2017 Medicare claims data for episodes ending on or before December 31, 2017 for which we had a
linked OASIS assessment. LUPA episodes, outlier episodes, and episodes with PEP adjustments were excluded.

In conjunction with the implementation of the PDGM, we are
proposing to revise the frequency with which we update the HH PPS
Grouper software used to assign the appropriate HIPPS code used for
case-mix adjustment onto the claim. Since CY 2004 when the HH PPS moved
from a fiscal year to a calendar year basis, we have updated the
Grouper software twice a year. We provide an updated version of the
Grouper software effective every October 1 in order to address ICD
coding revisions, which are effective on October 1. We also provide an
updated version of the HH PPS Grouper software effective on January 1
in order to capture the new or revised HH PPS policies that become
effective on January 1. In an effort to reduce provider burden
associated with testing and installing two software releases, we
propose to discontinue the October release of the HH PPS Grouper
software and provide a single HH PPS Grouper software release effective
January 1 of each calendar year. We propose that the January release of
the HH PPS Grouper software would include the most recent revisions to
the ICD coding system as well as the payment policy updates contained
in the HH PPS final rule. Therefore, under this proposal, during the
last quarter of each calendar year, HHAs would continue to use the ICD-
10-CM codes and reporting guidelines that they would have used for the
first three calendar quarters. HHAs would begin using the most recent
ICD-10-CM codes and reporting guidelines on home health claims
beginning on January 1 of each calendar year. We are soliciting
comments on this proposal.
We invite comments on the proposed PDGM case-mix weights, case-mix

[[Page 32421]]

weight methodology and proposed annual recalibration of the case-mix
weights, updates to the HH PPS Grouper software, and the associated
regulations text changes in section III.F.13 of this proposed rule.
11. Low-Utilization Payment Adjustment (LUPA) Add-On Payments and
Partial Payment Adjustments Under PDGM
LUPA episodes qualify for an add-on payment in the case that the
established episode is the first or only episode in a sequence of
adjacent episodes. As stated in the CY 2008 HH PPS final rule, LUPA
add-on payments are made because the national per-visit payment rates
do not adequately account for the front-loading of costs for the first
episode of care as the average visit lengths in these initial LUPAs are
16 to 18 percent higher than the average visit lengths in initial non-
LUPA episodes (72 FR 49848). LUPA episodes that occur as the only
episode or as an initial episode in a sequence of adjacent episodes are
adjusted by applying an additional amount to the LUPA payment before
adjusting for area wage differences. Under the PDGM, we propose that
the LUPA add-on factors will remain the same as the current payment
system, described in section III.C.4 of this proposed rule. We multiply
the per-visit payment amount for the first SN, PT, or SLP visit in LUPA
episodes that occur as the only episode or an initial episode in a
sequence of adjacent episodes by the appropriate factor (1.8451 for SN,
1.6700 for PT, and 1.6266 for SLP) to determine the LUPA add-on payment
amount.
The current partial episode payment (PEP) adjustment is a
proportion of the episode payment and is based on the span of days
including the start-of-care date (for example, the date of the first
billable service) through and including the last billable service date
under the original plan of care before the intervening event in a home
health beneficiary's care defined as:
A beneficiary elected transfer, or
A discharge and return to home health that would warrant,
for purposes of payment, a new OASIS assessment, physician
certification of eligibility, and a new plan of care.
We received comments on eliminating PEPs in response to the CY 2018
HH PPS proposed rule. We note that the change in the unit of payment
from 60 days to 30 days will reduce the number of instances where a PEP
adjustment occurs. However, we believe maintaining a PEP adjustment
policy is appropriate to ensure that Medicare is not paying twice for
the same period of care, as the PEP is involved with patient transfers
there is a risk of a duplicate payment error. For example, if a patient
chooses to transfer to a different HHA during the course of a home
health period of care, the payment is proportionally adjusted to
reflect the length of time the beneficiary remained under the agency's
care prior to the intervening event and ensures that Medicare is not
paying two HHAs for the same 30-day period of care.
In summary for 30-day periods of care, we propose that the process
for partial payment adjustments would remain the same as the existing
policies pertaining to partial episode payments. When a new 30-day
period begins due to the intervening event of the beneficiary elected
transfer or discharge and return to home health during the 30-day
episode, the original 30-day period would be proportionally adjusted to
reflect the length of time the beneficiary remained under the agency's
care prior to the intervening event. The proportional payment is the
partial payment adjustment. The partial payment adjustment is
calculated by using the span of days (first billable service date
through and including the last billable service date) under the
original plan of care as a proportion of 30. The proportion is
multiplied by the original case-mix and wage index 30-day payment.
12. Payments for High-Cost Outliers Under the PDGM
As described in section III.E of this proposed rule, section
1895(b)(5) of the Act allows for the provision of an addition or
adjustment to the home health payment amount in the case of outliers
because of unusual variations in the type or amount of medically
necessary care. The history of and current methodology for payment of
high-cost outliers under the HH PPS is described in detail in section
III.E of this proposed rule. In the CY 2018 HH PPS proposed rule (82 FR
35270), we proposed that we would maintain the current methodology for
payment of high-cost outliers upon implementation of a 30-day unit of
payment and that we would calculate payment for high-cost outliers
based upon 30-day periods of care.
Commenters expressed concerns regarding the outlier policy proposed
in the CY 2018 HH PPS proposed rule and the potential for more
providers to exceed the 10 percent outlier cap under a 30-day period of
care. Commenters also suggested modification to the 8-hour cap on the
amount of time per day that is permitted to be counted toward the
estimation of an episode's costs for outlier calculation purposes.
While we appreciate commenters' feedback regarding the proposed
outlier payment policy described in the CY 2018 HH PPS proposed rule,
we are proposing to maintain the existing outlier policy under the
proposed PDGM, except that outlier payments would be determined on a
30-day basis to align with the 30-day unit of payment under the
proposed PDGM. We believe that maintaining the existing outlier policy
and applying such policy to 30-day periods of care would ensure a
smooth transition within the framework of the proposed PDGM. We plan to
closely evaluate and model projected outlier payments within the
framework of the PDGM and consider modifications to the outlier policy
as appropriate. The requirement that the total amount of outlier
payments not exceed 2.5 percent of total home health payments as well
as the 10 percent cap on outlier payments at the home health agency
level are statutory requirements, as described in section 1895(b)(5) of
the Act. Therefore, we do not have the authority to adjust or eliminate
the 10-percent cap or increase the 2.5 percent maximum outlier payment
amount.
Regarding the 8-hour limit on the amount of time per day counted
toward the estimation of an episode's costs, as noted in the CY2017 HH
PPS final rule (81 FR 76729), where a patient is eligible for coverage
of home health services, Medicare statute limits the amount of part-
time or intermittent home health aide services and skilled nursing
services covered during a home health episode. Section 1861(m)(7)(B) of
the Act states that the term `` `part-time or intermittent services'
means skilled nursing and home health aide services furnished any
number of days per week as long as they are furnished (combined) less
than 8 hours each day and 28 or fewer hours each week (or, subject to
review on a case-by-case basis as to the need for care, less than 8
hours each day and 35 or fewer hours per week).'' Therefore, the daily
and weekly cap on the amount of skilled nursing and home health aide
services combined is a limit defined within the statute. As we further
noted in the CY 2018 HH PPS final rule (81 FR 76729), because outlier
payments are predominately driven by the provision of skilled nursing
services, the 8-hour daily cap on services aligns with the statute,
which requires that skilled nursing and home health aide services
combined be furnished less than 8 hours each day. Therefore, we believe
that maintaining the 8-hour per day cap is appropriate under the
proposed PDGM.

[[Page 32422]]

Simulating payments using preliminary CY 2017 claims data and the
CY 2019 payment rates, we estimate that outlier payments under the
proposed PDGM with 30-day periods of care would comprise approximately
4.77 percent of total HH PPS payments in CY 2019. Given the statutory
requirement to target up to, but no more than, 2.5 percent of total
payments as outlier payments, we currently estimate that the FDL ratio
under the proposed PDGM would need to change from 0.55 to 0.71.
However, given the proposed implementation of the PDGM for 30-day
periods of care beginning on or after January 1, 2020, we will update
our estimate of outlier payments as a percent of total HH PPS payments
using the most current and complete utilization data available at the
time of CY 2020 rate-setting.
We invite public comments on maintaining the current outlier
payment methodology outlined in section III.E of this proposed rule for
the proposed PDGM and the associated changes in the regulations text as
described in section III.F.13 of this proposed rule.
13. Conforming Regulations Text Revisions for the Implementation of the
PDGM in CY 2020
We are proposing to make a number of revisions to the regulations
to implement the PDGM for episodes beginning on or after January 1,
2020, as outlined in sections III.F.1 through III.F.12 of this proposed
rule. We propose to make conforming changes in Sec. 409.43 and part
484 Subpart E to revise the unit of service from a 60-day episode to a
30-day period. In addition, we are proposing to restructure Sec.
484.205. These revisions would be effective on January 1, 2020.
Specifically, we propose to:
Revise Sec. 409.43, which outlines plan of care
requirements. We propose to revise several paragraphs to phase out the
unit of service from a 60-day episode for claims beginning on or before
December 31, 2019, and to implement a 30-day period as the new unit of
service for claims beginning on or after January 1, 2020 under the
PDGM. We propose to move and revise paragraph (c)(2) to Sec. 484.205
as paragraph (c)(2) aligns more closely with the regulations addressing
the basis of payment.
Revise the definitions of rural area and urban area in
Sec. 484.202 to remove ``with respect to home health episodes ending
on or after January 1, 2006'' from each definition as this verbiage is
no longer necessary.
Restructure Sec. 484.205 to provide more logical
organization and revise to account for the change in the unit of
payment under the HH PPS for CY 2020. The PDGM uses 30-day periods
rather than the 60-day episode used in the current payment system.
Therefore, we propose to revise Sec. 484.205 to remove references to
``60-day episode'' and to refer more generally to the ``national,
standardized prospective payment''. We are also proposing revisions to
Sec. 484.205 as follows:
++ Add paragraphs to paragraph (b) to define the unit of payment.
++ Move language which addresses the requirement for OASIS
submission from Sec. 484.210 and insert it into Sec. 484.205 as new
paragraph (c).
++ Move paragraph (c)(2) from Sec. 409.43 to Sec. 484.205 as new
paragraph (g) in order to better align with the regulations detailing
the basis of payment.
++ Add paragraph (h) to discuss split percentage payments under the
current model and the proposed PDGM.
We are not proposing to change the requirements or policies
relating to durable medical equipment or furnishing negative pressure
wound therapy using a disposable device.
Remove Sec. 484.210 which discusses data used for the
calculation of the national prospective 60-day episode payment as we
believe that this information is duplicative and already incorporated
in other sections of part 484, subpart E.
Revise the section heading of Sec. 484.215 from ``Initial
establishment of the calculation of the national 60-day episode
payment'' to ``Initial establishment of the calculation of the
national, standardized prospective 60-day episode payment and 30-day
payment rates.'' Also, we propose to add paragraph (f) to this section
to describe how the national, standardized prospective 60-day episode
payment rate is converted into a national, standardized prospective 30-
day period payment and when it applies.
Revise the section heading of Sec. 484.220 from
``Calculation of the adjusted national prospective 60-day episode
payment rate for case-mix and area wage levels'' to ``Calculation of
the case-mix and wage area adjusted prospective payment rates.'' We
propose to remove the reference to ``national 60-day episode payment
rate'' and replace it with ``national, standardized prospective
payment''.
Revise the section heading in Sec. 484.225 from ``Annual
update of the unadjusted national prospective 60-day episode payment
rate'' to ``Annual update of the unadjusted national, standardized
prospective 60-day episode and 30-day payment rates''. Also, we propose
to revise Sec. 484.225 to remove references to ``60-day episode'' and
to refer more generally to the ``national, standardized prospective
payment''. In addition, we propose to add paragraph (d) to describe the
annual update for CY 2020 and subsequent calendar years.
Revise the section heading of Sec. 484.230 from
``Methodology used for the calculation of low-utilization payment
adjustment'' to ``Low utilization payment adjustment''. Also, we
propose to designate the current text to paragraph (a) and insert
language such that proposed paragraph (a) applies to claims beginning
on or before December 31, 2019, using the current payment system. We
propose to add paragraph (b) to describe how low utilization payment
adjustments are determined for claims beginning on or after January 1,
2020, using the proposed PDGM.
Revise the section heading of Sec. 484.235 from
``Methodology used for the calculation of partial episode payment
adjustments'' to ``Partial payment adjustments''. We propose to remove
paragraphs (a), (b), and (c). We propose to remove paragraphs (1), (2),
and (3) which describe partial payment adjustments from paragraph (d)
in Sec. 484.205 and incorporate them into Sec. 484.235. We propose to
add paragraph (a) to describe partial payment adjustments under the
current system, that is, for claims beginning on or before December 31,
2019, and paragraph (b) to describe partial payment adjustments under
the proposed PDGM, that is, for claims beginning on or after January 1,
2020.
Revise the section heading for Sec. 484.240 from
``Methodology used for the calculation of the outlier payment'' to
``Outlier payments.'' In addition, we propose to remove language at
paragraph (b) and append it to paragraph (a). We propose to add
language to proposed revised paragraph (a) such that paragraph (a) will
apply to payments under the current system, that is, for claims
beginning on or before December 31, 2019. We propose to revise
paragraph (b) to describe payments under the proposed PDGM, that is,
for claims beginning on or after January 1, 2020. In paragraph (c), we
propose to replace the ``estimated'' cost with ``imputed'' cost.
Lastly, we propose to revise paragraph (d) to reflect the per-15 minute
unit approach to imputing the cost for each claim.
We are soliciting comments on the proposed PDGM as outlined in
sections III.F.1 through III.F.12 and the associated regulations text
changes

[[Page 32423]]

described above and in section IX of this proposed rule.

G. Proposed Changes Regarding Certifying and Recertifying Patient
Eligibility for Medicare Home Health Services

1. Background
Sections 1814(a) and 1835(a) of the Act require that a physician
certify patient eligibility for home health services (and recertify,
where such services are furnished over a period of time). The
certifying physician is responsible for determining whether the patient
meets the eligibility criteria (that is, homebound status and need for
skilled services) and for understanding the current clinical needs of
the patient such that the physician can establish an effective plan of
care. In addition, as a condition for payment, section 6407 of the
Affordable Care Act amended sections 1814(a)(2)(C) and 1835(a)(2)(A) of
the Act requiring, as part of the certification for home health
services, that prior to certifying a patient's eligibility for the
Medicare home health benefit the certifying physician must document
that the physician himself or herself or an allowed non-physician
practitioner had a face-to-face encounter with the patient. The
regulations at 42 CFR 424.22(a) and (b) set forth the requirements for
certification and recertification of eligibility for home health
services. The regulations at Sec. 424.22(c) provide the supporting
documentation requirements used as the basis for determining patient
eligibility for Medicare home health services.
2. Current Supporting Documentation Requirements
In determining whether the patient is or was eligible to receive
services under the Medicare home health benefit at the start of care,
as of January 1, 2015, we require documentation in the certifying
physician's medical records and/or the acute/post-acute care facility's
medical records (if the patient was directly admitted to home health)
to be used as the basis for certification of home health eligibility as
described at Sec. 424.22(c). Specifically, the certifying physician
and/or the acute/post-acute care facility medical record (if the
patient was directly admitted to home health) for the patient must
contain information that justifies the referral for Medicare home
health services. This includes documentation that substantiates the
patient's:
Need for the skilled services; and
Homebound status;
Likewise, the certifying physician and/or the acute/post-acute care
facility medical record (if the patient was directly admitted to home
health) for the patient must contain the actual clinical note for the
face-to-face encounter visit that demonstrates that the encounter:
Occurred within the required timeframe,
Was related to the primary reason the patient requires
home health services; and
Was performed by an allowed provider type.
This information can be found most often in clinical and progress
notes and discharge summaries. While the face-to-face encounter must be
related to the primary reason for home health services, the patient's
skilled need and homebound status can be substantiated through an
examination of all submitted medical record documentation from the
certifying physician, acute/post-acute care facility, and/or HHA (if
certain requirements are met). The synthesis of progress notes,
diagnostic findings, medications, and nursing notes, help to create a
longitudinal clinical picture of the patient's health status to make
the determination that the patient is eligible for home health
services. HHAs must obtain as much documentation from the certifying
physician's medical records and/or the acute/post-acute care facility's
medical records (if the patient was directly admitted to home health)
as they deem necessary to assure themselves that the Medicare home
health patient eligibility criteria have been met. HHAs must be able to
provide it to CMS and its review entities upon request. If the
documentation used as the basis for the certification of eligibility
(that is, the certifying physician's and/or the acute/post-acute care
facility's medical record documentation) is not sufficient to
demonstrate that the patient is or was eligible to receive services
under the Medicare home health benefit, payment will not be rendered
for home health services provided.
3. Proposed Regulations Text Changes Regarding Information Used to
Satisfy Documentation of Medicare Eligibility for Home Health Services
Section 51002 of the BBA of 2018 amended sections 1814(a) and
1835(a) of the Act to provide that, effective for physician
certifications and recertifications made on or after January 1, 2019,
in addition to using the documentation in the medical record of the
certifying physician or of the acute or post-acute care facility (where
home health services were furnished to an individual who was directly
admitted to the HHA from such facility), the Secretary may use
documentation in the medical record of the HHA as supporting material,
as appropriate to the case involved. We believe the BBA of 2018
provisions are consistent with our existing policy in this area, which
is currently reflected in sub-regulatory guidance in the Medicare
Benefit Policy Manual (Pub.100-02, chapter 7, section 30.5.1.2) and the
Medicare Program Integrity Manual (Pub. 100-08, chapter 6, section
6.2.3).\51\ The sub-regulatory guidance describes the circumstances in
which HHA documentation can be used along with the certifying physician
and/or acute/post-acute care facility medical record to support the
patient's homebound status and skilled need. Specifically, we state
that information from the HHA, such as the plan of care required in
accordance with 42 CFR 409.43 and the initial and/or comprehensive
assessment of the patient required in accordance with 42 CFR 484.55,
can be incorporated into the certifying physician's medical record for
the patient and used to support the patient's homebound status and need
for skilled care. However, this information must be corroborated by
other medical record entries in the certifying physician's and/or the
acute/post-acute care facility's medical record for the patient. This
means that the appropriately incorporated HHA information, along with
the certifying physician's and/or the acute/post-acute care facility's
medical record, creates a clinically consistent picture that the
patient is eligible for Medicare home health services. The certifying
physician officially incorporates the HHA information into his/her
medical record for the patient by signing and dating the material. Once
incorporated, the documentation from the HHA, in conjunction with the
certifying physician and/or acute/post-acute care facility
documentation, must substantiate the patient's eligibility for home
health services.
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\51\ https://www.cms.gov/Regulations-and-Guidance/Guidance/
Manuals/Downloads/bp102c07.pdf and https://www.cms.gov/Regulations-
and-Guidance/Guidance/Manuals/Downloads/pim83c06.pdf.
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While we believe the provisions in section 51002 of the BBA of 2018
do not require a change to the current regulations because the
provisions are consistent with existing CMS policy, we are
discretionarily proposing to amend the regulations text at 42 CFR
424.22(c) to align the regulations text with current sub-regulatory
guidance to allow medical record documentation from the HHA to be used
to support the basis for certification and/or recertification of

[[Page 32424]]

home health eligibility, if the following requirements are met:
The documentation from the HHA can be corroborated by
other medical record entries in the certifying physician's and/or the
acute/post-acute care facility's medical record for the patient,
thereby creating a clinically consistent picture that the patient is
eligible for Medicare home health services as specified in Sec. 424.22
(a)(1) and (b).
The certifying physician signs and dates the HHA
documentation demonstrating that the documentation from the HHA was
considered when certifying patient eligibility for Medicare home health
services. HHA documentation can include, but is not limited to, the
patient's plan of care required in accordance with 42 CFR 409.43 and
the initial and/or comprehensive assessment of the patient required in
accordance with 42 CFR 484.55.
We believe that this proposal incorporates existing sub-regulatory
flexibilities into the regulations text that allow HHA medical record
documentation to support the basis of home health eligibility. By
incorporating the existing sub-regulatory guidance into regulation,
HHAs are assured that HHA-generated documentation can be used as
supporting material for the basis of home health eligibility, as long
as all conditions are met, as described previously. HHAs have the
discretion to determine the type and format of any documentation used
to support home health eligibility. The expectation is that the HHA-
generated supporting medical record documentation would be used to
support the existing medical record of the certifying physician or the
acute/post-acute care facility to create a clinically consistent
picture that the individual is confined to the home and requires
skilled services. Anecdotally, we have received reports from HHAs that
they typically include this supporting information on the plan of care.
Generally, the certifying physician is also the physician who
establishes the plan of care and the plan of care must be signed by the
physician. Consequently, no additional burden is incurred by either the
HHA or the certifying physician. As existing sub-regulatory guidance
allows HHA-generated documentation to be used as supporting material
for the physician's determination of eligibility for home health
services, we expect that most HHAs already have a process in place to
provide this information to the certifying physician or the acute/post-
acute care facility. We welcome comments on this assumption.
We invite comments on this proposal to amend the regulations text
at Sec. 424.22(c), which would codify subregulatory guidance allowing
HHA-generated medical record documentation to be used as supporting
material to the certifying physician's or the acute and/or post-acute
care facility's medical record documentation as part of the
certification and/or recertification of eligibility for home health
services, under certain circumstances. The corresponding proposed
regulations text changes can be found in section VIII. of this proposed
rule.
4. Proposed Elimination of Recertification Requirement To Estimate How
Much Longer Home Health Services Will Be Required
In the CY 2018 HH PPS proposed rule (82 FR 35378), we invited
public comments about improvements that can be made to the health care
delivery system that reduce unnecessary burdens for clinicians, other
providers, and patients and their families. Specifically, we asked the
public to submit their ideas for regulatory, sub-regulatory, policy,
practice, and procedural changes to reduce burdens for hospitals,
physicians, and patients, improve the quality of care, decrease costs,
and ensure that patients and their providers and physicians are making
the best health care choices possible. We specifically stated that CMS
would not respond to the comment submissions in the final rule.
Instead, we would review the comments submitted in response to the
requests for information and actively consider them as we develop
future regulatory proposals or future sub-regulatory policy guidance.
Several commenters requested that CMS consider eliminating the
requirement that the certifying physician include an estimate of how
much longer skilled services will be required at each home health
recertification, as set forth at Sec. 424.22(b)(2) and in sub-
regulatory guidance in the Medicare Benefit Policy Manual (Chapter 7,
Section 30.5.2). Commenters stated that this estimate is duplicative of
the Home Health Conditions of Participation (CoP) requirements for the
content of the home health plan of care, set out at 42 CFR
484.60(a)(2).
The Home Health CoP at Sec. 484.60(a)(2) sets forth the
requirements for the content of the home health plan of care, which
includes the types of services, supplies, and equipment required, as
well as, the frequency and duration of visits to be made. Commenters
stated that the plan of care requirement already includes the frequency
and duration of visits to be made and is an estimate of how much longer
home health services are expected to be required by the patient. They
observed that including this information as part of the recertification
statement is duplicative and unnecessary. Commenters went on to say
that because the certifying physician must review, sign and date the
plan of care at least every 60-days, he/she is attesting to how much
longer he/she thinks the patient will require home health services.
Commenters also stated that this estimate appears to have no value to
the patient, the physician, the HHA, or to CMS, but failure to include
the physician's estimate of how much longer skilled care will be
required can result in claim denials.
We have determined that the estimate of how much longer skilled
care will be required at each recertification is not currently used for
quality, payment, or program integrity purposes. Given this
consideration and the Home Health CoP requirements for the content of
the home health plan of care, and to mitigate any potential denials of
home health claims that otherwise would meet all other Medicare
requirements, we are proposing to eliminate the regulatory requirement
as set forth at 42 CFR 424.22(b)(2), that the certifying physician, as
part of the recertification process, provide an estimate of how much
longer skilled services will be required. All other recertification
content requirements under Sec. 424.22(b)(2) would remain unchanged.
We believe the elimination of this recertification requirement would
result in a reduction of burden for certifying physicians by reducing
the amount of time physicians spend on the recertification process and
would result in an overall cost savings of $14.2 million. We provided a
more detailed description of this burden reduction in section
VIII.C.1.c. of this proposed rule.
We invite comments regarding the proposed elimination of the
requirement that the certifying physician include an estimate of how
much longer skilled services will be required at each home health
recertification, as well as the corresponding regulations text changes
at Sec. 424.22(b)(2).
While we are not proposing any additional changes to the home
health payment regulations in this proposed rule as suggested by
commenters in the RFI, we will continue to consider whether future
regulatory or sub-regulatory changes are warranted to reduce
unnecessary burden. We thank

[[Page 32425]]

the commenters for taking the time to convey their thoughts and
suggestions on this initiative.

H. Proposed Change Regarding Remote Patient Monitoring Under the
Medicare Home Health Benefit

Section 4012 of the 21st Century Cures Act directed the Centers for
Medicare & Medicaid Services (CMS) to provide information on the
current use of and/or barriers to telehealth services. This directive,
along with advancements in technology, prompted us to examine ways in
which HHAs can integrate telehealth and/or remote patient monitoring
into the care planning process. Telehealth services, under section
1834(m)(4) of the Act, include services such as professional
consultations, office visits, pharmacologic management, and office
psychiatry services furnished via a telecommunications system by a
distant site physician or practitioner to a patient located at a
designated ``originating site.'' Originating sites, as defined under
section 1834(m)(4)(C) of the Act, generally must be certain kinds of
healthcare settings located in certain geographic areas. This
definition generally does not include the beneficiary's home. As a
Medicare condition for payment, an interactive telecommunications
system generally is required when furnishing telehealth services.
Medicare defines ``interactive telecommunication systems'' as audio and
video equipment permitting two-way, real-time interactive communication
between the patient and distant site physician or practitioner (42 CFR
410.78). Telehealth services are used to substitute for professional
in-person visits when certain eligibility criteria are met. For
patients receiving care under the Medicare home health benefit, section
1895(e)(1)(A) of the Act prohibits payment for services furnished via a
telecommunications system if such services substitute for in-person
home health services ordered as part of a plan of care certified by a
physician. However, the statute does not define the term
``telecommunications system'' as it relates to the provision of home
health care and explicitly notes that an HHA is not prevented from
providing services via a telecommunications system, assuming the
service is not considered a home health visit for purposes of
eligibility or payment.
Remote patient monitoring, while a service using a form of
telecommunications, is not considered a Medicare telehealth service as
defined under section 1834(m) of the Act, but rather uses ``digital
technologies to collect medical and other forms of health data from
individuals in one location and electronically transmit that
information securely to health care providers in a different location
for assessment and recommendations.'' \52\ For example, remote patient
monitoring allows the patient to collect and transmit his or her own
clinical data, such as weight, blood pressure, and heart rate for
monitoring and analysis. The clinical data is monitored without a
direct interaction between the practitioner and beneficiary, and then
reviewed by the HHA for potential consultation with the certifying
physician for changes in the plan of care. Additionally, because remote
patient monitoring is not statutorily considered a telehealth service,
it would not be subject to the restrictions on originating site and
interactive telecommunications systems technology.
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\52\ https://www.cchpca.org/remote-patient-monitoring.
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We believe remote patient monitoring could be beneficial in
augmenting the home health services outlined in the patient's plan of
care, without replicating or replacing home health visits. The plan of
care, in accordance with the home health conditions of participation
(CoPs), must identify patient-specific measurable outcomes and goals,
and be established, periodically reviewed, and signed by a physician
(42 CFR 484.60(a)). The HHA must also promptly alert the relevant
physician(s) to any changes in the patient's condition or needs that
suggest that outcomes are not being achieved, or that the plan of care
must be altered (42 CFR 484.60(c)). Remote patient monitoring could
enable the HHA to more quickly identify any changes in the patient's
clinical condition, as well as monitor patient compliance, prompting
physician review of, and potential changes to, the plan of care, as
required per the CoPs. Particularly in cases where the home health
patient is admitted for skilled observation and assessment of the
patient's condition due to a reasonable potential for complications or
an acute episode, remote patient monitoring could augment home health
visits until the patient's clinical condition stabilized. Fluctuating
or abnormal vital signs could be monitored between visits, potentially
leading to quicker interventions and updates to the treatment plan.
A review of the literature shows that utilizing remote patient
monitoring in chronic disease management has the potential to
``significantly improve an individual's quality of life, allowing
patients to maintain independence, prevent complications, and minimize
costs.'' \53\ Specifically for patients with chronic obstructive
pulmonary disease (COPD) and congestive heart failure (CHF), research
indicates that remote patient monitoring has been successful in
reducing readmissions and long-term acute care utilization.\54\
Likewise, a systematic review of evidence collected by the Agency for
Healthcare Research and Quality (AHRQ) revealed that remote patient
monitoring of chronic cardiac and respiratory conditions resulted in
lower mortality, improved quality of life, and reductions in hospital
admissions.\55\ If changes in condition are identified early through
careful monitoring, serious complications may be avoided, potentially
preventing emergency department visits and hospital admissions.
Surveillance and case management are frequently occurring interventions
in home health, and remote patient monitoring leverages technology to
encourage patient involvement and accountability in order to improve
care coordination.
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\53\ Rojhan, K., Laplante, S., Sloand, J., Main, C., Ibrahim,
A., Wild, J., Sturt, N. Remote Monitoring of Chronic Diseases: A
Landscape Assessment of Policies in Four European Countries (2016)
PLOS One. V11 (5) https://dx.doi.org/10.1371%2Fjournal.pone.0155738.
\54\ Broad, J., Davis, C., Bender, M., Smith, T. (2014)
Feasibility and Acute Care Utilization Outcomes of a Post-Acute
Transitional Telemonitoring Program for Underserved Chronic Disease
Patients. Journal of Cardiac Failure. Vol 20 (8S) S116. https://
dx.doi.org/10.1016/j.cardfail.2014.06.328.
\55\ Department of Health and Human Services, Agency for
Healthcare Research and Quality, Telehealth: Mapping the Evidence
for Patient Outcomes from Systematic Reviews, Technical Brief Number
26 (Washington, DC: June 2016).
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Anecdotally, we have heard from various home health agencies
regarding integration of remote patient monitoring into the care
planning process. For example, on a recent site visit to a home health
agency, CMS participated in a care coordination meeting, which included
a discussion of the agency's experience implementing remote patient
monitoring in home health episodes. Certain patients with chronic
conditions received tablets pre-loaded with software enabling patients
to take and transmit their vital signs on a daily basis. The
transmitted health data was then monitored and analyzed by an outside
service, which contacted the HHA with any changes or abnormalities.
This example highlights how remote patient monitoring could be
integrated into the home health episode of care.
Additionally, we believe that the growth of technology and new
software development could be used in the

[[Page 32426]]

provision of care and care coordination in the home, as well as empower
patients to be active participants in their disease management. Other
than the statutory requirement that services furnished via a
telecommunications system may not substitute for in-person home health
services ordered as part of a plan of care certified by a physician, we
do not have specific policies surrounding the use of remote patient
monitoring by HHAs. We anticipate that HHAs would follow clinical and
manufacturer guidelines when implementing the technology into clinical
practice, while still meeting all statutory requirements, conditions
for payment, and the home health conditions of participation.
Medicare began making separate payment in CY 2018 for CPT code
99091 that allows physicians and other healthcare professionals to bill
for the collection and interpretation of physiologic data digitally
stored and/or transmitted by the patient and/or caregiver to the
physician or other qualified health care professional (82 CFR 53013).
CPT code 99091 is paid under the Medicare physician fee schedule, and
thus cannot be billed by HHAs. Additionally, it includes the
interpretation of the physiologic data, whereas the HHA would only be
responsible for the collection of the data. However, with this
distinction, we feel the code's description accurately describes remote
monitoring services. Therefore, we propose to define remote patient
monitoring under the Medicare home health benefit as ``the collection
of physiologic data (for example, ECG, blood pressure, glucose
monitoring) digitally stored and/or transmitted by the patient and/or
caregiver to the HHA.''
Although the cost of remote patient monitoring is not separately
billable under the HH PPS and may not be used as a substitute for in-
person home health services, there is nothing to preclude HHAs from
using remote patient monitoring to augment the care planning process as
appropriate. As such, we believe the expenses of remote patient
monitoring, if used by the HHA to augment the care planning process,
must be reported on the cost report as allowable administrative costs
(that is, operating expenses) that are factored into the costs per
visit. Currently, costs associated with remote patient monitoring are
reported on line 23.20 on Worksheet A, as direct costs associated with
telemedicine. For 2016, approximately 3 percent of HHAs reported
telemedicine costs that accounted for roughly 1 percent of their total
agency costs on the HHA cost report. However, these costs are not
allocated to the costs per visit. We propose to amend the regulations
at 42 CFR 409.46 to include the costs of remote patient monitoring as
an allowable administrative cost (that is, operating expense), if
remote patient monitoring is used by the HHA to augment the care
planning process. This would allow HHAs to report the costs of remote
patient monitoring on the HHA cost report as part of their operating
expenses. These costs would then be factored into the costs per visit.
Factoring the costs associated with remote patient monitoring into the
costs per visit has important implications for assessing home health
costs relevant to payment, including HHA Medicare margin calculations.
We are soliciting comments on the proposed definition of remote patient
monitoring under the HH PPS to describe telecommunication services used
to augment the plan of care during a home health episode. Additionally,
we welcome comments regarding additional utilization of
telecommunications technologies for consideration in future rulemaking.
We are also soliciting comments on the proposed changes to the
regulations at 42 CFR 409.46, to include the costs of remote patient
monitoring as allowable administrative costs (that is, operating
expenses), as detailed in section IX. of this proposed rule.

IV. Home Health Value-Based Purchasing (HHVBP) Model

A. Background

As authorized by section 1115A of the Act and finalized in the CY
2016 HH PPS final rule (80 FR 68624), we began testing the HHVBP Model
on January 1, 2016. The HHVBP Model has an overall purpose of improving
the quality and delivery of home health care services to Medicare
beneficiaries. The specific goals of the Model are to: (1) Provide
incentives for better quality care with greater efficiency; (2) study
new potential quality and efficiency measures for appropriateness in
the home health setting; and (3) enhance the current public reporting
process.
Using the randomized selection methodology finalized in the CY 2016
HH PPS final rule, we selected nine states for inclusion in the HHVBP
Model, representing each geographic area across the nation. All
Medicare-certified Home Health Agencies (HHAs) providing services in
Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North
Carolina, Tennessee, and Washington (competing HHAs) are required to
compete in the Model. Requiring all Medicare-certified HHAs providing
services in the selected states to participate in the Model ensures
that: (1) There is no selection bias; (2) participating HHAs are
representative of HHAs nationally; and, (3) there is sufficient
participation to generate meaningful results.
As finalized in the CY 2016 HH PPS final rule, the HHVBP Model uses
the waiver authority under section 1115A(d)(1) of the Act to adjust
Medicare payment rates under section 1895(b) of the Act beginning in CY
2018 based on the competing HHAs' performance on applicable measures.
Payment adjustments will be increased incrementally over the course of
the HHVBP Model in the following manner: (1) A maximum payment
adjustment of 3 percent (upward or downward) in CY 2018; (2) a maximum
payment adjustment of 5 percent (upward or downward) in CY 2019; (3) a
maximum payment adjustment of 6 percent (upward or downward) in CY
2020; (4) a maximum payment adjustment of 7 percent (upward or
downward) in CY 2021; and (5) a maximum payment adjustment of 8 percent
(upward or downward) in CY 2022. Payment adjustments are based on each
HHA's Total Performance Score (TPS) in a given performance year (PY)
comprised of: (1) A set of measures already reported via the Outcome
and Assessment Information Set (OASIS) and completed Home Health
Consumer Assessment of Healthcare Providers and Systems (HHCAHPS)
surveys for all patients serviced by the HHA and select claims data
elements; and (2) three New Measures for which points are achieved for
reporting data.
For CY 2019, we are proposing to remove five measures and add two
new proposed composite measures to the applicable measure set for the
HHVBP model, revise our weighting methodology for the measures, and
rescore the maximum number of improvement points.

B. Quality Measures

1. Proposal To Remove Two OASIS-Based Measures Beginning With
Performance Year 4 (CY 2019)
In the CY 2016 HH PPS final rule, we finalized a set of quality
measures in Figure 4a: Final PY1 Measures and Figure 4b: Final PY1 New
Measures (80 FR 68671 through 68673) for the HHVBP Model used in PY1,
referred to as the starter set. We also stated that this set of
measures will be subject to change or retirement during subsequent
model years and revised through the rulemaking process (80 FR 68669).

[[Page 32427]]

The measures were selected for the Model using the following
guiding principles: (1) Use a broad measure set that captures the
complexity of the services HHAs provide; (2) incorporate flexibility
for future inclusion of the Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT) measures that cut across post-acute
care settings; (3) develop `second generation' (of the HHVBP Model)
measures of patient outcomes, health and functional status, shared
decision making, and patient activation; (4) include a balance of
process, outcome and patient experience measures; (5) advance the
ability to measure cost and value; (6) add measures for appropriateness
or overuse; and (7) promote infrastructure investments. This set of
quality measures encompasses the multiple National Quality Strategy
(NQS) domains \56\ (80 FR 68668). The NQS domains include six priority
areas identified in the CY 2016 HH PPS final rule (80 FR 68668) as the
CMS Framework for Quality Measurement Mapping. These areas are: (1)
Clinical quality of care; (2) Care coordination; (3) Population &
community health; (4) Person- and Caregiver-centered experience and
outcomes; (5) Safety; and (6) Efficiency and cost reduction. Figures 4a
and 4b of the CY 2016 HH PPS final rule identified 15 outcome measures
(five from the HHCAHPS, eight from OASIS, and two claims-based
measures), and nine process measures (six from OASIS, and three New
Measures, which were not previously reported in the home health
setting) for use in the Model.
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\56\ 2015 Annual Report to Congress, https://www.ahrq.gov/
workingforquality/reports/annual-reports/nqs2015annlrpt.htm.
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In the CY 2017 HH PPS final rule, we removed four measures from the
measure set for PY1 and subsequent performance years: (1) Care
Management: Types and Sources of Assistance; (2) Prior Functioning ADL/
IADL; (3) Influenza Vaccine Data Collection Period: Does this episode
of care include any dates on or between October 1 and March 31?; and
(4) Reason Pneumococcal Vaccine Not Received, for the reasons discussed
in that final rule (81 FR 76743 through 76747).
In the CY 2018 HH PPS final rule, we removed the Drug Education on
All Medications Provided to Patient/Caregiver during All Episodes of
Care from the set of applicable measures beginning with PY3 for the
reasons discussed in that final rule (82 FR 51703 through 51704).
For PY4 and subsequent performance years, we propose to remove two
OASIS-based process measures, Influenza Immunization Received for
Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever
Received, from the set of applicable measures. We adopted the Influenza
Immunization Received for Current Flu Season measure beginning PY1 of
the model. Since that time, we have received input from both
stakeholders and a Technical Expert Panel (TEP) convened by our
contractor in 2017 that because the measure does not exclude HHA
patients who were offered the vaccine but declined it and patients who
were ineligible to receive it due to contraindications, the measure may
not fully capture HHA performance in the administration of the
influenza vaccine. In response to these concerns, we are proposing to
remove the measure from the applicable measure set beginning PY4.
We also adopted the Pneumococcal Polysaccharide Vaccine Ever
Received measure beginning PY1 of the model. This process measure
reports the percentage of HH episodes during which patients were
determined to have ever received the Pneumococcal Polysaccharide
Vaccine. The measure is based on guidelines previously issued by the
Advisory Committee on Immunization Practices (ACIP),\57\ which
recommended use of a single dose of the 23-valent pneumococcal
polysaccharide vaccine (PPSV23) among all adults aged 65 years and
older and those adults aged 19-64 years with underlying medical
conditions that put them at greater risk for serious pneumococcal
infection.\58\ In 2014, the ACIP updated its guidelines to recommend
that both PCV13 and PPSV23 be given to all immunocompetent adults aged
>=65 years.\59\ The recommended intervals for sequential administration
of PCV13 and PPSV23 depend on several patient factors including: The
current age of the adult, whether the adult had previously received
PPSV23, and the age of the adult at the time of prior PPSV23
vaccination (if applicable). Because the Pneumococcal Polysaccharide
Vaccine Ever Received measure does not fully reflect the current ACIP
guidelines, we are proposing to remove this measure from the model
beginning PY4.
---------------------------------------------------------------------------

\57\ The Advisory Committee on Immunization Practices was
established under Section 222 of the Public Health Service Act (42
U.S.C. 217a), as amended, to assist states and their political
subdivisions in the prevention and control of communicable diseases;
to advise the states on matters relating to the preservation and
improvement of the public's health; and to make grants to states
and, in consultation with the state health authorities, to agencies
and political subdivisions of states to assist in meeting the costs
of communicable disease control programs. (Charter of the Advisory
Committee on Immunization Practices, filed April 1, 2018. https://
www.cdc.gov/vaccines/acip/committee/ACIP-Charter-2018.pdf).
\58\ Prevention of Pneumococcal Disease: Recommendations of the
Advisory Committee on Immunization Practices (ACIP), MMWR 1997;46:1-
24.
\59\ Tomczyk S, Bennett NM, Stoecker C, et al. Use of 13-valent
pneumococcal conjugate vaccine and 23-valent pneumococcal
polysaccharide vaccine among adults aged >=65 years: Recommendations
of the Advisory Committee on Immunization Practices (ACIP). MMWR
2014; 63: 822-5.
---------------------------------------------------------------------------

2. Proposal To Replace Three OASIS-Based Measures With Two Composite
Measures Beginning With Performance Year 4
As previously noted, one of the goals of the HHVBP Model is to
study new potential quality and efficiency measures for appropriateness
in the home health setting. In the CY 2018 HH PPS Final Rule, we
solicited comment on additional quality measures for future
consideration in the HHVBP model, specifically a Total Change in ADL/
IADL Peformance by HHA Patients Measure, a Composite Functional Decline
Measure, and behavioral health measures (82 FR 51706 through 51711).
For the reasons discussed, we are proposing to replace three individual
OASIS measures (Improvement in Bathing, Improvement in Bed
Transferring, and Improvement in Ambulation-Locomotion) with two
composite measures: Total Normalized Composite Change in Self-Care and
Total Normalized Composite Change in Mobility. These proposed measures
use several of the same ADLs as the composite measures discussed in the
CY 2018 HH PPS Final Rule (82 FR 51707). Our contractor convened a TEP
in November 2017, which supported the use of two proposed composite
measures in place of the three individual measures because HHA
performance on the three individual measures would be combined with HHA
performance on six additional ADL measures to create a more
comprehensive assessment of HHA performance across a broader range of
patient ADL outcomes. The TEP also noted that HHA performance is
currently measured based on any change in improvement in patient
status, while the composite measures would report the magnitude of
patient change (either improvement or decline) across six self-care and
three mobility patient outcomes.
There are currently three ADL improvement measures in the HHVBP
Model (Improvement in Bathing,

[[Page 32428]]

Improvement in Bed Transferring, and Improvement in Ambulation-
Locomotion). The maximum cumulative score across all three measures is
30. Because we are proposing to replace these three measures with the
two composite measures, we are also proposing that each of the two
composite measures would have a maximum score of 15 points, to ensure
that the relative weighting of ADL-based measures would stay the same
if the proposal to replace the three ADL improvement measures with the
two composite measures is adopted. That is, there would still be a
maximum of 30 points available for ADL related measures.
The proposed Total Normalized Composite Change in Self-Care and
Total Normalized Composite Change in Mobility measures would represent
a new direction in how quality of patient care is measured in home
health. Both of these proposed composite measures combine several
existing and endorsed Home Health Quality Reporting Program (HH QRP)
outcome measures into focused composite measures to enhance quality
reporting. These proposed composite measures fit within the Patient and
Family Engagement \60\ domain as functional status and functional
decline are important to assess for residents in home health settings.
Patients who receive care from an HHA may have functional limitations
and may be at risk for further decline in function because of limited
mobility and ambulation.
---------------------------------------------------------------------------

\60\ 2017 Measures under Consideration List. https://
www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/QualityMeasures/Downloads/2017-CMS-Measurement-
Priorities-and-Needs.pdf.
---------------------------------------------------------------------------

The proposed Total Normalized Composite Change in Self-Care measure
computes the magnitude of change, either positive or negative, based on
a normalized amount of possible change on each of six OASIS-based
quality outcomes. These six outcomes are as follows:

Improvement in Grooming (M1800)
Improvement in Upper Body Dressing (M1810)
Improvement in Lower Body Dressing (M1820)
Improvement in Bathing (M1830)
Improvement in Toileting Hygiene (M1845)
Improvement in Eating (M1870)

The proposed Total Normalized Composite Change in Mobility measure
computes the magnitude of change, either positive or negative, based on
the normalized amount of possible change on each of three OASIS-based
quality outcomes. These three outcomes are as follows:

Improvement in Toilet Transferring (M1840)
Improvement in Bed Transferring (M1850)
Improvement in Ambulation/Locomotion (M1860)

The magnitude of possible change for these OASIS items varies based
on the number of response options. For example, M1800 (grooming) has
four behaviorally-benchmarked response options (0 = most independent; 3
= least independent) while M1830 (bathing) has seven behaviorally-
benchmarked response options (0 = most independent; 6 = least
independent). The maximum possible change for a patient on item M1800
is 3, while the maximum possible change for a patient on item M1830 is
6. Both proposed composite measures would be computed and normalized at
the episode level, then aggregated to the HHA level using the following
steps:
Step 1: Calculate absolute change score for each OASIS
item (based on change between Start of Care(SOC)/Resumption of Care
(ROC) and discharge) used to compute the Total Normalized Composite
Change in Self-Care (6 items) or Total Normalized Composite Change in
Mobility (3 items) measures.
Step 2: Normalize scores based on maximum change possible
for each OASIS item (which varies across different items). The
normalized scores result in a maximum possible change for any single
item equal to ``1''; this score is provided when a patient achieves the
maximum possible change for the OASIS item.
Step 3: Total score for Total Normalized Composite Change
in Self-Care or Total Normalized Composite Change in Mobility is
calculated by summing the normalized scores for the items in the
measure. Hence, the maximum possible range of normalized scores at the
patient level for Total Normalized Composite Change in Self-Care is -6
to +6, and for Total Normalized Composite Change in Mobility is -3 to
+3.
We created two prediction models for the proposed Total Normalized
Composite Change in Self-Care (TNC_SC) and Total Normalized Composite
Change in Mobility (TNC_MOB) measures using information from OASIS
items and patient clinical condition categories (see Table 50 for
details on the number of OASIS items and OASIS clinical categories used
in the prediction models). We computed multiple ordinary least squares
(OLS) analyses beginning with risk factors that were available from
OASIS D items and patient condition groupings. Any single OASIS D item
might have more than one risk factor because we create dichotomous risk
factors for each response option on scaled (from dependence to
independence) OASIS items. Those risk factors that were statistically
significant at p <0.0001 level were kept in the prediction model. These
two versions (CY 2014 and CY 2015) of the prediction models were done
as ``proof of concept.'' We are proposing that the actual prediction
models that would be used if the proposed composite measures are
finalized would use episodes of care that ended in CY 2017, which would
be the baseline year for the quality outcome measures used to compute
the two proposed composite measures, as listed previously. The baseline
year for these two composite measures would be calendar year 2017.
The following Table 50 provides an overview of results from the CY
2014 and CY 2015 prediction models for each proposed measure with
estimated R-squared values comparing observed vs. predicted episode-
level performance.

Table 50--Observed Versus Predicted Episode-Level Peformance for the Proposed Total Normalized Composite Change
Measures
----------------------------------------------------------------------------------------------------------------
Number of Number of
Prediction model for OASIS items clinical R[dash]squared
used categories value
----------------------------------------------------------------------------------------------------------------
2014 TNC_SC..................................................... 42 14 0.299
2015 TNC_SC..................................................... 41 13 0.311
2014 TNC_MOB.................................................... 42 16 0.289

[[Page 32429]]

2015 TNC_MOB.................................................... 41 18 0.288
----------------------------------------------------------------------------------------------------------------

Table 50 presents the following summary information for the
prediction models for the two proposed composite measures.
Prediction Model for: This column identifies the measure
and year of data used for the two ``proof of concept'' prediction
models created for each of the two proposed composite measures, Total
Normalized Composite Change in Self-Care (TNC_SC) and Total Normalized
Composite Change in Mobility (TNC_MOB). The development of the
prediction models was identical in terms of the list of potential risk
factors and clinical categories. The only difference was one set of
prediction models used episodes of care that ended in CY 2014, while
the other set of prediction models used episodes of care that ended in
CY 2015.
Number of OASIS Items Used: This column indicates the
number of OASIS items used as risk factors in the prediction model. For
each prediction model, the number of OASIS items used is based on the
number of risk factors that were statistically significant at p <0.0001
level in the prediction model.
Number of Clinical Categories: This column indicates the
number of patient clinical categories (for example, diagnoses related
to infections or neoplasms or endocrine disorders) that are used as
risk factors in the prediction model.
R-squared Value: The R-squared values are a measure of the
proportion of the variation in outcomes that is accounted for by the
prediction model. The results show that the methodology that was used
to create the prediction models produced very consistent models that
predict at least 29 percent of the variability in the proposed
composite measures.
The prediction models are applied at the episode level to create a
specific predicted value for the composite measure for each episode of
care. These episode level predicted values are averaged to compute a
national predicted value and an HHA predicted value. The episode level
observed values are averaged to compute the HHA observed value. The HHA
TNC_SC and TNC_MOB observed scores are risk adjusted based on the
following formula:

HHA Risk Adjusted = HHA Observed + National Predicted-HHA Predicted

HHAs are not allowed to skip any of the OASIS items that are used
to compute these proposed composite measures or the risk factors that
comprise the prediction models for the two proposed composite measures.
The OASIS items typically do not include ``not available (NA)'' or
``unknown (UK)'' response options, and per HHQRP requirements,\61\ HHAs
must provide responses to all OASIS items for the OASIS assessment to
be accepted into the CMS data repository. Therefore, while we believe
the likelihood that a value for one of these items would be missing is
extremely small, we are proposing to impute a value of ``0'' if a value
is ``missing.'' Specifically, if for some reason the information on one
or more OASIS items that are used to compute TNC_SC or TNC_MOB is
missing, we impute the value of ``0'' (no change) for the missing
value. Similarly, if for some reason the information on one or more
OASIS items that are used as a risk factor is missing, we impute the
value of ``0'' (no effect) for missing values that comprise the
prediction models for the two proposed composite measures. Table 51
contains summary information for these two proposed composite measures.
Because the proposed TNC_SC and TNC_MOB are composite measures rather
than simple outcome measures, the terms ``Numerator'' and
``Denominator'' do not apply to how these measures are calculated.
Therefore, for these proposed composite measures, the ``Numerator'' and
``Denominator'' columns in Table 51 are replaced with columns
describing ``Measure Computation'' and ``Risk Adjustment''.
---------------------------------------------------------------------------

\61\ Data Specifications--https://www.cms.gov/Medicare/Quality-
Initiatives-Patient-Assessment-Instruments/OASIS/
DataSpecifications.html.
---------------------------------------------------------------------------

Table 51 contains the set of applicable measures under the HHVBP
model, if we finalize our proposals to remove the OASIS-based measures,
Influenza Immunization Received for Current Flu Season, Pneumococcal
Polysaccharide Vaccine Ever Received, Improvement in Ambulation-
Locomotion, Improvement in Bed Transferring, and Improvement in
Bathing, and add the two proposed OASIS-based outcome composite
measures, Total Change in Self-Care and Total Change in Mobility. This
measure set, if our proposals are finalized, would be applicable to PY4
and each subsequent performance year until such time that another set
of applicable measures, or changes to this measure set, are proposed
and finalized in future rulemaking.

Table 51--Measure Set for the HHVBP Model Beginning PY 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
NQS domains Measure title Measure type Identifier Data source Numerator Denominator
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clinical Quality of Care........ Improvement in Outcome........... NA................ OASIS (M1400)..... Number of home Number of home
Dyspnea. health episodes health episodes
of care where the of care ending
discharge with a discharge
assessment during the
indicates less reporting period,
dyspnea at other than those
discharge than at covered by
start (or generic or
resumption) of measure-specific
care. exclusions.
Communication & Care Discharged to Outcome........... NA................ OASIS (M2420)..... Number of home Number of home
Coordination. Community. health episodes health episodes
where the of care ending
assessment with discharge or
completed at the transfer to
discharge inpatient
indicates the facility during
patient remained the reporting
in the community period, other
after discharge. than those
covered by
generic or
measure-specific
exclusions.

[[Page 32430]]

Efficiency & Cost Reduction..... Acute Care Outcome........... NQF0171........... CCW (Claims)...... Number of home Number of home
Hospitalization: health stays for health stays that
Unplanned patients who have begin during the
Hospitalization a Medicare claim 12-month
during first 60 for an unplanned observation
days of Home admission to an period. A home
Health. acute care health stay is a
hospital in the sequence of home
60 days following health payment
the start of the episodes
home health stay. separated from
other home health
payment episodes
by at least 60
days.
Efficiency & Cost Reduction..... Emergency Outcome........... NQF0173........... CCW (Claims)...... Number of home Number of home
Department Use health stays for health stays that
without patients who have begin during the
Hospitalization. a Medicare claim 12-month
for outpatient observation
emergency period. A home
department use health stay is a
and no claims for sequence of home
acute care health payment
hospitalization episodes
in the 60 days separated from
following the other home health
start of the home payment episodes
health stay. by at least 60
days.
Patient Safety.................. Improvement in Outcome........... NQF0177........... OASIS (M1242)..... Number of home Number of home
Pain Interfering health episodes health episodes
with Activity. of care where the of care ending
value recorded on with a discharge
the discharge during the
assessment reporting period,
indicates less other than those
frequent pain at covered by
discharge than at generic or
the start (or measure-specific
resumption) of exclusions.
care.
Patient Safety.................. Improvement in Outcome........... NQF0176........... OASIS (M2020)..... Number of home Number of home
Management of health episodes health episodes
Oral Medications. of care where the of care ending
value recorded on with a discharge
the discharge during the
assessment reporting period,
indicates less other than those
impairment in covered by
taking oral generic or
medications measure-specific
correctly at exclusions.
discharge than at
start (or
resumption) of
care.
Patient & Caregiver-Centered Care of Patients.. Outcome........... .................. CAHPS............. NA................ NA.
Experience.
Patient & Caregiver-Centered Communications Outcome........... .................. CAHPS............. NA................ NA.
Experience. between Providers
and Patients.
Patient & Caregiver-Centered Specific Care Outcome........... .................. CAHPS............. NA................ NA.
Experience. Issues.
Patient & Caregiver-Centered Overall rating of Outcome........... .................. CAHPS............. NA................ NA.
Experience. home health care.
Patient & Caregiver-Centered Willingness to Outcome........... .................. CAHPS............. NA................ NA.
Experience. recommend the
agency.
Population/Community Health..... Influenza Process........... NQF0431 (Used in Reported by HHAs Healthcare Number of
Vaccination other care through Web personnel in the healthcare
Coverage for Home settings, not Portal. denominator personnel who are
Health Care Home Health). population who working in the
Personnel. during the time healthcare
from October 1 facility for at
(or when the least 1 working
vaccine became day between
available) October 1 and
through March 31 March 31 of the
of the following following year,
year: (a) regardless of
Received an clinical
influenza responsibility or
vaccination patient contact.
administered at
the healthcare
facility, or
reported in
writing or
provided
documentation
that influenza
vaccination was
received
elsewhere: Or (b)
were determined
to have a medical
contraindication/
condition of
severe allergic
reaction to eggs
or to other
components of the
vaccine or
history of
Guillain-Barre
Syndrome within 6
weeks after a
previous
influenza
vaccination; or
(c) declined
influenza
vaccination; or
(d) persons with
unknown
vaccination
status or who do
not otherwise
meet any of the
definitions of
the previously
mentioned
numerator
categories.
Population/Community Health..... Herpes zoster Process........... NA................ Reported by HHAs Total number of Total number of
(Shingles) through Web Medicare Medicare
vaccination: Has Portal. beneficiaries beneficiaries
the patient ever aged 60 years and aged 60 years and
received the over who report over receiving
shingles having ever services from the
vaccination?. received zoster HHA.
vaccine (shingles
vaccine).

[[Page 32431]]

Communication & Care Advance Care Plan. Process........... NQF0326........... Reported by HHAs Patients who have All patients aged
Coordination. through Web an advance care 65 years and
Portal. plan or surrogate older.
decision maker
documented in the
medical record or
documentation in
the medical
record that an
advanced care
plan was
discussed but the
patient did not
wish or was not
able to name a
surrogate
decision maker or
provide an
advance care plan.
--------------------------------------------------------------------------------------------------------------------------------------------------------
NQS domains Measure title Measure type Identifier Data source Measure Risk adjustment **
computation **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Patient and Family Engagement... Total Normalized Composite Outcome. NA................ OASIS (M1800) The total A prediction model
Composite Change (M1810) (M1820) normalized change is computed at
in Self-Care. (M1830) (M1845) in self-care the episode
(M1870). functioning level. The
across six OASIS predicted value
items (grooming, for the HHA and
bathing, upper & the national
lower body value of the
dressing, toilet predicted values
hygiene, and are calculated
eating). and are used to
calculate the
risk-adjusted
rate for the HHA,
which is
calculated using
this formula: HHA
Risk Adjusted =
HHA Observed +
National
Predicted - HHA
Predicted.
Patient and Family Engagement... Total Normalized Composite Outcome. NA................ OASIS (M1840) The total A prediction model
Composite Change (M1850) (M1860). normalized change is computed at
in Mobility. in mobility the episode
functioning level. The
across three predicted value
OASIS items for the HHA and
(toilet the national
transferring, bed value of the
transferring, and predicted values
ambulation/ are calculated
locomotion). and are used to
calculate the
risk-adjusted
rate for the HHA,
which is
calculated using
this formula: HHA
Risk Adjusted =
HHA Observed +
National
Predicted - HHA
Predicted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Notes: For more detailed information on the measures using OASIS refer to the OASIS-C2 Guidance Manual effective January 1, 2017 available at https://
www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/Downloads/OASIS-C2-Guidance-Manual-6-29-16.pdf.
For NQF endorsed measures see The NQF Quality Positioning System available at https://www.qualityforum.org/QPS. For non-NQF measures using OASIS see
links for data tables related to OASIS measures at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/
HomeHealthQualityInits/. For information on HHCAHPS measures see https://homehealthcahps.org/SurveyandProtocols/SurveyMaterials.aspx.
** Because the proposed Total Normalized Composite Change in Self-Care and Mobility measures are composite measures rather than simply outcome measures,
the terms ``Numerator'' and ``Denominator'' do not apply.

We invite public comment on the proposals to remove two OASIS-based
measures, Influenza Immunization Received for Current Flu Season and
Pneumococcal Polysaccharide Vaccine Ever Received, from the set of
applicable measures for PY4 and subsequent performance years. We also
invite public comment on the proposals to replace three OASIS-based
measures, Improvement in Ambulation-Locomotion, Improvement in Bed
Transferring, and Improvement in Bathing, with two proposed composite
measures, Total Normalized Composite Change in Self-Care and Total
Normalized Composite Change in Mobility, for PY4 and subsequent
performance years.
3. Proposal To Reweight the OASIS-Based, Claims-Based, and HHCAHPS
Measures
In the CY 2016 HH PPS final rule, we finalized weighting measures
within each of the HHVBP Model's four classifications (Clinical Quality
of Care, Care Coordination and Efficiency, Person and Caregiver-
Centered Experience, and New Measures) the same for the purposes of
payment adjustment. We finalized weighting each individual measure
equally because we did not want any one measure within a classification
to be more important than another measure, to encourage HHAs to
approach quality improvement initiatives more broadly, and to address
concerns where HHAs may be providing services to beneficiaries with
different needs. Under this approach, a measure's weight remains the
same even if some of the measures within a classification group have no
available data. We stated that in subsequent years of the Model, we
would monitor the impact of equally weighting the individual measures
and may consider changes to the weighting methodology after analysis
and in rulemaking (80 FR 68679).
For PY4 and subsequent performance years, we are proposing to
revise how we weight the individual measures and to amend Sec.
484.320(c) accordingly. Specifically, we are proposing to change our
methodology for calculating the Total Performance Score (TPS) by
weighting the measure categories so that the OASIS-based measure
category and the claims-based measure category would each count for 35
percent and the HHCAHPS measure category would count for 30 percent of
the 90 percent of the TPS that is based on performance of the Clinical
Quality of Care, Care Coordination and Efficiency, and Person and
Caregiver-Centered Experience measures. Note that these measures and
their proposed revised weights would continue to account for the 90
percent of the TPS that is based on the Clinical Quality of Care, Care
Coordination and Efficiency, and Person and Caregiver-Centered
Experience measures. Data reporting for each New Measure would continue
to have equal weight and account for the 10 percent of the TPS that is
based on the New Measures collected as part of the Model. As discussed
further below, we believe that this proposed reweighting, to allow for
more weight for the claims-based measures, would better support
improvement in those measures.
Weights would also be adjusted under this proposal for HHAs that
are missing entire measure categories. For example,

[[Page 32432]]

if an HHA is missing all HHCAHPS measures, the OASIS and claims-based
measure categories would both have the same weight (50 percent each).
We believe that this approach would also increase the weight given to
the claims-based measures, and as a result give HHAs more incentive to
focus on improving them. Additionally, if measures within a category
are missing, the weights of the remaining measures within that measure
category would be adjusted proportionally, while the weight of the
category as a whole would remain consistent. We are also proposing that
the weight of the Acute Care Hospitalization: Unplanned Hospitalization
during first 60 days of Home Health claims-based measure would be
increased so that it has three times the weight of the Emergency
Department Use without Hospitalization claims-based measure, based on
our understanding that HHAs may have more control over the Acute Care
Hospitalization: Unplanned Hospitalization during first 60 days of Home
Health claims-based measure. In addition, because inpatient
hospitalizations generally cost more than ED visits, we believe
improvement in the Acute Care Hospitalization: Unplanned
Hospitalization during first 60 days of Home Health claims-based
measure may have a greater impact on Medicare expenditures.
We are proposing to reweight the measures based on our ongoing
monitoring and analysis of claims and OASIS-based measures, which shows
that there has been a steady improvement in OASIS-based measures, while
improvement in claims-based measures has been relatively flat. For
example, Figures 5 and 6 show the change in average performance for the
claims-based and OASIS-based performance measures used in the Model.
For both figures, we report the trends observed in Model and non-Model
states. In both Model and non-Model states, there has been a slight
increase (indicating worse performance) in the Acute Care
Hospitalization: Unplanned Hospitalization during first 60 days of Home
Health measure. For all OASIS-based measures, except the Improvement in
Management of Oral Medications measure and the Discharge to Community
measure, there has been substantial improvement in both Model and non-
Model states. Given these results, we believe that increasing the
weight given to the claims-based measures, and the Acute Care
Hospitalization: Unplanned Hospitalization during first 60 days of Home
Health measure in particular, may give HHAs greater incentive to focus
on quality improvement in the claims-based measures. Increasing the
weight of the claims-based measures was also supported by the
contractor's TEP.

BILLING CODE 4120-01-P
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[[Page 32433]]

[GRAPHIC] [TIFF OMITTED] TP12JY18.005

Table 52 shows the current and proposed weights for each measure
based on this proposal to change the weighting methodology from
weighting each individual measure equally to weighting the OASIS,
claims-based, and HHCAHPS measure categories at 35-percent, 35-percent
and 30-percent, respectively. Table 52 also shows the proposed
weighting methodology based on various scoring scenarios. For example,
for HHAs that are exempt from their beneficiaries completing HHCAHPS
surveys, the total weight given to OASIS-based measures scores would be
50 percent, with all OASIS-based measures (other than the two proposed
composite measures) accounting for an equal proportion of that 50
percent, and the total weight given to the claims-based measures scores
would be 50 percent, with the Acute Care Hospitalization: Unplanned
Hospitalizations measure accounting for 37.50 percent and the ED Use
without Hospitalization measure accounting for 12.50 percent. Finally,
Table 52 shows the change in the number of HHAs, by size, that would
qualify for a TPS and payment adjustment under the current and proposed
weighting methodologies, using CY 2016 data. We note that Table 52
reflects only the proposed changes to the weighting methodology and not
the other proposed changes to the HHVBP model for CY 2019 which, if
finalized, would change the proposed weights as set forth in Table 52.
We refer readers to Table 65 in section X. of this proposed rule, which
reflects the weighting that would apply if all of our proposed changes,
including the proposed changes to the applicable measure set, are
adopted for CY 2019. As reflected in that table, the two proposed
composite measures, if finalized, would have weights of 7.5 percent
when all three measure categories are reported.

[[Page 32434]]

[GRAPHIC] [TIFF OMITTED] TP12JY18.006

BILLING CODE 4120-01-C
We invite public comment on the proposal to reweight the measures
within the Clinical Quality of Care, Care Coordination and Efficiency,
and Person and Caregiver-Centered Experience classifications so that
the OASIS-based measures account for 35-percent, the claims-based
measures account for 35-percent, and the HHCAHPS account for 30-percent
of the 90 percent of the TPS that is based on performance on these

[[Page 32435]]

measures, for PY4 and subsequent performance years. We are also
proposing to amend Sec. 484.320 to reflect these proposed changes.
Specifically, we are proposing to amend Sec. 484.320 to state that for
performance years 4 and 5, CMS will sum all points awarded for each
applicable measure within each category of measures (OASIS-based,
claims-based, and HHCAHPS) excluding the New Measures, weighted at 35-
percent for the OASIS-based measure category, 35-percent for the
claims-based measure category, and 30-percent for the HHCAHPS measure
category, to calculate a value worth 90-percent of the Total
Performance Score. Table 53 is a sample calculation to show how this
proposal, in connection with the proposed changes to the measure set,
would affect scoring under the model as set forth in prior rulemaking
(80 FR 68679 through 68686) when all three measure categories are
reported.

Table 53--Sample HHVBP Total Performance Score Calculation Under Current and Proposed Weights for Individual
Performance Measures
----------------------------------------------------------------------------------------------------------------
Points for Points for
current Current weight proposed Proposed Weighted
measures (%) measures weight (%) points
----------------------------------------------------------------------------------------------------------------
OASIS:
Composite self-care......... N/A 0.00 7.661 7.50 9.19
Composite mobility.......... N/A 0.00 5.299 7.50 6.36
Flu vaccine ever received... 7.662 6.25 N/A 0.00 N/A
Pneumococcal vaccine........ 8.162 6.25 N/A 0.00 N/A
Improvement in bathing...... 5.064 6.25 N/A 0.00 N/A
Improvement in bed transfer. 4.171 6.25 N/A 0.00 N/A
Improvement in ambulation... 3.725 6.25 N/A 0.00 N/A
Improve oral meds........... 3.302 6.25 3.302 5.00 2.64
Improve Dyspnea............. 4.633 6.25 4.633 5.00 3.71
Improve Pain................ 4.279 6.25 4.279 5.00 3.42
Discharge to community...... 0.618 6.25 0.618 5.00 0.49
Claims:
Outpatient ED............... 0 6.25 0 8.75 0.00
Hospitalizations............ 1.18 6.25 1.18 26.25 4.96
HHCAHPS:
Care of patients............ 10 6.25 10 6.00 9.60
Communication between 10 6.25 10 6.00 9.60
provider and patient.......
Discussion of special care 10 6.25 10 6.00 9.60
issues.....................
Overall rating of care...... 5.921 6.25 5.921 6.00 5.68
Willingness to recommend HHA 8.406 6.25 8.406 6.00 8.07
to family and friends......
-------------------------------------------------------------------------------
Total................... 87.123 100.00 .............. 100.00 57.776
----------------------------------------------------------------------------------------------------------------

Total performance score calculation Current Proposed
------------------------------------------------------------------------
Raw score............................... 87.123 57.776
Scaled score (adjusted for # of measures 58.082 57.776
present)...............................
Weighted score (90% of scaled score).... 52.274 51.998
New measure score....................... 100.000 100.000
Weighted new measure score (10% of new 10 10
measure score).........................
TPS (sum of weighted score and weighted 62.274 61.998
new measure score).....................
------------------------------------------------------------------------

C. Performance Scoring Methodology

1. Proposal To Rescore the Maximum Amount of Improvement Points
In the CY 2016 HH PPS final rule, we finalized that an HHA could
earn 0-10 points based on how much its performance in the performance
period improved from its performance on each measure in the Clinical
Quality of Care, Care Coordination and Efficiency, and Person and
Caregiver-Centered Experience classifications during the baseline
period. We noted, in response to public comment about our scoring
methodology for improvement points, that we would monitor and evaluate
the impact of awarding an equal amount of points for both achievement
and improvement and may consider changes to the weight of the
improvement score relative to the achievement score in future years
through rulemaking (80 FR 68682).
We are proposing to reduce the maximum amount of improvement
points, from 10 points to 9 points, for PY4 and subsequent performance
years for all measures except for, if finalized, the Total Normalized
Composite Change in Self-Care and Total Normalized Composite Change in
Mobility measures, for which the maximum improvement points would be
13.5. The maximum score of 13.5 represents 90-percent of the maximum 15
points that could be earned for each of the two proposed composite
measures. The HHVBP Model focuses on having all HHAs provide high
quality care and we believe that awarding more points for achievement
than for improvement beginning with PY4 of the model would support this
goal. We expect that at this point several years into participation in
the Model, participating HHAs have had enough time to make the
necessary investments in quality improvement efforts to support a
higher level of care, warranting a slightly stronger focus on
achievement over improvement on measure performance.
We believe that reducing the maximum improvement points to 9 would
encourage HHAs to focus on achieving higher performance levels and
incentivizing in this manner would encourage HHAs to rely less on their
improvement and more on their achievement.
This proposal would also be consistent with public comments, and
suggestions provided by our contractor's TEP. As summarized in the CY
2016 HH PPS final rule, we received comments encouraging us to focus on
rewarding

[[Page 32436]]

the achievement of specified quality scores, and reduce the emphasis on
improvement scores after the initial 3 years of the HHVBP Model. Some
commenters suggested measuring performance primarily based on
achievement of specified quality scores with a declining emphasis over
time on improvement versus achievement (80 FR 68682).
The TEP also agreed with reducing the maximum number of improvement
points, which they believed would better encourage HHAs to pursue
improved health outcomes for beneficiaries. We note that for the
Hospital Value-Based Purchasing (HVBP) Program, CMS finalized a scoring
methodology where hospitals could earn a maximum of 9 improvement
points if their improvement score falls between the improvement
threshold and the benchmark (76 FR 26515). Similarly, HHVBP is now
proposing a scoring methodology where HHAs could earn a maximum of 9
improvement points.
We propose that an HHA would earn 0-9 points based on how much its
performance during the performance period improved from its performance
on each measure in the Clinical Quality of Care, Care Coordination and
Efficiency, and Person and Caregiver-Centered Experience
classifications during the baseline period. A unique improvement range
for each measure would be established for each HHA that defines the
difference between the HHA's baseline period score and the same state
level benchmark for the measure used in the achievement scoring
calculation, according to the proposed improvement formula. If an HHA's
performance on the measure during the performance period was--
Equal to or higher than the benchmark score, the HHA could
receive an improvement score of 9 points (an HHA with performance equal
to or higher than the benchmark score could still receive the maximum
of 10 points for achievement);
Greater than its baseline period score but below the
benchmark (within the improvement range), the HHA could receive an
improvement score of 0-9 (except for, if finalized, the Total
Normalized Composite Change in Self-Care and Total Normalized Composite
Change in Mobility measures, for which the maximum improvement score
would be 15) for each of the two proposed composite measures) based on
the formula and as illustrated in the examples below; or,
Equal to or lower than its baseline period score on the
measure, the HHA could receive zero points for improvement.
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2. Examples of Calculating Achievement and Improvement Scores
For illustrative purposes we present the following examples of how
the proposed changes to the performance scoring methodology would be
applied in the context of the measures in the Clinical Quality of Care,
Care Coordination and Efficiency, and Person and Caregiver Centered
Experience classifications. These HHA examples are based on data from
2015 (for the baseline period) and 2016 (for the performance year).
Figure 7 shows the scoring for HHA `A' as an example. The benchmark
calculated for the improvement in pain measure is 97.676 for HHA A
(note that the benchmark is calculated as the mean of the top decile in
the baseline period for the state). The achievement threshold was
75.358 (this is defined as the performance of the median or the 50th
percentile among HHAs in the baseline period for the state). HHA A's
Year 1 performance rate for the measure was 98.348, which exceeds the
benchmark so the HHA earned the maximum 10 points based on its
achievement score. Its improvement score is irrelevant in the
calculation because measure performance exceeded the benchmark.
Figure 7 also shows the scoring for HHA `B.' As referenced below,
HHA B's performance on this measure went from 52.168 (which was below
the achievement threshold) in the baseline period to 76.765 (which is
above the achievement threshold) in the performance period. Applying
the achievement scale, HHA B' would earn 1.067 points for achievement,
calculated as follows: 9 * (76.765 - 75.358)/(97.676 - 75.358) + 0.5 =
1.067.\62\ Calculating HHA B's improvement score yields the following
result: based on HHA B's period-to-period improvement, from 52.168 in
the baseline year to 76.765 in the performance year, HHA B would earn
4.364 points, calculated as follows: 9 * (76.765 - 52.168)/(97.676 -
75.358) - 0.5 = 4.364.\63\ Because the higher of the achievement and
improvement scores is used, HHA B would receive 4.364 points for this
measure.
---------------------------------------------------------------------------

\62\ Achievement points are calculated as 9 * (HHA Performance
Year Score - Achievement Threshold)/(Benchmark - Achievement
threshold) + 0.5.
\63\ The formula for calculating improvement points is 9 * (HHA
Performance Year Score - HHA Baseline Period Score)/(HHA Benchmark -
HHA Baseline Period Score) - 0.5.
---------------------------------------------------------------------------

In Figure 8, HHA `C' yielded a decline in performance on the
improvement in pain measure, falling from 70.266 to 58.487. HHA C's
performance during the performance period was lower than the
achievement threshold of 75.358 and, as a result, the HHA would receive
0 points based on achievement. It would also receive 0 points for
improvement, because its performance during the performance period was
lower than its performance during the baseline period.

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We would monitor and evaluate the impact of reducing the maximum
improvement points to 9 and would consider whether to propose more
changes to the weight of the improvement score relative to the
achievement score in future years through rulemaking.
We invite public comment on the proposal to reduce the maximum
amount of improvement points, from 10 points to 9 points for PY 4 and
subsequent performance years.

D. Update on the Public Display of Total Performance Scores

In the CY 2016 HH PPS final rule (80 FR 68658), we stated that one
of the three goals of the HHVBP Model is to enhance the current public
reporting processes. We reiterated this goal and continued discussing
the public display of HHAs' Total Performance Scores (TPSs) in the CY
2017 HH PPS final rule (81 FR 76751 through 76752). We believe that
publicly reporting a participating HHA's TPS will encourage providers
and patients to use this information when selecting an HHA to provide
quality care. We are encouraged by the previous stakeholder comments
and support for public reporting that could assist patients,
physicians, discharge planners, and other referral sources to choose
higher-performing HHAs.
In the CY 2017 HH PPS final rule, we noted that one commenter
suggested that we not consider public display until after the Model was
evaluated. Another commenter favored the public display of the TPS, but
recommended that CMS use a transparent process and involve stakeholders
in deciding what will be reported, and provide a review period with a
process for review and appeal before reporting.
As discussed in the CY 2017 HH PPS final rule, we are considering
public reporting for the HHVBP Model after allowing analysis of at
least eight quarters of performance data for the Model and the
opportunity to compare how these results align with other publicly
reported quality data (81 FR 76751). While we are not making a specific
proposal at this time, we are soliciting further public comment on what
information, specifically from the CY 2017 Annual Total Performance
Score and Payment Adjustment Reports and subsequent annual reports,
should be made publicly available. We note that HHAs have the
opportunity to review and appeal their Annual Total Performance Score
and Payment Adjustment Reports as outlined in the appeals process
finalized in the CY 2017 HH PPS final rule (81 FR 76747 through 76750).
Examples of the information included in the Annual Total Performance
Score and Payment Adjustment Report include the agency: Name, address,
TPS, payment adjustment percentage, performance information for each
measure used in the Model (for example, quality measure scores,
achievement, and improvement points), state and cohort information, and
percentile ranking. Based on the public comments received, we will
consider what information, specifically from the annual reports, we may

[[Page 32439]]

consider proposing for public reporting in future rulemaking.

V. Proposed Updates to the Home Health Quality Reporting Program (HH
QRP)

A. Background and Statutory Authority

Section 1895(b)(3)(B)(v)(II) of the Social Security Act (the Act)
requires that for 2007 and subsequent years, each HHA submit to the
Secretary in a form and manner, and at a time, specified by the
Secretary, such data that the Secretary determines are appropriate for
the measurement of health care quality. To the extent that an HHA does
not submit data with respect to a year in accordance with this clause,
the Secretary is directed to reduce the HH market basket percentage
increase applicable to the HHA for such year by 2 percentage points. As
provided at section 1895(b)(3)(B)(vi) of the Act, depending on the
market basket percentage increase applicable for a particular year, for
2015 and each subsequent year (except 2018), the reduction of that
increase by 2 percentage points for failure to comply with the
requirements of the HH QRP and further reduction of the increase by the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act may result in the home health market basket percentage increase
being less than 0.0 percent for a year, and may result in payment rates
under the Home Health PPS for a year being less than payment rates for
the preceding year.
For more information on the policies we have adopted for the HH
QRP, we refer readers to the CY 2007 HH PPS final rule (71 FR 65888
through 65891), the CY 2008 HH PPS final rule (72 FR 49861 through
49864), the CY 2009 HH PPS update notice (73 FR 65356), the CY 2010 HH
PPS final rule (74 FR 58096 through 58098), the CY 2011 HH PPS final
rule (75 FR 70400 through 70407), the CY 2012 HH PPS final rule (76 FR
68574), the CY 2013 HH PPS final rule (77 FR 67092), the CY 2014 HH PPS
final rule (78 FR 72297), the CY 2015 HH PPS final rule (79 FR 66073
through 66074), the CY 2016 HH PPS final rule (80 FR 68690 through
68695), the CY 2017 HH PPS final rule (81 FR 76752), and the CY 2018 HH
PPS final rule (82 FR 51711 through 51712).
Although we have historically used the preamble to the HH PPS
proposed and final rules each year to remind stakeholders of all
previously finalized program requirements, we have concluded that
repeating the same discussion each year is not necessary for every
requirement, especially if we have codified it in our regulations.
Accordingly, the following discussion is limited as much as possible to
a discussion of our proposals for future years of the HH QRP, and
represents the approach we intend to use in our rulemakings for this
program going forward.

B. General Considerations Used for the Selection of Quality Measures
for the HH QRP

1. Background
For a detailed discussion of the considerations we historically
used for measure selection for the HH QRP quality, resource use, and
others measures, we refer readers to the CY 2016 HH PPS final rule (80
FR 68695 through 68696).
2. Accounting for Social Risk Factors in the HH QRP Program
In the CY 2018 HH PPS final rule (82 FR 51713 through 51714) we
discussed the importance of improving beneficiary outcomes including
reducing health disparities. We also discussed our commitment to
ensuring that medically complex patients, as well as those with social
risk factors, receive excellent care. We discussed how studies show
that social risk factors, such as being near or below the poverty level
as determined by HHS, belonging to a racial or ethnic minority group,
or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\64\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in our value-based purchasing programs.\65\ As we noted in the CY 2018
HH PPS final rule (82 FR 51713 through 51714), ASPE's report to
Congress, which was required by the IMPACT Act, found that, in the
context of value based purchasing programs, dual eligibility was the
most powerful predictor of poor health care outcomes among those social
risk factors that they examined and tested. ASPE is continuing to
examine this issue in its second report required by the IMPACT Act,
which is due to Congress in the fall of 2019. In addition, as we noted
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through 38429),
the National Quality Forum (NQF) undertook a 2-year trial period in
which certain new measures and measures undergoing maintenance review
have been assessed to determine if risk adjustment for social risk
factors is appropriate for these measures.\66\ The trial period ended
in April 2017 and a final report is available at: https://
www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that
``measures with a conceptual basis for adjustment generally did not
demonstrate an empirical relationship'' between social risk factors and
the outcomes measured. This discrepancy may be explained in part by the
methods used for adjustment and the limited availability of robust data
on social risk factors. NQF has extended the socioeconomic status (SES)
trial,\67\ allowing further examination of social risk factors in
outcome measures.
---------------------------------------------------------------------------

\64\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-
health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\65\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-
and-performance-under-medicares-value-based-purchasing-programs.
\66\ Available at https://www.qualityforum.org/
SES_Trial_Period.aspx.
\67\ Available at: https://www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------

In the CY 2018/FY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging CMS
to explore whether factors could be used to stratify or risk adjust the
measures (beyond dual eligibility), to consider the full range of
differences in patient backgrounds that might affect outcomes, to
explore risk adjustment approaches, and to offer careful consideration
of what type of information display would be most useful to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In

[[Page 32440]]

general, commenters noted that stratified measures could serve as tools
for hospitals to identify gaps in outcomes for different groups of
patients, improve the quality of health care for all patients, and
empower consumers to make informed decisions about health care.
Commenters encouraged us to stratify measures by other social risk
factors such as age, income, and educational attainment. With regard to
value-based purchasing programs, commenters also cautioned CMS to
balance fair and equitable payment while avoiding payment penalties
that mask health disparities or discouraging the provision of care to
more medically complex patients. Commenters also noted that value-based
payment program measure selection, domain weighting, performance
scoring, and payment methodology must account for social risk.
As a next step, we are considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital IQR Program
outcome measures. Furthermore, we continue to consider options to
address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.

C. Proposed Removal Factors for Previously Adopted HH QRP Measures

As a part of our Meaningful Measures Initiative, discussed in
section I.D.1 of this proposed rule, we strive to put patients first,
ensuring that they, along with their clinicians, are empowered to make
decisions about their own healthcare using data-driven information that
is increasingly aligned with a parsimonious set of meaningful quality
measures. We began reviewing the HH QRP measure set in accordance with
the Meaningful Measures Initiative discussed in section I.D.1 of this
proposed rule, and we are working to identify how to move the HH QRP
forward in the least burdensome manner possible, while continuing to
prioritize and incentivize improvement in the quality of care provided
to patients.
Specifically, we believe the goals of the HH QRP and the measures
used in the program overlap with the Meaningful Measures Initiative
priorities, including making care safer, strengthening person and
family engagement, promoting coordination of care, promoting effective
prevention and treatment, and making care affordable.
We also evaluated the appropriateness and completeness of the HH
QRP's current measure removal factors. In the CY 2017 HH PPS final rule
(81 FR 76754 through 76755), we adopted a process for retaining,
removing, and replacing previously adopted HH QRP measures. To be
consistent with other established quality reporting programs, we are
proposing to replace the six criteria used when considering a quality
measure for removal, finalized in the CY 2017 HH PPS final rule (81 FR
76754 through 76755), with the following seven measure removal factors,
finalized for the LTCH QRP in the FY 2013 IPPS/LTCH PPS final rule (77
FR 53614 through 53615), for the SNF QRP in the FY 2016 SNF PPS final
rule (80 FR 46431 through 46432), and for the IRF QRP in the CY 2013
OPPS/ASC final rule (77 FR 68502 through 68503), for use in the HH QRP:
Factor 1. Measure performance among HHAs is so high and
unvarying that meaningful distinctions in improvements in performance
can no longer be made.
Factor 2. Performance or improvement on a measure does not
result in better patient outcomes.
Factor 3. A measure does not align with current clinical
guidelines or practice.
Factor 4. A more broadly applicable measure (across
settings, populations, or conditions) for the particular topic is
available.
Factor 5. A measure that is more proximal in time to
desired patient outcomes for the particular topic is available.
Factor 6. A measure that is more strongly associated with
desired patient outcomes for the particular topic is available.
Factor 7. Collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
We believe these measure removal factors are substantively
consistent with the criteria we previously adopted (only we are
changing the terminology to call them ``factors'') and appropriate for
use in the HH QRP. However, even if one or more of the measure removal
factors applies, we might nonetheless choose to retain the measure for
certain specified reasons. Examples of such instances could include
when a particular measure addresses a gap in quality that is so
significant that removing the measure could result in poor quality, or
in the event that a given measure is statutorily required. Furthermore,
we note that consistent with other quality reporting programs, we apply
these factors on a case-by-case basis.
We finalized in the CY 2017 HH PPS final rule (81 FR 76755) that
removal of a HH QRP measure would take place through notice and comment
rulemaking, unless we determined that a measure was causing concern for
patient safety. Specifically, in the case of a HH QRP measure for which
there was a reason to believe that the continued collection raised
possible safety concerns, we would promptly remove the measure and
publish the justification for the removal in the Federal Register
during the next rulemaking cycle. In addition, we would immediately
notify HHAs and the public through the usual communication channels,
including listening sessions, memos, email notification, and Web
postings. If we removed a measure from the HH QRP under these
circumstances but also collected data on that measure under different
statutory authority for a different purpose, we would notify
stakeholders that we would also cease collecting the data under that
alternative statutory authority.
In this proposed rule, we are proposing to adopt an additional
factor to consider when evaluating potential measures for removal from
the HH QRP measure set:
Factor 8. The costs associated with a measure outweigh the
benefit of its continued use in the program.
As we discussed in section I.D.1 of this proposed rule, with
respect to our new Meaningful Measures Initiative, we are engaging in
efforts to ensure that the HH QRP measure set continues to promote
improved health outcomes for beneficiaries while minimizing the overall
costs associated with the program. We believe these costs are
multifaceted and include not only the burden associated with reporting,
but also the costs associated with i

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