Home Health & Hospice

CMS Issues Home Health PPS Final Rule for 2014

Homecare Insider, December 2, 2013

On Friday, November 22, the Centers for Medicare & Medicaid Services (CMS) issued CMS-1450-F, a final rule updating and revising the Medicare home health prospective payment system (HH PPS) for 2014.

CMS estimates that Medicare payments to home health agencies (HHA) will be reduced by 1.05%, or $200 million in 2014. According to CMS the decrease reflects:

  • 2.3% increase in the home health payment update percentage ($440 million)
  • 2.7% decrease due to rebasing adjustments mandated by the Affordable Care Act (ACA) (-$520 million)
  • 0.6% decrease due to the effects of HH PPS Grouper refinements (-120 million).

This final rule also updates the home health wage index for 2014.

HHAs should be aware of the following updates included in the final rule:

Rebasing the 60-day Episode Rate
The ACA requires that, beginning in 2014, CMS 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, CMS must phase in any adjustment over a four-year period in equal increments, not to exceed 3.5% of the amount (or amounts) as of the date of enactment of the ACA, and be fully implemented by 2017.

The maximum rebasing adjustment must be no more than 3.5% of the 2010 rates per year. As a result, the maximum adjustment to the national, standardized 60-day payment rate is $80.95. This was calculated as: 2010 payment rate of $2,312.94 x 0.035 = $80.95

According to the final rule, there will be a fixed-dollar reduction to the national, standardized 60-day episode rate of $80.95 in each year from 2014 through 2017— a 2.81% reduction opposed to a 3.5% reduction included in the proposed rule.

Rebasing Per-Visit Amounts
For episodes of care that require four or fewer visits, Medicare pays on the basis of a national per-visit amount by discipline, referred to as a Low-Utilization Payment Adjustment (LUPA). Due to the requirement that maximum rebasing adjustments should be no more than 3.5% of the 2010 rates each year from 2014 through 2017, the six per-visit payment rates will be increased by the maximum adjustments. Adjustments can be reviewed in the table titled Maximum Adjustments to the National Per-Visit Payment Rates, Not To Exceed 3.5 Percent of the Amount(s) in CY 2010 on page 80 of the final rule.

Rebasing and Updating Other Components of the HH PPS
This rule finalizes a rebasing adjustment to the non-routine medical supplies (NRS) conversion factor of -2.82% each year for 2014 through 2017. It also finalizes three separate LUPA add-on factors for skilled nursing, physical therapy, and speech-language pathology.

Quality Reporting
The final rule includes the addition of two claims-based quality measures:

  1. Re-hospitalization during the first 30 days of a home health stay
  2. Emergency department use without hospital readmission during the first 30 days of home health

According to CMS, the final rule also makes the following changes regarding quality reporting:

  • Reduces the number of home-health quality measures currently reported to home health agencies. CMS states that this change will serve to simplify home health agencies’ quality improvement activities.
  • Institutes a policy for continued use of Outcome & Assessment Information Set (OASIS) data, claims data, and patient experience of care data to comply with the HHA requirement to submit data for the measurement of home health care quality for Annual Payment Update 2014 and each subsequent year thereafter.

HH PPS Grouper Refinements and ICD-10-CM Conversion
The final rule removes two categories of ICD-9-CM codes (170 codes total) from the HH PPS Grouper, effective January 1, 2014. These categories are:

      1. Diagnosis codes that are “too acute,” meaning the condition could not be appropriately cared for in a home health setting. Although the diagnoses in Category 1 are seen in the inpatient setting, there are some cases that are discharged to HHAs before the conditions are fully resolved, according to Joan Usher, BS, RHIA, COS-C, ACE, president of JLU Health Record Systems in Pembroke, Mass.

“Agencies that see more complex patients will need to manage the care of patients within Category 1 without additional case-mix dollars,” says Usher. “Category 1 includes patients whose diagnosis may not be resolved upon discharge, and will require skilled nursing assessment of their clinical status for symptom management, exacerbation of disease process, and potential complications. These patients also require education and teaching of new medications, diet, and wound or drain care. More complex patients also require increased coordination of care with physicians for any lab work or changes in treatment.”

Consider the following coding examples:

  • 250.20 Diabetes with hyperosmolarity
  • 285.1 Acute post hemorrhagic anemia
  • 401.0 Malignant essential hypertension
  • 493.21Chronic obstructive asthma with status asthmaticus
  • 531-535 Different types of acute ulcers with hemorrhage, perforation or obstruction
  • 562.02 Diverticulosis of small intestine with hemorrhage
  • 562.03 Diverticulosis of small intestine with hemorrhage
  • 572.0 Abscess of Liver
  • 577.0 Acute pancreatitis
  • 578.9 Hemorrhage of GI tract

      2. Diagnosis codes for conditions that would not impact the home health plan of care, or would not result in additional resources when providing home health services to the beneficiary.
Coding examples include:

  • 333.94 Restless Leg Syndrome
  • 530.81 GERD

ICD-10-CM codes will be included in the HH PPS Grouper beginning October 1, 2014. The new ICD-10-CM codes will replace the existing ICD-9-CM codes used to report medical diagnoses and inpatient procedures.

The ICD-10 draft code list was posted with the proposed rule and has not changed at this time. To review this complete list, click here.

CMS is in the process of building the Grouper version for OASIS-C1 and plans to release before July 1, 2014.

Cost Allocations for HHA Surveys
This final rule institutes a policy in which Medicaid responsibilities for home health surveys will be explicitly recognized in the state Medicaid program. Each state’s allocation of costs for HHA surveys will be reviewed for adherence to Office of Management and Budget (OMB) Circular A-87 principles in 2014, and the goal is to ensure complete adherence by July 2014. CMS will assign 50% of the cost to Medicare and 50% to Medicaid—this is the same methodology used when allocating costs for dually-certified nursing homes.

The final rule will be published in the Federal Register on December 2, 2013.

To view the final rule, click here.

Beacon Health will continue to provide analysis of the final rule in the coming weeks.