CMS Releases Two Rules Affecting Home Health Services

The below Information Bulletin was sent to members of the Home Health Section and FALs.

CMS Releases Two Rules Affecting Home Health Services

The Centers for Medicare and Medicaid Services (CMS) released two rules on July 5, 2011 that affect home health services.  The first is the proposed Home Health Prospective Payment System (HH PPS) update for calendar year (CY) 2012 and the second is a proposed rule for Medicaid.  APTA has provided brief summaries of these rules below.  APTA will continue to analyze these rules and post comprehensive summaries shortly.  On behalf of its members, the American Physical Therapy Association (APTA) will submit comments in response to these rules.

Medicare Proposed Rule: Home Health Prospective Payment System Rate Update for Calendar Year 2012

The Medicare Home Health PPS Rate Update for CY 2012 proposed rule would implement approximately a 3.35 % decrease in Medicare payments to home health agencies (HHAs) for CY 2012. This reduction would include the combined effects of a $310 million increase in market basket and wage index updates and a $950 million decrease to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are largely related to billing practices and not related to changes in the health status of patients. 

This 3.35% decrease in payment is the result of the following provisions in the proposed rule:

• The original market basket update was an increase of 2.5%.  However, the implementation of the Affordable Care Act (ACA) mandates that CMS apply a 1% reduction to the CY 2012 home health market basket amount, which equates to a proposed 1.5% increase for HHAs next year.
  • HHAs that submit the required quality data would receive payments based on this full home health market basket update. 
• If an HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2%, resulting in a 0.5% percent decrease for those non-reporting agencies in CY 2012.
• As part of the HH PPS rate update, CMS also proposes to reduce HH PPS rates by 5.06% in CY 2012 to account for the increase in the case-mix that is unrelated to actual changes in patient characteristics over time.

The Medicare HHA proposed rule also would make structural changes to the HH PPS by removing 2 hypertension codes from the case-mix system due to their prevalence in reporting while current data indicates that these diagnoses are not predictors of higher home health patient resource costs.  Specifically, CMS proposed to remove ICD-9-CM code 401.1, Benign Essential Hypertension, and ICD-9-CM code 401.9, Unspecified Essential Hypertension, from the HH PPS case-mix model’s hypertension group. 

Further, the proposed rule lowers payments for high-therapy episodes and recalibrates the HH PPS case-mix weights to ensure that these changes result in the same amount of total aggregate payments, which will increase the weights for episodes with little or no therapy.  This revision of the case-mix weights is due to a data shift to an increased share of episodes with very high numbers of therapy visits as well as the latest MedPAC reports to Congress that suggest the HH PPS contains incentives that likely result in HHAs providing more therapy than is needed to maximize their therapy payments.

To add flexibility to its face-to-face encounter requirement, Medicare has proposed to allow physicians who attended to a home health patient in an acute or post-acute setting to inform the certifying physician of their encounters with the patient. If the physician who attended to the patient in the acute or post-acute setting informs the certifying physician of the encounters, then the certifying physician does not need to have a face-to-face encounter with the patient.

Finally, the rule proposes provisions for the Home Health Care CAHPS Survey (HHCAHPS), provisions regarding the transition to ICD-10 coding, and clarifications for the “confined to home” definition.

Medicaid Proposed Rule: Face-to-Face Requirements for Home Health Services; Policy Changes and Clarifications Related to Home Health

In a separate proposed rulemaking CMS would require face-to-face encounters under the Medicaid program comparable to the Medicare requirements to better facilitate home health services provided to patients who are eligible for Medicare and Medicaid and to lessen the administrative burden on providers participating in both programs.

In addition, this rule proposes to amend home health services regulations to clarify the definitions of included medical supplies, equipment and appliances, and clarify that States may not limit home health services to services delivered in the home, or to services furnished to individuals who are homebound. This Medicaid homebound clarification is distinct from the home health benefit policy within Medicare.