November 4, 2014

CMS Announces Payment Changes for Medicare Home Health Agencies for 2015

CMS Announces Payment Changes for Medicare Home Health Agencies for 2015

The Centers for Medicare & Medicaid Services (CMS) today announced changes to the Medicare home health prospective payment system (HH PPS) for calendar year (CY) 2015 that will foster greater efficiency, flexibility, payment accuracy, and improved quality. Approximately 3.5 million beneficiaries received home health services from nearly 12,000 home health agencies, costing Medicare approximately $18 billion in 2013.

In the rule, CMS projects that Medicare payments to home health agencies in CY 2015 will be reduced by 0.30 percent, or $60 million. This decrease reflects the effects of the 2.1 percent home health payment update percentage ($390 million increase) and the second year of the four-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies (NRS) conversion factor (2.4 percent or $450 million decrease).

The rule implements increases to the national per-visit payment rates, a 2.82 percent reduction to the NRS conversion factor, and a reduction to the national, standardized 60-day episode rate of $80.95 for CY 2015. The national, standardized 60-day episode payment for CY 2015 is $2,961.38.

The HH PPS final rule is one of several rules for calendar year 2015 that reflect a broader Administration-wide strategy to deliver better care at lower cost by finding better ways to deliver care, pay providers, and use information.Provisions in these rules are helping to move our health-care system to one that values quality over quantity and focuses on reforms such as measuring for better health outcomes, focusing on disease prevention, helping patients return home, helping manage and improve chronic diseases, and fostering a more-efficient and coordinated health care system. For example, the Home Health Agency (HHA) Value-based Purchasing (VBP) model that is introduced in this rule would be an opportunity to test whether carefully designed payment incentives would lead to higher quality of care for beneficiaries.

To qualify for the Medicare home health benefit, a Medicare beneficiary must be under the care of a physician, have an intermittent need for skilled nursing care, require physical therapy or speech-language pathology, or continue to need occupational therapy. The beneficiary must be homebound and receive home health services from a Medicare-approved home health agency (HHA).

Medicare pays home health agencies through a prospective payment system that pays higher rates for services furnished to beneficiaries with greater needs. Payment rates are based on relevant data from patient assessments conducted by clinicians as currently required for all home health agencies participating in Medicare. Home health payment rates are updated annually by the home health payment update percentage. The payment update percentage is based, in part, on the home health market basket, which measures inflation in the prices of an appropriate mix of goods and services included in home health services.

Face-to-face encounter requirements
The Affordable Care Act requires that the certifying physician or allowed non-physician provider (NPP) must have a face-to-face encounter with the beneficiary before they certify the beneficiary’s eligibility for the home health benefit. Current regulations require the encounter occur within 90 days before care begins or up to 30 days after care began. Documentation of the encounter must include a narrative to explain why the clinical findings of the encounter support that the patient is homebound and in need of skilled services.

In this rule, CMS is finalizing three changes to the face-to-face encounter requirements for episodes beginning on or after January 1, 2015. These changes will reduce administrative burden and provide home health agencies with additional flexibilities in developing individual agency procedures for obtaining documentation supporting patient eligibility for Medicare home health care.

First, CMS is eliminating the narrative requirement currently in regulation. The certifying physician would still be required to certify that a face-to-face patient encounter occurred and document the date of the encounter as part of the certification of eligibility. For medical review purposes, we will 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 patient eligibility.

Second, CMS is finalizing that if a HHA claim is denied, the corresponding physician claim for certifying/re-certifying patient eligibility for Medicare-covered home health services is considered non-covered as well because there is no longer a corresponding claim for Medicare-covered home health services.

Lastly, CMS is clarifying that a face-to-face encounter is required for certifications, rather than initial episodes; and that a certification (versus a re-certification) is generally considered to be any time a new start of care assessment is completed to initiate care.

Therapy reassessments
CMS is finalizing the elimination of the 13th and 19th visit reassessment requirements. For episodes beginning on or after January 1, 2015; at least every 30 calendar days a qualified therapist (instead of an assistant) must provide the needed therapy service and functionally reassess the patient. This policy change will lessen the burden on HHAs of counting visits and reduce the risk of non-covered visits so that therapists can focus more on providing quality care for their patients, while still promoting therapist involvement and quality treatment for all beneficiaries regardless of the level of therapy provided.

Rate-setting changes
Recalibration of the HH PPS case-mix weights
CMS is recalibrating the HH PPS case-mix weights using CY 2013 home health claims data to ensure that the case-mix weights reflect the most current utilization and resource data available.

Core Based Statistical Area (CBSA) changes for the HH wage index
In Feb. 2013, the Office of Management and Budget (OMB) issued a bulletin that contained a number of significant changes related to the delineation of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and guidance on uses of the delineation of these areas. CMS is finalizing changes to the wage index based on the revised CBSA delineations for the CY 2015 HH PPS wage index. These changes will be made to the wage index using a blended wage index for a one-year transition. For each county, a blended wage index is calculated as 50 percent of the CY 2015 wage index using the current OMB delineations and 50 percent of the CY 2015 wage index using the revised OMB delineations.

Home health payment update percentage
The Affordable Care Act requires that the market basket update for HHAs be adjusted by changes in economy-wide productivity for CY 2015 (and each subsequent calendar year). The CY 2015 home health market basket (2.6 percent) adjusted for multifactor productivity (0.5 percentage points) results in a 2.1 percent payment update.

Rebasing the 60-day episode rate
The Affordable Care Act directs that beginning in CY 2014, CMS apply an adjustment to the national, standardized 60-day episode rate and other applicable amounts to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. Additionally, CMS must phase-in any adjustment over a four year period, in equal increments, not to exceed 3.5 percent of the amount (or amounts) as of the date of the enactment of the Affordable Care Act (CY 2010), and be fully implemented by CY 2017. CY 2015 will be the second year of the four year phase-in for rebasing adjustments to the HH PPS payment rates.

Home Health Quality Reporting Program (HH QRP) update
The Home Health Conditions of Participations (CoPs) require HHAs to submit OASIS assessments as a condition of payment and also for quality measurement purposes. HHAs that do not submit quality measure data to CMS will see a two percent reduction in their annual payment update (APU). In this rule, CMS has established a minimum submission threshold for the number of OASIS assessments that each HHA must submit. Beginning in CY 2015, the initial compliance threshold will be 70 percent. This means that HHAs will be required to submit both admission and discharge OASIS assessments for a minimum of 70 percent of all patients with episodes of care occurring during the reporting period. CMS will increase the compliance threshold over the next two years to reach a maximum threshold of 90 percent.

Conditions of Participation for speech-language pathologists
CMS has revised the Home Health Conditions of Participation (CoPs) for speech language pathologist (SLP) personnel. Now, a qualified SLP is an individual who meets one of the following requirements: a) has a masters’ or doctoral degree in speech-language pathology, and is licensed as a speech-language pathologist by the state where they furnish services (CMS believes that all states license SLPs; therefore all SLPs would be covered by this option); or b) has successfully completed 350 clock hours of supervised clinical practicum (or be in the process of completing these hours), has at least nine months of supervised full-time speech-language pathology experience, and has successfully completed a national examination approved by the Secretary. These requirements, which align with the requirements in the Social Security Act, will replace the current stringent requirements with a more flexible option that defers to State licensure requirements.

Home Health Value-based Purchasing Model
CMS received comments on a potential HHA VBP model that it may begin testing in CY 2016. CMS will review these comments as it considers testing a HHA VBP model. CMS has already successfully implemented the Hospital VBP program where 1.5 percent of hospital payments in FY 2015 are tied to the quality of care that the hospitals provide. This percentage amount will gradually increase to two percent in FY 2017 and subsequent years. The HHA VBP model being considered would include a five to eight percent adjustment in payment made after each planned performance period in the projected five to eight states selected to participate in the model. A HHA VBP model presents an opportunity to test whether larger incentives would lead to higher quality of care for beneficiaries. If CMS decides to move forward with the implementation of an HHA VBP model in CY 2016, it intends to invite additional comments on a more detailed model proposal to be included in future rulemaking.

For additional information about the Home Health Prospective Payment System, visit

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