Home Health Prospective PaymentFinal Rule - Summary of Key Points

Brian D. Ellsworth

Senior Associate Director Policy Development Group

August, 2000

Structure of Presentation

• Context for Home Health PPS

• Key Components of the Final Rule

• Operational/Strategic Imperatives

Context for Home Health PPS

Major growth in Medicare home health care in the early ‘90s

Imposition of Interim Payment System in 1997

Restrictions in Medicare home health coverage

Major reductions in Medicare home health utilization from 1998 to present

Trends in Program Payments for MedicareHome Health Agency Services 1988-1998

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18000

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Number in Millions

Home Health Agency Types

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Facility-Based

Freestanding

10-1-97 4-13-99 3-16-00

Number of Agencies

Source: HCFA - On-Line Survey Certification and Reporting System

Medicare Home Health Agency PPS

• Proposed rule issued October 28, 1999

• Final Rule issued July 3, 2000

• Effective October 1, 2000

• Episodic, case mix adjusted payment

• Budget neutral on day one

Unit of payment is a 60-day “episode”

• Multiple episodes per beneficiary envisioned • PPS rate covers all HHA services & non-

routine medical supplies for a 60-day episode• Standard PPS rate: $2,115 • Adjusted for case-mix & wages • Four or fewer visits in an episode paid on per

visit basis - low utilization payment adj.

• 60% of episode payment made at start of care,

40% at first follow-up (50/50 thereafter)

AHA-supported Changes in the Final Rule

• Higher 60-day episode payment rate, further increased in FY 2002

• 25 percent higher per visit rates for low utilization cases

• Improved cash flow through increased payment on front-end

• Ability to initiate billing based on verbal physician orders

AHA-supported Changes in the Final Rule (Cont.)

• Improvements in payments for patients with wounds/skin ulcers and patients with multiple impairments

• Higher proportion of costs reimbursed for outlier cases

• Fewer medical supplies included in bundled rate

Impact of Home Health Agency PPSFinal Rule

Type of Agency Percentage changefrom IPS to PPS

All agencies -0-Rural Freestanding For-profit -7.50 Governmental 29.98 Non-profit 13.28 Provider-based 5.31Urban Freestanding For-profit -14.25 Governmental 20.58 Non-profit 18.89 Provider-based -2.50

Case-mix adjuster is called “Home Health Resource Groups”

• 80 group patient classification system• Payment varies from 53 percent ($1,271)

to 281 percent ($6,792) • Three major domains: clinical severity,

functional status and service utilization • Points assigned to 22 items from OASIS

patient assessment form

• 10 or more therapy visits during an episode is a critical case mix factor

HHRGs - Summary of scoring changes Proposed vs. Final rule

Clinical Severity domainLevel Proposed Final

Minimum 0-7 0-7Low 8-16 8-19Moderage 17-26 20-40High 27+ 41+

Functional impairment domainLevel Proposed Final

Minimum 0-4 0-2Low 5-15 3-15Moderatge 16-22 16-23High 23-25 24-29Maximum 36+ 30+

Service utilization domainNo changes

Low Utilization Payment Adjustment (LUPA)

• Low utilization case defines as four or fewer visits in 60 day episode

• Agencies paid on per visit basis for LUPA cases

• HCFA expects that five percent of total episodes will be LUPAs

LUPA Per Visit Rates - Proposed vs. Final

Home Health discipline Per visit ratesProposed Final Percent

Skilled nursing $76.32 $95.79 26%Home health aide 34.44 43.37 26%Physical therapy 83.39 104.74 26%Speech therapy 90.79 113.81 25%Occupational therapy 83.57 105.44 26%Medical social worker 123.31 153.55 25%

Adjustments for events during an episode

• Beneficiary-elected transfer to another HHA or discharge from original plan of care and return: in either case the original episode payment is pro-rated & a new 60-day episode begins

• Significant change in condition: triggers new case mix category for balance of the original 60-day episode

• Issue of payment gaps remains

Outlier adjustment available for very high cost cases

• Outlier provision allows for recovery of 80 percent of costs above set loss threshold

• Agency’s actual episode costs estimated from within-episode visit data provided on the claim

• Automatically provided if case qualifies

Key Points to Keep in Mind….

• Inaccurate OASIS scoring on any of the relevant items can mean big lost $$$

• Outside of the 10 visit therapy utilization threshold (during the episode), rates are truly prospective

• The OASIS form will eventually also be used for outcome analysis

Key Points to Keep in Mind…. (Cont.)

• Medicare coverage criteria are unchanged

• Obtaining the outcome most efficiently is the future of home health

• 15 percent reduction scheduled for FY 2002 is still out there

Home Health PPS – Agency To Do List

Train staff on PPS mechanics & implications

Train staff on importance of OASIS coding rules

Computerize all information processes, update OASIS and billing software, monitor forthcoming HIPAA rules

Educate local physicians on PPS

Home Health PPS – Agency To Do List (Cont.)

Formulate action plan for assessment of caseload during the period prior to start of PPS

Have financial back-up plan in case of cash flow delays

Develop ability to conduct patient-level cost vs. revenue analysis as part of care delivery re-engineering

Strategic Considerations for Hospital-based Home Health: Keys to success

Continuous outcome-based quality improvement strategies using OASIS data

Knowing revenue vs. cost on all patients at key intervals

Accurate coding of OASISWell-trained and motivated staff