THE HOME HEALTH PROSPECTIVE PAYMENT SYSTEM RATE UPDATE...

Proceedings of ASBBS Volume 21 Number 1

ASBBS Annual Conference: Las Vegas 616 February 2014

THE HOME HEALTH PROSPECTIVE PAYMENT

SYSTEM RATE UPDATE FOR CY 2014

Gonzalo Rivera, Jr.

Texas A&M University-Kingsville

ABSTRACT

As required by the Balanced Budget Act (BBA) of 1997 and its related amendments, Medicare

began to reimburse home health agencies under the new Home Health Prospective Payment

System (HHPPS) for services beginning October 1, 2000. Under HHPPS, all home health costs

for services including medical supplies are paid using a basic unit of payment known as the 60-

Day Episode. The payment amount was calculated using a national standardized rate, adjusted

for the home health service case mix and a wage index based on the site of the service. For 60-

Day Episodes beginning and ending in 2008, the Medicare HHPPS national standardized rate

was updated by a new 153 case mix grouping, and a new non-routine medical supply payment

was added to the nationalized standardized rate. For home health services beginning January 1,

2014, the new proposed rule titled “Medicare and Medicaid: Home Health Prospective Payment

System Rate Update for CY 2014” (78 Federal Register Vol. 128) discusses the new updates to

the HHPPS rates. This rule includes changes to the 60-day episode payment rates, the national

per-visit rates, the low-utilization payment adjustment (LUPA) rates, the non-routine medical

supplies (NRS) conversion factor, and the add-on LUPA payments. This rule further discusses the

new requirements under the Affordable Care Act regarding rebasing adjustments to the national

60-day episode national standardized rate, the national per-visit rate, the low-utilization payment

adjustments, and the non-routine medical supplies conversion factor. This paper discusses an

overview of these new updated Medicare HHPPS rates for CY 2014.

HHPPS Standardized National 60-Day Episode Rate

Beginning October 1, 2000, as required by the Balanced Budget Act (BBA) of 1997 and its

related amendments, Medicare changed the way it reimbursed home health agencies for home

health services using a new Home Health Prospective Payment System (HHPPS). Under HHPPS,

all home health costs for services including medical supplies are paid using a basic unit of

payment known as the 60-Day Episode. This HHPPS 60-day payment rate included the six home

health service disciplines (skilled nursing, physical therapy, occupational therapy, speech therapy,

home health aide, and medical social services). For home health services beginning October 1,

2000, Medicare computed the first HHPPS standardized national 60-day episode rate of

$ 2,115.30 as presented by the following table (1) (HHPPS 1999).



FY 2000 STANDARDIZED NATIONAL 60-DAY EPISODE PAYMENT CALCULATION

(Table 1)

HHA discipline

Type / Non-Routine

Supplies

(NRS)

Average cost per visit

from PPS audit sample /

Average cost per episode

(NRS…)

Average number of visits

for episodes with >4 visits

from CY 98 episode file

HHA

prospective

payment

rate

Skilled Nursing $94.96 14.08 $1,337.04

Home Health Aide $41.75 13.4 $559.45

Physical Therapy $104.05 3.05 $317.35

Occupational Therapy $104.76 .53 $55.52

Medical Social Service $153.59 .32 $49.15

Speech Therapy $113.26 .18 $20.39

NRS - cost report $43.54 $43.54

NRS – Part B $6.08 $6.08

Part B Therapies $17.67 $17.67

Initial OASIS cost $5.50 $5.50

Cont’d OASIS cost $4.32 $4.32

$2,416.01

Total non-

standardized

payment

Standardized

factor - wage

index & case-

mix

Budget

neutrality

factor

Outlier

adjustment

factor

Final standardized 60-day

episode rate Oct. 2000

$2,416.01 / .96184 * .88423 / 1.05 $2,115.30

The standardized 60-day episode payment rate was further updated for each of the following

years as noted on table (2) below (HHPPS 2001; HHPPS 2002).

National Standardized HHPPS Episode Updated FY 2001-2003 (Table 2)

National 60-Day Episode Rate

Amount Updated FY 2001- 2003

For Episodes Ending Between

National standardized

60-day episode rate

October 1, 2001- September 30, 2002

$ 2,274.17

October 1, 2002 - September 30, 2003

$ 2,159.39

Medicare Prescription Drug, Improvement and Modernization Act of 2003

The Medicare Prescription Drug, Improvement and Modernization Act of 2003(DIMA) updated

the national home health standard prospective payment system (HHPPS) rates for 60-day

episodes ending October 1, 2003-December 31, 2004 and the bill required updated payment

increases to be computed on a calendar year basis beginning January 1, 2005. The following table

(3) reflects the updated standardized 60-day episode rates that was required by the 2003 DIMA

for the following periods (Medicare Prescription 2003); (HHPPS 2004; 2005; 2006).



HHPPS National Standardized 60-Day Episode Rates Updated by DIMA (Table 3)

MSA (Metropolitan Service Area)

Episodes Ending Between

MSA National standardized

60-day episode rate (DIMA)

October 1, 2003 - March 31, 2004

$ 2,230.65

April 1, 2004 - December 31, 2004

$ 2,213.37

January 1, 2005 - December 31, 2005

$ 2,264.28


$ 2,327.68

January 1, 2007 – December 31, 2007

$ 2,339.00

HHPPS National 60-Day Episode Payment Rate for Episodes Beginning and Ending in CY

2008

For 60-day episodes beginning and ending in 2008, the Medicare HHPPS national standardized

rate was updated by a new 153 case mix grouping called home health resource groups (HHRGs)

and a new wage index value was determined by the site of the home health services. The August

29, 2008 ( 72 FR 49792) and November 30, 2008 (72 FR 67656) Federal Registers discussed

the new changes under the “Home Health Prospective Payment System Refinement and Rate

Update For Calendar Year 2008” rule which included the adjustments to the rebasing and revising

of the home health market basket, resulting in new labor portion percentage of 77.082 and non-

labor portion percentage of 22.918; this rule updated the LUPA (Low Utilization Payment

Adjustments) per-visit payment rate, and the inclusion of an new additional payment for NRS (

Non-Routine Supplies) (HHPPS 2008).

The following table (4) reflects the calculations used to update the national standardized payment

rate under the Medicare HHPPS for 60-day episodes beginning and ending CY 2008 (HHPPS

2008).

CY 2008 Medicare HHPPS National 60-Day Episode Standardized Payment Rate (Table 4)

CY 2007

National

Standardized 60-

day episode

payment rate

Multiplied by

the Home Health

Market Update

3.0 percent

Multiplied by

outlier adjusted

national payment

rate

Adjustments for

LUPA, SCIC,

NRS, Outliers,

and 0.0275

reduction for

case mix

changes

HHPPS CY

2008 National

60-Day

Standardized

Episode

Payment Rate

$ 2,339.00 X 1.030 X 1.05 -259.31 $ 2,270.32



WEIGHTS FOR NON-ROUTINE MEDICAL SUPPLIES (NRS)—SIX-GROUP

APPROACH CY 2008

The Home Health Prospective Payment System Refinement and Rate Update for Calendar Year

2008 included an additional payment for Non-Routine Supplies (NRS). The NRS payment

amounts were computed by multiplying the relative weight for a particular severity level by the

NRS conversion factor. The NRS conversion factor was updated by the home health market

basket update of 2.9 percent and reduced by the 2.75 percent reduction. The CY 2008 NRS

conversion factor for was $52.35. The following table (5) computed the new additional payment

for NRS (Non-Routine Supplies) incurred in home health services for CY 2008 60-day episodes.

The additional payment amount was based on the severity level of the patient care (HHPPS

2008).

CY 2008 Additional Payment for NRS (Table 5)

Severity Level Points Scoring Relative Weight Conversion

Factor

Payment Amount

1

2

3

4

5

6

0

1 – 14

15-27

28-48

49-98

99+

0.2698

0.9742

2.6712

3.9686

6.1198

10.5254

$ 52.35

52.35

52.35

52.35

52.35

52.35

$14.12

51.00

139.84

207.76

320.37

551.00

Home Health Prospective Payment System Updates to the Nationalized Standardized

60-Day Payment Rates

The following table (6) reflects the HHPPS updates to the nationalized 60-day episode payment

rates for each of the following years (excluding NRS): (HHPPS 2008; 2009; 2010; 2011; 2012)

National 60-Day Episode Amounts Updated for Calendar Years 2009-2013 (Table 6)

MSA (Metropolitan Service Area)

Episodes Ending Between

MSA National standardized

60-day episode rate


$ 2,271.92


$ 2,312.94


$ 2,192.07


$ 2,112.37


$ 2,138.52



Home Health Prospective Payment System Rate Update for CY 2014

Effective January 1, 2014, home health agencies receiving Medicare payment rates for providing

home health services has been updated by following proposed rule: “Home Health Prospective

Payment System Rate Update for CY 2014” (FR Vol. 78, No. 128). This rule updates the national

standardized 60-day episode payment rate, the national per visit rates, the low-utilization payment

adjustments (LUPA) rate, and the non-routine medical supplies rate (NRS). The Patient

Protection and Affordable Care Act of 2010(Pub. L. 111-148) also required the Medicare

program to rebase adjustments to the national 60-day rate, the national per-visit rates, and the

NRS payment rates. Table 7 below presents the new 60-day episode nationalized standardized

amount proposed by the above said rule (HHPPS 2014).

Proposed 60-Day Episode Nationalized Standardized Payment Rates for CY 2014 (Table 7)

2013 average

cost per

episode

(estimated)

Rebasing

adjustment

2014 (3.5%

rebasing

reduction)

Factor

adjustment

for outlier

(2.5%

reduction)

Factor

standardization

(2014 wage

index/2013

wage index)

2014 HH

Market

basket index

CY 2014 60-

day

nationalized

standardized

payment

amount

$2,963.65 x 0.9650 x 0.975 x 1.0017 x 1.024 $2,860.20

National Per-Visit Payment Amounts Used To Pay LUPAs for CY 2014

The HHPPS 2014 proposed rule updates the national per-visit rate. This national per-visit rate is

used in paying low- utilization payment adjustments (LUPAs). LUPAs are for episodes with four

or fewer visits. The rate is based on the type of home health visit or home health service

discipline. There are six home health (HH) disciplines as noted on Table 9 below. In determining

the CY 2014 national per-visit amounts used for LUPA episodes, the CY 2013 per-visit amounts

were increased for each home health discipline for CY 2014 by the rebasing adjustment of 3.5

percent. The rates were reduced by an outlier adjustment of 2.9%. The rates were then multiplied

by a neutrality factor of 1.0003. The rates were then updated by the new 2014 HH market basket

of 2.4%. The proposed new CY 2014 national per-visit rates for each HH discipline is shown

below in Table 8 (HHPPS 2014).

Proposed National Per-Visit Rates for CY 2014 (Table 8)

Home health

service

discipline

Nationalized

per - visit

payment

amounts for

CY 2013

Rebasing

adjustment

CY 2014

Adjustment

for outlier

payments

Budget

neutrality

factor

Home

health

market

basket

2014

update

National

per-visit

payment

amounts

for CY

2014

Health Aide $53.12 x 1.035 x 0.975 1.0003 x 1.024 $54.91

Medical

Social Service

188.01 x 1.035 x 0.975 1.0003 x 1.024 194.34

Occupational

Therapy

129.11 x 1.035 x 0.975 1.0003 x 1.024 133.46

Physical

Therapy

128.24 x 1.035 x 0.975 1.0003 x 1.024 132.56



Skilled

Nursing

117.28 x 1.035 x 0.975 1.0003 x 1.024 121.23

Speech

Therapy

139.34 x 1.035 x 0.975 1.0003 x 1.024 144.03

LUPA Add-On Factor CY 2014

The Table 8 per-visit rates computed above are before an additional payment is added to the

LUPA payment. Beginning in CY 2008, home health agencies with LUPAs payments for

episodes billed as the only episode or the initial episode were paid an additional amount (Add-on

Factor) to the LUPA payments. For CY 2014, the proposed additional amount paid to LUPAs

billed as initial episodes in a sequence of adjacent episodes or as the only episode is $87.93.

(HHPPS 2014)

Non-Routine Supplies (NRS)

Beginning in CY 2008, a new system was implemented to pay for non-routine supplies (NRS)

based on 6 severity groups (HHPPS 2008). NRS payment amounts are computed by multiplying

the relative weight for a particular severity level by the NRS conversion factor. The NRS

conversion factor is to be updated each year. The proposed CY 2014 NRS conversion factor is

$53.84. The proposed payment amounts for NRS in the various severity levels are presented

below in Table 9 (HHPPS 2014).

CY 2014 National Standardized Payment Amounts for the 6-Severity NRS System (Table 9)

Severity Level Scoring (Points) Relative Weight Conversion

Factor

Payment Amount

NRS

1 0 0.2698 $53.84 $14.53

2 1 – 14 0.9742 $53.84 52.45

3 15 – 27 2.6712 $53.84 143.82

4 28 – 48 3.9686 $53.84 213.67

5 49 – 98 6.1198 $53.84 329.49

6 99+ 10.5254 $53.84 566.69



Computing the CY 2014 HHPPS 60-Day Episode Payment Rate For a Home Health Agency

The example below demonstrates a sample computation using the national home health

standardized prospective payment system (HHPPS) rates for the 60-day episodes beginning CY

2014. The example computation includes the CY 2014 case-mix weights for a city with the Core

Based Statistical Area (CBSA) codes for labor wage indexes and the labor portion of 78.535

percent and non-labor portion of 21.465 percent. The NRS payment is included in the final

computation (HHPPS 2014).

Corpus Christi

Texas

1. 2014 CBSA Number Site of Service (See Table 10) 18580

2. HHRG C1F1S1 Case Mix Weight (See Table 11) 0.6056

3. Non-Routine Severity Level 1

4. 2014 National 60 Day PPS Rate (See Table 7) $2,860.20

5. HHRG Weight C1F1S1 0.6056

6. Case Mix Adjusted PPS (Line 4 * Line 5) $1,732.13

7. Labor Rate Percentage 0.78535

8. CBSA Labor Wage Index – 18580 (See Table 10) 0.8469

9. CBSA Labor Wage Adjusted Rate PPS (Line 6 * Line 7 * Line 8) $1,152.06

10. National PPS Rate -Non Labor % 0.21465

11. Case Mix PPS Rate - Non Labor Rate% (Line 6 * Line 10) $371.80

12. Adjusted PPS Rate (Line 9 + Line 11) $1,532.86

Non-Routine Supply Add On

13. NRS Conversion Rate (See Table 9) $53.84

14. Severity Level Weighted Adjustment 0.2698

15. Computed NRS Supply Payment ( Line 13 * Line 14) $14.53

16. HHPPS Rate with NRS payment (Line 12 + Line 15) $1,547.39



Medicare HHPPS CY 2014 Wage Index (Table 10)*

CBSA

Code Urban Area

Wage

Index

10180 Abilene, TX 0.8260

10380 Aguadilla-Isabela-San Sebastián, PR 0.3662

10420 Akron, OH 0.8485

10500 Albany, GA 0.8750

10580 Albany-Schenectady-Troy, NY 0.8636

10740 Albuquerque, NM 0.9704

10780 Alexandria, LA 0.7821

10900 Allentown-Bethlehem-Easton, PA-NJ 0.9208

11020 Altoona, PA 0.9140

11100 Amarillo, TX 0.8993

11180 Ames, IA 0.9465

11260 Anchorage, AK 1.2259

11300 Anderson, IN 0.9694

11340 Anderson, SC 0.8803

11460 Ann Arbor, MI 1.0125

11500 Anniston-Oxford, AL 0.7369

11540 Appleton, WI 0.9485

11700 Asheville, NC 0.8508

12020 Athens-Clarke County, GA 0.9284

12060 Atlanta-Sandy Springs-Marietta, GA 0.9465

12100 Atlantic City-Hammonton, NJ 1.2310

12220 Auburn-Opelika, AL 0.7802

12260 Augusta-Richmond County, GA-SC 0.9189

12420 Austin-Round Rock-San Marcos, TX 0.9616

12540 Bakersfield-Delano, CA 1.1730

12580 Baltimore-Towson, MD 0.9916

12620 Bangor, ME 0.9751

12700 Barnstable Town, MA 1.3062

12940 Baton Rouge, LA 0.8050

12980 Battle Creek, MI 0.9763

13020 Bay City, MI 0.9526

13140 Beaumont-Port Arthur, TX 0.8634

13380 Bellingham, WA 1.1940

13460 Bend, OR 1.1857

13644 Bethesda-Rockville-Frederick, MD 1.0348

13740 Billings, MT 0.8727



13780 Binghamton, NY 0.7863

13820 Birmingham-Hoover, AL 0.8395

13900 Bismarck, ND 0.7312

13980 Blacksburg-Christiansburg-Radford, VA 0.8354

14020 Bloomington, IN 0.9343

14060 Bloomington-Normal, IL 0.9349

14260 Boise City-Nampa, ID 0.9298

14484 Boston-Quincy, MA 1.2505

14500 Boulder, CO 0.9891

14540 Bowling Green, KY 0.8314

14740 Bremerton-Silverdale, WA 1.0311

14860 Bridgeport-Stamford-Norwalk, CT 1.3287

15180 Brownsville-Harlingen, TX 0.8213

15260 Brunswick, GA 0.7716

15380 Buffalo-Niagara Falls, NY 1.0048

15500 Burlington, NC 0.8552

15540 Burlington-South Burlington, VT 1.0173

15764 Cambridge-Newton-Framingham, MA 1.1201

15804 Camden, NJ 1.0297

15940 Canton-Massillon, OH 0.8729

15980 Cape Coral-Fort Myers, FL 0.8720

16020 Cape Girardeau-Jackson, MO-IL 0.9213

16180 Carson City, NV 1.0767

16220 Casper, WY 1.0154

16300 Cedar Rapids, IA 0.9001

16580 Champaign-Urbana, IL 0.9450

16620 Charleston, WV 0.8147

16700 Charleston-North Charleston-Summerville 0.9013

16740 Charlotte-Gastonia-Rock Hill, NC-SC 0.9479

16820 Charlottesville, VA 0.8443

16860 Chattanooga, TN-GA 0.8499

16940 Cheyenne, WY 0.9534

16974 Chicago-Joliet-Naperville, IL 1.0446

17020 Chico, CA 1.1637

17140 Cincinnati-Middletown, OH-KY-IN 0.9382

17300 Clarksville, TN-KY 0.7376

17420 Cleveland, TN 0.7528

17460 Cleveland-Elyria-Mentor, OH 0.9306

17660 Coeur d'Alene, ID 0.9102

17780 College Station-Bryan, TX 0.9537

17820 Colorado Springs, CO 0.9321



17860 Columbia, MO 0.8231

17900 Columbia, SC 0.8680

17980 Columbus, GA-AL 0.7896

18020 Columbus, IN 0.9860

18140 Columbus, OH 0.9700

18580 Corpus Christi, TX 0.8469

HHPPS CY 2014 Case-Mix Weights (Table 11)*

Payment

group Description

Clinical,

Functional,

and Service

Levels

2014 HHPPS

Case-Mix Weights

10111 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F1S1 0.6056

10112 1st and 2nd Episodes, 6 Therapy Visits C1F1S2 0.7245



































* Medicare and Medicaid Programs; Home Health Prospective Payment System Rate Update for CY 2014;

42 CFR Part 431, Vol. 78. No. 128

Conclusion

Home health agency administrators need to calculate and evaluate the Medicare HHPPS payment amounts

expected to be received for each of their patients admitted for home health services. These administrators should

prepare standardized payment tables for each of their sites of services. These tables should reflect the HHPPS

payment amount for a patient assigned a particular payment group within each of the 60-day episode based on the

site of service. Under the 2014 HHPPS, home health agencies are to be reimbursed one total for all home health

services, including routine and non-routine medical supplies, provided to their patients within each 60-day episode.

Home health agencies need to calculate their per patient costs for each type of home health service. By obtaining the

per patient cost for each of the different home health services, an agency will be able to determine the total number

of visits financially feasible within the 60-day episode.



REFERENCES

Medicare Program; “Prospective Program Payment System for Home Health Agencies”. 1999.

42 CFR Vol. 64 Parts 409, 410, 411, 413, 424, and 484.

Medicare Program; “Update to the Prospective Program System for Home Health Agencies FY 2002. 2001”.

F.R. Vol. 66, No. 126.

Medicare Program; “Update to the Prospective Program System for Home Health Agencies FY 2003. 2002”.

F.R. Vol. 67, No. 125.

Medicare Program; “Medicare Prescription Drug, Improvement, and Modernization Act of 2003. 2003”.

P.L.: 108-173, Section 701.

Medicare Program; “Home Health Prospective Payment System Rate Update for Calendar Year 2005”.

42 CFR Part 484 Vol. 69, No, 204.


42 CFR Part 484 Vol. 70, No, 216.


42 CFR Part 484 Vol. 71, No. 149.

Medicare Program; “Home Health Prospective Payment System Refinement and Rate Update for

Calendar Year 2008”. 42 CFR Part 484 Vol. 72, No. 230.

Medicare Program; “Home Health Prospective System Rate Update for Calendar Year 2009”.

42 CFR Part 484 Vol. 73, No. 213.


42 CFR Part 484 Vol. 74, No. 216.


42 CFR Parts 409,418,424 et al Vol. 75, No. 221.

Medicare Programs; “Home Health Prospective Payment System Rate Update for CY 2012”.

42 CFR Parts 409, 424, and 484 Vol. 76, No. 214


42 CFR Parts 409,424,484, et al, Vol. 77, No. 217

Medicare and Medicaid Programs; “Home Health Prospective Payment System Rate Update for CY 2014”.

42 CFR Part 431, Vol. 78. No. 128

THE HOME HEALTH PROSPECTIVE PAYMENT SYSTEM RATE UPDATE...

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