The Benchmark Email

...benchmarks, strategies and ideas for improving your agency
A service of Fazzi Associates, Inc.

May 2, 2007

CMS Announces Proposed Changes
to Home Health PPS

Question: CMS has come out with their proposed changes for the Home Health Perspective Payment System. Have you analyzed the changes and can you tell us what the major changes are?

Answer: Yes! On Friday, April 27, 2007, CMS published the proposed changes to the Home Health Prospective Payment System. The proposed rule includes changes to the case-mix model, base episode payment, and quality reporting requirements. These refinements are expected to be finalized in fall 2007 with implementation expected for January 1, 2008. The changes outlined in the proposed model are considerable and require continued analysis.

The changes recommended in the proposed rule could significantly impact an agency's operations and reimbursement. They include but are not limited to:

• Reduced payment rates by 2.75% per year for three consecutive years
• 80 HHRGs increased to 153 HHRGs
• Ten visit therapy threshold eliminated and replaced with gradual increase in payment using three threshold model: 6, 14, and 20 visits
• Four-equation case-mix weight model that accounts for early and late episodes; regardless if same provider or not
• M0175 (Inpatient facility) eliminated
• SCIC eliminated
• $92.63 added to LUPAs when the only episode or first episode in series
• Non-routine supply (NRS) cost based on updated conversion factor of $52.30; case-mix adjusted based on five NRS severity groups
• Quality reporting on 12 measures of quality (Emergent Care for Wound Infections and Improvement in Status of Surgical Wounds added)

The CMS document outlining the proposed HH PPS refinements can be found at this CMS web site.

A comparison of the current model with the proposed model prepared by CMS can be found on this fact sheet.

The reduction in payment rates by 2.75% per year for three consecutive years clearly has significant implications to agencies as to a number of other recommendations. Fazzi Associates continues to monitor and evaluate the developments of the PPS refinements. We plan on using both this Benchmark Email and other communication vehicles to keep our clients and Benchmark Email subscribers updated.

If there is one suggestion we should make it is this: Now is the time to focus on ensuring that your OASIS Assessments are accurate and your case mix weights reflect that accuracy. In the CMS document, CMS reports that in the most current available data from 2003, the average case-mix weight per episode for initial episodes is 1.233. If you are not near that average, you should determine if it is because you are dealing with patients with less severity or if your problem really is OASIS accuracy. If you don't know or if you know it is the latter, we strongly suggest that you consider an OASIS audit and training. It is the best way to ensure that you are positioned for changes that will certainly occur.