Home Health Prospective Payment Final Rule - Summary of Key Points

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Home Health Prospective PaymentFinal Rule -
Summary of Key Points

• Brian D. Ellsworth
• Senior Associate Director Policy Development
  Group
• August, 2000

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Structure of Presentation

• Context for Home Health PPS
• Key Components of the Final Rule
• Operational/Strategic Imperatives

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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

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Trends in Program Payments for MedicareHome
Health Agency Services 1988-1998
Number in Millions
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Home Health Agency Types
Number of Agencies
10-1-97
4-13-99
3-16-00
Source HCFA - On-Line Survey Certification and
Reporting System
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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

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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)

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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

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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

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Impact of Home Health Agency PPSFinal Rule
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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

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HHRGs - Summary of scoring changes Proposed vs.
Final rule
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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

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LUPA Per Visit Rates - Proposed vs. Final
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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

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Outlier adjustment available for very high cost
cases

• Outlier provision allows for recovery of 80
  percent of costs above set loss threshold
• Agencys actual episode costs estimated from
  within-episode visit data provided on the claim
• Automatically provided if case qualifies

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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

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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

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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

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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

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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 OASIS
• Well-trained and motivated staff