42 C.F.R. Subpart E—Prospective Payment System for Home Health Agencies
Title 42 - Public Health
Source: 65 FR 41212, July 3, 2000, unless otherwise noted.
(a) Basis. This subpart implements section 1895 of the Act, which provides for the implementation of a prospective payment system (PPS) for HHAs for portions of cost reporting periods occurring on or after October 1, 2000. (b) Scope. This subpart sets forth the framework for the HHA PPS, including the methodology used for the development of the payment rates, associated adjustments, and related rules. As used in this subpart— Case-mix index means a scale that measures the relative difference in resource intensity among different groups in the clinical model. Discipline means one of the six home health disciplines covered under the Medicare home health benefit (skilled nursing services, home health aide services, physical therapy services, occupational therapy services, speech- language pathology services, and medical social services). Home health market basket index means an index that reflects changes over time in the prices of an appropriate mix of goods and services included in home health services. Rural area means, with respect to home health episodes ending on or after January 1, 2006, an area defined in §412.64(b)(1)(ii)(C) of this chapter. Urban area means, with respect to home health episodes ending on or after January 1, 2006, an area defined in §412.64(b)(1)(ii)(A) and (B) of this chapter. [70 FR 68142, Nov. 9, 2005] (a) Method of payment. An HHA receives a national prospective 60-day episode payment of a predetermined rate for a home health service previously paid on a reasonable cost basis (except the osteoporosis drug defined in section 1861(kk) of the Act) as of August 5, 1997. The national 60-day episode payment is determined in accordance with §484.215. The national prospective 60-day episode payment is subject to the following adjustments and additional payments: (1) A low-utilization payment adjustment (LUPA) of a predetermined per-visit rate as specified in §484.230. (2) A partial episode payment (PEP) adjustment due to an intervening event defined as a beneficiary elected transfer or a discharge and return to the same HHA during the 60-day episode, that warrants a new 60-day episode payment during an existing 60-day episode, that initiates the start of a new 60-day episode payment and a new physician certification of the new plan of care. The PEP adjustment is determined in accordance with §484.235. (3) A significant change in condition (SCIC) payment adjustment due to the intervening event defined as a significant change in the patient's condition during an existing 60-day episode. The SCIC adjustment occurs when a beneficiary experiences a significant change in condition during a 60-day episode that was not envisioned in the original plan of care. The SCIC adjustment is determined in accordance with §484.237. (4) An outlier payment is determined in accordance with §484.240. (b) Episode payment. The national prospective 60-day episode payment represents payment in full for all costs associated with furnishing home health services previously paid on a reasonable cost basis (except the osteoporosis drug listed in section 1861(m) of the Act as defined in section 1861(kk) of the Act) as of August 5, 1997 unless the national 60-day episode payment is subject to a low-utilization payment adjustment set forth in §484.230, a partial episode payment adjustment set forth at §484.235, a significant change in condition payment set forth at §484.237, or an additional outlier payment set forth in §484.240. All payments under this system may be subject to a medical review adjustment reflecting beneficiary eligibility, medical necessity determinations, and HHRG assignment. DME provided as a home health service as defined in section 1861(m) of the Act continues to be paid the fee schedule amount. (1) Split percentage payment for initial episodes. The initial percentage payment for initial episodes is paid to an HHA at 60 percent of the case-mix and wage adjusted 60-day episode rate. The residual final payment for initial episodes is paid at 40 percent of the case-mix and wage adjusted 60-day episode rate. Split percentage payments are made in accordance with requirements at §409.43(c) of this chapter. (2) Split percentage payment for subsequent episodes. The initial percentage payment for subsequent episodes is paid to an HHA at 50 percent of the case-mix and wage adjusted 60-day episode rate. The residual final payment for subsequent episodes is paid at 50 percent of the case-mix and wage adjusted 60-day episode rate. Split percentage payments are made in accordance with requirements at §409.43(c) of this chapter. (c) Low-utilization payment. An HHA receives a national 60-day episode payment of a predetermined rate for home health services previously paid on a reasonable cost basis as of August 5, 1997, unless CMS determines at the end of the 60-day episode that the HHA furnished minimal services to a patient during the 60-day episode. A low- utilization payment adjustment is determined in accordance with §484.230. (d) Partial episode payment adjustment. An HHA receives a national 60-day episode payment of a predetermined rate for home health services previously paid on a reasonable cost basis as of August 5, 1997, unless CMS determines an intervening event, defined as a beneficiary elected transfer, or discharge and return to the same HHA during a 60-day episode, warrants a new 60-day episode payment. The PEP adjustment would not apply in situations of transfers among HHAs of common ownership as defined in §424.22 of this chapter. Those situations would be considered services provided under arrangement on behalf of the originating HHA by the receiving HHA with the common ownership interest for the balance of the 60-day episode. The common ownership exception to the transfer PEP adjustment does not apply if the beneficiary moves to a different MSA or Non-MSA during the 60-day episode before the transfer to the receiving HHA. The transferring HHA in situations of common ownership not only serves as a billing agent, but must also exercise professional responsibility over the arranged-for services in order for services provided under arrangements to be paid. The discharge and return to the same HHA during the 60-day episode is only recognized in those circumstances when a beneficiary reached the goals in the original plan of care. The original plan of care must have been terminated with no anticipated need for additional home health services for the balance of the 60-day episode. If the intervening event warrants a new 60-day episode payment and the new physician certification of a new plan of care, the initial HHA receives a partial episode payment adjustment reflecting the length of time the patient remained under its care. A partial episode payment adjustment is determined in accordance with §484.235. (e) Significant change in condition adjustment. The HHA receives a national 60-day episode payment of a predetermined rate for home health services paid on a reasonable cost basis as of August 5, 1997, unless CMS determines an intervening event defined as a beneficiary experiencing a significant change in condition during a 60-day episode that was not envisioned in the original plan of care occurred. In order to receive a new case-mix assignment for purposes of payment during the 60-day episode, the HHA must complete an OASIS assessment and obtain the necessary physician change orders reflecting the significant change in the treatment approach in the patient's plan of care. The total significant change in condition payment adjustment is a proportional payment adjustment reflecting the time both prior and after the patient experienced a significant change in condition during the 60-day episode. A SCIC adjustment is determined in accordance with §484.237. (f) Outlier payment. An HHA receives a national 60-day episode payment of a predetermined rate for a home health service paid on a reasonable cost basis as of August 5, 1997, unless the imputed cost of the 60-day episode exceeds a threshold amount. The outlier payment is defined to be a proportion of the imputed costs beyond the threshold. An outlier payment is a payment in addition to the national 60-day episode payment. The total of all outlier payments is limited to 5 percent of total outlays under the HHA PPS. An outlier payment is determined in accordance with §484.240. To calculate the national prospective 60-day episode payment, CMS uses the following: (a) Medicare cost data on the most recent audited cost report data available. (b) Utilization data based on Medicare claims. (c) An appropriate wage index to adjust for area wage differences. (d) The most recent projections of increases in costs from the HHA market basket index. (e) OASIS assessment data and other data that account for the relative resource utilization for different HHA Medicare patient case-mix. (a) Determining an HHA's costs. In calculating the initial unadjusted national 60-day episode payment applicable for a service furnished by an HHA using data on the most recent available audited cost reports, CMS determines each HHA's costs by summing its allowable costs for the period. CMS determines the national mean cost per visit. (b) Determining HHA utilization. In calculating the initial unadjusted national 60-day episode payment, CMS determines the national mean utilization for each of the six disciplines using home health claims data. (c) Use of the market basket index. CMS uses the HHA market basket index to adjust the HHA cost data to reflect cost increases occurring between October 1, 1996 through September 30, 2001. (d) Calculation of the unadjusted national average prospective payment amount for the 60-day episode. CMS calculates the unadjusted national 60-day episode payment in the following manner: (1) By computing the mean national cost per visit. (2) By computing the national mean utilization for each discipline. (3) By multiplying the mean national cost per visit by the national mean utilization summed in the aggregate for the six disciplines. (4) By adding to the amount derived in paragraph (d)(3) of this section, amounts for nonroutine medical supplies, an OASIS adjustment for estimated ongoing reporting costs, an OASIS adjustment for the one time implementation costs associated with assessment scheduling form changes and amounts for Part B therapies that could have been unbundled to Part B prior to October 1, 2000. The resulting amount is the unadjusted national 60-day episode rate. (e) Standardization of the data for variation in area wage levels and case-mix. CMS standardizes— (1) The cost data described in paragraph (a) of this section to remove the effects of geographic variation in wage levels and variation in case-mix; (2) The cost data for geographic variation in wage levels using the hospital wage index; and (3) The cost data for HHA variation in case-mix using the case-mix indices and other data that indicate HHA case-mix. CMS adjusts the national prospective 60-day episode payment rate to account for— (a) HHA case-mix using a case-mix index to explain the relative resource utilization of different patients; and (b) Geographic differences in wage levels using an appropriate wage index based on the site of service of the beneficiary. (a) CMS updates the unadjusted national 60-day episode payment rate on a fiscal year basis. (b) For fiscal year 2001, the unadjusted national 60-day episode payment rate is adjusted using the latest available home health market basket index factors. (c) For fiscal years 2002 and 2003, the unadjusted national prospective 60-day episode payment rate is updated by a factor equal to the applicable home health market basket minus 1.1 percentage points. (d) For the last calendar quarter of 2003 and the first calendar quarter of 2004, the unadjusted national prospective 60-day episode payment rate is equal to the rate from the previous fiscal year (FY 2003) increased by the applicable home health market basket index amount. (e) For the last the 3 calendar quarters of 2004, the unadjusted national prospective 60-day episode payment rate is equal to the rate from the previous fiscal year (FY 2003) increased by the applicable home health market basket minus 0.8 percentage points. (f) For each calendar year of 2005 and 2006, the unadjusted national prospective 60-day episode payment rate is equal to the rate from the previous calendar year, increased by the applicable home health market basket minus 0.8 percentage points. (g) For 2007 and subsequent calendar years, the unadjusted national rate is equal to the rate for the previous calendar year increased by the applicable home health market basket index amount. [65 FR 41212, July 3, 2000, as amended at 69 FR 62138, Oct. 22, 2004] An episode with four or fewer visits is paid the national per-visit amount by discipline updated annually by the applicable market basket for each visit type. The national per-visit amount is determined by using cost data set forth in §484.210(a) and adjusting by the appropriate wage index based on the site of service for the beneficiary. (a) CMS makes a PEP adjustment to the original 60-day episode payment that is interrupted by an intervening event described in §484.205(d). (b) The original 60-day episode payment is adjusted to reflect the length of time the beneficiary remained under the care of the original HHA based on the first billable visit date through and including the last billable visit date. (c) The partial episode payment is calculated by determining the actual days served by the original HHA as a proportion of 60 multiplied by the initial 60-day episode payment. (a) CMS makes a SCIC payment adjustment to the original 60-day episode payment that is interrupted by the intervening event defined in §484.205(e). (b) The SCIC payment adjustment is calculated in two parts. (1) The first part of the SCIC payment adjustment reflects the adjustment to the level of payment prior to the significant change in the patient's condition during the 60-day episode. The first part of the SCIC adjustment is determined by taking the span of days (the first billable visit date through and including the last billable visit date) prior to the patient's significant change in condition as a proportion of 60 multiplied by the original episode amount. (2) The second part of the SCIC payment adjustment reflects the adjustment to the level of payment after the significant change in the patient's condition occurs during the 60-day episode. The second part of the SCIC adjustment is calculated by using the span of days (the first billable visit date through and including the last billable visit date) through the balance of the 60-day episode. (c) The initial percentage payment provided at the start of the 60-day episode will be adjusted at the end of the episode to reflect the first and second parts of the total SCIC adjustment determined at the end of the 60-day episode. (a) CMS makes an outlier payment for an episode whose estimated cost exceeds a threshold amount for each case-mix group. (b) The outlier threshold for each case-mix group is the episode payment amount for that group, the PEP adjustment amount for the episode or the total significant change in condition adjustment amount for the episode plus a fixed dollar loss amount that is the same for all case-mix groups. (c) The outlier payment is a proportion of the amount of estimated cost beyond the threshold. (d) CMS imputes the cost for each episode by multiplying the national per-visit amount of each discipline by the number of visits in the discipline and computing the total imputed cost for all disciplines. (e) The fixed dollar loss amount and the loss sharing proportion are chosen so that the estimated total outlier payment is no more than 5 percent of total payment under home health PPS. (a) General rule. Upon request, an accelerated payment may be made to an HHA that is receiving payment under the home health prospective payment system if the HHA is experiencing financial difficulties because there is a delay by the intermediary in making payment to the HHA. (b) Approval of payment. An HHA's request for an accelerated payment must be approved by the intermediary and CMS. (c) Amount of payment. The amount of the accelerated payment is computed as a percentage of the net payment for unbilled or unpaid covered services. (d) Recovery of payment. Recovery of the accelerated payment is made by recoupment as HHA bills are processed or by direct payment by the HHA. An HHA must submit to CMS the OASIS data described at §484.55(b)(1) and (d)(1) in order for CMS to administer the payment rate methodologies described in §§484.215, 484.230, 484.235, and 484.237. An HHA is not entitled to judicial or administrative review under sections 1869 or 1878 of the Act, or otherwise, with regard to the establishment of the payment unit, including the national 60-day prospective episode payment rate, adjustments and outlier payments. An HHA is not entitled to the review regarding the establishment of the transition period, definition and application of the unit of payments, the computation of initial standard prospective payment amounts, the establishment of the adjustment for outliers, and the establishment of case-mix and area wage adjustment factors. QIO photocopy and mailing costs. An additional payment is made to a home health agency in accordance with §476.78 of this chapter for the costs of photocopying and mailing medical records requested by a QIO. [68 FR 67960, Dec. 5, 2003]
Title 42: Public Health
PART 484—HOME HEALTH SERVICES
Subpart E—Prospective Payment System for Home Health Agencies
§ 484.200 Basis and scope.
§ 484.202 Definitions.
§ 484.205 Basis of payment.
§ 484.210 Data used for the calculation of the national prospective 60-day episode payment.
§ 484.215 Initial establishment of the calculation of the national 60-day episode payment.
§ 484.220 Calculation of the adjusted national prospective 60-day episode payment rate for case-mix and area wage levels.
§ 484.225 Annual update of the unadjusted national prospective 60-day episode payment rate.
§ 484.230 Methodology used for the calculation of the low-utilization payment adjustment.
§ 484.235 Methodology used for the calculation of the partial episode payment adjustment.
§ 484.237 Methodology used for the calculation of the significant change in condition payment adjustment.
§ 484.240 Methodology used for the calculation of the outlier payment.
§ 484.245 Accelerated payments for home health agencies.
§ 484.250 Patient assessment data.
§ 484.260 Limitation on review.
§ 484.265 Additional payment.
