PPS 2008 A New Approach to Home Health PPS

1. PPS 2008A New Approach to Home Health PPS

2. What Does Not Change Episodic payment on 60-day episodes LUPA to full episode at 5th visit Basic HHRG concept with domains (C/F/S) PEPs Outliers Therapy visits are still counted in rate RAPs OASIS feeds the grouper

3. What Does Not Change Use of pre-floor, pre-reclassified hospital wage index Use of CBSA area designations for location where services are furnished Use of adjacent CBSAs to back-fill rural area home health wage index where no rural hospital data is reported

4. What is Gone: M0175 M0175 was hard and costly to administer for both CMS and agencies The weights were counter-intuitive and small The claims system forced retroactive adjustments and audit recoveries Propose keeping it in OASIS VNAA supported elimination

5. What is Gone: M0610 Behavioral disorders are out of PPS Difficult to assess objectively Low points fell out when diagnostic variables including behavioral health were added

6. What is Gone: Therapy Threshold CMS wanted to completely eliminate and substitute OASIS-based algorithm Instead: Three therapy thresholds at 6, 14 and 20 visits with grouped payments in-between at a reduced incremental payment Increments are grouped at 6, (7,8,9), 10, (11,12,13),14, 15, (16,17), (18,19) and 20

7. What is Done: SCIC Significant Change In Condition (SCIC) Hard to identify Almost always up vs. down Small percentage of cases Net payment increase - was often zero or small due to proration methodology Agencies persisted in claiming negative SCICs thus reducing their payment - saved CMS money VNAA supported elimination

8. What is New: Late Episode Adjuster CMS research verified that episodes are consistently more costly after second consecutive episode Long stay patient episodes will get an average 7% premium payment built into the case mix weights Will be captured in add-on OASIS item VNAA supported validation and payment for chronic patients

9. What is New: Diagnoses Many new primary diagnoses are now scored for PPS points In addition some secondary diagnoses are scored for the first time In addition, some primary/secondary diagnoses are scored in combination Added: gastrointestinal, pulmonary, cardiac, cancer, blood disorder, affective and psychoses diagnostic groups

10. What Is New: Oasis Items M0470 - Current Observable Pressure Ulcers M0520 - Urinary Incontinence or Urinary Catheter Presence M0800 - Management of Injectable Medications

11. What is New: Scorings for OASIS Format remains clinical, functional, service Clinical is C1, C2, C3 Functional is F1, F2, F3 Service is S1, S2, S3, S4, S5 OASIS variables to scoring level is complex and reflected in several dozen pages (Rule Table 2a and 2b)

12. What is New: Case Mix Groups From 80 to 153 Case Mix (HHRG) Groups Still based on scoring in 3 domains (clinical, functional, service) Subdivided into 5 Subsets: First episodes 0 -13 therapy visits - 45 HHRGs First episodes 14 - 19 therapy visits - 27 HHRGs Third+ episodes 0 -13 therapy visits - 45 HHRGs Third+ episodes 14 -19 therapy visits - 27HHRGs All episodes 20+ therapy visits - 9 HHRGs

13. What is New: Case Mix Weights 153 new case mix weights (Rule Table 5) Range from 0.5549 to 3.3724 Same score achieves significantly higher payment in 3+ episode group. For example, C1-F1-S1 is .5549 for initial episodes and .6474 in 3+ episode group.

14. What is New: Increase in LUPA Payment CMS agrees LUPA (Low Utilization Payment Adjustment) systematically underpaid LUPAs will be paid additional $92.63 Only applied to LUPA-only episodes and first LUPA in a series of adjacent episodes Seeking comment on alternative methodologies

15. What is New: Add-on Non-Routine Supplies (Corrected Table Pending CMS) Flat rate ($53.96) in each PPS episode is replaced. (Conversion Factor $52.77) New 5-level payment structure is substituted Severity Level 1 =.2456=$12.96 (zero points) Severity Level 2 =1.0356=$54.65(1-16 points) Severity Level 3 = 2.0764=$109.48 (17-34 points) Severity Level 4 = 4.0776=$215.17(35-59 points) Severity Level 5 = 6.9612=$367.34 (60+ points) Point scores based on 37 diagnostic and OASIS items. See Table 12(a)

16. What is New: MB Base, Labor Split, Standardized Rate HHMB base year moved from 2000-2003 Labor increased from 76.775 to 77.082 Non-labor decreased from 23.225 to 22.918 2008 HHMB estimated at 2.9%, effective 1/08 New standardized rate for full implementation (episodes beginning and ending in 2008) = $2,300.60 Note episodes beginning in 2007 and ending in 2008 have higher $2,355.96 rate. Full 2008 includes adjustments to increase LUPA, NRS add-on, SCIC elimination, creep adjustment and outlier adjustment

17. Calculating New PPS: Full Episode Multiply the standardized episode rate ($2300.60) by the new HHRG weight (Rule Table 5 based on score from Table 2a) Split the result between labor and non-labor portion (Labor = .77082) and apply CBSA wage index to labor portion (Table Addendum A & B) Sum of the wage index adjusted labor and non-labor portion = HHPPS payment for that episode without NRS. Multiply the NRS Conversion factor ($52.77) by the NRS Severity level (Rule Table 11 based on score from Table 12a) Add severity adjusted NRS amount to previously calculated episode payment to get total PPS payment

18. Calculation: Initial Episode LUPAs Multiply LUPA Episode Adjustment amount ($92.63) times .77082 to determine labor portion Multiply labor portion times CBSA Wage Index Add labor and non-labor portions to get labor adjusted LUPA Episode Adjustment Calculate discipline specific LUPA payment by multiplying labor portion of standardized LUPA amount by CBSA Wage Index Add labor and non-labor portions and sum these with previously calculated LUPA Episode Adjustment to get total LUPA payment

19. LUPA Rates HHAide = $47.91 MSS = $169.53 OT = $116.42 PT = $115.63 SN = $105.76 SLP = $124.55 Add $92.63 per single or initial LUPA episode

20. Home Health Quality Improvement Two additional measures added to public reporting and data submission requirements Emergent care for wound infections, deteriorating wound status Improvement in status of surgical wound Patient level process measures in testing and revised OASIS measures introduced in 2008 and implemented by 2010

21. The Bad News: Creep Adjustment Federal Law BIPA 2000, Section 501c � Secretary can adjust standardized payment for home health in any year in which he determines payment will be made ��as a result of changes in the coding or classification of services that do not reflect real changes in case mix�� CMS contracted study was not expected until PPS Reform settled White House budget required savings. Thus, standard rate reduced 2.75% in each year 2008, 2009, 2010.

22. Creep Analysis Average Case Mix weight in 2000 was 1.0, now it is 1.233. Average Case Mix in IPS was 1.125 which when adjusted to first year PPS agency distribution was 1.134 Difference between 1.134 and 1.233 is 8.7% Spread across 3 years at 2.75% to be nice and allow for further adjustment

23. Conclusion and Next Steps While CMS has addressed many long-standing issues in this rule in the direction suggested by VNAA and others, only individual member by member analysis will reveal true impact and guide our overall response. Vendors are gearing up to offer impact analysis services. The imposition of the case mix creep reduction significantly undermines financial progress this year and for the next 2 years and must be opposed administratively and politically. CMS failed to act on many smaller issues such as cost impact of Medicaid and caregiver status, PEPs, RAPs etc. We need to call these to their attention in comments.

24. How Much Time do We Have to Eliminate 3-year 2.75% Cuts (total $8.25 billion)? Until July 3, 2007, 5:00 p.m. EDT Only 33 business days!

25. 2008 Reimbursement Before/After 2.75% Cut CY 2007 60-day rate (before case-mix and wage index adjustments): $2,339.00 Before: CY 2008 60-day rate (before CM and WI adjustments) plus the estimated 2.9% market basket update, and LUPA, NRS, SCIC, and FDL adjustments: $2370.10 After: CY 2008 60-date rate (before CM and WI adjustments), plus the 2.9% update, minus 2.75% adjustment, and LUPA, NRS, SCIC, FDL adjustments: $2300.60

26. What Can We Do? All VNAs should submit comments to CMS on how the 2.75% cuts in 2008, 2009, and 2010 would affect the special programs or services you provide in your community and/or the impact the cuts would have on consumers� access to home healthcare

27. Submitting Comments Can be done in one of four ways: ? By regular mail: Centers for Medicare and Medicaid Services, Dept. of Health and Human Services, Attention: CMS-1541-P, PO Box 8012, Baltimore, MD, 21244-8012 ? By express or overnight mail: CMS, DHHS, Attention: CMS-1541-P, Mail Stop C4-26-05, 7500 Security Blvd., Baltimore, MD 21244-1850 ? Electronically: http://www.cms.hhs.gov/eRulemaking ? By hand or courier Details in May 4 Federal Register, Page 25356; one original/2 copies

28. When Commenting on the Proposed 2.75% �Rebasing� Cuts, Reference: 42 CFR Part 484, Section II � �Provisions of the Proposed Regulation�; Subsection B � �Rebasing and Revising the Home Health Market Basket�

29. Talking Points on Impact of 8.25% Cut The proposed 2.75% cut in each of 2008, 2009, and 2010 would jeopardize our VNA�s mission to serve as the safety net, home health provider in our community by: List any programs or services that you would no longer be able to provide. Would you still be able to take Medicaid patients? Would you have to limit service areas? Would beneficiaries� access to home health be limited? What would the effect be on your employees?

30. Additional Talking Points Address the increase from 1.0 to 1.23 � why else would it have gone up? Increase in acuity level of patients?

31. Bring your Members of Congress into the Loop Send a copy of your comments to your U.S. Senators and your U.S. Representative at their Washington D.C. offices with a cover letter on your letterhead. If any of these legislators are Republican, please ask them at the beginning of your cover letter to contact Herb Kuhn, Director of the Center for Medicare Management at CMS (410-786-4164), to voice their concern about the impact that the 2.75% �rebasing cuts� would have on your VNA and on Medicare home health beneficiaries in their district or state. Follow-up with the Legislators� Health Legislative Aides

32. Bringing Congress into the Loop For Democrats, explain the situation in your cover letter and the effects that the 2.75% cuts would have on your VNA and access to care. (Opportunity to explain impact of ANY Medicare cuts) VNAA will send to CEOs and other targets lists a cover letter for both Republicans and Democrats All Legislators phone numbers, addresses, and fax numbers may be found at www.congress.org Faxed letters are the most efficient (or e-mailed letters if you know the e-mail addresses of the Health LAs)

33. Priority Focus is Now on Admin. Cut Window of influencing change is tight Congress is not looking at Medicare legislation right now � most likely in the Fall There are Senate and House letters supporting home health, but we need to put all of our energies into fighting the Admin. cut now. VNAA may call you individually regarding the letters.