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PPS Home Health Reform. Revised CMS regulations By Renee Korb, President Korb Consulting, Inc. What we will Learn. Summary of payment changes What C – F & S stand for Formula’s & Calculations Strategies Billing and Technical Changes. Summary of Payment Changes.

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pps home health reform

PPS Home Health Reform

Revised CMS regulations


Renee Korb, President

Korb Consulting, Inc.

what we will learn
What we will Learn
  • Summary of payment changes
    • What C – F & S stand for
  • Formula’s & Calculations
  • Strategies
  • Billing and Technical Changes
summary of payment changes
Summary of Payment Changes
  • 80 episodes payment rates to 153
  • Additional oasis questions effect payment score
  • New oasis questions
  • Early & Late episodes
c clinical domain
C = Clinical Domain


  • Diagnosis – not just primary
  • Clinical Condition
f functional
F = Functional

Components remain unchanged

  • Dressing – MO650 or MO660
  • Bathing – MO670
  • Toileting – MO680
  • Transferring – MO690
  • Ambulation – MO700
clinical functional
Clinical & Functional

45 Clinical Oasis questions are assigned points based on the 4 Equation model

6 Functional Oasis questions are assigned points based on the 4 Equation model

See Exhibit 1

s service utilization
S = Service Utilization
  • OLD 10 therapy visit cut off
s service utilization8
S = Service Utilization


  • 6 visits
  • 7 to 9 visits
  • 10 visits
  • 11 to 13 visits
  • 14 to 19 visits
  • 20 + visits
the calculation
The Calculation
  • 1st complete the Oasis
    • Identify if an early or late episode
    • Determine the number of therapy visits
  • Score clinical and functional items based on 4 equation model (Exhibit 1 – CMS Table 2A)
  • Assign CFS Severity levels based on scores (Exhibit 2 - CMS Table 3)
the calculation10
The Calculation
  • National Rate X Case Mix Weight = Case Mix Rate
  • Identify Labor Portion (.77082 X Case Mix Rate)
  • Adjust for wage index (Labor Portion X Wage index for patients location)
  • Add Non Labor Portion to wage weighted labor portion
  • Calculate the NRS amount and add it on
case mix groups
Case Mix Groups
  • 153 Case Mix Groups (HHRGS)
  • Severity levels are:
    • C1 to C3
    • F1 to F3
    • S1 to S5
  • Assigned to 5 Groups
    • Early Episode (1st & 2nd) Low Therapy (0 – 13 visits)
    • Early Episode (1st & 2nd) High Therapy (14 – 19 visits)
    • Late Episode (3+) Low Therapy (0 – 13 visits)
    • Late Episode (3+) High Therapy (14 – 19 visits)
    • All episodes 20+ therapy visits
  • Case weights range from .5827 to 3.4872
other changes
Other Changes

SCIC (significant change in condition)

Gone to the Wind

other changes21
Other Changes
  • The Outlier ratio has changed
  • Will result in fewer episodes that will qualify as an outlier
other changes22
Other Changes
  • LUPA Add On
  • Very 1st Episode or 1st in a series of adjacent episodes
  • $87.93 additional for the episode
  • Supposed to cover the additional cost of an initial assessment
calculate agency impact
Calculate Agency Impact

Understand and measure the financial impact to your prior episodes

  • List every episode
  • Attempt to get the following
    • DX
    • Visit totals by discipline
    • Episode dates
    • Episode payment
    • Patient name
calculate agency impact25
Calculate Agency Impact


  • Sort by client
  • Summarize between early and late episodes
  • Summarize early and late episodes by therapy utilization group
  • Apply industry estimates by category
analyze current case load
Analyze current case load
  • Review episodes
    • Sort episodes by DX codes
    • Sort by HHRG
    • Look for positive cases
      • Lower visits
      • Excellent outcomes
      • Reduced Hospitalizations
    • What can we learn from these
analyze your operations
Analyze your operations
  • Review your current operations and look for process changes that result in additional cost savings
  • Use Telehealth
  • Use the telephone
  • Look for disease management pathways or programs
analyze your operations29
Analyze your operations
  • Staff training on OASIS for accuracy
  • Office or persons checking CWF to answer M0110 and re-check in 2-3 week timeframe
  • Coding for diagnosis very important, do any on line or audio courses available. Do not over use V codes
analyze your operations30
Analyze your operations
  • Diagnosis sequencing extremely important. Refer to ICD-9 books for guidance
  • Consider making 1 person a coding expert
  • Use real time benchmarking systems to stay on top of outcomes and performance
  • Consider having an OASIS QA person to make sure all questions are answered consistently and accurately
analyze your operations31
Analyze your operations
  • OASIS QA person to be sure intent is accurate for all SOC, Recerts and D/C.
  • Consider using HHA’s for rehab that do not require therapies
  • Check supplies to be sure you are using the most cost effective supply and not the most expensive
analyze your operations32
Analyze your operations
  • Include all supplies on the bills and 485, even if they are supplies that are not being reimbursed. Be sure you know supply costs, Look at best practice for wound care
analyze your operations33
Analyze your operations
  • Billable Medical Supply List Exhibit A
  • Get your medical supply billing process in place (Payment rates in CMS Table 9)
plan for cash flow interruptions
Plan for Cash Flow Interruptions
  • Will the Intermediaries be ready??
  • Will your vendors be ready?
  • Will your staff be trained?
back office changes
Back Office Changes
  • New methodology requires tracking new things
    • Which episode is it
    • Accurately project therapy visits
    • Identify supplies or why no supplies
back office changes36
Back Office Changes
  • New methodology requires clinical reporting changes
    • New Oasis
    • During transition will file both forms for episodes under old rules and episodes under new rules
back office changes37
Back Office Changes
  • New methodology requires billing changes
    • Results in IT interface changes
technical process changes
Technical Process Changes

CR 5746 (Exhibit B) contains revisions to a number of sections for case mix policy changes

  • Revises field by field billing instructions
  • Describes the new coding required
  • Contains detailed description of new HH pricer Logic
  • Contains IT requirements for Medicare ET
data submission changes
Data Submission Changes
  • Elimination of SCIC
    • Effective episodes starting on or after 1/1/08
    • Claims must NOT contain more than 1 revenue code 0023 line
    • Claims will be rejected and returned
data submission changes40
Data Submission Changes
  • New HIPPS coding structure requires additional information to determine payment
  • Many new HIPPS codes
data submission changes41
Data Submission Changes

Need episode sequence and grouping step

  • New HIPPS codes will begin with a number to represent the episode sequence and therapy visit grouping

1 = early episodes and 0 – 13 therapy visits

2 = early episodes and 14 – 19 therapy visits

3 = later episodes and 0 – 13 therapy visits

4 = later episodes and 14 – 19 therapy visits

5 = all episodes and 20+ therapy visits

data submission changes42
Data Submission Changes
  • Positions 2, 3 & 4 continue to report severity levels C F & S Domains
  • Clinical domain reported with letters A, B or C
  • Functional domain letters reported with F, G or H
  • Service domain reported with letters K,L, M, N & P
data submission changes43
Data Submission Changes

Need non-routine supply severity level

  • Position 5 of the code will represent NRS

S – Level 1 NRS provided

T – Level 2 NRS provided

U – Level 3 NRS provided

V – Level 4 NRS provided

W – Level 5 NRS provided

X– Level 6 NRS provided

data submission changes44
Data Submission Changes

Need non-routine supply severity level

  • Position 5 of the code will represent NRS

1 – Level 1 NRS NOT provided

2 – Level 2 NRS NOT provided

3 – Level 3 NRS NOT provided

4 – Level 4 NRS NOT provided

5 – Level 5 NRS NOT provided

6– Level 6 NRS NOT provided

data submission changes45
Data Submission Changes

New format for treatment authorization code

  • The “Claims Oasis Matching Key” contains information needed
  • The last 9 positions will carry recoding info
  • 1 number to show the episode sequence (1 =early, 2 = late)
data submission changes46
Data Submission Changes
  • 4 pairs of letters that encode the scores in the clinical and functional domains as calculated under each of the 4 equations of the refined case mix model
  • Again, “possible new format” matches CR 5746
  • Format will be validated by Medicare systems
intermediaries re code claims
Intermediaries Re-code Claims
  • Medicare systems will validate your final claim
    • Did the original episode get reported with the correct sequence # (early or late)
    • Are the therapy levels reported supported by actual covered therapy visits
intermediaries re code claims48
Intermediaries Re-code Claims
  • Errors found in sequence and therapy reporting will automatically adjust the codes and pay accordingly
  • Values in the treatment authorization code will be used to make the determination
supply reporting
Supply Reporting
  • CMS is creating a validation process
  • Ensure that the 5th position of the HIPPS code is a letter indicating supplies were reported
  • At least 1 revenue code 27x or 623 line must be present on the claim
supply reporting50
Supply Reporting
  • A Grace period will initially allow for absent supply lines
    • Claim will be paid
    • Message on the Remittance advice will alert HHA to the inconsistent data
  • After the “Grace Period” claims will be rejected
supply reporting51
Supply Reporting
  • You will be required to report why there are no supplies
  • For example, patient is VA and gets them through VA
  • Supplies are not required and why
supply reporting52
Supply Reporting
  • Final changes will be described by CMS in a separate CR and implemented in April 2008
  • Grace period will begin in April 2008 and extend for a period to be announced in the future
  • Not sure what happens January through March
good luck
  • Overall the impact should be 50% lose and 50% win.
  • Analysis has shown the expected reimbursement change will hit the Midwest less than anywhere else
  • Analysis has also shown we will lose more on early episodes with less than 14 visits
good luck54
  • Analysis has shown Urban agencies will gain more and rural agencies will lose more
  • Analysis has shown non profit agencies will gain more and for profit agencies will lose more
get ready
Get Ready
  • Educate
  • Analyze
  • Improve quality while implementing cost saving processes
  • Prepare for cash flow interruptions
  • Implement new management tools to monitor as you move forward and adjust accordingly
pps home health reform56

PPS Home Health Reform

Revised CMS regulations


Renee Korb, President

Korb Consulting, Inc.