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Home Health Medicare Refinement Changes Effective 1/1/2008. HFMA: Southern California chapter, March program Paul Giles, Catholic Healthcare West. Timeline. First revision since October, 2000 Proposed rule published on April 27, 2007 Sixty day comment period closes June 26, 2007

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home health medicare refinement changes effective 1 1 2008

Home Health Medicare Refinement Changes Effective 1/1/2008

HFMA: Southern California chapter, March program

Paul Giles, Catholic Healthcare West

  • First revision since October, 2000
  • Proposed rule published on April 27, 2007
  • Sixty day comment period closes June 26, 2007
  • Final rule August 2007
  • Effective date 1-1-08, but 2 step approach
    • Those episodes beginning in 2007 but ending in 2008
    • Those episodes beginning in 2008
pps reform rule
PPS Reform Rule
  • 2008 rate update
  • PPS case-mix adjuster replaced
  • PPS structural reforms
  • Case-mix creep adjustment
no changes in services within episodes
No Changes in Services Within Episodes
  • Services include same required Skilled Nursing, Physical Therapy, Occupational Therapy, Speech-language pathology, Medical Social Services, Home Health Aide, and non-routine supplies
  • 60-day Episodes
rebase national rate
Rebase National Rate
  • Use freestanding 2003 cost reports
  • Hospital-based reports considered “skewed”
  • Change in labor portion from 76.775% to 77.082%
  • 3.0% inflation increase for FY 2008, but 2.75% decrease for case-mix creep adjustment
  • Continue to use hospital pre-floor and pre re-classified hospital wage index
  • Rural and urban wage indexes
rebase national rate6
Rebase National Rate
  • For those episodes beginning in 2007 but ending in 2008 Rate = $2,337.06 (current = $2,339.00)
  • Current rules apply
  • Episodes beginning and ending in 2008 Rate = $2,270.62 .. new refinement rules apply
  • All rates 2% less where HHAs do not report quality data
existing hh pps average case mix
Existing HH PPS – Average Case Mix
  • Original design, case mix average = 1.0
  • Using 2003 data, analysis determined new average is 1.233, increase of 23.3%
  • CMS suggests upward trend toward coding behavior changes
case mix creep
Case Mix Creep
  • CMS explains Case Mix Creep as a natural increase in coding the acuity level of patients due to behavior changes in provider types
  • They estimate an 8.7% creep increase since PPS started
  • Final rule establishes a 2.75% rate reduction for each of the next 3 years and a fourth year of 2.71%
  • Over 5 years this is a cut of $6.2B, Nationally
episode payments
Episode Payments
  • Same basic payment structure for Episodes
  • Adjustments for LUPA
  • PEP and Outlier Adjustments
  • SCIC adjustments are eliminated
case mix system
Case-mix System
  • Projects patient resource use based on patient characteristics
  • Patient characteristics / acuity level come from OASIS scoring
past model
Past Model
  • OASIS data elements (24 questions) organized into three dimensions:
    • Clinical severity
    • Functional severity
    • Service utilization
  • 4C x 5F x 4S = 80 HHRGs
  • Model explained 34% of variation in resource use at the time
research to improve performance
Research to Improve Performance
  • Later episodes use more resources
  • Testing additional clinical, functional and demographic variables
  • Exploring effect of co-morbidities
  • Testing new therapy thresholds
  • Alternatives to account for non-routine medical supplies
  • LUPA adjustments
2008 changes
2008 Changes
  • Account for later episodes
  • Expanded diagnosis codes
  • Changes to MO items
  • Three graduated therapy thresholds
  • Four separate regression models
  • Changes to episode reimbursement adjustments
pep adjustment review
PEP Adjustment Review
  • PEPs = 3% of all episodes
  • Discharge and return (55%)
  • Transfer to another agency (42%)
  • Move to managed care (3%)
  • No change to current policy
  • Didn’t look at medical necessity of admission to second agency
lupa review
LUPA Review
  • 13% of all episodes
  • Incidence has changed little
  • Initial and only episode LUPAs require longer visits
  • Proposing increase of $92.63 for LUPA episodes that occur as the only episode or the initial episode during a sequence of adjacent episodes
  • Amount will be wage adjusted
scic review
SCIC Review
  • SCICs declining (3.7% to 2.1%)
  • SCICs had negative margins
  • Eliminating SCICs has little impact on total payments (0.5%)
  • Effective 1/1/2008 SCIC adjustments eliminated
outlier payment review
Outlier Payment Review
  • Outliers = 13% of all episodes and payments
  • Change to Fixed Dollar Loss Ratio=0.89, from 0.67
  • Loss Sharing Ratio = 0.80
  • Outlier target = 5% of all payments
  • Fewer episodes will qualify for outlier payments
analysis of later episodes
Analysis of Later Episodes
  • Early = 1st or 2nd episode
  • Later = 3rd or later
  • Later have higher resource use and different relationship between clinical conditions and resource use
  • New OASIS item to identify later episodes (MO110)
  • Default will be “Early”
diagnosis codes
Diagnosis Codes
  • 4 diagnosis groups in earlier model (diabetes, orthopedic, neurological, and burns and trauma)
  • Additional code groups in new model
expanded diagnosis codes table 2b

Blood disorders




Gait abnormality


Heart disease







Expanded Diagnosis Codes(Table 2b)
changes m0230 m0240 m0246
Changes …M0230/M0240 /M0246
  • M0246 expands and replaces M0245
  • Consists of 4 columns
  • Column 1 -description of diagnoses
  • Column 2 -ICD9 codes for M0230 – primary and up to 5 M0240 all other
  • Column 3 –optionally used if a V code is used in column 2 in place of a case-mix code.
  • Column 4 –optionally used if a V code is used in column 2 in place of a case-mix diagnoses that requires multiple codes
m0230 m0240 m0246 edits
M0230/M0240 /M0246 Edits
  • Extensive edits on V codes, secondary codes, etiology underlying codes and manifestation codes
case mix model variables
Case-mix Model Variables
  • Exclude MO175 and MO610
  • MO470, MO520 and MO800 added
  • Delete MO245 and replace it
  • Include scores for infected surgical wounds, abscesses, chronic ulcers and gangrene
  • Points assigned for some secondary diagnoses
  • Points assigned for some combinations of conditions in same episode
oasis case mix items
OASIS Case-mix Items
  • Clinical
    • MO230 and MO240 Primary and secondary diagnosis
    • MO250 Therapies
    • MO390 Vision
    • MO420 Pain
    • MO450 and 460 Pressure ulcers
    • MO470 (New) and MO476 Stasis ulcers
clinical cont
Clinical, cont.
  • MO488 Surgical wounds
  • MO490 Dyspnea
  • MO520 Urinary incontinence/catheter (New)
  • MO530 Bowel incontinence
  • MO550 Ostomy
  • MO800 Injectable drugs (New)
oasis functional items
OASIS Functional Items
  • MO650 or 660 Dressing
  • MO670 Bathing
  • MO680 Toileting
  • MO690 Transferring
  • MO700 Ambulation
addition of therapy thresholds
Addition of Therapy Thresholds
  • 10 visit threshold artificial
  • One peak at 5-7 visits (pre-PPS) and two peaks (post-PPS) below 10 and 10-13 visits
  • New thresholds based on data analysis and policy considerations
  • MO175 no longer used
new therapy thresholds
New Therapy Thresholds
  • 6, 14 and 20 visits
  • Reduce undesirable emphasis on a single threshold
  • Restore primacy of clinical considerations for rehabilitation patients
gradations between thresholds
Gradations Between Thresholds
  • Marginal cost of 7th therapy visit = $36
  • One dollar decrease for each additional visit
  • Therapy visits grouped into small aggregates
new oasis scoring for case mix determination
New OASIS Scoring for Case Mix Determination
  • Four equation model
    • Early episodes: 1st and 2nd episodes
    • Late episodes: 3 or more adjacent episodes
    • 0-13 Therapy Visits
    • 14 or more Therapy Visits
  • 5 Grouping steps within equations to determine case mix
  • OASIS questions segregated into dimensions also called domains: Clinical, Functional and Service
oasis scoring diagnosis codes
OASIS Scoring – Diagnosis Codes
  • If 250.00 were other diagnosis, equation 1 = 2 points but equation 2 = 4 points
  • Up to 6 point scores may be accumulated for M0230 , M0240 & M0246 between Primary and Other diagnosis codes
  • Optional coding should be inserted in M0246 where V codes are used in column 2
  • First time V codes accepted as case mix codes: V55.0, V55.5, V55.6
new oasis scoring for case mix determination37
New OASIS Scoring for Case Mix Determination
  • Case-Mix points will vary depending upon equation to use, 51 elements
  • Table 2A, Case Mix Scores, pg 3
determining case mix weights
Determining Case-mix Weights
  • Each severity level represents a different number of therapy visits
  • Indicator variables allow 4 equation model to be combined into single regression
  • Lowest group = $1,276.66
  • Add amounts for additional levels from Table 4
the new hhrgs
The New HHRGs
  • Same HHRG form (CxFxSx) but new groupings
  • 153 groups vs. 80 currently
  • Past groups are not comparable to new
  • New HIPPS codes for billing
case mix weights
Case Mix Weights
  • Past Range: 0.5265 – 2.8113
  • New Range: 0.5549 – 3.3724
non routine medical supply nrs add ons
Non-Routine Medical Supply (NRS) Add-Ons
  • 6 Set Severity Levels based upon total points
  • Points gathered from OASIS answers
  • All episodes will have NRS payment add-on except LUPAs no matter if supplies are provided or not
  • 0 points will result in add-on payment of $14.12 (minimum)
  • Set payment range $14.12 - $551.00
  • Payment is not wage-adjusted
oasis scoring for nrs case mix scores
OASIS Scoring For NRS Case Mix Scores
  • 42 elements for selected skin conditions
  • 7 elements for other clinical factors
  • See Table 10B ICD-9 diagnoses codes for non-routine medical supplies
  • Sum of points from the 49 elements will determine NRS severity level
example in icd 9 coding
Example in ICD-9 Coding
  • Example patient in CBSA 42060, early episode and projected 005 therapy visits
  • Will fall into grouping #1 for point scores
  • Assuming all dimensions have minimum scores
  • Primary Cancer diagnosis of 149.00 in M0230 will score 4 points
  • HHRG level would be C1F1S1
  • Payment w/o NRS add-on would be $1,497.70
example in icd 9 coding48
Example in ICD-9 Coding
  • Continuing example, if patient had other diagnoses of blood disorder 284.00
  • Recording this other diagnoses in M0240 or M0246 results in 2 additional points
  • This pushes HHRG level to C2F1S1
  • Payment now w/o NRS add-on would be $1,885.29, $387.59 higher
example in icd 9 coding49
Example in ICD-9 Coding
  • Continuing example, if patient had a 2nd other diagnoses of low vision 369.25
  • Recording this 2nd other diagnoses in M0240 or M0246 results in 3 additional points
  • This pushes HHRG level to C3F1S1
  • Payment now w/o NRS add-on would be $2,315.82, $430.53 higher
  • The two other diagnoses included has increased reimbursement for the episode by $818.12 or nearly 55%
up and down coding
Up and Down Coding
  • CMS announced that all up and down coding will occur automatically for the following:
    • Early vs. Later episodes – the Medicare claims system will know the episode count based upon claims and episode dates paid. This will affect payment based on equation, grouping step and LUPA add-on
    • M0826, number a therapy visits – Never change HIPPS code due to difference in actual # of therapy visits provided vs. the M0826 answer, claims system will adjust automatically
billing hipps codes
Billing HIPPS Codes
  • New system of codes
  • No longer validity flag
  • First position is episode grouping step
  • Positions 2 -4: severity levels
  • Position 5 is non-routine supply severity level
  • 5th position is letter when supplies are billed and a number when supplies are not billed
  • 1836 different codes for Home Health
treatment authorization code
Treatment Authorization Code
  • 18 digit code
  • Associated with key dates
  • Also codes to provide logic for up and down coding
  • RAP / Claim will reject if not correct
current issues
Current Issues
  • Incorrect LUPA add-on payments made with episodes beginning in 2007 and ending within 2008
  • Claims rejecting when HIPPS code does not match code on RAP
  • CMS updated ICD-9 codes as late as 1/28/08
  • Info vendor issues
  • Major change to case-mix system
  • Success dependant upon knowledge of changes
  • Many will see decreased reimbursement