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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


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    1. Home Health Medicare Refinement Changes Effective 1/1/2008 HFMA: Southern California chapter, March program Paul Giles, Catholic Healthcare West

    2. Timeline • 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

    3. PPS Reform Rule • 2008 rate update • PPS case-mix adjuster replaced • PPS structural reforms • Case-mix creep adjustment

    4. 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

    5. 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

    6. 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

    7. 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

    8. 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

    9. Episode Payments • Same basic payment structure for Episodes • Adjustments for LUPA • PEP and Outlier Adjustments • SCIC adjustments are eliminated

    10. Case-mix System • Projects patient resource use based on patient characteristics • Patient characteristics / acuity level come from OASIS scoring

    11. 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

    12. 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

    13. 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

    14. 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

    15. 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

    16. LUPA Payment Example

    17. LUPA Payment Example

    18. 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

    19. 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

    20. Specific OASIS Changes…M0110 Episode Timing (NEW)

    21. 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”

    22. Diagnosis Codes • 4 diagnosis groups in earlier model (diabetes, orthopedic, neurological, and burns and trauma) • Additional code groups in new model

    23. Blindness Blood disorders Cancer Diabetes Dysphagia Gait abnormality Gastrointestinal Heart disease Hypertension Neurological Orthopedic Psychiatric Pulmonary Skin Expanded Diagnosis Codes(Table 2b)

    24. New OASIS Form for ICD-9

    25. 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

    26. M0230/M0240 /M0246 Edits • Extensive edits on V codes, secondary codes, etiology underlying codes and manifestation codes

    27. 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

    28. 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

    29. Clinical, cont. • MO488 Surgical wounds • MO490 Dyspnea • MO520 Urinary incontinence/catheter (New) • MO530 Bowel incontinence • MO550 Ostomy • MO800 Injectable drugs (New)

    30. OASIS Functional Items • MO650 or 660 Dressing • MO670 Bathing • MO680 Toileting • MO690 Transferring • MO700 Ambulation

    31. 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

    32. New Therapy Thresholds • 6, 14 and 20 visits • Reduce undesirable emphasis on a single threshold • Restore primacy of clinical considerations for rehabilitation patients

    33. Gradations Between Thresholds • Marginal cost of 7th therapy visit = $36 • One dollar decrease for each additional visit • Therapy visits grouped into small aggregates

    34. 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

    35. 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

    36. OASIS Scoring – Diagnosis Codes • Table 2B Codes, pg 8

    37. 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

    38. OASIS Scoring – Functional Dimension

    39. OASIS Scoring For Case Mix

    40. 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

    41. 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

    42. Summary of Case Mix Groups

    43. Case Mix Weights • Past Range: 0.5265 – 2.8113 • New Range: 0.5549 – 3.3724

    44. 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

    45. 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

    46. OASIS Scoring For NRS Case Mix Scores • Table 9

    47. 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

    48. 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

    49. 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%

    50. New Rate Sheet Example