On July 5, 2011, the Centers for Medicare and Medicaid Services
(CMS) published a proposed rule in the Federal Register that would
make a number of changes to the Medicare program's home health
prospective payment system for calendar year 2012.
Most significantly, the proposed rule would reduce Medicare
payments to home health agencies by 3.35% or approximately $640
million in 2012. The reduction reflects the combined effects of (i)
a home health market basket update of 2.5%, which is reduced by
1.0% as required by the Affordable Care Act, and (ii) an additional
5.06% reduction in home health payment rates that will be imposed
in 2012. CMS believes the additional 5.06% reduction is needed to
account for the remainder of the 19.03% nominal case-mix change
that occurred from 2000-2009 that is unrelated to patient acuity
and that has not been recouped by previous rate reductions.
In addition to the payment rate update, the proposed rule would
also make a number of structural changes to the Medicare home
health prospective payment system. First, the proposed rule would
remove the codes for Benign Essential Hypertension and Unspecified
Essential Hypertension from the case-mix system. In the proposed
rule, CMS indicated that the removal of these codes was warranted
because of the dramatic increase in the use of these codes from
2005-2009 and the Agency's belief that these codes are not
accurate predictors of high home health patient resource costs.
Second, the proposed rule would also lower the relative weights for
episodes with high amounts of therapy and increase the relative
weights for episodes that require little or no therapy. CMS stated
that these changes were needed because the resource costs reflected
in the current case-mix weights for therapy episodes are higher
than the costs actually being incurred by home health providers for
these services. CMS also noted that the current relative weights
have created an incentive for providers to favor high therapy
patients and to provide more therapy services than may be medically
necessary. The Agency anticipates that its relative weight changes
will more adversely impact urban and for-profit home health
agencies.
Finally, the proposed rule would also amend existing Medicare
regulations to create additional flexibility in meeting the home
health face-to-face encounter and certification requirements. In
short, for patients who are admitted to home health upon their
discharge from a hospital or post-acute care setting, the proposed
rule would allow the physician who attended to the patient in that
setting to inform the certifying physician about his or her
encounter with the patient to satisfy the face-to-face encounter
requirement. CMS believes that this policy change would encourage
more collaborative communication between the patient's
physicians and improve the overall quality of care received by
Medicare beneficiaries. This proposed change will be the subject of
an upcoming Waller Lansden bulletin that will discuss the current
issues surrounding the home health and hospice face-to-face
encounter requirements in more detail.
The proposed rule for the Medicare Home Health Prospective Payment
System Rate Update for 2012 can be found at this link. CMS has requested comments on
these proposals and will consider comments submitted until
September 6, 2011. Waller Lansden is soliciting comments on the
proposed rule, and we will provide these comments to CMS.
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