The Centers for Medicare & Medicaid Services (CMS) published its proposed update of the Medicare home health prospective payment system (HH PPS) rates for calendar year (CY) 2015 in the July 7, 2014 Federal Register.  In addition to the annual update to the 60-day national episode rates and the national per-visit rates, the proposal includes important updates and proposals affecting HH PPS.  Comments on the proposed rule are due by 5:00 pm on September 2, 2014.

Proposed CY2015 HH PPS Rule

Medicare pays home health agencies through a prospective payment system for Medicare beneficiaries who are under the care of a physician; who have an intermittent need for skilled nursing care; or who need physical therapy, speech-language pathology (SLP) or continue to need occupational therapy.  To qualify for the benefit, the beneficiary must be homebound and receive home health services from a Medicare certified home health agency (HHA).  Payment is made on a national, standardized 60-day episode payment rate, national per-visit rates and the non-routine medical supply (NRS) conversion factor required under the Affordable Care Act (ACA).  Payment rates are based upon data from regularly conducted patient assessments by HHA clinicians required of each HHA.

In the July 7, 2014 Federal Register, CMS published its proposed regulatory update to the HH PPS payment rates and wage index for CY 2015.  As required by the ACA, the rule implements the second year of the four-year phase-in of the rebasing adjustments.  After phasing in rebasing and other rate adjustments, CMS estimates payments to home health agencies will decrease by approximately 0.30 percent, or $58 million in CY 2015.  CMS also proposes changes that it believes will simplify the physician face-to-face encounter requirements, update the HH PPS case-mix weights and revise the home health quality reporting program requirements.  In addition, CMS responds to industry concerns about the complexity of administering the therapy reassessment timeframes by a proposal to simplify them, revise the SLP personnel qualifications and limit the reviewability of the civil monetary penalty provisions.  The proposed rule also discusses Medicare coverage of insulin injections under the HH PPS, the delay in the implementation of ICD-10-CM and solicits comments on a home health agency value-based purchasing (HHA VBP) model.

Some highlights of the proposed rule, including ones that CMS has specifically flagged for comment, follow.

The Evolving Face-to-Face Requirements—A Partial Concession

The Medicare face-to-face encounter requirements have been controversial.  For example, earlier this year, the National Association for Home Care & Hospice (NAHC) filed a lawsuit against the U.S. Department of Health and Human Services challenging the agency's face-to-face rule, including a physician narrative requirement.  By way of background, the Medicare face-to-face encounter rule requires that, prior to certifying a patient's eligibility for the Medicare home health benefit, the certifying physician must document that he or she, or a permitted non-physician provider (NPP), had a face-to-face encounter with the patient.  The face-to-face encounter rule is the subject of continuing home health industry concerns.  According to CMS, the requirement was enacted, in part, to discourage physicians certifying patient eligibility for the home health benefit from relying solely on information provided by the HHAs when making eligibility determinations.  Currently, the regulations require the encounter to occur within 90 days before care begins or up to 30 days after care began.  Documentation of the encounter must include a narrative to explain why the clinical findings of the encounter support that the patient is homebound and in need of skilled services.  The certifying physician is responsible for determining whether the patient meets the eligibility criteria (homebound and skilled care need) and understanding the clinical needs of the patient so that the physician can establish an effective plan of care.

There is industry frustration with having to rely on the physician to satisfy the face-to-face encounter documentation requirement without incentives to encourage physician compliance and lack of established and understandable standards regarding the "extensive and redundant" physician narrative requirement.  The industry position voiced is that detailed evidence to support the physician certification is available in clinical records.  In responding to industry concerns, CMS is proposing, first, to eliminate the current narrative requirement.  The certifying physician would still be required to certify that a face-to-face patient encounter occurred and document the date of the encounter as part of the certification of eligibility.  Notwithstanding the proposed elimination of the narrative requirement, where the physician is ordering skilled nursing visits for management and evaluation of the patient's care plan, CMS is still requiring that the physician include a brief narrative that describes the clinical justification of this need as part of the certification/recertification of patient eligibility.

Second, for medical review purposes, CMS is proposing to only consider medical records from the patient's certifying physician or discharging facility in determining initial eligibility for the Medicare home health benefit.  If the patient's medical record used in certifying eligibility was not sufficient to demonstrate that the patient was eligible to receive services under the home health benefit, payment would not be made for the home health services provided.

Third, CMS is proposing that the physician claim for certification/recertification of eligibility for home health services (not the face-to-face encounter visit) be considered a non-covered service if the HHA claim was non-covered because the patient was ineligible for the home health benefit.  Reflecting CMS' reliance upon what it calls "sub-regulatory guidance," this proposal would be implemented through such guidance in the future.

Ultimately, CMS' partial concession in the HH PPS is a step in the right direction for the home health community.  However, we encourage interested stakeholders to engage with the agency through this proposed rulemaking process so as to ensure that program integrity considerations do not jeopardize access to (or place an undue burden on) an appropriate clinical option for certain Medicare beneficiaries.

Home Health Quality Reporting Program and Payment Reductions

CMS proposes to implement its highly technical pay-for-reporting performance requirement beginning with all HHA episodes of care occurring on or after July 1, 2015.  HHA conditions of participation require comprehensive assessments, including the administration of Outcome and Assessment Information Set (OASIS ) as a condition of participation for a HHA in Medicare.  Failure to submit sufficient OASIS data to allow calculation of quality measures, including transfer and discharge assessments, is failure to comply with the Medicare conditions of participation.

CMS seeks to develop quality measures that will promote more efficient and safer care and is taking into account input from the Measure Applications Partnership, among other resources.  For episodes beginning on or after July 1, 2015, an HHA must score at least 70 percent on the Quality Assessments Only (QAO) metric of pay-for-reporting performance or be subject to a 2 percent reduction to the HHA's market basket update for CY 2017.  For episodes beginning on or after July 1, 2016, and before June 30, 2017, an HHA must score at least 80 percent on the QAO metric of pay-for-reporting performance or be subject to a 2 percent reduction to the HHA's market update for CY 2018.  In the following pay-for-reporting period (episodes beginning on or after July 1, 2017, and before June 30, 2018), the QAO metric moves to CMS' desired metric of at least 90 percent of pay-for-reporting performance for an HHA to avoid a 2 percent reduction of its market basket update for CY 2019 and each subsequent year thereafter.

Simplify Therapy Reassessment Timeframes

Under current rules, therapy reassessments must be performed on or "close to" therapy visits 13 and 19 and at least once every 30 days.  A qualified therapist, of the corresponding discipline for the type of therapy being provided, must functionally reassess the patient.  The results of the reassessment and the effectiveness (or lack thereof) of the therapy must be documented in the clinical record.  Moreover, when multiple types of therapy are provided, each therapist must assess the patient after therapy visit 10 but no later than therapy visit 13 and after therapy visit 16 but no later than therapy visit 19 for the plan of care.  When a therapy reassessment is missed, any visits for that discipline prior to the next reassessment are not covered.  As might be expected in view of the complexity of this documentation requirement, providers expressed frustration regarding the timing of reassessment for multidiscipline therapy episodes.  In multiple therapy episodes, therapists must communicate when a planned visit or reassessment is missed to accurately track and count visits.  Otherwise, therapy reassessments may be in jeopardy of not being performed during the required timeframe, increasing the risk of subsequent visits not being covered.  CMS proposes to simplify the requirement to one in which a qualified therapist (instead of an assistant) from each discipline provides the needed therapy and functionally reassesses the patient at least every 14 calendar days.  The requirement to perform a therapy reassessment at least once every 14 calendar days would apply to all episodes, regardless of the number of therapy visits provided.  CMS believes that revising the requirement would make it easier and less burdensome for HHAs to track and to schedule therapy reassessments every 14 calendar days, as opposed to tracking and counting therapy visits, especially for multiple discipline therapy episodes.

HHA VBP Model—A Proposal to Link Quality Measures to Payment

CMS is considering testing a HHA model that builds on what CMS has learned from the Hospital Value-Based Purchasing Program.  As envisioned, the HHA VBP model would reduce or increase Medicare payments, in a 5 percent to 8 percent range, depending on the degree of quality performance in various measures to be selected.  The model would apply to all HHAs in each of the projected five to eight states selected to participate in the model.  CMS invites comments on the HHA VBP model that is outlined in the rule, including elements of the model, size of the payment incentives and percentage of payments that would need to be placed at risk in order to incentivize HHAs to make the necessary investments to improve the quality of care, the timing of the incentive payments, and how performance payments should be distributed.  CMS also invites comments on the best approach for selecting states for participation in the model.  In light of recent policymaking trends focused on linking payment to quality, we encourage interested stakeholders to fully engage with the agency through this proposed rulemaking process by helping the agency understand the various critical considerations in defining "quality," given the unique attributes of patient populations receiving home health care and other important parameters to adopting such an incentive program in home health.

Limit on the Reviewability of Civil Monetary Penalties

CMS proposes to add a new paragraph to its regulations that would explain the reviewability of a civil money penalty (CMP) that is imposed on an HHA for noncompliance with federal participation requirements.  The new language will provide that when administrative law judges, state hearing officers or higher administrative review authorities find that the basis for imposing a CMP exists, they may not set a penalty of zero or reduce a penalty to zero; review the exercise of discretion by CMS or the state to impose a CMP; or in reviewing the amount of the penalty, consider any factors other than those specified in the regulations.  The proposed language for HHA reviews is similar to the current regulatory language governing the scope of review for CMPs imposed against skilled nursing facilities.

The proposed CY 2015 rule contains extensive background and commentary on the proposed change, including detailed and technical explanations of its calculation of the CY 2015 HH PPS rates; the national, standardized 60-day episode payment rates; the national per-visit rates; and the non-routine medical supply conversion factor.  We commend the rule to your attention for review and possible commentary.  CMS is accepting comments on the proposed rule until 5:00 pm on September 2, 2014.

CMS Proposes Update To 2015 Home Health Prospective Payment System For Comment

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