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Home Health Medicare Refinement Changes Effective

1/1/2008

HFMA: Southern California chapter, March program

Paul Giles, Catholic Healthcare West

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Timeline

First revision since October, 2000Proposed rule published on April 27, 2007Sixty day comment period closes June 26, 2007Final rule August 2007Effective date 1-1-08, but 2 step approach

Those episodes beginning in 2007 but ending in 2008Those episodes beginning in 2008

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PPS Reform Rule

2008 rate updatePPS case-mix adjuster replacedPPS structural reformsCase-mix creep adjustment

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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 supplies60-day Episodes

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Rebase National Rate

Use freestanding 2003 cost reportsHospital-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 adjustmentContinue to use hospital pre-floor and pre re-classified hospital wage indexRural and urban wage indexes

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Rebase National Rate

For those episodes beginning in 2007 but ending in 2008 Rate = $2,337.06 (current = $2,339.00)Current rules applyEpisodes beginning and ending in 2008 Rate = $2,270.62 .. new refinement rules applyAll rates 2% less where HHAs do not report quality data

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Existing HH PPS – Average Case Mix

Original design, case mix average = 1.0Using 2003 data, analysis determined new average is 1.233, increase of 23.3%CMS suggests upward trend toward coding behavior changes

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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 typesThey estimate an 8.7% creep increase since PPS startedFinal 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

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Episode Payments

Same basic payment structure for EpisodesAdjustments for LUPAPEP and Outlier AdjustmentsSCIC adjustments are eliminated

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Case-mix System

Projects patient resource use based on patient characteristicsPatient characteristics / acuity level come from OASIS scoring

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Past Model

OASIS data elements (24 questions) organized into three dimensions:

Clinical severityFunctional severityService utilization

4C x 5F x 4S = 80 HHRGsModel explained 34% of variation in resource use at the time

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Research to Improve Performance

Later episodes use more resourcesTesting additional clinical, functional and demographic variablesExploring effect of co-morbiditiesTesting new therapy thresholdsAlternatives to account for non-routine medical suppliesLUPA adjustments

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2008 Changes

Account for later episodesExpanded diagnosis codesChanges to MO itemsThree graduated therapy thresholdsFour separate regression modelsChanges to episode reimbursement adjustments

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PEP Adjustment Review

PEPs = 3% of all episodesDischarge and return (55%)Transfer to another agency (42%)Move to managed care (3%)No change to current policyDidn’t look at medical necessity of admission to second agency

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LUPA Review

13% of all episodesIncidence has changed littleInitial and only episode LUPAs require longer visitsProposing increase of $92.63 for LUPA episodes that occur as the only episode or the initial episode during a sequence of adjacent episodesAmount will be wage adjusted

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LUPA Payment Example

Example of LUPA Payment with Add-on1SN visit @ $105.76 $105.762 HHA visiits @ $47.91 $95.82Add-on for initial episode $92.63 $92.63wage index 1.0853

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LUPA Payment Example

SN Visit $105.76HHA visits $95.82Add-on $92.63

sum $294.210.77082 x $226.78 labor portion of amounts

1.0853 x $246.12 wage index adjusted portion(294.21-226.78) $67.43 non-labor portion(246.12+67.43) $313.55 Total Payment

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SCIC Review

SCICs declining (3.7% to 2.1%)SCICs had negative marginsEliminating SCICs has little impact on total payments (0.5%)Effective 1/1/2008 SCIC adjustments eliminated

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Outlier Payment Review

Outliers = 13% of all episodes and paymentsChange to Fixed Dollar Loss Ratio=0.89, from 0.67Loss Sharing Ratio = 0.80Outlier target = 5% of all paymentsFewer episodes will qualify for outlier payments

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Specific OASIS Changes…M0110 Episode Timing (NEW)

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Analysis of Later Episodes

Early = 1st or 2nd episodeLater = 3rd or laterLater have higher resource use and different relationship between clinical conditions and resource useNew OASIS item to identify later episodes (MO110)Default will be “Early”

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Diagnosis Codes

4 diagnosis groups in earlier model (diabetes, orthopedic, neurological, and burns and trauma)Additional code groups in new model

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Expanded Diagnosis Codes(Table 2b)

BlindnessBlood disordersCancerDiabetesDysphagiaGait abnormalityGastrointestinal

Heart diseaseHypertensionNeurologicalOrthopedicPsychiatricPulmonarySkin

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New OASIS Form for ICD-9

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Changes …M0230/M0240 /M0246

M0246 expands and replaces M0245Consists of 4 columnsColumn 1 -description of diagnosesColumn 2 -ICD9 codes for M0230 – primary and up to 5 M0240 all otherColumn 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

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M0230/M0240 /M0246 EditsExtensive edits on V codes, secondary codes, etiology underlying codes and manifestation codes

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Case-mix Model VariablesExclude MO175 and MO610MO470, MO520 and MO800 addedDelete MO245 and replace itInclude scores for infected surgical wounds, abscesses, chronic ulcers and gangrenePoints assigned for some secondary diagnosesPoints assigned for some combinations of conditions in same episode

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OASIS Case-mix Items

ClinicalMO230 and MO240 Primary and secondary diagnosisMO250 TherapiesMO390 VisionMO420 PainMO450 and 460 Pressure ulcersMO470 (New) and MO476 Stasis ulcers

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Clinical, cont.

MO488 Surgical woundsMO490 DyspneaMO520 Urinary incontinence/catheter (New)MO530 Bowel incontinenceMO550 OstomyMO800 Injectable drugs (New)

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OASIS Functional Items

MO650 or 660 DressingMO670 BathingMO680 ToiletingMO690 TransferringMO700 Ambulation

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Addition of Therapy Thresholds

10 visit threshold artificialOne peak at 5-7 visits (pre-PPS) and two peaks (post-PPS) below 10 and 10-13 visitsNew thresholds based on data analysis and policy considerationsMO175 no longer used

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New Therapy Thresholds

6, 14 and 20 visitsReduce undesirable emphasis on a single thresholdRestore primacy of clinical considerations for rehabilitation patients

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Gradations Between Thresholds

Marginal cost of 7th therapy visit = $36One dollar decrease for each additional visitTherapy visits grouped into small aggregates

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New OASIS Scoring for Case Mix Determination

Four equation modelEarly episodes: 1st and 2nd episodesLate episodes: 3 or more adjacent episodes0-13 Therapy Visits14 or more Therapy Visits

5 Grouping steps within equations to determine case mixOASIS questions segregated into dimensions also called domains: Clinical, Functional and Service

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OASIS Scoring – Diagnosis Codes

If 250.00 were other diagnosis, equation 1 = 2 points but equation 2 = 4 pointsUp to 6 point scores may be accumulated for M0230 , M0240 & M0246 between Primary and Other diagnosis codesOptional coding should be inserted in M0246 where V codes are used in column 2First time V codes accepted as case mix codes: V55.0, V55.5, V55.6

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OASIS Scoring – Diagnosis Codes

Table 2B Codes, pg 8

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New OASIS Scoring for Case Mix Determination

Case-Mix points will vary depending upon equation to use, 51 elementsTable 2A, Case Mix Scores, pg 3

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OASIS Scoring – Functional Dimension

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OASIS Scoring For Case Mix

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Determining Case-mix Weights

Each severity level represents a different number of therapy visitsIndicator variables allow 4 equation model to be combined into single regressionLowest group = $1,276.66Add amounts for additional levels from Table 4

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The New HHRGs

Same HHRG form (CxFxSx) but new groupings153 groups vs. 80 currentlyPast groups are not comparable to newNew HIPPS codes for billing

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Summary of Case Mix GroupsSeverity Level for Each Dimension

Episode Therapy Visits Case Mix WeightClass Range RangeEarly 0 - 13 3 3 5 45 0.5549 -1.8693Early 14 - 19 3 3 3 27 1.5074 - 2.5474Later 0 - 13 3 3 5 45 .06474 - 2.1049Later 14 - 19 3 3 3 27 1.5106 - 2.7354ALL 20+ 3 3 1 9 2.3080 - 3.3724

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Clinical Functional Service Util Combinations

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Case Mix Weights

Past Range: 0.5265 – 2.8113New Range: 0.5549 – 3.3724

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Non-Routine Medical Supply (NRS) Add-Ons

6 Set Severity Levels based upon total pointsPoints gathered from OASIS answersAll episodes will have NRS payment add-on except LUPAs no matter if supplies are provided or not0 points will result in add-on payment of $14.12 (minimum)Set payment range $14.12 - $551.00 Payment is not wage-adjusted

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OASIS Scoring For NRS Case Mix Scores

42 elements for selected skin conditions7 elements for other clinical factorsSee Table 10B ICD-9 diagnoses codes for non-routine medical suppliesSum of points from the 49 elements will determine NRS severity level

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OASIS Scoring For NRS Case Mix Scores

Table 9

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Example in ICD-9 Coding

Example patient in CBSA 42060, early episode and projected 005 therapy visitsWill fall into grouping #1 for point scoresAssuming all dimensions have minimum scoresPrimary Cancer diagnosis of 149.00 in M0230 will score 4 pointsHHRG level would be C1F1S1Payment w/o NRS add-on would be $1,497.70

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Example in ICD-9 Coding

Continuing example, if patient had other diagnoses of blood disorder 284.00Recording this other diagnoses in M0240 or M0246 results in 2 additional pointsThis pushes HHRG level to C2F1S1Payment now w/o NRS add-on would be $1,885.29, $387.59 higher

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Example in ICD-9 CodingContinuing example, if patient had a 2nd

other diagnoses of low vision 369.25Recording this 2nd other diagnoses in M0240 or M0246 results in 3 additional pointsThis pushes HHRG level to C3F1S1Payment now w/o NRS add-on would be $2,315.82, $430.53 higherThe two other diagnoses included has increased reimbursement for the episode by $818.12 or nearly 55%

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New Rate Sheet Example

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Reimbursement Comparison Example

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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-onM0826, 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

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Billing HIPPS Codes

New system of codesNo longer validity flagFirst position is episode grouping stepPositions 2 -4: severity levelsPosition 5 is non-routine supply severity level5th position is letter when supplies are billed and a number when supplies are not billed1836 different codes for Home Health

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Treatment Authorization Code

18 digit codeAssociated with key datesAlso codes to provide logic for up and down codingRAP / Claim will reject if not correct

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Current Issues

Incorrect LUPA add-on payments made with episodes beginning in 2007 and ending within 2008Claims rejecting when HIPPS code does not match code on RAPCMS updated ICD-9 codes as late as 1/28/08Info vendor issues

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Summary

Major change to case-mix systemSuccess dependant upon knowledge of changesMany will see decreased reimbursement