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

2. 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. 3 PPS Reform Rule  2008 rate update  PPS case-mix adjuster replaced  PPS structural reforms  Case-mix creep adjustment

4. 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. 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. 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. 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. 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. 9 Episode Payments  Same basic payment structure for Episodes  Adjustments for LUPA  PEP and Outlier Adjustments  SCIC adjustments are eliminated

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

11. 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. 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. 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. 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. 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. 16 LUPA Payment Example

17. 17 LUPA Payment Example

18. 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. 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. 20 Specific OASIS Changes…M0110 Episode Timing (NEW)

21. 21 Analysis of Later Episodes  Early = 1 st or 2 nd episode  Later = 3 rd 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. 22 Diagnosis Codes  4 diagnosis groups in earlier model (diabetes, orthopedic, neurological, and burns and trauma)  Additional code groups in new model

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

24. 24 New OASIS Form for ICD-9

25. 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. 26 M0230/M0240 /M0246 Edits  Extensive edits on V codes, secondary codes, etiology underlying codes and manifestation codes

27. 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. 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. 29 Clinical, cont.  MO488 Surgical wounds  MO490 Dyspnea  MO520 Urinary incontinence/catheter (New)  MO530 Bowel incontinence  MO550 Ostomy  MO800 Injectable drugs (New)

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

31. 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. 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. 33 Gradations Between Thresholds  Marginal cost of 7 th therapy visit = $36  One dollar decrease for each additional visit  Therapy visits grouped into small aggregates

34. 34 New OASIS Scoring for Case Mix Determination  Four equation model  Early episodes: 1 st and 2 nd 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. 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. 36 OASIS Scoring – Diagnosis Codes  Table 2B Codes, pg 8

37. 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. 38 OASIS Scoring – Functional Dimension

39. 39 OASIS Scoring For Case Mix

40. 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. 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. 42 Summary of Case Mix Groups

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

44. 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. 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. 46 OASIS Scoring For NRS Case Mix Scores  Table 9

47. 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. 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. 49 Example in ICD-9 Coding  Continuing example, if patient had a 2 nd other diagnoses of low vision 369.25  Recording this 2 nd 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. 50 New Rate Sheet Example

51. 51 Reimbursement Comparison Example

52. 52 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

53. 53 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  5 th position is letter when supplies are billed and a number when supplies are not billed  1836 different codes for Home Health

54. 54 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

55. 55 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

56. 56 Summary  Major change to case-mix system  Success dependant upon knowledge of changes  Many will see decreased reimbursement