Home Health & Hospice Week

Case mix creep cut shoots up by one-third.

The feds have turned a deaf ear to hundreds of pages of comments from home health agencies on the proposed prospective payment system refinements.

The Centers for Medicare & Medicaid Services released the final PPS refinements rule late on Aug. 22, and agencies aren't going to be happy. First, CMS keeps the Jan. 1 implementation date despite numerous protests that there's not enough time to prepare for the major system changes.

Second, after receiving scores of strident comments on the proposed 8.25 percent cut for case mix creep, including detailed and specific arguments about the data involved, CMS actually ups the payment cut to 10.96 percent total, according to the final rule released just before press time.

CMS will keep the 2.75 percent cut over three years that it first proposed back in April, plus the agency wants to add a fourth-year cut of 2.71 percent in 2011. The three years of 2.75 percent cuts are final in this rule, but the additional 2.71 cut is still open for comment, CMS notes in the rule.

CMS shoots down HHAs' claims that patients' conditions are more severe now than under the interim payment system and sticks to its case mix creep guns in the face of vociferous arguments against the payment cut.

Other changes from the proposed to final rule include:

• Supplies. CMS adds five cents to the base non-routine supplies (NRS) payment level so that it now totals $52.35. But it drastically redistributes that amount in the NRS categories and adds one category. The levels will now run from 1-6 instead of the 0-4 originally proposed.

Dollars: Category 1 now receives $14.12 in NRS payment as opposed to the $12.96 CMS first proposed for Category 0. Category 6 now receives $551.00, compared with no such category in the proposed refinements. The previous highest category, 4, received $367.34 under CMS' proposal.

• LUPAs. CMS reduces the add-on amount for initial low utilization payment adjustment (LUPA) episodes from $92.63 in the proposed rule to $87.93 in the final rule.

• Outliers. Despite industry protests that the outlier pool goes significantly unused every year, CMS hikes the fixed dollar loss (FDL) ratio from a proposed 0.67 to a whopping 0.89. Trade groups already complained that under the 0.67 figure, agencies rarely qualify for outliers, using way less than the 5 percent allotted for them under PPS.

Note: For more breaking news and analysis on the PPS refinements final rule, see next week's issue of Eli's Home Care Week. To sign up for an upcoming Eli audioconference on the final rule, go to www.audioeducator.com. The final rule is at www.cms.hhs.gov/homehealthPPS/downloads/CMS-1541-FCdisplay.pdf.