Home Health & Hospice Week

Prospective payment system proposed rule holds bad news for home health agencies.

Get ready to shoulder your expanded regulatory burden with less money next year, if the prospective payment system proposed rule gets finalized as is.

The Centers for Medicare & Medicaid Services proposes to cut home health agency prospective payment system rates by 3.35 percent starting in January 2012, according to the PPS proposed rule put on display at the Federal Register July 5. The cut would translate to an estimated decrease of $640 million compared to HHA payments in 2011, CMS says in a release.

The culprit: CMS proposes a 5.06 percent reduction for so-called "case-mix creep" -- upcoding by HHAs. That combines with a 1.5 percent inflation update, which is reduced by 1 percent.

Plus: CMS wants to remove two hypertension codes from the case-mix system -- 401.1 (Benign Essential Hypertension) and 401.9 (Unspecified Essential Hypertension), it says in the rule scheduled for publication in the July 12 Federal Register. "Beginning with the HH PPS refinements in 2008, hypertension was included in the HH PPS system because data suggested it was associated with elevated resource use," CMS explains in the rule. But them "our analysis showed a large increase in the reporting of codes 401.1 and 401.9 in 2008."

CMS suspected that an increase in reporting of these codes "was a key driver of the high 2008 growth in nominal case-mix," it says in the rule. So it proposed removing these codes last year for 2011. But the agency withdrew the proposal when commenters said it needed more data to support the move.

Now CMS has conducted additional studies and says increased reporting of the codes continued to occur in 2009. Thus, it has re-proposed the removal of the codes for 2012.

In the proposed rule, CMS says it also wants to lower payments for high therapy episodes and recalibrate the PPS case-mix weights. CMS aims to "decrease incentives for upcoding," Jonathan Blum, CMS Deputy Administrator, says in the release.

Note: The rule is available via a link at www.cms.gov/center/hha.asp. Comments on the proposed rule are due Sept. 6.