Home Health & Hospice Week

Don't expect the lucrative therapy threshold to remain the same.

Hold onto your hats - the first overhaul of the prospective payment system is slated to take effect in a-year-and-a-half.
 
The Centers for Medicare & Medicaid Services this December will issue a proposed rule containing big PPS changes, CMS says in the Department of Health and Human Services' latest semiannual regulatory agenda. "This rule proposes the first major refinements to the payment system since its implementation in October of 2000," CMS says in the agenda published in the May 16 Federal Register.
 
While the proposed rule is scheduled to come out in December 2005, the changes wouldn't take effect until January 2007, CMS notes.
 
A CMS official outlined possible changes at the National Association for Home Care & Hospice's April policy conference in Washington, DC, according to NAHC's Mary St. Pierre. Expected revisions include refining the case-mix (HHRG) categories, changing the therapy threshold, addressing medical supplies, and adjusting reimbursement for subsequent episodes, St. Pierre reports. CMS might change the therapy threshold quite dramatically to take into account patient characteristics rather than the number of therapy visits, she adds.
 
The home care industry has been expecting a PPS refinement - and especially one targeting the significant therapy threshold increase - for years, says Abilene, TX-based reimbursement consultant Bobby Dusek. "No one every tested the HHRGs" or the system overall, Dusek points out.
 
Because HHAs see an increase of around $2,000 when they go from furnishing nine to 10 therapy visits, it's a sure-fire area for scrutiny, Dusek says. HHAs have responded to the strong financial incentive by furnishing more therapy visits. "They'd be stupid not to," he maintains.
 
If CMS doesn't want to switch away from using a therapy threshold altogether, the agency might make the visit threshold higher (14 visits has been rumored), count therapy minutes (PPS originally called for eight hours instead of 10 visits) or create multiple thresholds (for five to nine visits, 10 to 14 visits, etc.) with more moderate payment increases attached, Dusek suggests.

Subsequent Episodes, Supplies Ripe for Change

St. Pierre expects CMS to increase reimbursement for PPS episodes following the initial one, but Dusek thinks the agency is more likely to actually decrease subsequent episode payments. That's because often agencies barely exceed the low utilization payment adjustment (LUPA) threshold on the second episode, he says. Also, HHAs have a lot of the administrative activities for the patients out of the way by the second episode.
 
Dusek welcomes a change to the supplies procedures, because Medicare currently isn't capturing most supply costs, he believes. Many agencies don't report supplies costs on their claims and cost reports because there is no financial impact tied to the activity. That failure was reinforced when Medicare claims systems problems forced agencies to strip their claims of supplies costs last year. "After that, many agencies just never went back" to reporting supplies, Dusek tells Eli.
 
But if CMS wants to make a drastic change to reimbursing supplies on a cost- or fee-basis, agencies can expect major transition headaches, he warns.

PPS Update May See Delays

CMS plans to have the proposed rule out by December and the changes in place by January 2007, it says in the agenda. But experts call that an ambitious schedule, considering the lengthy clearance and approval process the changes must undergo at CMS. So 2008 changes may be a safer bet.
 
That's especially true considering that the bulk of CMS' resources are focused on the Part D prescription drug benefit that is scheduled to take effect in 2006 and the Medicare Advantage changes, notes Bob Wardwell with the Visiting Nurse Associations of America. Wardwell is a former top CMS official.
 
Wardwell likens CMS to a three-ring circus - Part D is in one ring, the managed care changes are in another ring and everything else, including home care initiatives, are crowded together into the third ring. "There is not a whole lot of space in that last ring for everything else to happen. You gotta know where the Ring Master is putting his resources," he quips.
 
Just the fact that CMS is proposing changes probably means they will be pretty significant, Ward-well predicts. "Since the space in that last ring is precious, it's hard to get your act on if its not ready for prime time." Pressure from the Medicare Payment Advisory Commission on PPS accuracy probably also tipped the balance, he says (see Eli's HCW, Vol. XIV, No. 11, p. 82).
 
Keep an eye out: HHAs also should be prepared for a separate payment change - pay for performance based on patient outcomes, Dusek cautions.
 
Because of the 2007 changes, a routine PPS update proposed in June is all that's expected for 2006.
 
Other HHA items in the agenda include: