Home Health & Hospice Week

New winners, losers under methodology revamp.

Time will be of the essence when it comes to outlier reimbursement come Jan. 1.

If the Centers for Medicare & Medicaid Services finalizes its Home Health Prospective Payment System proposed rule for 2017 as-is, Medicare will significantly change how it reimburses home health agencies for “outlier” patients who use more services than others.

Currently, CMS bases its outlier payments on the number of visits the HHA furnishes to the patient.

When the assigned cost for the number of visits exceeds the national episodic base rate plus a Fixed Dollar Loss (FDL) ratio, then outlier payments kick in. CMS sets the FDL with the aim of agencies achieving an 0.80 loss-ratio. At the industry’s suggestion, CMS implemented a 10 percent cap on outlier payments in 2010. The cap combatted outlier abuse in certain areas of the country, particularly Miami.

The problem: “Analysis of CY 2015 home health claims data indicates that there is significant variation in the visit length by discipline for outlier episodes,” CMS says in the rule released June 27.

“Those agencies with 10 percent of their total payments as outlier payments are providing shorter but more frequent skilled nursing visits than agencies with less than 10 percent of their total payments as The solution: “We are proposing to change the methodology used to calculate outlier payments, using a cost-per-unit approach rather than a costper-visit approach,” CMS says in the rule. CMS will convert the national per-visit rates (see chart, p. 195) into 15-minute unit rates. CMS then will use visit lengths reported by HHAs to see whether episodes exceed the threshold to qualify for outlier payments.

Overall, “we believe that this proposed change to the outlier methodology will result in more accurate outlier payments where the calculated cost per episode accounts for not only the number of visits during an episode of care, but also the length of the visits performed,” CMS says in the rule. “This, in turn, may address some of the findings … where margins were lower for patients with medically complex needs that typically require longer visits, thus potentially creating an incentive to treat less complex patients.”

Winners: “Certain subgroups … may benefit from the change from the current outlier methodology to the proposed outlier methodology,” CMS says. They include patients needing caregiver assistance; with fragile-serious overall status; needing bathing assistance; using parenteral nutrition; with poorly controlled cardiac dysrhythmia; with poorly controlled pulmonary disorder; and with surgical wounds.

Losers: While CMS doesn’t spell it out in the rule, industry experts predict that a portion of patients receiving quick, frequent visits for insulin injections will not qualify for outlier payments under the new methodology, as they do under the current one.

Note: See links to rule materials at www.cms.gov/center/provider-Type/home-Health-Agency-HHA-Center.html.