Home Health & Hospice Week

Start by taking a close look at the reg.

Home health prospective payment system changes will be here before you know it--will you be ready to thrive under the PPS refinements?

The Centers for Medicare & Medicaid Services' proposed changes to PPS, published in the May 4 Federal Register, are sinking in across the industry. "The proposed rule contains several significant changes, many of them positive and long anticipated," notes the Connecticut Association for Home Care in a summary of the rule. For example, the elimination of the significant change in condition (SCIC) adjustment and M0175 in prior inpatient stays as a case mix item.

And home health agencies hope the system's increased complexity will create a payment system that more accurately pays for patients based on their needs.

Currently, PPS has only a 21 percent accuracy rate in predicting patient resource use, noted consultant Mark Sharp in a May 17 audioconference on the PPS changes sponsored by Eli Research. It was originally designed for a 34 percent accuracy rate, and hospital PPS has about a 39 percent accuracy rate, said Sharp, of BKD in Springfield, MO.

High hopes: Under the proposed home health PPS changes, CMS and PPS contractor Abt Associates estimate they will drastically improve the system's accuracy rate to 44 percent. That's a "very ambitious" goal, Sharp told listeners.

Cut Will Annihilate Industry

But the good parts of the PPS refinement are deeply overshadowed by the proposed 2.75 percent cut every year for three years, blasts the National Association for Home Care & Hospice. CMS proposed the 8.25 percent total cut in response to supposed "case mix creep" (see Eli's HCW, Vol. XVI, No. 17).

The rate cut will mean a whopping $7 billion HHA payment rate reduction by 2012, NAHC says. "Home care can not sustain such drastic cuts without the loss of access to care throughout the country," warns NAHC's Val Halamandaris in a statement.

"We will give Medicare a fair chance to ex-plain itself, but we will enlist the support of Congress and even the courts to protect the elderly and infirm from this threat," Halamandaris warns.

CMS bases the cut on "unfounded assumptions and speculation," adds NAHC's Bill Dombi. "With over 20 percent of all home health agencies currently losing money serving Medicare patients, that cut will spell disaster," the trade group protests.

Providers and their representatives aren't the only ones predicting trouble ahead. Stock analysts warn that the changes are negative for home health stocks like Amedisys Inc. and Gentiva Health Services Inc., although industry lobbying could mitigate the impact.

"Buckle your seat belt, as it may be a bumpy ride," CAHC warns its members.

The PPS revisions aren't final yet, but here are steps you can take now to adapt:

1. Study the new rules and regulations. "Actually take the Federal Register and study the rules yourself," Sharp urged. "Read through them, understand them and figure out how they apply to you."

CMS has posted the rule at www.cms.hhs.gov/HomeHealthPPS/downloads/CMS-1541-P.pdf and the FR copy is at www.access.gpo.gov/su_docs/fedreg/a070504c.html --scroll down to the CMS section.

2. Perform impact assessments. CMS predicts that agencies in the North will make gains and agencies in the South losses under the proposed changes. Likewise, nonprofit and voluntary HHAs will see increases while freestanding proprietary agencies will see payment decreases under the proposal.

But "these estimates by CMS are very generalized," NAHC warns. "There will be wide variation in the impact on individual HHAs of all types and geographic location."

"I recommend that you actually perform your own impact assessment on your agency," Sharp offered.

3. Assess and improve OASIS coding accuracy. Under the PPS changes, M0 item scores for diagnoses, episode, functionality and clinical conditions inter-relate to make a big change in the patient's home health resource group (HHRG). You must understand how OA-SIS coding triggers the case mix score, Sharp stressed.

That makes OASIS accuracy more important than ever. "Continue to focus on more accurate scoring," he instructed.

4. Evaluate potential changes in care planning practices. You must ask yourself, "Will there be a need for the way you care for your patients to better adapt to these changes?" Sharp said.

5. Blend clinical and financial staff in planning operational changes. Financial staff can keep an eye on the bottom line and clinical staff can meet patients' needs and boost outcomes. "You blend them together and you get effective proposed changes," Sharp told listeners.

6. Be aware but be prudent. Learn as much as you can and formulate plans for change, but realize that the refinements still are only proposed and may change in the final rule, expected out this fall. "Don't overreact to the proposed rule," Sharp advised. 

Note: To find out Mark Sharp's 5 additional tips for preparing for the PPS changes and learn more about the proposed rule, order a transcript or recording of his May 17 Eli-sponsored audioconference at http://goto.elinetwork.net/go/6766.