Home Health & Hospice Week

Resulting complexity leaves providers scratching their heads over impact.

Toss out all your preconceived notions about which patients are profitable and which aren't under Medicare's prospective payment system.

The PPS changes proposed by the Centers for Medicare & Medicaid Services are very complicated, experts note.

As a result, there are no clear-cut winners and losers if the revisions take effect as proposed, judges Mark Sharp with BKD in Springfield, MO.

Then: That's unlike when CMS first proposed PPS in 1999, industry veterans recall. Then some financial benefits were pretty clear from the outset--for example, patients needing 10 or more therapy visits would be profitable while those with extensive visit and supplies needs, such as wound care patients, wouldn't.

Now: Home health agencies still aren't likely to lose out on patients needing therapy,  Sharp predicts. The PPS revisions call for a three-tier therapy threshold at 6, 14 and 20 visits. Reimbursement for patients needing from 10 to 13 visits will generally be lower under the new PPS rules than the current ones. Conversely, patients needing six to nine visits will probably garner higher reimbursement than under current PPS, he forecasts.

And CMS may reimburse for wound care patients more adequately. The agency has included the M0 questions on wounds in the new nonroutine supplies (NRS) payments (see Eli's HCW, Vol. XVI, No. 17), points out consultant Lynda Laff with Laff Associates in Hilton Head, SC. And CMS has reweight-ed certain wound-related case mix items.

The new therapy reimbursement continuum is just one way CMS is trying to make its home care system less easily manipulated by providers, experts point out. "I have been getting multiple questions about [therapy] 'strategies,'" notes physical therapist and consultant Cindy Krafft with UHSA in Atlanta. "There are NONE. Trying to make one will further raise concerns about gaming," Krafft warns.

Safeguard: Wheth-er it's intentional or not, the drastically increased complexity of PPS calculations will make the system more gaming-proof as well.

Under the proposal, instead of just assigning points to OASIS case-mix items and adding them up, CMS has a tricky "four-equation" model. It bases payment on case-mix item points in conjunction with clinical conditions represented by diagnoses. The OASIS items "interrelate much more," Sharp stresses.

Episode number and the previously mentioned therapy continuum also affect payment significantly.

Impact Is Agency-Specific

Sharp hopes that the new complexity will result in a payment system that is more sensitive to patient acuity and reimburses agencies more accurately for the care needed.

But for now, the intricacies are making it difficult for HHAs to judge how the PPS changes would affect their bottom lines.

HHAs "have to get into it episode by episode," tabulate the new HHRGs, run them through the PPS grouper and judge how their current payments would be different from the proposed ones, Sharp instructs.

To make things more work-intensive, agencies have to gather information that isn't currently collected via OASIS--namely, episode number and specific number of therapy visits. Agencies "have to gather all these pieces that aren't on OASIS right now and put in the answers" to complete the calculations, Sharp tells Eli.

Analysts can't just declare one type of patient or one geographic region a winner or loser under the system. "It's very, very agency-specific," Sharp warns.

Prediction: The complex relationship between OASIS items under the new case mix will mean answers to the questions must be more accurate than ever, Sharp warns. Processes for finding inconsistencies between OASIS answers may become more valuable.

OASIS data accuracy has always been important for payment and patient outcomes purposes, "but the interrelation between items adds a new dynamic," Sharp says.

Example: An MS diagnosis joined with a score of 2 or more on M0670 (bathing) or M0680 (toileting) in the third episode will add 9 points to the clinical domain score, while a M0670 or M0680 score below 2 will net zero points.

Episode Differential May Give Rise To Gaming

A system entirely free of gaming potential isn't possible. For example, by paying less for the first two episodes and more for episodes three and later, CMS may be leaving the system open to manipulation.

"This will provide an incentive to keep patients on service longer and potentially raise issues of appropriate coverage," forecasts consultant Judy Adams with LarsonAllen based in Charlotte, NC. "Instead of case mix creep, we may be looking at episode creep," Adams warns.

Adams also questions the higher-paying later episodes because HHAs often expend the most resources at the onset of care. "Agencies will lose with lower rates for episode 1 and 2," she believes. "Most home health resources are used up front, not later in the care."

Biggest loser: And all agencies will lose out if CMS implements the 2.75 percent cut to HHA payments in 2008, with another 5.5 percent in cuts in 2009 and 2010.

This case mix creep cut combined with continued recommendations from the Medicare Payment Advisory Commission to freeze rates "are a serious threat to the viability of HHAs," Adams emphasizes.