Medicare Compliance & Reimbursement

Agency wants CMS to research case-mix data.

Home health agencies' 2006 prospective payment system may receive further tweaking--if the Medicare Payment Advisory Commission gets its way.

The Centers for Medicare and Medicaid Services should consider analyzing the case mix classification system, the outlier policy and the benefit's definition under next calendar year's home health PPS, MedPAC Chairman Glenn Hackbarth wrote in a Sept. 6 letter to CMS Administrator Mark McClellan.

In the home health PPS proposed rule, the agency plans to base HHAs' wage indices on their proximity to Metropolitan Statistical Areas or Core-Based Statistical Areas--the same payment methodology that CMS uses for inpatient hospitals and skilled nursing facilities.

Unlike inpatient hospitals and SNFs, "HHAs that will have a lower wage index under the new geographic definitions will not be afforded a transition period in which their wage index would be a blend of old and new," Hackbarth writes. CMS' proposal to establish new labor market designations for HHAs on Jan. 1, 2006 is also a concern for MedPAC. "Large payment changes should be phased-in over time in a budget-neutral manner," in the same way that CMS phased-in the new designations for inpatient hospitals and SNFs, Hackbarth advises.

To read the letter, go to http://www.medpac.gov/publications/other_reports/090605_HHA_rate_update_2006_comment.pdf.