Medicare Compliance & Reimbursement

CMS tries to align payments with current utilization data.

The Centers for Medicare & Medicaid Services (CMS) has bad news for home health agencies. In its 2015 home health prospective payment system proposed rule, CMS outlines its plan to cull about 200 diagnosis codes from the case mix system and drop two OASIS items as well. CMS is “adjusting the weights relative to one another using more current data and aligning payments with current utilization data in a budget neutral manner,” the agency explains in the rule published in the July 7 Federal Register.

Warning: While the overall effect is supposed to be budget-neutral, the case mix recalibration could take a big bite out of your budget if your patients fall into the categories losing reimbursement under the new model. Coupled with the proposed rate cut, “it is really going to be a tough year for HHAs,” predicts Judy Adams with Adams Home Care Consulting in Asheville, N.C.

The proposed update makes “significant changes to the point values for the variables in the four-equation model” under PPS, CMS explains in the rule. “These reflect changes in the relationship between the grouper variables and resource use since 2005.”

“There are more than 200 case mix codes in the categories of blindness/low vision, psych 1, psych 2, and pulmonary alone” removed from the case mix equation, Adams points out. “Plus the removal of case mix points for a number of interactions, primary GI diagnosis, etc.”

Diabetes No Longer A Case Mix Factor In These Scenarios

“A primary diagnosis of diabetes will no longer gain any points in an early or late episode with low therapy,” Adams says. And the diabetes diagnosis “will only receive 1 point in an early episode with low therapy, and no points in the other three equations when diabetes is a secondary diagnosis.”

That’s “a major impact for home health, where so many diabetic patients are treated for diabetic ulcers and other manifestations,” Adams continues. “Diabetes has been one of the primary case mix diagnoses since the beginning of PPS.”

The proposed case mix recalibration often reinforces the financial divide between episodes with significant amounts of therapy and episodes without, Adams adds.

“CMS proposes to increase case mix weights by 3.75 percent for episodes with 0-5 therapy visits; decrease weights by 2.5 percent for episodes with 14-15 therapy visits; decrease weights by 5 percent for episodes with 20+ therapy visits; and institute gradual weight adjustments for episodes between those thresholds,” notes the National Association for Home Care & Hospice (NAHCH) in its analysis of the rule.

“The greatest losses in case mix points are in the non-therapy or low therapy equations where the reimbursement was already lower,” Adams tells Eli. “Given the loading of case mix points in the early and late high-therapy equations, it looks as if once again, CMS is rewarding high therapy at the cost to all other types of situations.”

Meanwhile, other resource-intensive patients will see less reimbursement if the proposal is finalized. “Case mix points for wounds, a high-cost service for home health agencies, have been significantly reduced,” Adams highlights.

Say Good-Bye To These OASIS Items In Case Mix

CMS proposed to eliminate any case mix points for two OASIS items: M1200 (Vision) and M2030 (Injectable drug use). “M1200 has ... been a case mix item for years,” Adams says.

CMS doesn’t give many details about the case mix changes. “The CY 2015 four-equation model resulted in 121 point-giving variables being used in the model (as compared to the 164 variables for the 2012 recalibration),” the agency notes in a brief overview of the adjustments. “There were 19 variables that were added to the model and 62 variables that were dropped due to the lack of additional resources associated with the variable. The points for 56 variables increased in the CY 2015 four-equation model and the points for 28 variables decreased.”

But CMS doesn’t go any deeper in justifying the changes. “At least last year CMS had some reason why they removed the 170 diagnosis codes from case mix,” Adams says. CMS also proposes changing the thresholds for the clinical and functional domains to reflect the variable changes.

One break: Even though CMS found a 2 percent growth in so-called case mix creep, the agency doesn’t plan to reduce PPS rates accordingly, as it has done in previous years. After considering a case mix creep cut, the agency decided to “continue to monitor case-mix growth” instead, it says in the rule. CMS “may consider whether to propose nominal case-mix reductions in future rulemaking,” it cautions.

The decision to forego any cuts for case mix creep “is welcomed by the home health industry that is facing potentially unsustainable rate rebasing cuts,” NAHC says in its rule analysis. “It is hoped that CMS maintains it position in the Final Rule.”

Take These Steps Now

With such significant case mix changes on deck, the top-line rate changes aren’t going to tell you much about how you’ll be affected under the rule, experts agree.

“We encourage you to review all of the new case mix weights to determine the potential impact on your individual home health agency,” advises Dixon Healthcare Solutions Inc. on its website.

“All HHAs need to be sure to look at their current case loads and compare these changes to what they are seeing for case mix scores now,” Adams urges. “If your home health agency does not have a good percentage of therapy patients, next year will be devastating,” she warns.

Don’t forget: HHAs “really need to be submitting comments back to CMS that these changes will be devastating to nearly every home health agency,” Adams stresses.