OASIS Alert

CMS gives with one hand and takes away with the other.

Under the final Home Health Prospective Payment System Refinement and Rate Update for Calendar Year 2008 ("final rule"), released Aug. 22, the Centers for Medicare & Medicaid Ser-vices addressed industry concerns that non-routine medical supplies (NRS) reimbursement did not adequately compensate for NRS costs to home health agencies.

The result: After the final rule takes effect Jan. 1, the agency will "expect that HHAs will report NRS costs on their claims." And to provide a stronger incentive for agencies to report supplies costs, "claims that do not report NRS costs, unless explicitly noted [on the claim] by the HHA that NRS was not provided, will be returned to the provider (RTP)," CMS says in the final rule. The HHA must then resubmit the claim with either the NRS costs reported or the fact that NRS were not provided noted on the claim, CMS explains.

Grace period: CMS will determine and communicate a grace period for this change, the final rule reports. CMS plans to monitor the accuracy of the new method of reimbursing NRS and explore alternative methods, the agency says.

Historically, home health agencies have encountered problems with clinicians keeping track of supply cost, says senior consultant Debbie Dawson with HealthCare Strategies Inc. in Chat-tanooga, TN. HHAs also neglect reporting NRS costs on claims because of an attitude of "we don't get paid for them, so why bother," she tells Eli.

More than 40 percent of the cost reports CMS reviewed before proposing the new NRS reimbursement rates did not contain any costs for NRS, reports senior consultant Judy Adams with Charlotte, NC-based LarsonAllen. This causes inadequate NRS reimbursement at least until CMS revisits this issue, she says.

In the proposed PPS refinement, CMS eliminated the NRS reimbursement contained in the home health PPS base rate and instead suggested paying NRS separately based on a system of five severity ratings. The final rule expands that to six severity ratings (see related story, page 87).

Most episodes (63.7 percent) will fall into the lowest severity rating, CMS expects. That level will pay $14.12 for NRS for an episode. Only 0.3 percent of episodes will score at the highest severity level, CMS predicts. That level will pay $551.00 for the episode's NRS (see chart, page 87).

Upside: The PPS refinements are budget neutral; however, the new NRS reimbursement plan gives you more options to receive part of the available case mix funds, Adams says.

Downside: To maintain budget neutrality, CMS plans to offset the increased NRS reimbursement by reducing the national standardized 60-day episode payment rate, the final rule explains. That rate for episodes beginning and ending in calendar year 2008 will be $2,270.32, according to the final rule.

Example: An ostomy related to an inpatient stay or regimen change is worth 35 points toward the NRS severity rating, Adams explains. But an ostomy not related to an inpatient stay or regimen change adds only 21 points. Determining exactly which category the patient fits into at start of care can gain or lose reimbursement dollars.

Responses other than "0" to M0450 (Current number of pressure ulcers at each stage) can add from 12 to 143 points. M0 items concerning stasis ulcers, surgical wounds, ostomies, infusions and catheters also add NRS points. Point values also may differ depending on whether the episode is an "early" or "later" episode in the patient's current sequence of adjacent Medicare home health payment episodes.

Tip: Points for NRS are additive, the final rule explains, "but points may not be given for the same line item in the table more than once. Points are not assigned for a secondary diagnosis if points are already assigned for a primary diagnosis from the same diag-nosis/condition group," CMS adds.

Caveat: These NRS calculations do not apply to low utilization payment adjusted (LUPA) episodes, the final rule clarifies. CMS plans to continue studying the issue of NRS associated with LUPAs, Adams says.