The 2012 PPS Proposed Rule outlines Medicare Home Health refinements in the latest CMS installation of the care and quality controls that have redefined the benefit. The changes involve the expected funding cuts provided in the form of case-mix modifications and reductions in the market basket update (see 8/8/11 HHSM Newsletter). Also included was the elimination of the two primary hypertension ICD-9 codes from the case-mix equation, essentially another funding cut that will uniquely affect providers based on their use of this diagnosis. Face to Face and homebound clarifications completed the document, save for one important and game-changing set of proposals regarding therapy care and payment. By introducing a therapy payment re-allocation model, the 2012 PPS Proposed Rule significantly changes reimbursement of rehab services to assure equal access and reduce gaming. Furthermore, in doing so, CMS has initiated a series of refinements that will irrevocably alter how therapy is addressed and delivered in the Home Health model of the future.
Important History
The desire to address therapy issues has been a hallmark of the Prospective Payment System (PPS) model since its introduction in 1999. The Home Health benefit was introduced to the acuity-based PPS protocols that had re-invented care delivery in hospitals and nursing homes, and initial concerns regarding rehab care were evident in the development of the high-therapy threshold. This aspect of the initial PPS model marked the beginning of the era of directly connecting payment levels to clinical volumes of delivered therapy care. In order to prevent a reduction in the use of needed but expensive therapy care, the Home Health provider received a bonus payment ($2200) on a per claim basis for all episodes that included 10 or more combined therapy visits. The high-therapy threshold did, in fact, prevent the skimping of therapy services for the homebound client. But this initial emphasis on rehab care tied to the core payment mechanism brought other, less desirable changes to the PPS model.
The cluster of therapy visits around the high side of the 10-visit number progressed steadily throughout the first five years under PPS. The tiered payment levels of the 2008 PPS Rule changed the fiscal game as it related to therapy; CMS and Med Pac wanted to assure that Home Health patients received the volume of rehab care they needed on an individualized basis. By way of clustering care volumes around a fee-specific number (in this case 10), we had begun to fit the program to the payment, rather than to the patient. Patient access is the concern here; an emphasis on the 10-visit patient profile reduces access of care to those patients who need less financially attractive programs. The 2008 rule spread the therapy payment funds at visit-related intervals from 0 to 20+ visits, with the most pronounced payment steps occurring at visits 6, 14, and 20.
Home Health providers were, at that time, certainly tuned into the effects of therapy care volumes, and how they related to the financial health of any agency. The 2008 therapy payment changes were just the latest challenge they faced regarding rehab delivery. Most agencies struggled to retain and manage rehab staff, resulting in contract labor situations that often leave much to be desired. Visit patterns showed the response to be rapid and specific; therapy programs clustered around the visit totals connected to the payment increases (6, 14, & 20). The primary movement occurred from 10-14 visits, as the 10+ cluster rose toward the 14-visit payment level. These results were featured in a now legendary Wall Street Journal article in early 2010, prompting separate Senate Finance Committee and SEC investigations of the four largest, publicly traded Home Health providers regarding these specific issues.
The realization that therapy visit totals could move rapidly in response to altered payment levels confirmed Med Pac beliefs that access to care could be compromised for patients not needing higher programming volumes. The CMS mandate to evolve care models, assuring that beneficiaries received the most progressive and advanced healthcare services possible, combined with the new findings on therapy adjustments to prompt a re-allocation of funds for Home Health rehab programs. This re-allocation is the centerpiece of the 2012 Proposed Rule, and it comes in the form of a regressive payment model for rehab programming.
2012 Therapy Payment Re-allocation: A New Day in Homecare
The 2012 PPS Proposed Rule addresses therapy concerns in a not so subtle manner; removing much of the incentive to increase therapy care volumes as a means of improving financial outcomes. The re-allocation of therapy payment funds, as they relate to specific visit levels, is intended to equate fiscal attractiveness across ALL visit profiles. By decreasing payments to the overused higher therapy programs (10-20) while simultaneously increasing payments to the lower utilization programs (0-9), CMS hopes to achieve multiple goals. First, decreased incentive to produce higher volume therapy programs will improve the clinical validity of the delivered services; in effect equalizing access for homecare patients despite their level of care needs. Second, by rewarding the efficient and focused care that prompts quicker outcomes, utilization decreases with elevated clinical results are expected. Finally, the payment re-allocation for therapy services is entirely budget-neutral; funds for rehab services are not being cut; instead, CMS seeks to re-focus payment to improve therapy care across the board.
CMS and Med Pac sought to achieve this goal by re-defining the interpretation of the Home Health Resource Group, or HHRG [1], the clinical profile scale employed to identify patient acuity on an individualized basis. This involved the staging of the Clinical (“C”) and Functional (“F”) severity ratings as a separate step in the case-mix equation, “avoiding undesired influence from payment levels on care volumes” [2]. By separating the “C” and “F” aspects of the HHRG from the therapy-influenced “S” component, CMS then installed a new method of decelerating therapy resources for higher numbers of therapy visits. The resultant therapy payment regression, in fact, steadily decreases payment on a per visit level basis for visits 10 and above (of combined therapies).
In the 2012 Proposed Rule, simultaneous payment increases for therapy programs totaling 9 or less (combined visits) rounds out the re-allocation of therapy payments. Noticeable differences in payment levels will be seen by most providers and agencies that possess therapy volume averages of 10 or above; they will undoubtedly feel the financial results in a less than positive manner.
CMS employed this methodology to assure that therapy programming volumes assigned to any specific clinical/functional profile would occur for primarily clinical reasons. Whether or not you agree with this approach, one truth becomes very apparent: It pays to get patients better in a faster manner. Providers who know how to get this done, or employ clinicians who do, will focus care and receive new payment levels in return. In addition, they will be one step further on their path to the bundled care models of the future.
Home Health agencies who, for whatever reason, continue to cluster claims around specific visit totals (10 or above) will have therapy income reductions to combine with the previously described cuts in the Proposed Rule. Providers who have employed therapy-derived fiscal health for their agencies will be challenged to reproduce past performance levels. Contract therapy providers may also struggle to conform to these new realities, and the therapy landscape may become somewhat shaky as a result. In addition, CMS and Med Pac have announced game-changing plans for therapy reimbursement sure to be included in the PPS Proposals if the future.
The removal of therapy from the payment formula will mark yet another earth-shaking re-invention of how rehab will be delivered in the Home Health model of the future. By including therapy funding in the HHRG-derived comprehensive payment, the connection between therapy visits and payment will be eliminated. This methodology will effectively equate nursing and therapy in a fee-capitated approach that eliminates most of the gaming and profit concern. Providers will be able to make as many nursing or therapy visits as they wish; the payment will have already been capitated. The author believes that, in response to the recent regulatory activity regarding therapy over-utilization, this proposal should be expected to come to fruition in the next 12- 18 months.
So as we attempt to make sense of these latest changes, it is important to note that we are just beginning. Length of stay reductions, a certain result of the proposed co-payments for non post-acute patients, bundling models, increased scrutiny of programming, etc, will all combine to create a new day in homecare. Home Health providers and clinicians in for the long haul must internalize these changes to remain on the care path of the future.
[1] - HHRG – Home Health Resource Group – Comprised of three scores derived from the OASIS Star of Care document performed at all Medicare Home Health admissions – 1) Clinical - “C” – nursing score derived from diagnoses, wounds, disease processes etc,
2) Functional – “F” – ADL decline derived from Functional section (M1810-1860),
3) Service – “S” - number of combined therapy visits, estimated at Start of Care, adjusted at discharge. Example HHRG – C2F1S1 – denoted moderate clinical nursing needs, minimal functional declines, and minimal therapy delivery (0-5 visits).
[2] – Department of Health and Human Services, Center for Medicare and Medicaid Services; Medicare Program; Home Health Prospective Payment System Rate Update for Calendar Year 2012 – Proposed Rule.