1. Home Health Prospective Payment Final Rule - Summary of Key Points Brian D. Ellsworth Senior Associate Director Policy Development Group August, 2000

2. Structure of Presentation Context for Home Health PPS Key Components of the Final Rule Operational/Strategic Imperatives

3. Context for Home Health PPS Major growth in Medicare home health care in the early 90s Imposition of Interim Payment System in 1997 Restrictions in Medicare home health coverage Major reductions in Medicare home health utilization from 1998 to present

4. Trends in Program Payments for Medicare Home Health Agency Services 1988-1998 Number in Millions

5. Home Health Agency Types 10-1-974-13-99 3-16-00 Number of Agencies Source: HCFA - On-Line Survey Certification and Reporting System

6. Medicare Home Health Agency PPS Proposed rule issued October 28, 1999 Final Rule issued July 3, 2000 Effective October 1, 2000 Episodic, case mix adjusted payment Budget neutral on day one

7. Unit of payment is a 60-day episode Multiple episodes per beneficiary envisioned PPS rate covers all HHA services & non- routine medical supplies for a 60-day episode Standard PPS rate: $2,115 Adjusted for case-mix & wages Four or fewer visits in an episode paid on per visit basis - low utilization payment adj. 60% of episode payment made at start of care, 40% at first follow-up (50/50 thereafter )

8. AHA-supported Changes in the Final Rule Higher 60-day episode payment rate, further increased in FY 2002 25 percent higher per visit rates for low utilization cases Improved cash flow through increased payment on front-end Ability to initiate billing based on verbal physician orders

9. AHA-supported Changes in the Final Rule (Cont.) Improvements in payments for patients with wounds/skin ulcers and patients with multiple impairments Higher proportion of costs reimbursed for outlier cases Fewer medical supplies included in bundled rate

10. Impact of Home Health Agency PPS Final Rule

11. Case-mix adjuster is calledHome Health Resource Groups 80 group patient classification system Payment varies from 53 percent ($1,271) to 281 percent ($6,792) Three major domains: clinical severity, functional status and service utilization Points assigned to 22 items from OASIS patient assessment form 10 or more therapy visits during an episode is a critical case mix factor

12. HHRGs - Summary of scoring changes Proposed vs. Final rule

13. Low Utilization Payment Adjustment (LUPA) Low utilization case defines as four or fewer visits in 60 day episode Agencies paid on per visit basis for LUPA cases HCFA expects that five percent of total episodes will be LUPAs

14. LUPA Per Visit Rates - Proposed vs. Final

15. Adjustments for events during an episode Beneficiary-elected transfer to another HHA or discharge from original plan of care and return: in either case the original episode payment is pro-rated & a new 60-day episode begins Significant change in condition: triggers new case mix category for balance of the original 60-day episode Issue of payment gaps remains

16. Outlier adjustment available for very high cost cases Outlier provision allows for recovery of 80 percent of costs above set loss threshold Agencys actual episode costs estimated from within-episode visit data provided on the claim Automatically provided if case qualifies

17. Key Points to Keep in Mind…. Inaccurate OASIS scoring on any of the relevant items can mean big lost $$$ Outside of the 10 visit therapy utilization threshold (during the episode), rates are truly prospective The OASIS form will eventually also be used for outcome analysis

18. Key Points to Keep in Mind…. (Cont.) Medicare coverage criteria are unchanged Obtaining the outcome most efficiently is the future of home health 15 percent reduction scheduled for FY 2002 is still out there

19. Home Health PPS – Agency To Do List 3Train staff on PPS mechanics & implications 3Train staff on importance of OASIS coding rules 3Computerize all information processes, update OASIS and billing software, monitor forthcoming HIPAA rules 3Educate local physicians on PPS

20. Home Health PPS – Agency To Do List (Cont.) 3Formulate action plan for assessment of caseload during the period prior to start of PPS 3Have financial back-up plan in case of cash flow delays Develop ability to conduct patient- level cost vs. revenue analysis as part of care delivery re-engineering

21. Strategic Considerations for Hospital-based Home Health: Keys to success ÜContinuous outcome-based quality improvement strategies using OASIS data ÜKnowing revenue vs. cost on all patients at key intervals ÜAccurate coding of OASIS ÜWell-trained and motivated staff