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Delta Connect Blog

Proposed Medicare Home Health Services Rates Would Reshape Payments Significantly

Posted by Crystal Parks on Jul 31, 2014 2:06:05 PM


With the Notice of Proposed Rulemaking, the Centers for Medicare and Medicaid Services (CMS) sets out a plan to recalibrate all 153 Home Health Resource Groups in the case mix adjustment model. These proposed changes, if finalized later this year, would result in a dramatic reshaping of the payment distribution model. CMS has evaluated and modified all variables that affect the assignment of an HHRG to a particular patient episode.

The recalibration is based on the methodology that was used to modify the 2008 and 2012 case mix adjustment weights. CMS used preliminary 2013 home health claims data for generating the proposed 2015 case mix weights. The dependent variable that was used in the recalibration is the same that was applied in 2012: wage weighted minutes of care using Bureau of Labor Statistics data on national hourly wage plus fringe rates for the six disciplines of care. All 164 variables in the four-equation model were examined. The four-equation model consists of four “legs:” early episode 0-13 therapy visits; early episode 14+ therapy visits; later episode 0-13 therapy visits; and later episode 14+therapy visits. The evaluation affects both the Clinical and Functional domains in the model.

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). There were 19 variables that were added to the model and 62 variables that were dropped from the model due to the lack of additional resources associated with the variable. The points for 56 variables increased in the CY 2 015 four-equation model and the points for 28 variables in (sic) decreased in the CY 2015 for-equation model.   

The bottom-line is that the proposed case mix adjustment model has had nearly all of its inputs that affect the calculated case mix weight redone resulting in wholesale and HHRG-specific changes to all HHRGS. CMS claims that the new model is more accurate in terms of correlating the case mix weights to the resources used in each HHRG category. The 2012 version has an R-squared (explanatory power) of 0.3769 while the proposed model’s R-squared is 0.4691.

In recalibrating the case mix weights, CMS revises the weight associated with therapy utilization. HHRGs weights associated with 0-5 therapy visits were increased by 3.75 percent; 14-15 therapy visits decreased by 2.5 percent; and 20+ therapy visits decreased by 5 percent. However, this does not mean that the resulting case mix weights are all affected to the same degree. Instead, therapy utilization is just one of the variables in the case mix weight calculation. Although the adjustments on therapy utilization impact the final weights, they do not control the outcome. In fact, the final proposed weights actually show higher weights on high volume therapy episodes than under the present case mix weight calibration.

As is shown in the chart (link here), the actual impact of the case mix weight recalibration on payment levels is anything but consistent in each of the 153 HHRGs. Throughout the model case mix weights are increased and decreased individually at various levels. Furthermore, HHRGs associated with 20+ therapy visits go up significantly, but inconsistently in relation to the CY2012 currently in use.

For example, Payment Group 40111, HHRG C1F1S1 20+ therapy visits would be paid $5324.52 on a base episode, non- wage indexed adjusted rate in contrast to $4804.71 in the 2014 HHRG weight calibration. In comparison, Payment Group 10131, HHRG Early Episode, 0-5 therapy visits would lead to a 2015 payment level of $2322.08 compared to $2393.83. The continued rate rebasing affects both HHRGs in a proportionate equal manner. It is very noteworthy that the higher therapy volume HHRG goes up despite the 5 percent reduced weight assigned to the service utilization variable of 20+ therapy visits. The reason is that the other variables in the calculation show a higher overall resource use.   

For HHAs wishing to evaluate the impact of the proposed rule, including the case mix weight recalibration, on the organization, it is necessary to perform an HHA-specific comparison using a recent case mix census. Since the recalibration has inconsistent outcomes between and among the HHRG, only by way of an application of the HHA’s own case mix experience can the impact be reasonably forecast. Even then, the forecast assumes that the nature of the case mix census is consistent between 2014 and 2015. While CMS forecasts that nonprofit HHAs will fare better than proprietary and Northern HHAs better than Southern ones, the reality is that each HHA must be individually evaluated regardless of location, tax status, or ownership.

In an upcoming article, NAHC will review the proposed changes to the area wage index. Each year, wage index changes have the potential to trigger significant reimbursement changes. The 2015 proposal offers a 50/50 blend of 2015 CBSAs with 2015 new CBSAs.  Under the proposed change, there are 7 new CBSAs, 208 counties changes CBSA designations with 38 shifting from urban to rural, 105 rural to urban, and 65 shifting from one rural area to another rural area.

To view a chart of the proposed case mix adjustments, please click here.

From the NAHC Report article 


Topics: Home Care reimbursement


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