Medicare Home Health Rules for 2014 – The Update

By Baker Newman Noyes August 9, 2013

The Centers for Medicare and Medicaid Services recently issued Federal Register Vol. 78, No. 128 updating 42 CFR Part 431 (CMS 1450-P) through a Proposed Rule detailing several updates to the Home Health Agency (HHA) rates.  Perhaps more importantly, this release also includes the Affordable Care Act HHA rebasing requirements for 2014.  Finally, the proposed rule includes changes to establish home health quality reporting requirements, clarifying state Medicaid certification responsibilities as well as language supporting that HHAs must now participate in the cost of state surveys.

A summary of the major proposed Medicare changes follows:

• That national standardized 60-day episodic rate will be adjusted to reflect changes in the calculations such as the number of visits in an episode, the different types of services in an episode, intensity levels, average costing of the episode as well as other relevant factors that make up the component.
• CMS seeks to reduce Case Mix Weights (CMW) by some 26% in order to reign in associated Medicare payments as a result of what they term, Case Mix Creep.  Essentially, CMS has held a long standing position that the industry is artificially raising CMWs in their episodic scoring, but not putting in the associated time or services they would expect at that particular level.  By reducing the CMW, CMS looks to take back what translates into excessive payments through inflated scores.
• CMS is proposing to eliminate 170 ICD-9-CM codes because they consider some of these to be “too acute” for the home health industry and others deemed to no longer require home health intervention.  The general feeling is that these codes are no longer applicable to home care.
• CMS will be set to adopt ICD-10 coding for home health agencies on October 1, 2014.
• National per visit Low Utilization Payment Adjustment will be overhauled to vary the add-on with four or fewer visits based upon which discipline makes the first visit in the affected episode.
• The Home Health Prospective Payment System Episodic Rate is proposed to change to $2,860.20 from $2,963.65.  This change in payment incorporates the rebasing adjustment, outlier adjustment, budget neutrality adjustment and a market basket increase.
• The Non-Routine Supplies calculation will revise the payment to $53.84 from $53.97.  The change in payment incorporates the rebasing reduction and market basket update.
• Wage Index labor and non-labor percentages used to calculate payments will remain unchanged from CY 2013 at 78.535% and 21.465%, respectively.
• The CMS proposed rule will continue to penalize HHAs that do not report OASIS data by 2% in CY 2014.  Additionally, two other quality measures will need to be included in future reporting:
  1. Rehospitalizations within 30 days of a home health stay
  2. Emergency Department usage without a hospital readmission during the first 30 days of a home health stay.

If you would like to learn more, please contact your BNN advisor at 1.800.244.7444.