[Federal Register: August 29, 2007 (Volume 72, Number 167)]
[Rules and Regulations]
[Page 49761-49945]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29au07-9]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 484
Medicare Program; Home Health Prospective Payment System Refinement and
Rate Update for Calendar Year 2008; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 484
[CMS-1541-FC]
RIN 0938-AO32
Medicare Program; Home Health Prospective Payment System
Refinement and Rate Update for Calendar Year 2008
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period sets forth an update to
the 60-day national episode rates and the national per-visit amounts
under the Medicare prospective payment system for home health services,
effective on January 1, 2008. As part of this final rule with comment
period, we are also rebasing and revising the home health market basket
to ensure it continues to adequately reflect the price changes of
efficiently providing home health services. This final rule with
comment period also sets forth the refinements to the payment system.
In addition, this final rule with comment period establishes new
quality of care data collection requirements.
Finally, this final rule with comment period allows for further
public comment on the 2.71 percent reduction to the home health
prospective payment system payment rates that are scheduled to occur in
2011, to account for changes in coding that were not related to an
underlying change in patient health status (section III.B.6).
DATES: Effective date: These regulations are effective on January 1,
2008.
Comment date: We will consider public comments on the provisions in
section III.B.6 that deal with the 2.71 percent reduction to payment
rates in 2011. To be assured consideration, comments must be received
at one of the addresses provided below, no later than 5 p.m. on October
29, 2007.
ADDRESSES: In commenting, please refer to file code CMS-1541-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1541-FC, P.O. Box 8012, Baltimore, MD 21244-8012.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1541-FC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-7195 in advance to schedule your arrival
with one of our staff members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-
1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Randy Throndset, (410) 786-0131.
Sharon Ventura, (410) 786-1985 and Katie Lucas, (410) 786-7723 (for
general issues). Kathy Walch, (410) 786-7970 (for clinical OASIS
issues). Doug Brown, (410) 786-0028 (for quality issues). Mollie
Knight, (410) 786-7948; and Heidi Oumarou, (410) 786-7942 (for market
basket issues).
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on the
2.71 percent reduction to the Home Health Prospective Payment System
(HH PPS) rates for 2011, as set forth in this final rule with comment
period, to assist us in fully considering this issue and developing
policies.
Inspection of Public Comments: All comments received before the
close of the comment period will be available for viewing by the
public, including any personally identifiable or confidential business
information that is included in the comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare and Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Background
A. Requirements of the Balanced Budget Act of 1997 for
Establishing the Prospective Payment System for Home Health Services
B. Deficit Reduction Act of 2005
C. Updates to the HH PPS
D. System for Payment of Home Health Services
II. Summary of the Provisions of the CY 2008 Proposed Rule
III. Analysis of and Response to Public Comments on the CY 2008
Proposed Rule
A. General Comments on the CY 2008 HH PPS Proposed Rule
1. Operational Issues
2. The Schedule for Implementation of the CY 2008 Refinements
3. Complexity of the System
B. Case-Mix Model Refinements
1. General Comments
2. Later Episodes
3. Addition of Variables
4. Addition of Therapy Thresholds
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5. Determination of Case-Mix Weights
6. Case-Mix Change Under the HH PPS
7. Case-Mix Groups
8. OASIS Reporting and Coding Practices
C. Payment Adjustments
1. The Partial Episode Payment (PEP) Adjustment
2. The Low Utilization Payment Adjustment (LUPA)
3. The Significant Change in Condition (SCIC) Adjustment
4. Non-Routine Medical Supplies (NRS)
D. The Outlier Policy
E. The Update of the HH PPS Rates
1. The Home Health Market Basket Update
2. The Rebasing and Revising of the Home Health Market Basket
3. Wage Index
4. Home Health Care Quality Improvement
5. CY 2008 Payment Updates
IV. Provisions of the Final Rule With Comment Period
V. Collection of Information Requirements
VI. Regulatory Impact Analysis
A. Overall Impact
B. Anticipated Effects
C. Accounting Statement
Addendum A. CY 2008 Wage Index for Rural Areas by CBSA; Applicable
Pre-floor and Pre-reclassified Hospital Wage Index
Addendum B. CY 2008 Wage Index for Urban Areas by CBSA; Applicable
Pre-floor and Pre-reclassified Hospital Wage Index
Addendum C. Comparison of the CY 2007 HH PPS Wage Index and the CY
2008 HH PPS Wage Index
I. Background
A. Requirements of the Balanced Budget Act of 1997 for Establishing the
Prospective Payment System for Home Health Services
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) enacted on
August 5, 1997, significantly changed the way Medicare pays for
Medicare home health services. Section 4603 of the BBA governed the
development of the home health prospective payment system (HH PPS).
Until the implementation of a HH PPS on October 1, 2000, home health
agencies (HHAs) received payment under a cost-based reimbursement
system.
Section 4603(a) of the BBA provides the authority for the
development of a HH PPS for all Medicare-covered home health services
provided under a plan of care that were paid on a reasonable cost basis
by adding section 1895 of the Social Security Act (the Act), entitled
``Prospective Payment For Home Health Services,'' to the Act.
Section 1895(b)(1) of the Act requires the Secretary to establish a
HH PPS for all costs of home health services paid under Medicare.
Section 1895(b)(3)(A) of the Act requires that (1) the computation
of a standard prospective payment amount include all costs for home
health services covered and paid for on a reasonable cost basis and be
initially based on the most recent audited cost report data available
to the Secretary, and (2) the prospective payment amounts be
standardized to eliminate the effects of case-mix and wage levels among
HHAs.
Section 1895(b)(3)(B) of the Act addresses the annual update to the
standard prospective payment amounts by the home health applicable
increase percentage as specified in the statute.
Section 1895(b)(4) of the Act governs the payment computation.
Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the
standard prospective payment amount be adjusted for case-mix and
geographic differences in wage levels. Section 1895(b)(4)(B) of the Act
requires the establishment of an appropriate case-mix adjustment factor
that adjusts for significant variation in costs among different units
of services. Similarly, section 1895(b)(4)(C) of the Act requires the
establishment of wage adjustment factors that reflect the relative
level of wages, and wage-related costs applicable to home health
services furnished in a geographic area compared to the applicable
national average level. These wage-adjustment factors may be used by
the Secretary for the different geographic wage levels for purposes of
section 1886(d)(3)(E) of the Act.
Section 1895(b)(5) of the Act gives the Secretary the option to
make additions or adjustments to the payment amount otherwise made in
the case of outliers because of unusual variations in the type or
amount of medically necessary care. Total outlier payments in a given
fiscal year (FY) may not exceed 5 percent of total payments projected
or estimated.
In accordance with the statute, we published a final rule (65 FR
41128) in the Federal Register on July 3, 2000 to implement the HH PPS
legislation. The July 2000 final rule established requirements for the
new HH PPS for home health services as required by section 4603 of the
BBA, as subsequently amended by section 5101 of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act (OCESAA) for
Fiscal Year 1999, (Pub. L. 105-277), enacted on October 21, 1998; and
by sections 302, 305, and 306 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act (BBRA) of 1999, (Pub. L. 106-113),
enacted on November 29, 1999. The requirements include the
implementation of a HH PPS for home health services, consolidated
billing requirements, and a number of other related changes. The HH PPS
described in that rule replaced the retrospective reasonable cost-based
system that was used by Medicare for the payment of home health
services under Part A and Part B.
For a complete and full description of the HH PPS as required by
the BBA, see the July 2000 HH PPS final rule.
B. Deficit Reduction Act of 2005
On February 8, 2006, the Deficit Reduction Act (DRA) of 2005 (Pub.
L. 109-171) was enacted. This legislation affected updates to HH
payment rates for calendar year (CY) 2006. The DRA also required HHAs
to submit home health care quality data and created a linkage between
that data and payment beginning in CY 2007.
Specifically, section 5201 of the DRA changed the CY 2006 update
from the applicable home health market basket percentage increase minus
0.8 percentage points to a 0 percent update. In addition, section 5201
of the DRA amends section 421(a) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173,
enacted on December 8, 2003). The amended section 421(a) of the MMA
requires that for home health services furnished in a rural area (as
defined in section 1886(d)(2)(D) of the Act) on or after January 1,
2006 and before January 1, 2007, that the Secretary increase the
payment amount otherwise made under section 1895 of the Act for home
health services by 5 percent. The statute waives budget neutrality for
purposes of this increase since it specifically states that the
Secretary must not reduce the standard prospective payment amount (or
amounts) under section 1895 of the Act applicable to home health
services furnished during a period to offset the increase in payments
resulting in the application of this section of the statute.
The 0 percent update to the payment rates and the rural add-on
provisions of the DRA were implemented through Pub. 100-20, One Time
Notification, Transmittal 211 issued on February 10, 2006.
In addition, section 5201 of the DRA requires HHAs to submit data
for purposes of measuring health care quality, and links the quality
data submission to payment. This requirement is applicable for CY 2007
and each subsequent year. If an HHA does not submit quality data, the
home health market basket percentage increase will be reduced 2
percentage points.
C. Updates to the HH PPS
As required by section 1895(b)(3)(B) of the Act, we have
historically updated the HH PPS rates annually in a separate
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Federal Register document. In those documents, we also incorporated the
legislative changes to the system required by the statute after the
BBA, specifically the MMA. On November 9, 2006, we published a final
rule titled ``Medicare Program; Home Health Prospective Payment System
Rate Update for Calendar Year 2007 and Deficit Reduction Act of 2005
Changes to Medicare Payment for Oxygen Equipment and Capped Rental
Durable Medical Equipment; Final Rule'' (CMS-1304-F) (71 FR 65884) in
the Federal Register that updated the 60-day national episode rates and
the national per-visit amounts under the Medicare HH PPS for home
health services for CY 2007. In addition, the November 2006 final rule
ended the 1-year transition period that consisted of a blend of 50
percent of the new area labor market designations' wage index and 50
percent of the previous area labor market designations' wage index. We
also revised the fixed dollar loss ratio, which is used in the
calculation of outlier payments. According to section 5201(c)(2) of the
DRA, this final rule also reduced, by 2 percentage points, the home
health market basket percentage increase to HHAs that did not submit
required quality data, as determined by the Secretary.
D. System for Payment of Home Health Services
Generally, Medicare makes payment under the HH PPS on the basis of
a national standardized 60-day episode payment rate that is adjusted
for case-mix and wage index. The national standardized 60-day episode
payment rate includes the six home health disciplines (skilled nursing,
home health aide, physical therapy, speech-language pathology,
occupational therapy, and medical social services) and medical
supplies. Durable medical equipment covered under home health is paid
for outside the HH PPS payment. To adjust for case-mix, the HH PPS uses
an 80-category case-mix classification to assign patients to a home
health resource group (HHRG). Clinical needs, functional status, and
service utilization are computed from responses to selected data
elements in the OASIS assessment instrument.
For episodes with four or fewer visits, Medicare pays on the basis
of a national per-visit amount by discipline, referred to as a low
utilization payment adjustment (LUPA). Medicare also adjusts the
national standardized 60-day episode payment rate for certain
intervening events that are subject to a partial episode payment
adjustment (PEP adjustment) or a significant change in condition
adjustment (SCIC adjustment). For certain cases that exceed a specific
cost threshold, an outlier adjustment may also be available.
II. Summary of the Provisions of the CY 2008 Proposed Rule
We published a proposed rule in the Federal Register on May 4, 2007
(72 FR 25356) that set forth a proposed update to the 60-day national
episode rates and the national per-visit amounts under the Medicare
prospective payment system for home health services. In accordance with
section 1895(b)(3)(B) of the Act, the standard prospective payment
amounts are to be increased by a factor equal to the applicable home
health market basket update for those HHAs that submit quality data as
required by the Secretary. The proposed home health market basket
update for CY 2008 was 2.9 percent. For HHAs that fail to submit the
required quality data, the home health market basket update would be
reduced by 2 percentage points.
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to establish area wage adjustment factors that reflect the
relative level of wages and wage-related costs applicable to the
furnishing of home health services and to provide appropriate
adjustments to the episode payment amounts under the HH PPS to account
for area wage differences. As set forth in the July 3, 2000 final rule
(65 FR 41128), the statute provides that the wage adjustment factors
may be the factors used by the Secretary for the purposes of section
1886(d)(3)(E) of the Act for hospital wage adjustment factors. In the
CY 2008 proposed rule (72 FR 25449), we proposed to use the 2008 pre-
floor and pre-reclassified hospital wage index (not including any
reclassification under section 1886(d)(8)(B) of the Act) to adjust
rates for CY 2008 and would publish those final wage index values in
the final rule.
As part of the CY 2008 proposed rule (72 FR 25435), we also
proposed to rebase and revise the home health market basket to reflect
FY 2003 Medicare cost report data, the latest available and most
complete data on the structure of HHA costs. In the proposed rebased
and revised home health market basket, the labor-related share was
77.082 (an increase from the current labor-related share of 76.775).
The proposed non-labor-related share was 22.918 (a decrease from the
current non-labor-related share of 23.225). The increase in the
proposed labor-related share using the FY 2003 home health market
basket was primarily due to the increase in the benefit cost weight.
The CY 2008 proposed rule (72 FR 25358) also proposed refinements
to the payment system. Extensive research was conducted to investigate
ways to improve the performance of the case-mix model. This research
was the basis for our proposals to refine the case-mix model. We
proposed to refine the case-mix model to reflect different resource
costs for early home health episodes versus later home health episodes
and to expand the case-mix variables included in the payment model. For
2008, we proposed a 4-equation case-mix model that recognizes and
differentiates payment for episodes of care based on whether a patient
is in what is considered to be an early (1st or 2nd episode in a
sequence of adjacent episodes) or later (the 3rd episode and beyond in
a sequence of adjacent episodes) episode of care as well as recognizing
whether a patient was a high therapy (14 or more therapy visits) or low
therapy (13 or fewer therapy visits) case. We defined episodes as
adjacent if they were separated by no more than a 60-day period between
claims. Analysis of the performance of the case-mix model for later
episodes revealed two important differences for episodes occurring
later in the home health treatment compared to earlier episodes: higher
resource use per episode and a different relationship between clinical
conditions and resource use. We also proposed that additional variables
include scores for certain wound and skin conditions; more diagnosis
groups such as pulmonary, cardiac, and cancer diagnoses; and certain
secondary diagnoses. The proposed 4-equation model resulted in 153
case-mix groups.
In addition, we proposed to replace the current single therapy
threshold of 10 visits with three therapy thresholds at 6, 14, and 20
visits. We proposed that payment for additional therapy visits between
the three thresholds would increase gradually, incorporating a
declining, rather than a constant, amount per added therapy visit. The
proposed approach would not reduce total payments to home health
providers because the payment model would still predict total resource
cost. We noted that the combined effect of the new therapy thresholds
and payment gradations was expected to reduce the undesirable emphasis
in treatment planning on a single therapy visit threshold, and to
restore the primacy of clinical considerations in treatment planning
for rehabilitation patients.
In the May 4, 2007 proposed rule (72 FR 25395), we further proposed
to make
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an adjustment for case-mix that was not due to a change in the
underlying health status of the home health users. Section
1895(b)(3)(B) of the Act requires that in compensating for case-mix
change, a payment reduction must be applied to the standardized payment
amount. At the time of publication of the proposed rule, the most
recent available data, from which to compute an average case-mix
weight, or case-mix index, under the HH PPS rule, was from 2003. Using
the 2003 data, the average case-mix weight per episode for initial
episodes was 1.233. Analysis of a 1-percent sample of initial episodes
from the 1999-2000 data under the HH IPS revealed an average case-mix
weight of 1.125. Standardized to the distribution of agency type
(freestanding proprietary, freestanding not-for-profit, hospital-based,
government, and skilled nursing facility (SNF)-based) that existed in
2003 under the HH PPS, the average weight was 1.134. We noted this time
period is likely not free from anticipatory response to the HH PPS,
because we published our initial HH PPS proposal on October 28, 1999.
The increase in the average case-mix using this time period as the
baseline resulted in an 8.7 percent increase (from 1.134 to 1.233;
1.233-1.134=0.099; 0.099/1.134=0.087; 0.087x100=8.7 percent). We
proposed that the 8.7 percent of case-mix change that occurred between
the 12 months ending September 30, 2000 and the most recent available
data at the time from 2003 be considered case-mix change unrelated to
change in health status, also referred to as ``nominal case-mix
change.'' We proposed to apply this reduction over 3 years at 2.75
percent per year. Our analysis on the average case-mix under the HH PPS
using an Abt Associates' case-mix study sample from October 1997 to
April of 1998 as the baseline revealed an increase in the average case-
mix of 23.3 percent (from 1.0 during October 1997 to April 1998 to
1.233 in 2003). Because we believed the HHAs response to BBA
provisions, such as the home health interim payment system (HH IPS)
during this period, could have produced data from this sample that
reflected a case-mix in flux, we were not confident that the trend in
the case-mix index (CMI) between the time of the Abt Associates case-
mix study sample and 2003 data, used in the analysis for the proposed
rule, reflected only changes in nominal coding practices. Conversely,
the average case-mix for a sample data set for 12 months ending
September 30, 2000 (HH IPS baseline) was found to be 1.125,
standardized to 1.134. Using this time period as the base-line from
which to measure nominal change in case-mix under the HH PPS, we
identified an 8.7 percent change (increase) in the average CMI that
would not be due to a change in the patient health status (1.233, 2003
rate -1.134, September 2000 baseline = 0.099; 0.099/1.134 = 0.087).
Consequently, we proposed to account for that 8.7 percent in case-mix
change, that we considered to be nominal by reducing the national 60-
day episode rate by 2.75 percent, per year, for 3 years (subject to
change upon analysis of newer, 2005 data for the final rule), beginning
in CY 2008.
Additionally, we proposed to modify a number of existing HH PPS
payment adjustments. Specifically, we proposed modifying the LUPA by
increasing the payment, by $92.63, for LUPA episodes that occur as the
only episode or the initial episode during a sequence of adjacent
episodes. It has been suggested, by the industry, that LUPA payment
rates do not adequately account for the front-loading of costs in an
episode. Our analysis showed that these types of LUPAs require longer
visits, on average, than non-LUPA episodes, and that the longer average
visit length is due to the start of care visit, when the case is opened
and the initial assessment takes place. Consequently, these analyses
indicate that payments for such episodes may not offset the full cost
of initial visits. We also proposed eliminating the significant change
in condition (SCIC) payment adjustment. The current SCIC policy allows
an HHA to adjust payment when a beneficiary experiences a SCIC during
the 60-day episode that was not envisioned in the original plan of
care. Because of the apparent difficulty HHAs have in interpreting the
SCIC policy, their negative margins, the decline in the occurrence of
SCICs, and the estimated little impact on outlays in eliminating the
SCIC policy, we proposed to eliminate the SCIC policy.
In the development of the HH PPS, non-routine medical supplies
(NRS) were accounted for by attributing $49.62 to the standardized
episode payment. In the CY 2008 proposed rule (72 FR 25427), we
proposed to apply a severity adjustment to the NRS portion of the HH
PPS standardized episode payment. Specifically, we proposed a five-
severity group level approach that we believe would account for NRS
costs based on measurable conditions, would be feasible to administer,
and offered HHAs some protection against episodes with extremely high
NRS costs. Finally, we did not propose to modify the existing Partial
Episode Payment (PEP) Adjustment. At the time of the proposed rule, our
analysis did not suggest a more appropriate alternative payment policy.
However, we solicited the public for suggestions and comments on this
aspect of the HH PPS for ways to improve the PEP adjustment policy.
Section 1895(b)(5) of the Act also allows for the provision of an
addition or adjustment to account for outlier episodes, which are those
episodes that incur unusually large costs due to patient care needs.
Under the HH PPS, outlier payments are made for episodes for which the
estimated cost exceeds a threshold amount. The wage adjusted fixed
dollar loss (FDL) amount represents the amount of loss that an agency
must bear before an episode becomes eligible for outlier payments.
Section 1895(b)(5) of the Act requires that the estimated total outlier
payments may not exceed 5 percent of total estimated HH PPS payments.
With outlier payments having increased in recent years, and given the
unknown effects that the proposed refinements may have on outliers, we
proposed to maintain the FDL ratio of 0.67. We stated, in the proposed
rule (72 FR 25434), that we believed this would continue to meet the
statutory requirement of having an outlier payment outlay that does not
exceed 5 percent of total HH PPS payments, while still providing for an
adequate number of episodes to qualify for outlier payments. We further
stated in the proposed rule (72 FR 25434) that we would rely on the
latest data and best analysis available at the time to estimate outlier
payments and update the FDL ratio in the final rule if appropriate.
Finally for CY 2007, we specified 10 OASIS quality measures as
appropriate for measurements of health care quality. These measures
were to be submitted by HHAs to meet their statutory requirements to
submit data for a full increase in their home health market basket
percentage increase amount. For CY 2008, we proposed to expand the set
of 10 measures by adding up to 2 National Quality Forum (NQF)-endorsed
measures. The proposed additional measures for 2008 were as follows:
Emergent Care for Wound Infection, Deteriorating Wound Status
Improvement in the Status of Surgical Wounds
Accordingly, for CY 2008, we proposed to consider the 12 OASIS
quality measures submitted by HHAs to CMS for episodes beginning on or
after July 1, 2006 and before July 1, 2007 as meeting the reporting
requirement for CY 2008.
[[Page 49766]]
III. Analysis of and Responses to Public Comments on the CY 2008
Proposed Rule
In response to the publication of the CY 2008 HH PPS proposed rule,
we received approximately 150 items of correspondence from the public.
We received numerous comments from various trade associations and major
organizations. Comments also originated from HHAs, hospitals, other
providers, suppliers, practitioners, advocacy groups, consulting firms,
and private citizens. The following discussion, arranged by subject
area, includes our responses to the comments and, where appropriate, a
brief summary as to whether or not we are implementing the proposed
provision or some variation thereof.
A. General Comments on the CY 2008 HH PPS Proposed Rule
1. Operational Issues
Overall, commenters were pleased with the proposed changes to the
HH PPS. However, commenters did express concerns over the burden they
perceived that would be placed on HHAs to accomplish a number of the
proposed changes.
Comment: Commenters generally appreciated CMS's plan to
automatically adjust claims to reflect the actual amount of therapy
provided versus that initially reported in OASIS item M0826, Therapy
Need, but two commenters noted that for payment adjustments to be made
accurately, Medicare's Common Working File (CWF) system must contain
timely, accurate information. Numerous commenters were concerned that
the creation of M0110 (Episode Timing) would be burdensome, as agencies
do not have the information to complete them. The commenters did not
want to be penalized if M0110 was answered incorrectly, and wanted to
avoid administrative burden from having to cancel and resubmit final
claims and Request for Anticipated Payments (RAPs).
Response: CMS has made efforts over the last several years to
reduce internal processing delays and ensure that the CWF is updated
with claim receipts more quickly overall. While new errors may arise
that delay processing, we will seek to correct them as swiftly as
possible in light of all the competing demands on our systems.
The factor that most affects the timeliness and accuracy of the CWF
is how promptly within the 15 to 27 month timely filing period each
provider submits its claims. Medicare systems can only process to the
greatest degree of accuracy based on the information received to date.
In all instances where we foresee submission or processing lags
affecting the accuracy of claim payments under the refined system, we
are designing processes to retrospectively adjust paid claims at the
point when the delayed information is received. For example, the CWF
will automatically adjust claims up or down to correct for episode
timing (early or later, from M0110) and for therapy need (M0826) when
submitted information is found to be incorrect.
No cancelling and resubmission on the part of HHAs will be required
in these instances. Additionally, as the proposed rule noted, providers
have the option of using a default answer reflecting an early episode
in M0110 in cases where information about episode sequence is not
readily available.
Comment: Most commenters supported the elimination of OASIS item
M0175 from the case-mix model, as they sometimes found it difficult to
code accurately. Some commenters thought that we were eliminating M0175
from the OASIS entirely, and supported that. Several recommended that
we also stop retrospective M0175 audits. One asked that we keep M0175
as a case-mix variable, and apply the points to patients who have been
admitted directly from a hospital.
Response: We appreciate the support of our decision to eliminate
M0175 as a case-mix variable. We are not eliminating M0175 from the
OASIS, as is explained in section III.E.4, but only removing it from
the case-mix model. The M0175 item's results across the four equations
were difficult to interpret, and the item's explanatory power (with
respect to contribution to the R-squared statistic) was small.
Therefore, M0175 was not included as a case-mix variable in our final
case-mix model.
The M0175 item is part of the original HH PPS case-mix model and
was reflected in the determination of payments under that system. The
retrospective M0175 audits are still necessary to correct payments that
were made inappropriately under the original HH PPS. These payment
corrections have been repeatedly recommended to CMS by HHS's Office of
Inspector General.
Comment: One commenter proposed that the timeliness of information
on Medicare systems would be increased by the removal of the option to
submit no-RAP LUPA claims. The commenter believes that requiring RAPs
for all episodes will speed submission of episodes to Medicare.
Response: The no-RAP LUPA billing mechanism was created as part of
the original implementation of the HH PPS in response to concerns from
the home health industry that requiring RAPs for brief LUPA episodes
presented an administrative burden. Absent consistent feedback
throughout the home health industry that the benefits of removing this
billing mechanism would outweigh the costs, we plan to retain the no-
RAP LUPA process. However, we note this billing mechanism is an
operational issue and we have not received many comments on this issue.
It should be further noted that requiring the submission of RAPs for
all episodes will not necessarily speed the submission of those RAPs in
all cases. RAPs, like no-RAP LUPAs, can also be submitted at any point
in the timely filing period.
Comment: One commenter asked whether home health services received
when a beneficiary is enrolled in a Medicare Advantage (MA) Plan will
be considered in determining the sequence of adjacent episodes in cases
where the beneficiary has disenrolled from the MA Plan and resumes his
or her coverage under the Medicare fee-for-service program.
Response: Medicare does not typically receive claim-by-claim or
individual service data on beneficiaries enrolled in MA Plans. As a
result, the information is not available to determine whether a
beneficiary has been receiving home health services under the plan or
for how long. Medicare systems will determine sequences of adjacent
episodes based on the fee-for-service episode information currently
housed in the CWF and accessible to Medicare providers through
eligibility inquiry transactions.
Comment: A commenter believed that the addition of multiple payment
tiers based on therapy usage would create a problem concerning
beneficiary notification of their financial obligation to pay for home
health services. Many beneficiaries are now enrolled in Medicare
replacement plans that require a co-pay on the episodic rate. The
Medicare Conditions of Participation (CoPs) at 42 CFR 484.10 require
that the HHA notify the patient in advance of his or her liability for
payment. The commenter believed some consideration needs to be made
about the obligations of HHAs to meet this requirement as it is
virtually impossible to calculate the rate and provide notices of the
changing rate prior to providing service.
Response: The provisions of this rule apply to Medicare's fee-for-
service HH PPS and do not apply to Medicare Advantage/Medicare Choice
plans where co-pays for home health services provided under the plan
may exist. As
[[Page 49767]]
long as the patient meets the Medicare fee-for-service eligibility
requirements, and the HHA provides covered services that are reasonable
and necessary based on the patient's plan of care, there would be no
financial obligation on the part of the patient. However, if the
patient asks the HHA for services outside the scope of the Medicare
home health benefit, or the HHA provides non-covered services, the HHA
would be required to provide the patient with financial liability
information via the Advanced Beneficiary Notification (ABN). The
multiple payment tiers (that is, multiple therapy thresholds) would not
affect the determination of the patient's financial liability. That
liability would be outside the scope of the Medicare home health
benefit, and would be determined between the HHA and the patient. This
comment is beyond the scope of this final rule with comment period,
which deals with payment under HH PPS to fee-for-service HHAs.
Comment: Several commenters wrote that smaller, rural agencies are
particularly disadvantaged by the changes in the proposed rule. They
were concerned that the proposed changes will limit the ability of
agencies to survive or compete, which could limit access for patients.
This may impact rural patients more than urban patients.
Another commenter noted that CMS derives resource costs by
weighting each minute reported on the claim by the national average
labor market hourly rate for the discipline, and summing the total. The
commenter believed that it is not realistic to attribute the same
resource cost to rural beneficiaries as to urban beneficiaries, who
have more social programs available to them. Additionally, this method
does not account for the significant travel costs associated with rural
beneficiaries. The commenter added that this is why there has
periodically been a rural add-on.
Response: Our impact tables show that rural agencies, on average,
will experience a modest reduction in total payments between 2007 and
2008--less than 2 percent. Factors in the reduction are discussed in
section VI.B. These include the small reduction in the average case-mix
weight in 2008 among rural agencies, the impact of the wage index, and
several other factors discussed in that section. The offsetting
positive effect of the annual payment update offsets most of the total
negative effect of the changes.
Medicare prices are adjusted for the cost differences among
different locations. Although we use standardized national average
resource cost estimates for developing the relative case-mix weights,
the pricing procedure applied after accounting for standardized
resource costs adjusts for geographic differences in cost levels. We
have no data to effectively evaluate the comments on the disadvantages
attributed to rurally residing beneficiaries.
Comment: A commenter suggested raising the RAP to 75 percent of the
base rate. Another commenter noted that the proposed rule is silent on
the need to increase the RAP, even though program abuse of the RAP has
not materialized. This commenter proposed that the RAP be increased to
80/20 for all providers who have participated in the HH PPS since its
inception, and noted that CMS would retain the right to reduce this
level for abuse of the RAP. The commenter further proposed that less
established providers could operate under current RAP rules until they
had a 5 year record of responsible Medicare performance.
Response: Before HH PPS implementation, HHAs were accustomed to
billing Medicare on a 30-day cycle or receiving periodic interim
payments. The change to a 60-day episode of care under HH PPS, combined
with concerns over delays due to claims processing times, documentation
requirements, and medical review, led us to address agency cash flow
concerns in our 1999 HH PPS proposed rule. At that time, we proposed a
split percentage payment to ensure that agencies have adequate cash
flow to maintain quality services to beneficiaries. In 2000, we
implemented the RAP which paid 60 percent up front for an initial
episode, as we recognized that some administrative costs were front-
loaded; the remaining 40 percent would be paid after submission of the
final claim. We allowed a RAP of 50 percent for a subsequent episode,
with the remaining 50 percent paid upon receipt of the final claim.
We expect agencies to follow normal business practices with regard
to financing their operations. The current RAP percentage splits are
reasonable given the RAP's purpose, therefore, we do not see a need to
increase them. Moreover, we believe our current process protects
against abuse, as an agency's RAP may be reduced or withheld when
protecting Medicare program integrity warrants this action.
Comment: Two commenters wrote that they are unable to make
meaningful public comment because CMS has not released the impact file
that would enable modeling of the proposed changes. Agencies are unable
to plan operationally and financially for these changes.
Response: We do not agree that agencies are unable to plan
operationally and financially for these changes. We worked with a
large, 20-percent sample of 2005 claims, which would not permit us to
produce accurate summaries at the agency level for many agencies, which
would be required for a file of the type mentioned by the commenter.
Our proposed rule impact table provided average case-mix weights for
agencies to use as estimates, according to the detailed subgroup to
which they belong. Consistent with resources available, we opted to
provide a simple preliminary grouper to assist agencies in
understanding the impacts. We also provided preliminary grouper logic
(``pseudocode'') for software developers assisting some agencies to
evaluate the impacts.
Comment: A number of commenters noted that home health agencies
provide quality care that saves Medicare money in hospital or other
inpatient facility benefits. Several commenters expressed concern that
the proposed changes do not consider today's health picture, with an
aging population, a wave of baby boomers entering retirement, a
shortage of nurses, high fuel costs, and the cost of technological
advances such as telehealth and physician's portal.
Response: The goal of the refinements in this regulation is to pay
as accurately as possible given the case-mix of patients in home health
agencies today. We appreciate the broad context referenced in this
comment, and will continue to work with the home health industry and
the public to understand and anticipate changes that affect proper
pricing of home health services.
Comment: A commenter suggested that we revise the regulation
requiring that orders and plans of care for home health patients be
signed by a physician. Another commenter asked that the CoPs be changed
to allow therapists, in addition to nurses, to open a case, as it could
improve the ability to accurately project therapy requirements for
patients.
Response: We appreciate these comments, but note that this
regulation updates the HH PPS payment rates and does not change any of
the CoPs. Sections 1814(a)(2)(c) and 1835(a)(2)(A)(ii) of the Act
require that orders and plans of care be established and periodically
reviewed by a physician. The CoP dictating the physician signature
requirements on the plan of care is detailed in 42 CFR 484.18(b) and
(c).
Moreover, in 42 CFR 484.55(a)(1), agencies are required to have a
registered nurse conduct an initial assessment. We note, however in 42
[[Page 49768]]
CFR 484.55(a)(2), the home health CoP regulations state that ``when
rehabilitation therapy service * * * is the only service ordered by the
physician, and if the need for that service establishes program
eligibility, the initial assessment visit may be made by the
appropriate rehabilitation skilled professional.''
Comment: A commenter noted that CMS currently uses salary
information to estimate the costs of a visit, and does not include
overhead costs. This method assumes indirect costs are proportional to
direct costs. The commenter believes this assumption may be incorrect,
and suggested examining cost report data to see if further review
provides better data on overhead costs. This information could be
combined with claims information about home health charges to better
assess labor costs. These two sources of information could be used to
compute the per-visit discipline costs for different types of episodes.
Response: CMS' methodology does assume that overhead costs are
proportional to direct labor costs. We will continue to consider the
appropriate role of cost reports in understanding potential
improvements to our methodology. At this time, we believe the role is
limited, as demonstrated by the limitations on cost report reliability
pertaining to the derivation of cost-to-charge ratios for the analysis
of NRS payments. We urge agencies to put more resources into accurately
completing the cost reports for future use in payment refinements.
Comment: A commenter suggested that the recommendations from the
two Technical Expert Panel (TEP) meetings be shared with the industry,
and that the industry be allowed to provide feedback, as these affected
the development of the proposed rule.
Response: The TEP was administered by Abt Associates. The panel was
not asked for, nor did it produce, consensus recommendations. Abt
Associates used TEP participants as a sounding board about differing
aspects of the research approach and the refinements emerging from it
at the time of the TEP meeting.
Comment: A commenter asked that we provide detailed technical
specifications and grouper software with issuance of the final rule.
Response: We intend to issue detailed specifications and a grouper
software package as soon as possible after the issuance of this rule.
Comment: A commenter noted that there was an error in Table 5
posted to CMS' Web Site.
Response: Table 5 was originally posted with an error, but was
replaced with a corrected version. The correct version was promptly
posted on the CMS Web site.
Comment: Regarding dual eligibles, a commenter suggested that CMS
improve the alignment of HHRGs and Medicare coverage guidelines for
homebound status and medical necessity, particularly for cases that
receive coverage under ``Assessment and Observation'' or ``Management
and Evaluation of the Care Plan'' guidelines. Improved alignment of the
payment system and coverage rules is critical to addressing ongoing
disputes between state Medicaid agencies and the Medicare program
regarding Third Party Liability.
Response: These comments are outside the scope of this regulation;
however, we will take them under consideration when evaluating the need
for additional guidance on Medicare coverage guidelines.
Comment: A commenter is concerned that the proposed HH PPS
refinements place emphasis on therapy and would support a system that
provides for the utilization of restorative nursing as a substitution
for therapist visits. The expansion of this type of service utilization
will ultimately provide better patient outcomes and address the growing
demand for restorative services.
Response: The proposed refinements were developed within the
disciplines covered by the home health benefit. A specialty of
restorative nursing is not recognized within those disciplines.
Moreover, we do not have evidence about effects on patient outcomes
from implementing the commenter's proposal.
Comment: A commenter believed it is important for CMS to align
regulatory and reimbursement decisions so that they reflect the needs
of patients as outlined by the Institute of Medicine. The commenter
stated that the proposed regulation signals a change in which the home
health industry would be asked to move from its current focus on acute
and rehabilitative services to the provisions of more long-term care
services of the type offered prior to HH PPS implementation. The
commenter asked CMS to clarify whether it prefers Medicare home health
services to emphasize more sophisticated treatments or whether it
expects home health services to be used solely for long-term care and/
or custodial services, which have traditionally been the purview of
Medicaid.
Response: We disagree that the proposals signal a shift away from
acute and rehabilitative services. The proposals recognize that a
minority of patients have an extended period of incapacitation and need
for medically necessary nursing or rehabilitative or assistive
services, while they continue to meet the homebound requirement.
Agencies are expected to apply the statutory eligibility and coverage
criteria.
Comment: A commenter questioned whether the increase seen in costs
of late episodes is due to end-of-life care given to patients who did
not want hospice care.
Response: We appreciate the comment. We note, however, our analysis
did not focus on whether or not the patient had a terminal illness.
2. The Schedule for Implementation of the CY 2008 Refinements
In the May 4, 2007 proposed rule, we proposed to implement the
finalized updates and refinements on January 1, 2008. However, we did
recognize that there may be operational considerations, affecting CMS
or the industry, which could necessitate an implementation schedule
that results in certain refinements becoming effective on different
dates (a split-implementation). We solicited the public for suggestions
and comments on this matter.
Comment: Several commenters expressed concern about the amount of
time available for providers to make any necessary changes to their
billing systems and administrative processes between the publication of
this rule and the implementation date of episodes beginning on January
1, 2008. They were concerned about the administrative burden, and that
CMS does not have a contingency plan to facilitate interim payments to
HHAs that are unable to bill Medicare under the revised HH PPS. A
contingency payment arrangement would ensure that no provider is
presented with a significant cash flow problem because of the tight
timeframe involved. Several commenters suggested we convene an ongoing
series of implementation meetings including Medicare contractors, the
home health community, and the vendors who support the home health
industry to reduce the likelihood of delays and errors. One commenter
asks for additional resources to help providers cope with this major
change. Another asked that we not follow a split-implementation plan.
Response: While the changes described by this rule are significant,
their overall impact on provider billing practices are far less
extensive than those required for the initial implementation of HH PPS.
We also anticipate the time period between the issuance of this final
rule with comment
[[Page 49769]]
period and the implementation date will be longer than the period that
was available between publication of the final rule on July 3, 2000,
and initial implementation of the HH PPS on October 1, 2000. CMS
expects to issue final implementing instructions and educational
materials about the case-mix refinement changes as soon as it is
feasible after finalization of the proposals contained in this final
rule with comment period. We also plan to conduct outreach through
industry associations and representatives of software companies that
serve home health agencies to facilitate this transition.
CMS plans to conduct calls with vendors, hold OASIS training, and
continue the use of the home health Open Door Forums (ODFs) as
mechanisms to provide information to HHAs regarding implementation.
Regarding cash flow issues and contingency plans, CMS is taking steps,
internally, to test systems changes before implementation. We do not
feel that the vulnerabilities that existed when we moved from a cost-
based system to a prospective payment system exist today in moving to a
refined HH PPS system. Consequently, we do not feel it is necessary to
create an elaborate contingency plan as was needed for the
implementation of the HH PPS.
Comment: Several commenters expressed that an implementation date
of January 1, 2008 be delayed because the HH PPS reform changes are
significant, and providers will have to educate all of their employees
on the changes in addition to working closely with the vendors to
initiate complex IT changes. Because as providers, they must also
implement the changes throughout the organization, to both clinical and
financial staff, the commenters suggested that CMS delay the
implementation date to October 1, 2008 to allow ample time for
providers to make all the necessary adjustments. The commenters also
requested that CMS release of the home health CoPs coincide with the
implementation of HH PPS refinement requirements to ease the burden of
staff training. It was also suggested that the implementation be linked
to future ICD-9-CM coding manuals.
Response: We recognize that the changes described in this rule are
significant. However, the overall impact on provider billing practices
is far less significant than the impact resulting from the initial
implementation of the HH PPS when we were moving from a reasonable
cost-based system to that of a prospective payment system. And as
mentioned previously, there is more time between the issuance of this
rule and the effective date (January 1, 2008) than there was for the
initial implementation of the HH PPS. Consequently, we believe that
there will be sufficient time for agencies and their vendors to make
the changes necessary to implement the system on January 1, 2008.
Regarding the home health CoPs, these are on a separate track from our
home health payment regulations, and will be implemented through a
separate rule-making process.
While we recognize that implementing the updates and refinements of
this rule is an ambitious task, we believe that it is in the best
interest of the industry, CMS, and home health recipients to implement
a finalized set of refinements without further delay and without a
split-implementation. The refinements will work together to improve the
accuracy and appropriateness of the HH PPS, which has not undergone
major refinements since its inception in October of 2000. Updates to
the HH PPS are not linked, specifically, to coding manuals, and thus
there would be no advantage to delaying implementation to any future
coding manual update. CMS will make every effort to communicate the
instructions necessary for HHAs to implement all of the changes to the
HH PPS, in a timely manner so that implementation of these changes
occurs as smoothly as possible.
Comment: Several commenters expressed that the comment period was
too brief to afford providers enough time to understand the proposed
changes and assess the impact that the changes will have on their
businesses.
Response: We provided the 60-day comment period from the date of
display, with the 60-day period for comments ending on June 26, 2007.
We acknowledge that in the publication of the May 4, 2007 proposed
rule, the comment period was incorrectly listed as closing on July 3,
2007. The correct date for the close of the comment period was June 26,
2007. Recognizing the implication of this incorrect date, CMS alerted
the public to the correct date through listserves, open door forums,
and the publication of a correction notice on May 11, 2007 (72 FR
26867). We believe the comment period, as corrected, provided adequate
time for commenters to review the proposals and assess their options.
Comment: Several commenters questioned the listing of an earlier
deadline on the internet for submission of public comments, June 26,
2007, rather than the deadline published in the Federal Register, July
3, 2007.
Response: We recognize that there was an inadvertent technical
error in the May 4, 2007 proposed rule in that July 3, 2007 was
incorrectly noted as the close of the comment period. Subsequent to
that publication, a correction notice was published on May 11, 2007 (72
FR 26867), noting that error and correctly stating that the end of the
comment period for the HH PPS proposed rule was June 26, 2007 and not
July 3, 2007.
We believe we made reasonable efforts to quickly alert the public
to the error such that adequate time to comment on the proposed rule
was provided.
3. Complexity of the System
In general, our goal for the proposed refinements was to ensure
that the home health payment system continues to produce appropriate
compensation for providers while creating opportunities for home health
agencies to manage home health care efficiently. We also believe it is
important in any refinement to maintain an appropriate degree of
operational efficiency.
Comment: Several commenters stated that the goal of ``operational
simplicity'' is not achieved by the proposed refinements. One commenter
stated that the proposed system is twice as complex as the current
system, thus making it more difficult for providers to understand how
it works. Moreover, the commenter stated it will make it more difficult
for providers to manage the level of services provided for each HHRG
with the payment for that HHRG.
Response: We acknowledge the proposed refined system is more
complex than the current system. The proposed refinements to the
current system represent an attempt to pay more accurately for the
range and intensity of home health services that are provided to our
beneficiaries.
The proposed refinements are derived from the concepts that form
the basis of the current payment approach. We agree that any
refinements to the system will take time and training to learn. CMS has
conducted extensive outreach regarding the proposed refinements. We
have posted a Fact Sheet which summarizes the proposed changes on our
home health Web site to assist agencies in understanding the
differences between the current system and the proposed refinements. We
have developed and posted an Excel toy grouper, which allows agencies
to see the effect of the new proposal on their payments (see ``Toy
Grouper'' on the CMS Home Health Web site at: http://www.cms.hhs.gov/center/hha.asp
). We have posted the draft pseudocode for
[[Page 49770]]
the HHRG grouper software at the same Web site address. We also
continue to plan for additional training and outreach.
We have also developed claims processing procedures to reduce the
amount of administrative burden associated with using a more complex
case-mix model. For example, providers do not have to determine whether
an episode is early (the initial episode in a sequence of adjacent
episodes or the next adjacent episode, if any) or later (all adjacent
episodes beyond the second episode) if they choose not to. Information
from Medicare systems will be used during claims processing to
automatically address this issue. We will also relieve providers of the
responsibility for resubmitting a claim if the number of therapy visits
delivered during an episode is more than or less than the number
originally forecasted on the OASIS.
Comment: A commenter stated that the Excel toy grouper did not
allow for enough digits in the ICD-9 codes to effectively capture the
degree of change needed. The commenter also noted that each case had to
be added individually, which resulted in increased entering time; the
results were confusing to the commenter.
Response: We believe that the requirement that the ICD-9 codes be
entered exactly as they appear in the proposed rule and the current
grouper documentation does not negate the usefulness of the Excel toy
grouper. The instructions imbedded in the Excel toy grouper specify the
requirements for entering the ICD-9 codes. We provided the Excel toy
grouper as a courtesy to allow users to more easily calculate the
proposed new CY 2008 HHRGs and resulting payments rather than having
only the grouper pseudocode for analysis. Moreover, the majority of
feedback from commenters regarding the Excel toy grouper indicated that
the tool is helpful and easy to use.
B. Case-Mix Model Refinements
In the proposed rule, we proposed to refine the case-mix model to
reflect different resource costs for early home health episodes versus
later home health episodes and to expand the case-mix variables
included in the payment model. We proposed additional variables
including scores for certain wound and skin conditions; more diagnosis
groups such as pulmonary, cardiac, and cancer diagnoses; and certain
secondary diagnoses. We also proposed to replace the current single
therapy threshold of 10 visits with three therapy thresholds (6, 14,
and 20 visits). In addition, we proposed that payment for therapy
episodes would increase gradually between the first and third therapy
thresholds. For a complete description of the proposed case-mix
refinements model and the underlying research, we refer readers to the
CY 2008 HH PPS proposed rule (72 FR 25358-25420) published on May 4,
2007.
1. General Comments
Comment: A commenter wrote that an industry analysis of 2006 HH PPS
data using the proposed case-mix model showed a decline in
reimbursement for specific populations with congestive heart failure
(CHF), chronic obstructive pulmonary disease (COPD), ulcers, diabetes,
orthopedic diagnoses, and neurological diagnoses. Given these findings,
the commenter asked how the proposed case-mix refinement could improve
reimbursement. The commenter suggested that CMS use more current
diagnosis data so as not to skew the results, and score secondary
diagnoses. Other commenters echoed the concern that the refinement was
based on ``old'' data. A couple of commenters noted that there has been
a philosophical change to front-load visits in home health which has
not been captured by the data.
Response: We are unable to specifically address the industry
analysis mentioned above without more detailed information on their
analysis. We note the proposed case-mix model pays for more diagnoses
than under the current HH PPS model, including recognition of point-
bearing diagnoses for heart disease and COPD. Agencies will continue to
receive points to the extent that patients have certain conditions or
diagnoses (for example, ulcers, diabetes, orthopedic diagnoses, and
neurological diagnoses). Agencies can also receive points for secondary
diagnoses, thereby accounting for multiple co-morbidities. Also, the
proposed case-mix model allows points for some resource intensive
interactions. Furthermore, agencies will be receiving improved
reimbursement for supplies, particularly those related to ulcers or
wounds. We believed the model as proposed would better align agency
costs with payments.
We further note that the proposed refinement research was based
upon data files created from a 20-percent sample of claims data
collected between 2001 and 2004. OASIS data was further linked to
claims and cost reports. However for this final rule with comment
period, we used more recent data, claims processed from 2005, with the
associated OASIS data. Therefore, this final rule with comment period
is based upon the most recent data available, and reflects any
philosophical or diagnosis changes that the industry has experienced.
Comment: A commenter suggested that the case-mix refinement model
was too complex, and suggested that we simplify it so that the
assessment can drive clinical and functional dimension scores that are
the same regardless of the number of therapy visits or timing of the
episode. Subsequent factors could be added into the case-mix for the
sequential number of the episode and for the number of visits.
Response: Based on our data analysis, implementing the commenter's
suggestion would ignore patterns in the data that we think reflect
differences between patients and would thereby reduce accuracy. We have
tried to strike a balance between simplicity and complexity. The new
system is more complex than the old system but this is a natural
outgrowth of our attempt to pay more accurately for the range and
intensity of home health services that can be provided to our
beneficiaries.
As noted in the discussion of complexity in section III.A.3, a
system may seem initially overly complex when it is new. We believe the
proposed refinements are clearly focused, and are a logical outgrowth
of the original payment system. We detail our attempts to make the
proposed refinements easier to understand and implement in a previous
comment in section III.A.3.
Comment: One commenter noted that the proposed diagnosis changes
may negatively impact providers who are currently providing care to
those in early episodes with less than 14 therapy visits. Those
providers have worked hard to help patients become independent and
rehabilitated as soon as possible.
Response: Our proposal was intended to refine and to better fit
costs incurred by agencies for patients with differing characteristics
and needs under the prospective payment system. The resource cost
estimates are derived from minutes spent on visits in the home during a
60-day period. The source of the minutes data is a very large,
representative sample of Medicare claims. Therefore, we expect that the
proposal does reflect agencies' average costs for patients with
characteristics measured on the OASIS and used in defining payment
groups.
Comment: While supporting the concept behind the new case-mix
system, a commenter is concerned about any payment system that ties
payments explicitly to the level of services provided. Under the
proposed system, HHAs could seek higher payments by
[[Page 49771]]
providing more therapy or providing later episodes of home care. The
commenter notes that HHA margins will increase with the number of
therapy visits.
Response: We are attuned to concerns about payment incentives that
could drive up therapy visits unnecessarily. We implemented a gradual
increase in payments between the proposed first and third therapy
thresholds to achieve two goals: (1) To better match costs to payments;
and (2) to avoid incentives for providers to distort patterns of good
care created by the increase in payment that would occur at each
proposed therapy threshold. As a disincentive for agencies to deliver
more than the appropriate, clinically determined number of therapy
visits, we also proposed that any per-visit increase incorporate a
declining, rather than a constant, amount per added therapy visit. We
will monitor the impact of the changes implemented, including on home
health agency margins, and will propose further refinements to the
therapy threshold, as well as other aspects of the HH PPS, if
warranted.
Comment: Several commenters were concerned that paying more for
later episodes would lead to gaming, with patients on service longer
than is appropriate. One commenter noted the growth in HHAs in her area
had led to more competition for patients; providers may not be
discharging patients when they should. Additionally, this commenter
felt the fiscal intermediaries (FIs) concentrate review activities on
larger agencies where there is the greatest potential for risk of harm
to beneficiaries or where the dollars recovered are greater. The
commenter encouraged discussion and investigation of these issues.
Another commenter was concerned that the proposed case-mix refinements
created incentives for less efficient and less effective care if
agencies provided unneeded care just to extend the length of stay. A
third commenter felt that the proposal would lead to unwarranted
recertification of episodes.
Response: We appreciate the concerns and will monitor the use of
home health visits. Additionally, we will share these concerns with the
Regional Home Health Intermediaries (RHHIs).
Comment: A commenter's analysis of the proposed changes to the
case-mix system found that it would result in a more even distribution
of payments relative to costs. The commenter's analysis resulted in a
more uniform payment to cost ratio. The commenter noted the proposed
refinement would reduce the differences in financial returns among
different types of patients, and reduce the provider's preference for
some patients.
Response: We appreciate the commenter's assessment of the proposed
changes to the case-mix system, and agree that the proposed refinements
improve the performance and payment accuracy of the HH PPS. We agree
that these changes will reduce incentives to select patients based upon
perceived financial advantages.
Comment: A commenter noted that an analysis of the coefficient of
variation (CV) of the proposed HHRGs found it to be more internally
homogeneous. The average CV has dropped from 0.81 in the current system
to 0.75 for the proposed HHRGs. The reduction in variation means that
the new resource groups are better at identifying episodes with similar
resource use than under the current system. Further, the reduction in
within-group variation reduces the potential for providers to select
the least costly patients in a resource group and makes a modest
improvement in the accuracy of the system.
Response: We agree with the commenter, and believe that the
proposed payment system better matches payments to costs. We also
believe that the payments will be more accurate, and will benefit
patients as well as agencies.
Comment: Since this is the first time the case-mix index has been
updated since the inception of HH PPS, and considering the rapid pace
of change that can occur in health care delivery, a commenter suggested
CMS update the case-mix index with greater frequency to ensure that
payments reflect agency costs.
Response: We will continue to monitor the performance of any
finalized case-mix model, and will make changes to it as necessary.
Future refinements may occur at more frequent intervals, depending on
the research outcomes. We recognize that changes in health care
delivery may also affect the model, and will monitor those as well.
Comment: A commenter asked CMS to accept all pertinent diagnoses.
The commenter believed that without a complete clinical picture, the
ability to accurately assess patient severity, evaluate outcomes, and
make policy decisions is seriously jeopardized.
Response: We agree that a complete clinical picture of the patient
is necessary to accurately assess patient severity and evaluate
outcomes. To qualify for Medicare coverage of home health services, a
beneficiary must be under the care of a physician who establishes the
plan of care (POC). The POC must contain all pertinent diagnoses as
stipulated in 42 CFR 484.18(a). All diagnoses listed in OASIS M0230/240
and M0246 should be pertinent and are expected to be listed in the
patient's POC.
2. Later Episodes
In the proposed rule, for 2008 we proposed a 4-equation case-mix
model that recognizes and differentiates payment for episodes of care
based on whether a patient is in what is considered to be an early (1st
or 2nd episode in a sequence of adjacent episodes) or later (the 3rd
episode and beyond in a sequence of adjacent episodes) episode of care
as well as recognizing whether a patient was a high therapy (14 or more
therapy visits) or low therapy (13 or fewer therapy visits) case. Early
episodes are defined as to include not only the initial episode in a
sequence of adjacent episodes, but also the next adjacent episode, if
any, that followed the initial episode. Later episodes are defined as
all adjacent episodes beyond the second episode. Episodes are
considered to be adjacent if they are separated by no more than a 60-
day period between claims. The analysis of the performance of the case-
mix model for later episodes revealed two important differences for
episodes occurring later in the home health treatment compared to
earlier episodes: (1) Higher resource use per episode and (2) a
different relationship between clinical conditions and resource use.
Comment: We received a question about the case-mix weights for
early versus later episodes when the service utilization is for 16 to
17 therapy visits (S2; see table 3, III.B.5). In all other gradients
except this one, the case-mix weight is greater for later episodes than
for early episodes. The commenter asked why in this case the later
episodes were not associated with a higher case-mix weight.
Response: The model results in Table 4 of the proposed rule (72 FR
25388) indicated that the higher cost for later episodes was associated
with clinical and functional severity levels above the base levels C1
and F1, and not at or below the base levels C1 and F1. The amount
isolated in the payment regression associated with 16 to 17 therapy
visits was simply not higher for later episodes.
Comment: Several commenters asked for clarification of the
definition of early and later episodes and adjacent episodes.
Response: Early episodes are defined as the initial episode or the
next episode in a sequence of adjacent episodes. Therefore an early
episode can be the first or second episode in a series of adjacent
episodes, or even the first and
[[Page 49772]]
only episode that a patient has. Later episodes are defined as all
subsequent adjacent episodes beyond the second episode. Episodes are
considered to be adjacent if they are contiguous, meaning that they are
separated by no more than a 60-day period between episodes. This means
any gaps are less than or equal to 60 days in length. In determining a
gap, we only consider whether the beneficiary was receiving home health
care from traditional fee-for-service Medicare. If the beneficiary
transfers from a managed care plan, that time under managed care is
considered part of the gap.
For example, if the beneficiary has not received home health care
through traditional Medicare for at least 60 days, and then receives
home health care from agency A, that is an early episode. If that
episode receives a PEP adjustment and agency B recertifies the
beneficiary for a second episode, that second episode is also an early
episode. However, the beneficiary could have received home health care
from other traditional Medicare providers within 60 days before coming
to agency A. The designation of early or later would depend upon how
many adjacent episodes of care were received prior to coming to agency
A. The CWF will examine claims upon receipt in comparison to all
previously processed episodes to make sure the episode is correctly
designated as early or later.
The 60-day period to determine a gap that will begin a new sequence
of episodes will be counted in most instances from the calculated 60-
day end date of the episode. That is, in most cases CWF will count from
``day 60'' of an episode without regard to an earlier discharge date in
the episode. The exception to this is for episodes that were subject to
PEP adjustment. In PEP cases, CWF will count 60 days from the date of
the last billable home health visit provided in the PEP episode.
Regarding PEP adjustments, consider the following example: An episode
is opened on January 1, 2008 which would normally span until February
29, 2008. If this episode were not subject to a PEP adjustment, any
episode within 60 days following February 29, 2008 would be considered
an adjacent episode. In the case of a PEP adjustment, the determination
of an adjacent episode would no longer be based on day 60, but would
instead be based on the latest billable visit in the episode. Assume in
the example, the patient is transferred to another HHA (triggering the
PEP adjustment) on February 15, 2008 but the last billable visit is
provided on February 13, 2008. In this case, any episode within 60 days
following the February 13, 2008 visit would be considered an adjacent
episode.
Intervening stays in inpatient facilities will not create any
special considerations in counting the 60-day gap. If an inpatient stay
occurred within an episode, it would not be a part of the gap, as
counting would begin at ``day 60'' which in this case would be later
than the inpatient discharge date. If an inpatient stay occurred within
the period after the end of HH episode and before the beginning of the
next one, those days would be counted as part of the gap just as any
other days would.
If episodes are received after a particular claim is paid that
change the sequence initially assigned to the paid episode (for
example, by service dates falling earlier than those of the paid
episode, or by falling within a gap between paid episodes), Medicare
systems will initiate automatic adjustments to correct the payment of
any necessary episodes.
Upon receipt of a HH episode coded to represent the early episode
in a sequence, Medicare systems will search the episode history records
that are maintained for each beneficiary. If two or more adjacent
episodes are found on that history, the claim for the new episode will
be recoded to represent its sequence correctly and paid according to
the changed code. In addition, when any new episode is added to those
history records for each beneficiary, the coding representing episode
sequence on previously paid episodes will be checked to see if the
presence of the newly added episode causes the need for changes to
those episodes. If the need for changes is found, Medicare systems will
initiate automatic adjustments to those previously paid episodes.
For example, a given episode is initially determined to be, and
paid as the second episode (early) in a sequence of episodes. After
some period of time, a claim is submitted by another HHA that occurs
before the previously designated first episode in the sequence of
adjacent episodes and is less than 60 days before the beginning of that
previously designated first episode. In such a case, the episode
corresponding to the newly submitted claim becomes the first episode of
this sequence of adjacent episodes and thus is considered to be an
early episode. The episode previously designated as the first episode
in the sequence of episodes now becomes the second episode in the
sequence of adjacent episodes and is thus still considered to be an
early episode. The real change occurs with the episode previously
described as the second episode in the sequence of adjacent episodes.
Under this scenario, that original second episode is now considered to
be the third episode in the sequence of adjacent episodes, thus
changing its status from that of an early episode to that of a later
episode.
Comment: A commenter noted that CMS determined its four equation
model based on information collected from the OASIS data set. The data
collection is required for both Medicare and Medicaid patients. The
commenter stated that the analysis by CMS included a period of time
when instructions dictated collection of all information from payer
sources. The data is inclusive of the Medicaid patients, who under
Medicare regulations, would not be eligible for the third or additional
episodes of care. The commenter questioned the type of patients served
in third or later episodes, noting that the CMS data suggest that few
patients fall into the new equations. The commenter believed that one
group of patients includes those with severely infected wounds,
Parkinson's disease, Amyotrophic Lateral Sclerosis (ALS), stroke, or
similar conditions, while another group includes those receiving B-12
injections and catheter care, or Medicaid patients.
Response: We used data from Medicare episodes only, linked to the
OASIS assessment that generated the HHRG. Medicare episodes include
episodes of some patients who are dually eligible for Medicare and
Medicaid. Later episodes include both Medicare-only and dually eligible
patients with a variety of conditions and needs.
To summarize, we are implementing the proposed aspect of the case-
mix model that recognizes and differentiates payment for episodes of
care based on whether a patient is in what is considered to be an early
or later episode of care as we believe that it better accounts for the
higher resource use per episode and the different relationship between
clinical conditions and resource use that exists in later episodes.
3. Addition of Variables
In the proposed rule, for 2008 we proposed to expand the case-mix
variables to include scores for conditions such as infected surgical
wounds, abscesses, chronic ulcers, and gangrene; more diagnosis groups
such as pulmonary, cardiac, and cancer diagnoses; and certain secondary
diagnoses.
Comment: Several commenters were concerned that we had not included
a variable for informal caregivers. One commented that higher costs for
these
[[Page 49773]]
patients are not captured because of the unmeasured effects of multiple
co-morbidities, patient non-compliance, and the tendency to live alone.
Several commenters felt that CMS' policy position on caregivers placed
the fear of negative incentives above the needs of the beneficiary.
Commenters were concerned that payment incentives might limit access
for patients without caregivers or result in institutional care. Others
suggested that we refine OASIS items related to caregiver access to
produce more reliable information about the actual roles caregivers
play in meeting the day-to-day needs of home health patients, and the
time they are available. Some commenters expressed concern that these
patients would have difficulty accessing care due to their high costs.
We were asked to conduct further research into the role of caregivers
and their affect on costs.
Response: OASIS item M0350 asks whether there are assisting persons
in the home, other than the home care agency staff. We recognize that
the data collected by this item is limited in the information it
collects regarding caregivers. However, in the absence of other data,
we used this item in our analysis. We found that on average, episodes
without caregivers would be underpaid. However the score to be gained
by adding this variable was not large, and the overall ability of the
four-equation model to explain resource costs is minimally improved by
adding this variable. As we noted in the proposed rule, we believe this
variable raises significant policy concerns. We maintain that a case-
mix adjustment should not discourage assistance from family members of
home care patients, nor should it make patients feel that there is some
financial stake in how they report their familial supports during
convalescence. We believe that adjusting payment in response to the
absence of a caregiver would introduce negative incentives with adverse
affects on home health Medicare beneficiaries. We will continue to
study the effects of caregivers on the case-mix model.
Using our final analytic data set, we rechecked the contribution of
this variable to explain home health resource use. We found no change
from what was described for this variable in the proposed rule.
Consistent with our original policy on this item, we did not include
this variable in the final four-equation model of this rule. We will
continue to explore additional refinements to the OASIS instrument to
gather more information regarding the roles caregivers play in home
health care and to better quantify any unmeasured effects of multiple
co-morbidities, patient non-compliance, or living alone.
Comment: Several commenters were concerned that a variable for
Medicare/Medicaid dual eligibles was not included in the payment model.
One commenter noted that the increased costs associated with dual
eligibles have been confirmed by MedPAC in hospital DSH studies, and it
is unlikely that these costs disappear once the patient is in home
health. Another noted that these patients have longer lengths of stay
and multiple co-morbidities. Several commenters noted that Medicaid
numbers are not consistently reported in OASIS because Medicaid is not
the primary payer. Others suggested that CMS compare the impact of
Medicaid eligibility by studying resource use of a sample of home
health patients enrolled in a Medicaid program from Medicaid files
against home health patients without Medicaid.
Response: HHAs are required to complete OASIS item M0065, which
asks for the patient's Medicaid number, whether or not Medicaid is the
reimbursement source for the home care episode. CMS has sought to
improve the accuracy of the OASIS data through extensive training and
guidance on proper use of OASIS. Additionally, the OASIS guidelines
provide clear instructions to complete M0065. Therefore we believe it
is appropriate to use M0065 in an analysis of resource use in patients
with Medicaid. After accounting for a broad range of clinical and
functional factors which predict resource use, M0065 was found to have
a low score, suggesting that having Medicaid is not a strong predictor
of resource use. Accordingly, we did not propose to include a Medicaid
variable in the case-mix model. Using our final analytic data set, we
rechecked the contribution of this variable to explain home health
resource use. We found no change from what was described for this
variable in the proposed rule. Consistent with our original policy on
this item, we did not include this variable in the final four-equation
model of this rule. We will continue to study the effect of dual
eligibles on the case-mix model, and we encourage HHAs to complete
M0065 as required.
Comment: A commenter asked that we evaluate the impact of adding a
case-mix variable for patients aged 85 or older, who have greater care
needs, and for diabetics. The commenter also expressed concern that
providers in Southern states would be more affected by proposed
policies noted in the proposed rule, as these parts of the country
serve larger populations of two groups at high risk for diabetes.
Response: In considering variables for inclusion in the model, we
analyzed the relationship between resource use and patient
characteristics. We were able to measure resource use directly from the
claims sample and patient characteristics from the OASIS assessments.
Variables were assessed for statistical performance and for policy
appropriateness. Diabetes is taken into account as a point-bearing
case-mix diagnosis under the current HH PPS, and under this final rule
with comment period continues to receive points as either a primary or
a secondary diagnosis (see Table 2A for the points given).
Our research did not find the proportion of home health
beneficiaries 85 or older to be increasing. The literature reports that
those 85 or older were actually less likely to be admitted to home
health agencies (McCall et al., 2003). Additionally, we tested an age
variable and found it was not associated with greater resource use
after controlling for other factors. As such, we did not include it in
our case-mix model. Accordingly, we did not propose to include a
variable for those 85 and older in the refinements.
Comment: A commenter stated that the proposed rule refers to
unnamed variables which while correlated with higher home health cost,
were not considered in the case-mix because of negative treatment
incentives they could create. The commenter believed CMS should specify
these alternatives which were not adopted along with the reason for
dismissing them.
Response: As in our original HH PPS proposal, we avoided including
a score for catheter-using patients in the case-mix system, out of
concern that this would work against catheter removal at the
appropriate time. However, for the proposed refinement approach, we did
include a score in the non-routine supplies model out of concern that
agencies would fail to admit patients with supplies costs.
Comment: A commenter objected to the proposal to eliminate M0610
(behavioral problems) as a case-mix variable. The commenter noted that
patients with behavioral problems, including those without formal
psychiatric diagnoses, consume large amounts of resources. The
commenter asked for further data to support removal of M0610.
Response: We have added case-mix scores to the system for
psychiatric conditions, as they are better markers for increased
resource use related to behavioral problems than M0610. When the
psychiatric conditions were included in the model, M0610 does not
[[Page 49774]]
add further predictive power (that is, it was not statistically
significant).
Comment: Several commenters asked that V-codes be included in the
case-mix diagnosis list as they are appropriately prevalent in home
care due to ICD-9 coding guidelines. One commenter suggested V-codes be
added as interactions. A number of commenters also asked for more
guidance regarding coding, especially in the use of V-codes. Several
commenters noted that they have had to hire certified coders.
Response: We have included selected codes from the V44 and V55 code
categories in Tables 2B and 10B. The major use of V-codes in the home
health setting occurs when a person with a current or resolving disease
or injury encounters the health care system for specific aftercare of
that disease or injury. V-codes are less specific to the clinical
condition of the patient than are numeric diagnosis codes. A single V-
code could substitute for various numeric codes each of which describes
a specific different clinical condition.
For more guidance regarding coding especially in the use of V-codes
please see the CDC Web site noted below to obtain a copy of the ICD-9-
CM Official Coding Guidelines effective November 15, 2005. (http://www.cdc.gov/nchs/datawh/ftpserv/ftpicd9/ftpicd9.htm.
)
Comment: CMS currently allows points for bowel ostomies, but
reimbursement points should be allocated to all ostomies. A commenter
suggested we add V55.0-V55.9 to the non-routine supply list to capture
patients needing supplies for non-bowel ostomies.
Response: It is important to note that all ostomies were not
included in the original HH PPS payment because the OASIS instrument
does not capture all ostomies, for example, the tracheostomy is not
included in the OASIS instrument. Therefore, we do not have data for
all ostomies. However, we have tested the non-routine supplies for
stoma conditions for which we have added appropriate ``status (V44) V-
codes'' and ``attention (V55) V-codes'' to the model.
Comment: A commenter asked that we include fracture aftercare codes
and orthopedic correction codes (V54.01-V54.9) as point bearing codes.
Response: The HH PPS does not rely on V-codes, except as mentioned
above. Therefore we are continuing to require agencies to list the
underlying problem that led to the V-codes in M0246 of the OASIS
assessment. The numeric fracture codes are listed in Table 2B and are
expected to be assigned when indicated to our optional payment item
M0246. When a fracture code is assigned to M0246 it will be expected
that the appropriate aftercare V-code from V54.1 through V54.8 will be
assigned to M0230. We note, however, that assigning of V54.01, V54.02
and V54.09 is considered generally inappropriate in the post-acute care
setting.
Comment: The proposed rule designates the dementia codes 290.0
series as manifestation codes in the Psych 2 diagnosis group. A
commenter stated those codes can only be placed as secondary diagnoses,
but the proposed rule only offers points when Psych 2 conditions are
primary diagnoses. Patients with these diagnoses require considerable
resources even when the primary focus of the plan of care is another
diagnosis. Commenters suggested allowing case-mix points when Psych 2
diagnoses are in the secondary position.
Response: The ICD-9-CM code category 290, Dementia, codes are
listed in the ``Psych 2--Degenerative and other organic psychiatric
disorders''. The ICD-9-CM code category 290 codes are point bearing
regardless of whether the codes are primary or secondary diagnoses. We
have removed the manifestation designation for these codes.
Comment: Commenters noted that key surgical complication codes (996
and 997 series) have been omitted from the case-mix. These series
include joint prosthesis complications, amputation complications, skin
graft complications, transplanted organ complications, etc. They
believed these codes should be added to the case-mix diagnoses.
Response: We disagree. It is not appropriate to add these codes to
the case-mix because these codes represent complications that are
typically treated initially in the inpatient setting.
Comment: One commenter asked that we add 728.87 and 781.3 back to
the table of point-bearing diagnosis codes. This commenter also asked
that we add the 414 series of diagnosis codes.
Response: We disagree with the suggestion that 728.87, Muscle
weakness (generalized) and 781.3, Lack of Coordination, should be added
to Table 2B. The conditions assigned to the 781.3 and 728.87 diagnosis
codes are identified as nonspecific conditions that represent general
symptomatic complaints in the elderly population as such. We believe
inclusion of these codes would threaten to move the case-mix model away
from a foundation of reliable and meaningful diagnosis codes that are
appropriate for home care.
We agree with the addition of the diagnostic category 414, ``Other
forms of chronic ischemic heart disease'' codes to the case-mix model,
with one exception. We are not including code 414.9, ``Chronic ischemic
heart disease, unspecified'', because this is a nonspecific code and
there are numerous specific codes that we would expect to be used for
this condition. As noted previously, we believe the implementation of
the refined HH PPS will better reflect more accurate payments, and we
are taking steps to ensure the least amount of burden for HHAs.
Comment: Several commenters noted that the neuro 3 code list
included ICD-9 diagnosis 436, which is an outdated code. They asked
that it be replaced with 434.91.
Response: We are aware of the ICD-9-CM changes effective October 1,
2004 to the classification of unspecified cerebrovascular accident
(CVA). Before this change these conditions were indexed to 436, Acute
but ill-defined cerebrovascular disease. In order to comply with the
``ICD-9-CM Official Guidelines for Coding and Reporting'', effective
November 15, 2006, we have deleted codes in categories 430-437 listed
in the ``Neuro 3-Stroke'' diagnostic category of Table 2B of the
proposed rule. The conditions in categories 430-437 identify the cause
of the initial onset of an acute stroke and must not be assigned in the
home health setting.
Agencies should use ICD-9-CM code category 438, Late Effects of
Cerebrovascular disease, for conditions occurring at any time after the
onset of an acute stroke. The coding guidelines indicate that these
``late effects'' include neurologic deficits that persist after the
initial onset of conditions classifiable to 430 through 437. The
neurologic deficits caused by cerebrovascular disease may be present
from the onset or may arise at any time after the onset of the
condition classifiable to 430 through 437.
To summarize, we deleted diagnosis codes from Table 2B in the
following situations:
The code was assigned to a minor condition or mild symptom
that may be found in the elderly population;
The code was a non-specific code or
The code could not be assigned within the home health
setting.
We believe the deletion of these codes directly correlates with the
goals stipulated in the proposed rule. Specifically, the proposed rule
stipulated that the case-mix system avoid, to the fullest extent
possible, nonspecific or ambiguous ICD-9-CM codes, codes that represent
general symptomatic complaints in the elderly
[[Page 49775]]
population, and codes that lack consensus for clear diagnostic criteria
within the medical community. The diagnosis codes listed in Table 2C at
the end of section III.B.5 are identified as minor conditions or mild
symptoms that may be found in the elderly population or identified as
non-specific conditions and as noted above, have been deleted as point-
bearing diagnosis codes. The following discussion provides further
explanation of the specific changes to the diagnoses occurring in Table
2B (also found at the end of section III.B.5):
Deletion of constipation and mild, unspecified burns;
Deletion of acute stroke codes (categories 430-437);
Revision of code category 410, Acute Myocardial Infarction
and
Addition of code category 414, Other forms of chronic
ischemic heart disease.
Constipation
The clinical condition of constipation (ICD-9-CM codes 564.00,
564.01, 564.02, and 564.09) was originally included in the GI group.
Occurrences of constipation as a primary diagnosis were extremely rare.
Therefore, the analysis was conducted with constipation as a secondary
diagnosis separate from the rest of the diagnoses in the GI group. The
results of this analysis show 2, 5, 1, and 5 points from leg 1 to leg
4, respectively, of the four-equation model (please see Table 2A at the
end of section III.B.5). However, this likely reflects selective coding
by providers of only those patients with more severe forms of this
condition without inclusion of the many patients with mild constipation
symptoms. Constipation is both a clinical symptom and a medical
diagnosis (ICD-9-CM 564). It is relatively common in the elderly
population with a prevalence ranging from 15 to 20 percent in the
community setting. The clinical acuity of patients with constipation
can range from asymptomatic to extreme distress (including abdominal
pain and impending bowel obstruction). The ICD-9-CM codes, however, do
not distinguish the severity levels of these patients. Since there are
no specific diagnostic clinical criteria for constipation that are
widely accepted throughout the medical community, clinicians are free
to assign this diagnosis to all patients with even minimal symptoms of
constipation regardless of severity. If additional points were allowed
for constipation under the HH PPS, we would expect to find a large
increase in the number of patients with this diagnosis simply because
HHAs would be allowed to begin including all patients with constipation
symptoms, not just those who are more severely affected. Furthermore,
the ICD-9-CM category 564 (Functional Digestive Disorders Not Elsewhere
Classified) specifically excludes those clinical conditions that are
more accurately identified by other more specific ICD-9-CM diagnostic
codes. Therefore, codes 564.00, 564.01, 564.02 and 564.09 have been
deleted from the Gastrointestinal Disorders diagnostic category in
Table 2A (found at the end of section III.B.5). Most patients with
significant constipation symptoms can be captured with other ICD-9-CM
diagnostic codes that are more specific than the codes for
constipation.
First Degree Burns
A first degree burn is a minor self-limited condition that usually
requires no professional medical attention. The skin typically displays
mild redness without blisters. The most common example of a first
degree burn is mild sunburn. Neither bandages nor medical supplies are
required for first degree burns. This condition is often not coded as a
diagnosis for medical billing because it rarely requires any
professional medical treatment. Therefore the actual frequency of first
degree burns is underreported in medical claims databases. Because the
severity of this condition is so minimal, we do not think it is
appropriate to include it in the four-equation case-mix model. In
addition, no medical supplies are required for treatment of this
condition so it would be inappropriate to include it in Table 10B for
Non-Routine Supplies.
Late Effects of Cerebrovascular Disease
To comply with the ``ICD-9-CM Official Guidelines for Coding and
Reporting'', Effective November 15, 2006 we have deleted codes in
categories 430-437 listed in the ``Neuro 3-Stroke'' diagnostic category
from Table 2B of the proposed rule. The conditions in categories 430-
437 identify the cause of the initial onset of an acute stroke and must
not be assigned in the home health setting.
The ICD-9-CM coding guidelines stipulate the assignment of code
category 438, Late Effects of Cerebrovascular disease, for conditions
occurring at any time after the onset of an acute stroke. The coding
guidelines indicate that these ``late effects'' include neurologic
deficits that persist after the initial onset of conditions
classifiable to 430-437. The neurologic deficits caused by
cerebrovascular disease may be present from the onset or may arise at
any time after the onset of the condition classifiable to 430-437.
Table 2C includes these codes as deletions from Table 2B of the
proposed rule.
Acute Myocardial Infarction
We have also revised code category 410, Acute Myocardial
Infarction, in the ``Heart Disease'' category of Table 2B of the
proposed rule, to comply with ICD-9-CM coding instruction (see Table 2C
at the end of section III.B.5 for the list of the 410 codes to be
included). The code category 410 has been replaced in Table 2B with
specific codes from category 410, (410.x2 ). The specific codes
designate an episode of care following the initial episode of care. The
fifth-digit sub-classification of 2 is for use with code category 410
to designate an episode of care following the initial episode when the
patient is admitted for further observation, evaluation, or treatment
for a myocardial infarction that has received initial treatment but is
still less than 8 weeks old.
We have also revised code category 045, Acute Poliomyelitis, in the
Neuro 2-Peripheral Neurological disorders section of Table 2B to
correlate with ICD-9-CM coding instructions by replacing this code with
code 138, Late effects of acute poliomyelitis(see Table 2C at the end
of section III.B.5).
Chronic Ischemic Heart Disease
We also evaluated the appropriateness of code suggestions from
commenters, and we have inserted codes from ICD-9-CM code category 414,
other forms of chronic ischemic heart disease to Table 2B. The only
code from category 414 that was not included is 414.9, ``Chronic
ischemic heart disease, unspecified'' due to the non-specificity of the
code and the fact that we would expect that other codes from this
category would be used if appropriate.
Table 2C lists those codes noted above that have been deleted or
added to Table 2B in the proposed rule. Tables 2A, 2B, and 2C are found
at the end of section II.B.5. We recognize that some HHAs have used
ICD-9-CM coding in the past which will no longer meet future coding
standards, as discussed above. For example, some acute stroke codes
were recognized in the original case-mix system, and we included them
in the modeling of the refined system finalized in this rule to capture
the effects on the diagnosis group score. However, we assume that these
acute stroke codes will not be used in the future, and these changes
are reflected in the codes listed in Table 2B.
[[Page 49776]]
4. Addition of Therapy Thresholds
In the proposed rule, for 2008, we proposed to discontinue the use
of a single 10-therapy threshold, for the purpose of payment, and
proposed to implement three therapy thresholds at 6, 14, and 20 visits.
We proposed using graduated steps (groupings of 1 to 4 visits) between
these three thresholds to provide an equitable increase in payment that
would not otherwise occur between the three threshold levels. As a
disincentive for agencies to attempt to reach a therapy level higher
than the appropriate, clinically determined number of therapy visits,
we proposed to decelerate the increase in payment with each grouping of
additional therapy visits between the therapy thresholds.
For example, if the current proposed model produces an average
value for each additional grouping of therapy visits above 6 and below
14 visits, we would incrementally decrease the marginal payment for
each grouping of therapy visits as the number of therapy visits grow.
At this time, no study has been performed to study the clinically
appropriate number of visits primarily because of the resources
required to perform such a study. Under fee-for-service Medicare,
beneficiaries can select clinicians to treat and act on their behalf so
long as the clinicians meet the CoPs, such as licensing (qualified
nurses and therapists), and other forms of credentialing (CoPs). In the
research vacuum that exists, the Medicare program relies upon the
providers to determine the clinically appropriate number of visits.
However, we found that a payment system with an incentive such as the
10-visit-therapy threshold indicated that such reliance was perhaps
misplaced. Our revised system of multiple thresholds and smoothing
(that is, graduated per-visit payments between the thresholds) is an
attempt to reduce the financial incentive that we saw as distorting
clinically appropriate decision making. MedPAC has stated repeatedly
that the home health benefit would be enhanced by a better
understanding and definition of appropriate clinical standards (e.g.,
Report to the Congress: Medicare Payment Policy, MedPac, March 2006, p.
195). We believe it would take years of research to determine with
sufficient precision for payment purposes and claims processing what is
clinically appropriate. We will continue to rely on the RHHIs during
normal medical review operations to consider therapy treatment plan
appropriateness on a case-by-case basis. Of course, we also continue to
rely in good faith on the professional judgment of certified agencies
and their clinicians to select appropriate courses of treatment for
their patients.
Comment: Many commenters supported our proposal to have multiple
therapy thresholds. However, several questioned the point allocation
for functional variables in relation to therapy. One commenter was
concerned that this could lead to gaming, where agencies prescribe 14
visits instead of 10 visits, noting that almost all patients who need
10 physical therapy or rehab visits could benefit from 14 visits. The
commenter was concerned that the cost to agencies would be prohibitive,
and would force them to replace physical therapists with physical
therapy assistants, to drop therapy services altogether, or gaming to
receive reasonable reimbursement. Another commenter noted that the
dollar increments between 6 and 14 visits were so modest that they may
create payment deficits.
Response: We appreciate the comments supporting our multiple
therapy thresholds. We disagree with the commenter's concern that our
increased therapy thresholds will be cost prohibitive and will force
providers to replace physical therapists with physical therapy
assistants or to drop therapy services altogether. The goal of the
case-mix refinements is to better align payment with actual agency
costs. Changing to multiple therapy thresholds with a gradual increase
in payment better aligns costs and payments and avoids incentives for
providers to distort patterns of good care.
Specifically, because we used multiple regression to derive the
point values, with indicator variables for therapy visits (for example,
7 to 9 therapy visits) included in the regression model, the point
allocations for functional variables take into account the range of
visits into which the treatment plan falls. The point allocations
therefore serve to define more precisely the average resources used by
a patient given that a certain range of therapy visits is to be
delivered. We are aware that the new threshold of 14 therapy visits may
be misperceived as a new target for treatment. We do, however, intend
to monitor administrative data for indications of gaming, which could
include shorter lengths for prior therapy visits and increased
frequencies of episodes with 14 or more visits without evidence that an
increase in the number of therapy visits was appropriate for the
patients. We believe that the need to spend on therapy visits, in order
to get paid for high therapy treatment plans, will provide a natural
disincentive to game the system, and that imposing on the regression
model a mildly decelerating trend in the resources per added therapy
visit between 6 and 20 therapy visits will further mitigate against
gaming. We detail the resource cost values that impose a decelerating
trend in the four-equation model in Table 1. We have updated this table
using 2005 data. If a potential problem is detected through data
analysis processes with our RHHIs, then the RHHIs may conduct Medical
Review of claims identified as potential problems to determine if the
services rendered were reasonable and necessary.
Comment: While supporting the concept of a graduated therapy
threshold, several commenters were concerned that the reimbursement
decrease was so substantial. One commenter noted that his calculations
showed that it would require 17 therapy visits under the proposed
system to receive the same therapy adjustment as under the current
system, when the 10-therapy threshold is met. The commenter noted the
resource intensity of therapy services, and asked that we consider a
greater payment allocation for visits from 10 to 14. Another commenter
noted that the new therapy thresholds will minimize payment for
orthopedic cases. This commenter recommended that the therapy threshold
be changed to 6, 12, and 20 to allow adequate compensation for therapy
visits.
Response: The original 10-visit therapy threshold supported
treatment plans involving 10 therapy visits and higher, so one should
not expect that weights under the original system for 10 visits would
be comparable to weights under the new system for 10 therapy visits.
Compared to the original system, weights under the new system are more
precise with respect to the cost of a given range of therapy (for
example, a range of 16 to 17 therapy visits). It is important to
understand that the regression method modeled the addition to total
resource cost for treatment plans with each range of therapy visits in
Table 4 of the proposed rule--not just the addition to cost from
therapy visits. Therefore, the services utilization severity levels
cannot be noted strictly as direct costs for added ranges of therapy
visits, though the cost of added therapy visits is certainly very
important in producing the values noted in Table 4 of the proposed rule
and thus the proposed relative case-mix weights. The proposal was not
intended to propose minimized payment for orthopedic cases, but to
reflect to the best of our ability the treatment
[[Page 49777]]
practices extant in the data for different types of patients and costs
experienced by a wide range of patients in the data analyzed.
Comment: A commenter stated that the variations in payment
introduced by multiple therapy thresholds were not consistent with a
regression model. This commenter's initial analysis indicated that
agencies can obtain significant additional payments when they provide
14 therapy visits as opposed to 13 therapy visits when all other OASIS
answers remain constant, even though the scoring in the 3rd and 4th
equations is different from the scoring in the 1st and 3rd equations.
The commenter stated that the inconsistencies found in this review make
it difficult to understand how CMS arrived at the proposed increments
between HHRGs. The commenter asks for additional information on how CMS
arrived at the increments in payment between the various levels of
therapy services proposed.
Response: For an early episode, Table 4 in the proposed rule
indicated that agencies would receive an additional $2,191.76-
$1,771.84=$419.42 before wage adjustment for treatment plans involving
14 or 15 therapy visits. For later episodes, agencies would receive an
additional $2,198.69-$1,907.93=$290.76. In the final version of Table
4, which is based on CY2005 data, agencies would receive an additional
$366.03 for early episodes and $504.44 for later episodes. These values
result from using indicator variables in the regression for differing
ranges of therapy visits (ranges indicated in Tables 3 and 4 of the
proposed rule) and from reintroducing the decelerated payments per
added therapy visit at the stage of the payment regression. Our
technique for reintroducing the decelerated payments was to estimate a
variant of the four-equation model that did not incorporate
deceleration. From this, we were able to compare the added payments for
the proposed ranges of therapy visits with and without deceleration in
order to adjust the services utilization (S-level) marginal resource
cost estimates of the payment regression appropriately.
Comment: Several commenters questioned the $36 estimated marginal
cost of adding a seventh therapy visit to an episode with 6 therapy
visits and the deceleration of payments, as the source for this
information was not cited, and the dollars appear to be significantly
below agency costs. One commenter asks for additional information
regarding how CMS identified an incremental cost of $36 between the 6th
and 7th therapy visits. Another commenter noted that the Excel toy
grouper produced an increased payment of $402 for the seventh visit.
Response: We cited the source for the starting value of $36 in the
proposed rule (72 FR 25364). It was the addition to total resource cost
from comparing episodes with 7 therapy visits to episodes with 6
therapy visits, based on a variant of the four-equation model that
allowed for a separate marginal addition to cost associated with each
separate, individual number of therapy visits. Thus, this value was
entirely data driven, given the entire set of clinical, functional, and
therapy indicator variables used in the four-equation model. In the
final version, the updated analysis yielded a starting value of $42
instead of $36. The declining trend was modeled by decrements of 1.5
units instead of 1 unit. Please see Table 1 at the end of this section
for details. It should be understood that the resource cost measure is
not equivalent to the average cost of a therapy visit, as it is derived
from national Bureau of Labor Statistics survey data on the direct
hourly wage and benefit cost of therapy-related clinical disciplines in
home care. We convert minutes per episode reported on claims into
resource cost dollars using the national wage and benefit data. Table 4
of the proposed rule indicated that the therapy increment for services
utilization severity S3 encompasses treatment plans that include 7, 8,
or 9 therapy visits. We intend to monitor payments under the system in
the future for evidence that agencies are failing to provide the full
range of visits included in each S-level.
Comment: Several commenters questioned our assumption that most
patients would require 6 to 13 visits and that 14 or more therapy
visits would not be normal. They note that therapy services are
resource intensive. A commenter disagreed with our statement that
several common treatment plans only require about 6 visits, using the
example of falls.
Response: Abt Associates conducted TEP meetings on December 15,
2005 and March 14, 2006. These TEP meetings provided an opportunity for
experts, industry representatives, and practitioners in the field of
home health care to provide feedback on Abt's research examining the HH
PPS and exploration of payment policy alternatives. Abt received input
from TEP members as to what the appropriate levels for the therapy
threshold would be based on clinical conditions of home health
patients. Different sets of therapy thresholds were discussed at TEP
meetings. Abt considered this feedback when developing recommendations
for refinements to the HH PPS.
Comment: A commenter strongly disagreed that patients with a high
risk of falls should be used as an example of patients with a treatment
plan commonly requiring 6 therapy visits (72 FR 25363). The comment did
not include an alternate illustration or example of a common treatment
plan requiring 6 therapy visits, however, the commenter did agree with
us that there are therapy treatment plans within the 6 visit range.
The commenter stated that ``clinical experience with homebound
Medicare patients at high risk for falls indicates that these patients
typically have significant problems with balance and gait. They may
also be receiving treatments that elevate their risk, including the use
of diuretics.'' The commenter is concerned that payment contractors
will apply this example to the medical review process and deny needed
visits to patients at risk for falls who have extensive therapy needs.
Response: We used the example of patients with a risk of falls as
typically receiving six therapy visits based on input from Abt
Associates, using information from their TEP. According to the TEP,
physicians may deliberately order short term plans of care for patients
because they want the patient to proceed to outpatient therapy as soon
as possible. A short-term plan of care of six visits will typically
involve evaluation, safety/falls assessment and prevention
intervention, with the possibility of more than one therapy discipline
being involved.
We disagree with the commenter that the RHHIs will apply the
example of patients with a high risk of falls as a basis for their
decision on the determination of coverage. Section 20.1.2 in Chapter
Seven of the Medicare Benefit Policy Manual explains the following:
``The intermediary's decision on whether care is reasonable and
necessary is based on information reflected in the home health plan of
care, the OASIS as required by 42 CFR 484.55 or a medical record of the
individual patient. Medicare does not deny coverage solely on the basis
of the reviewer's general inferences about patients with similar
diagnoses or on data related to utilization generally, but bases it
upon objective clinical evidence regarding the patient's individual
need for care.'' It is at the discretion of the contractor to determine
the use of its resources. If a potential problem is detected through
their data analysis processes, then they may conduct Medical Review of
claims to determine
[[Page 49778]]
if the services rendered were reasonable and necessary.
Comment: A commenter was concerned that CMS planned to conduct
automatic medical reviews of every episode requiring 20 or more therapy
visits. While this commenter agreed that such cases are unusual, there
was concern that the threat of automatic medical review could provide
an incentive for providers to restrict the number of visits to
individuals who need a higher level of intervention.
Another commenter asked if HHAs should anticipate an increase in
therapy Additional Documentation Requests (ADRs) from the RHHIs, at
least initially, as we validate the appropriateness of the new therapy
thresholds and the accuracy of provider coding. The commenter noted
that increases in ADRs lead to unfunded increases in administrative
costs, even if they result in no adjustments.
Response: The intermediary's decision on whether care is reasonable
and necessary is based on information reflected in the home health plan
of care, the OASIS as required by 42 CFR 484.55 or a medical record of
the individual patient. Medicare does not deny coverage solely on the
basis of the reviewer's general inferences about patients with similar
diagnoses or on data related to utilization generally, but bases it
upon objective clinical evidence regarding the patient's individual
need for care. As mentioned above, it is at the discretion of the
contractor to determine the use of its resources. If a potential
problem is detected through their data analysis processes, then they
may conduct Medical Review of claims to determine if the services
rendered were reasonable and necessary.
Medical review targets problem areas which demonstrate significant
risk to the Medicare program as a result of inappropriate payments,
over-utilization, abusive billing and unnecessary services. Here, the
Medicare Contractors (RHHIs) use different parameters to target their
review of home health claims. The decision regarding which claim to
review depends on the information obtained from data analysis which
includes all providers submitting claims for payment. A provider's
claims may be subject to review if they do not meet the coverage,
coding, and billing guidelines contained in the statute, regulations,
coverage guidance, CMS manuals, and contractor policies.-
Comment: A commenter noted that providers are sensitive to
financial incentives associated with therapy visits, but that it is
difficult to anticipate how utilization may change under the proposed
system. The commenter asked that analysis of changes in therapy under
the new system be a key priority for future research. The commenter
also noted that higher payments for third and later episodes appear
reasonable, but suggested further research into the nature of third and
subsequent episodes.
Response: We agree that financial incentives can affect care
provided, and we will monitor the effects of the refined payment
system. We will be analyzing changes in therapy under the refined
system and will conduct further refinement research as appropriate.
Comment: A commenter noted that adding therapy thresholds in the
revised case-mix regression model improved the ability of the model to
predict resource use, with substantially increased R-squared for both
early and later episodes, as compared to the R-squared values for a
single therapy threshold model (72 FR 25365, May 4, 2007). The
commenter asked what the improved R-squared values were, and if they
were statistically significant. Further, the commenter asked if there
were concerns that the randomness being measured was truly not random,
which would raise questions about the appropriateness of a linear
regression model and its associated R-squared.
Response: Abt Associates estimated models without therapy
thresholds using the basic four-equation structure. The basic four-
equation structure incorporates a threshold at 14 therapy visits. After
adding thresholds to this model at 6 and 20 visits, and adding per-
visit therapy variables, the R-squared statistic increased by
approximately 0.10. We subsequently modified the approach to the per-
visit therapy variables, as described in the proposed rule. We believe
the linear model is appropriate based on results of experimentation
with nonlinear specifications during the research. This technical topic
is treated in the Abt Associates Final Technical Report.
Comment: A commenter noted that the four-equation model actually
contains a fifth equation for 20 or more therapy visits and asked for
clarification regarding how to code as early or later episodes in this
case.
Response: The OASIS item for early or later episodes (M0110) needs
to be completed for all episodes, regardless of the number of therapy
visits. The estimated number of therapy visits must also be entered
into OASIS (M0826). The episode will then be assigned an appropriate
HHRG by the grouper, and priced out correctly by the Pricer. The system
will automatically verify the accuracy of the early/later designation,
and correct the payment if necessary.
As explained in the proposed rule (72 FR 25388), we collapsed all
episodes with visits over 19 when we saw the results of the four-
equation model. These episodes are grouped in the payment regression,
and severity distinctions are made using the breakpoints described in
that last column (20+ therapy visits) of Table 3, Severity Group
Definitions: Four-equation model (72 FR 25387).
We note the labeling of Table 3 in the proposed rule left the
impression among some readers that there was a fifth equation. The
commenter may have been confused because Table 3 in the proposed rule
shows a separate column for all episodes with 20 or more visits, which
can give the appearance of a five-equation model rather than a four-
equation model. However, there are only four equations from which to
draw case-mix points. Table 2A of the proposed rule gives a description
of each diagnosis group, followed by four columns with the four
``legs'' of the four-equation model. If an episode has 20 or more
visits, the case-mix points would come from the second leg if it is an
early episode, and from the fourth leg if it is a later episode. The
table column headers indicate that these two legs are for 14 or more
therapy visits. As explained in the proposed rule, we found strong
similarities in the case-mix-adjusted costs for early and later
episodes with 20 or more therapy visits. In other words, the results of
the four-equation model indicated that predicted costs for the same
clinical and functional severity levels across the two equations
(equations 2 and 4) were highly similar. Therefore, to reduce the
number of groups and thereby simplify the system at the payment
regression stage, we treated episodes with 20 or more therapy visits
the same (that is, we used the same indicator variables for clinical
and functional severity, regardl