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CMS to Cut Payments to HHA by 1.5%

On June 27, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule which would cut payments to home health agencies (HHA) by 1.5 percent, or $290 million, in calendar year (CY) 2014.

Home health agencies serve approximately 3.5 million beneficiaries, which cost Medicare about $18.2 billion in 2012. The proposed rule is designed to cut spending by updating the Home Health Prospective Payment System (HH PPS) rates. As mandated by the Affordable Care Act (ACA) the rule proposes a 4-year phase-in adjustment to the HH PPS rate updates starting in CY 2014. The payments will be adjusted by rebasing the rates to the national standardized 60 day rates, the national per visit rates, a new non-routine supplies (NRS) conversion factor, and updating the LUPA (an episode consisting of four or fewer visits within 60 days) add-on amounts.

Furthermore, the rule proposes many ICD-9-CM codes should be deleted in order to limit the eligibility of patients with less serious diseases, such as uncomplicated diabetes. This proposed rule defines CMS’s transition to ICD-10-CM coding, and states that a draft ICD-10-CM HH PPS Grouper should be on the CMS website today. The proposed rule also adds two new claims-based measures for recently hospitalized patients, as these patients are at an increased risk of further acute hospital care.

In addition, the rule proposes home health quality reporting requirements for CY 2014 and subsequent years. It also proposes several provisions for Medicaid re-alignment in states charters, such as requiring State Medicaid Plans to recognize Medicaid responsibilities for home health surveys, by July 2014. The rule proposes that the current home health resource groups (HHRGs) be adjusted based on the average number of visits per episode nationally, the account for service mixtures, the level of intensity, and the national average cost for each service. Furthermore, the rule proposes a study to determine whether access problems exist for high severity of illness, low income patients in underserved geographic areas. The ACA requires CMS to submit recommendations for improvements based on this study to Congress by March, 2014.

Finally, CMS is seeking comments on a solution for calculating state Medicaid programs’ share of HHA survey costs. As of right now, CMS has suggested the same allocation used for skilled nursing facilities (SNFs), which assigns 50 percent to Medicare and 50 percent to Medicaid.

CMS will be accepting comments on this proposed rule until August 26, 2013 at 5 p.m.

This proposed rule comes as HHAs face increased scrutiny from auditors and Congress. If you or your healthcare entity needs assistance defending a Medicare or Medicaid audit, or if you have any other healthcare question, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888.