In October 2000, CMS implemented the home health prospective payment
system (PPS). Under PPS, a standardized payment is made for each 60-day
episode of care that a beneficiary receives from an HHA. The PPS payment
covers skilled nursing and home health aide visits, as well as covered
therapy, medical social services, and routine medical supplies.
HHAs use certain elements from the Outcome and Assessment Information
Set (OASIS) to determine the payment amount for each 60-day episode of care for each beneficiary. OASIS evaluates beneficiaries and measures
outcomes using demographic, clinical, and functional data items. Elements
of OASIS contribute to a score that the HHAs use to assign the individual to
a Home Health Resource Group (HHRG). The HHRGs reflect beneficiaries’
health conditions and their needs for care in three distinct areas: clinical
severity, functional severity, and service utilization. The assignment to a
given HHRG represents the amount of care that the HHA expects a
beneficiary to need. A change in the group assignment can change the
payment that the HHA receives for care of that individual. The HHA assigns
the beneficiary to a Health Insurance Prospective Payment System (HIPPS)
code that is based on the HHRG level.
2008 Changes to Home Health PPS
For home health care episodes paid prior to 2008, CMS adjusted the home
health base payment by assigning beneficiaries to 1 of 80 HHRGs.17 As of
January 1, 2008, CMS significantly refined the home health payment method
with the goal of reducing overpayments. Although HHAs continue to assign
individuals to an HHRG using OASIS, the score now depends on the timing
of the episode. CMS created a case-mix model that differentiates payment
based on whether the beneficiary is in an early episode (i.e., a first or second
episode) or a late episode (i.e., third episode and beyond), as well as whether
the beneficiary has received more than 20 therapy visits. CMS also
expanded the number of HHRGs from 80 to 153 to better capture the actual
cost of care.
