Recent Changes in Medicare Home Health Payment Requirements

CMS makes additional payments, known as outlier payments, to compensate HHAs that supply services to beneficiaries who incur unusually large costs. However, in 2008 a number of HHAs in Miami-Dade County accounted for more outlier payments than did HHAs in the rest of the Nation combined.20 In an attempt to mitigate vulnerabilities associated with outlier payments, in 2010 CMS capped outlier payments to individual HHAs at 10 percent of each HHA’s total home health payments.

To increase physician involvement with Medicare home health beneficiaries, as well as to provide additional clinical oversight for HHA-provided care, the ACA requires that physicians (or certain practitioners working with the physician) who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with those beneficiaries. Such encounters must occur within a 120-day window: either within the 90 days before beneficiaries start home health care or up to 30 days after they start care. The signing practitioner must document who saw the patient and the date of the encounter; the practitioner must also describe how clinical findings support the beneficiary’s eligibility for home health services. CMS gave HHAs until April 1, 2011, to comply with this requirement.

Health Care Fraud Prevention and Enforcement Action Team

 In 2007, HHS and the Department of Justice (DOJ) established the joint Medicare Fraud Strike Force, which was designed to combat fraud through the use of Medicare data analysis and an increased focus on community policing.25 Building on the success of the Strike Force, in 2009 HHS and DOJ established an interagency Health Care Fraud Prevention and Enforcement Action Team to combat health care fraud nationwide.26 Now operating in 9 cities, Strike Force efforts have resulted in charges against 213 individuals or entities, 107 convictions, and $63.9 million in investigative receivables.

For example, on July 13, 2011, a manager and a registered nurse from an HHA pleaded guilty to participating in an alleged $25 million Medicare billing scheme.28 The two individuals falsified patient records to make it appear as though beneficiaries qualified for home health care and therapy services.

Home Health Prospective Payment System

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.