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Medicare updates home health payments for 2010

The Centers for Medicare and Medicaid Services has announced a 2 percent market basket update to Medicare’s calendar year 2010 home health prospective payment system rates and modifications to the home health outlier policy.

The changes are designed to ensure appropriate payments, prevent fraud and abuse and protect beneficiaries in the Medicare home health program, officials said.

Home health agencies receive additional payments (outlier payments) for 60-day home care that carry unusually high costs. In CY 2010, CMS will cap the outlier payments at 10 percent per HHA and target total aggregate outlier payments at 2.5 percent of all HH PPS payments.

The current (2009) target for aggregate outlier payments is 5 percent of total HH PPS expenditures. By lowering the total outlier payment target to 2.5 percent, this final rule increases home health base rates by 2.5 percent for CY 2010.

“This final regulation builds on Medicare’s efforts to refine its payment systems while working to reduce waste, fraud and abuse,” said Jonathan Blum, director of CMS’ Center for Medicare Management. “Through the use of up-to-date home health data, it also provides a clearer focus for oversight of the program while encouraging better coordination of Medicare’s home health benefits.”

In this final rule, CMS continues its current policy of a 2.75 percent reduction to national standardized 60-day episode payment rates and non-medical supply factors in CY 2010. It will help offset the increase in the home health case-mix that is not associated with any underlying change in the actual clinical conditions of home health patients. The reduction is the third of a four-year phase-in of HH PPS rate adjustments.

Historically, home health payment rates have been updated annually by either Congress or CMS with the full home health market basket index, which is an inflation measurement of the costs of the mix of goods and services offered by home health agencies.

The final rule is expected to reduce Medicare’s vulnerability to fraud, abuse and improper payments. HHAs currently submit outcome and assessment information set (OASIS) data as a condition of participation in Medicare. Beginning Jan. 1, 2010, the final rule will require HHAs to submit OASIS data as a condition of payment under HH PPS.

CMS is implementing an improved version of OASIS, called OASIS-C, to collect data on all episodes of care beginning Jan. 1, 2010. It will document important aspects of a patient’s health status including clinical condition, functional abilities and service needs. As a result, CMS officials say, a clinician will be able to capture a clear and accurate picture of the patient, which will assist in development of an appropriate plan of care.

In CY 2010, CMS will publicly report 12 nationally accepted and approved quality measures plus 13 new process measures on its CMS Home Health Compare Web site. HHAs that submit required quality data would receive payments based on the full home health market basket update of 2 percent for CY 2010.

The home health market basket index percentage will be reduced by 2 percent to 0 percent for CY 2010 for HHAs that don't submit the required quality data. For CY 2012, CMS will require HHAs to report, as part of the required home health quality measures, the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Home Health Care Survey for Medicare and/or Medicaid beneficiaries.

To qualify for the Medicare home health benefit, a Medicare beneficiary must be under the care of a physician and have an intermittent need for skilled nursing care, need physical or speech therapy or have a continuing need for occupational therapy. The beneficiary also must be homebound and receive home health services from a Medicare-approved HHA.

This final rule will be published in the Federal Register on Nov. 10. The effective date is January 1, 2010.