"The continued improvement in the quality of and access to home health services will be enhanced through this additional public reporting of quality information," said Norwalk. "These changes are significant steps toward Medicare becoming an active purchaser of high quality, efficient care."

CMS analysis of the latest available home health claims data indicates a significant increase in the observed case-mix since 2000 and that the case-mix increase is due to changes in coding practices and documentation rather than to treatment of more resource-intensive patients. To account for the changes in case-mix that are not related to a home health patient's actual clinical condition, this rule proposes to reduce the national standardized 60-day episode payment rate by 2.75 percent per year for three years beginning in CY 2008.


Under HH PPS, HHAs are paid prospectively for 60-day episodes of care. Based on an assessment from the patient's OASIS data, HHAs are paid at different rates for different patients, depending on their care needs, and based upon their clinical severity, their level of function, and their usage of HHA services. This rule proposes ways to improve the comprehensiveness of the case-mix model and thus improve the accuracy of Medicare's payments. The proposed case-mix model includes a proposal to replace the current therapy threshold at 10 visits per episode with three new therapy thresholds at six, 14, and 20 therapy visits. The new levels would have graduated payment levels between the proposed therapy thresholds to reduce incentives to inappropriately target higher thresholds. These proposed changes would significantly increase the case-mix model's ability to more appropriately reflect HHA costs and consequently provide more accurate payments to HHAs.

This rule also proposes to modify the low utilization payment adjustment (LUPA) and to eliminate the significant change in condition payment adjustment. The rule proposes to increase payment for LUPA episodes that occur as the only episode or the first episode during a series of home health episodes to account for the initial greater costs in such episodes.

CMS is also proposing to revise the way to account for non-routine medical supplies (NRS) in the standardized 60-day episode payment rate. This rule proposes to pay for NRS based on 5 severity groups, similar to the proposed clinical case-mix model, to more accurately reflect home health agency costs for NRS.

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