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CMS Issues Final Home Health Payment Rule


Email Alert

August 24, 2007

On August 23, 2007, the Centers for Medicare and Medicaid Services (CMS) announced its final rule for the Home Health Prospective Payment System (HHPPS) for Calendar Year (CY) 2008. The rule is scheduled to be published in the August 29 edition of the Federal Register, but was placed on display at the Office of Federal Register and can be viewed online.

Among other changes, the rule:

  • Implements a 3 percent market basket update, but only for home health agencies (HHAs) that submit quality data on twelve measures drawn from standard Outcome and Assessment Information Set (OASIS) data. HHAs that do not submit quality data will only receive a 1 percent market basket update.

  • Adjusts the National 60-day Episode Rate for case-mix and wages, which, even after including the full update, results in approximately a 2.75% reduction for each of the next three years.

  • Modifies the Low Utilization Payment Adjustment (LUPA).

  • Eliminates the Significant Changes in Condition (SCIC) adjustment.

  • Adopts a tiered case-mix regression model, implementing single episode therapy thresholds at 6, 14, and 20 visits instead of the former fixed 10 visit threshold, resulting in 153 case-mix groups instead of 80 case-mix groups.

  • Modifies case-mix model variables.

  • Readjusts the average case mix based upon the revised case-mix system.

  • Changes the reimbursement methodology for non-routine supplies (NRS), moving from a fixed payment to payment based upon six severity-weighted groups.

  • Increases the "fixed dollar loss ratio" for the outlier adjustment.

View the CMS press release and fact sheet that accompanied the rule's release.

We would like to thank Alex Hendler (Powell Goldstein LLP, Washington, DC) for providing this email alert.

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