A Brief Summary of PPS for Home Health

Late Breaking News: As of September 5, 2000 the pms5 PPS Seminar on September 15, 2000 is now closed. Due to the overwhelming demand we may be offering another session for those who did not sign up in time. Those we registered will be sent confirmation notices very shortly. Again we thank you. Registration is now closed. However, The class session for September 22, 2000 remains open, please download the registration forms indicated above, sign and fax them back at once.

Institute an OASIS quality assurance program. It could be something as simple as a last-minute spot check. But you'd better develop a system to catch data entry mistakes on your OASIS assessments.

HCFA has instructed software vendors not only to note when you make mistakes on OASIS data entry (missed digits, inverted numbers, etc.) but that Medicare will not award points for OASIS items with errors.

As of September 1, 2000, home health agencies who accept Medicare patients have less than 20 working days to prepare for one of the most profound changes to impact the home health industry – prospective payment. For those of you who haven’t taken the time to peruse the Federal Register on the subject, here is a brief summary of the released regulations, and what you can expect. Final regulations are available to download from the www.hcfa.gov website and came out on June 28, 2000, and have had a few revisions after that, so be aware that some of this may change.

Beginning October 1, 2000, Medicare will pay home health agencies a standard rate for a 60-day episode, for each patient. This rate is adjusted for patient severity and local wage rates, and there is currently no limit on the number of 60-day episodes a patient can have.

Medicare spending for home health rose from $3 billion in 1990 to $12.8 billion in 1997 (Source: National Health Expenditures Projections Nov. 1998). In an attempt to slow the rate of growth, the Balanced Budget Act of 1996 included a mandate that Medicare payments to home health agencies switch to a prospective payment system by the year 2001.

HCFA will use a set of approximately 20 questions from the OASIS assessment to assign patients into one of 80 different HHRGs (Home Health Resource Groups). These groups are based on three factors: clinical severity (how sick the patient is), functional status (how well a patient can perform the activities of daily living), and on service utilization (if the patient has been hospitalized recently, or requires 10 visits or 8 or more hours of therapy services). The combination of these factors places the patient in the correct HHRG. A “case weight” is assigned to each HHRG score and these case weights range from the lowest at 0.5276 to the highest at 2.5702. The HHRG in turn are converted to a series of codes know as HIPPs.

The pms5 system contains the table for the entire nation for both rural and the non-rural MSA factors. Using these codes, pms5 determines the RAP (request for anticipated payment) prior to ever sending the RAP. It lets you view the HIPPs code with the scoring point and notifies you if you are below the agency threshold amount.

HCFA has proposed a national payment rate of $2,115.30 per 60-day period. The national payment rate is multiplied by the patient’s HHRG case weight, and adjusted up or down based on the prevailing local wage rate. HCFA has proposed paying HHAs 60% of their payment at the beginning of the 60-day episode, and 40% at the end. Then 50% for the RAP and 50% for the final claim for each subsequent episode for this patient.

Other adjustments

There are many other adjustments that may come into play. The LUPA (Low Utilization Payment Adjustment) was designed to prevent underutilization. If an HHA provides 4 or fewer visits during a 60 day period, the agency is paid on a per visit basis ranging from $42.37 for a Home Health Aide visit to $153.55 for a Medical Social Work visit. This is instead of the HHRG method and could result in significantly less reimbursement.

Other adjustments include outlier adjustments (for those with excessive cost), partial episode payments (for patients who don’t stay the full 60 days) or had services through another HHA, and an adjustment if patients have a Significant Change in Condition (SCIC).

How will it work?

Agencies will submit two claims within the 60-day period. The preliminary known as the RAP and the final claims which is a standard ECS UB format. Final Claims will be submitted to the Fiscal Intermediary with the initial HIPPs code plus the visit information. The Fiscal Intermediary pricing software will assign the payment rate. The RAP needs to be submitted with a $0.0 in the 0023 field, even though pms5 will let you see the amount ahead of time. Adjustments will be made to the final payment at the end of the payment period.

How can I find out more?

Use this link to download a copy of the latest Federal Register proposed rules for PPS for Home Health. Scroll down the page to “Health Care Financing Administration Proposed Rules” and click on the TEXT or PDF to download the document.

What opportunities or challenges does this create for us?

Under PPS the focus shifts from visits = revenue to visits = costs. Managing the patient throughout the 60-day episode in the most cost effective way will be the goal of most home health agencies, and there will be increased interest in information to help manage both clinical and financial performance. Tracking how lowered cost effects patient outcomes will become even more important, and clinicians will want to develop systems to monitor outcomes on an ongoing basis. Agencies that are able to develop systems to operate cost effectively will be financially rewarded, while those that don’t may not survive.

How do we prepare for PPS?

pms5 UFO-OASIS and pms5 HavenBridge clients already have the new grouper software and many have already begun planning for prospective payment. They are running the CHS grouper software on an existing group of patients, exporting it to a spreadsheet program, and modeling their reimbursement on these patients as if PPS were operating today. Then, they are calculating their costs for these patients, and identifying areas where they may need to develop new systems, or make changes in operations. One thing that many agencies are doing is ensuring that clinicians are completing the OASIS assessments correctly, as these will drive their reimbursement under PPS. Our clients have been working on in-service for the field staff along with making sure the new oasis formsa re properly distributed. Also clients have been ordering version 7.0 of pms5 for the PPS upgrade. Throughout the year clients have been renewing their informix tools in order to be able to comply with the new HCFA changes that are in the pms5 package.

What is CHS doing to prepare for PPS?

We have worked with our clients to redesign our software so that it is up-to-date with the latest regulations from HCFA regarding both PPS and OASIS. This will allow clients to analyze their data to better manage under PPS. We will keep you informed as we go along, and please let us know if you have ideas for changes in the software.