+--------------------------------+-------------------------------------+
| > Department of Veterans       | > VHA HANDBOOK 1140.3               |
| > Affairs                      |                                     |
+--------------------------------+-------------------------------------+
| > Veterans Health              | > Transmittal Sheet                 |
| > Administration               |                                     |
+--------------------------------+-------------------------------------+
| > Washington, DC 20420         | > August 16, 2004                   |
+--------------------------------+-------------------------------------+

# HOME HEALTH AND HOSPICE CARE REIMBURSEMENT HANDBOOK

**1. REASON FOR ISSUE:** This Veterans Health Administration (VHA)
Handbook provides specific guidance for establishing reimbursement rates
for selected home and community based care services.

**2. SUMMARY OF MAJOR CHANGES:** This is a new Handbook that
incorporates procedural changes for establishing reimbursement
benchmarks for home health and hospice care services.

**3. RELATED DIRECTIVES:** VHA Directive 1140 (to be published).

**4.** **FOLLOW-UP RESPONSIBILITY:** The Chief Consultant for Geriatrics
and Extended Care Strategic Healthcare Group (114) is responsible for
the contents of this Handbook. Questions may be addressed to
202-273-8543.

**5.** **RECISSIONS:** None.

**6. RECERTIFICATION:** This document is scheduled for re-certification
on or before the last working day of August 2009.

  ------------------------------- ---------------------------------------
                                  

                                  S**/** Jonathan B. Perlin, MD, PhD,
                                  MSHA, FACP

                                  Acting Under Secretary for Health
  ------------------------------- ---------------------------------------

  ---------------- ------- -----------------------------------------------
  DISTRIBUTION:    CO:     E-mailed 8/18/04

                   FLD:    VISN, MA, DO, OC, OCRO, and 200 -- E-mailed
                           8/18/04
  ---------------- ------- -----------------------------------------------

# CONTENTS 

# 

# HOME HEALTH AND HOSPICE CARE REIMBURSEMENT HANDBOOK

## PARAGRAPH PAGE

1\. Purpose 1

2\. Background 1

3\. Scope 1

4\. Goals 2

5\. Definitions 2

6\. Home Care Reimbursement 3

7\. Hospice Care Reimbursement 3

> 8\. Reimbursement Rate Publication, Verification, and Review 4
>
> 9\. Reimbursement Rate Calculation Example 5

10\. Responsibilities 5

11\. References 5

# 

# HOME HEALTH AND HOSPICE CARE REIMBURSEMENT HANDBOOK

**1. PURPOSE**

This Veterans Health Administration (VHA) Handbook provides direction
for establishing reimbursement rates for Home Health and Hospice Care
Services. ***NOTE:** This Handbook replaces M-1, Part I, Chapter 30 for
all purchased home health care services except Spinal Cord Injury Home
Care (SCI-HC); however, SCI-HC will continue to use the M-1 series,
Chapter 18 and 30 for program operations.*

**2. BACKGROUND**

a\. The Department of Veterans Affairs (VA) long-term care includes a
continuum of services for the delivery of care to veterans needing
assistance due to chronic illness, physical disability, or end of life
care. Assistance takes many forms and is provided in varied settings,
including institutional care in nursing homes, or non-institutional care
in home or community-based settings.

b\. In the past, VHA furnished home care services, both skilled home
health care (SHHC) and Homemaker/Home Health Aide (H/HHA) services, as
well as hospice care, to a limited number of veterans through Home Based
Primary Care (HBPC) programs and a limited fee-for-service program.
Today, all enrolled veterans are eligible for a comprehensive array of
medically necessary in-home services as identified in VA's medical
benefits package (see Title 38 Code of Federal Regulations (CFR)
17.38(a) (1)(ix)). These services are an increasingly important
component of VHA's integrated health care delivery system.

**3. SCOPE**

a\. VHA is committed to the provision of clinically appropriate home
health care services as an integral component of medical care services.
VHA purchases skilled home health care, homemaker/home health aide
services, respite care, hospice care services, and other in-home
services to enhance or build a comprehensive array of resources
necessary to address the short term or long term care needs of enrolled
veterans.

b\. This Handbook specifies:

\(1\) Benchmark reimbursement rates, set at maximal levels, for
VA-purchased home health care and comprehensive hospice care services.

\(2\) Processes for establishing local reimbursement rates for
VA-purchased home health and comprehensive hospice care services.

**4. GOALS**

The goals of VHA home health and hospice care programs are to assure
that clinically appropriate services are available in the home as a
component of the medical care necessary to support veterans in restoring
or improving their health status, maintaining their independence, or
providing them comfort-oriented supportive services at the end of their
lives.

**5. DEFINITIONS**

a\. [Home Health Care.]{.underline} Home Health Care is the inclusive
term used to indicate skilled home health care services (SHHC) and
homemaker and home health aid services (H/HHA).

b\. [Skilled Home Health Care Services (SHHC).]{.underline} Skilled home
health care services are in-home services provided by qualified
personnel that include skilled nursing, physical therapy, occupational
therapy, speech therapy, and social work services. Care includes
clinical assessment, treatment planning, treatment provision, patient
and/or family education, health status monitoring, reassessment,
referral, and follow-up. A VA physician prescribes skilled home health
care services when medically necessary and appropriate for enrolled
veterans.

c\. [Homemaker/Home Health Aide Services (H/HHA)]{.underline}. H/HHA
services are personal care and related support services that enable
frail or disabled veterans to live at home. A VA physician prescribes
H/HHA services when medically necessary and appropriate for enrolled
veterans.

d\. **[Hospice Care Services]{.underline}.** Hospice is the final stage
of the palliative care continuum in which the primary goal of treatment
is comfort rather than cure for patients with advanced disease that is
life-limiting and refractory to disease-modifying treatment. Hospice
services, provided by an interdisciplinary team of professionals and
volunteers, emphasize relief of suffering and maintenance of functional
capacity as long as possible through comprehensive management of the
physical, psychological, social and spiritual needs of the patient.
These programs also provide support for the patients' families or other
caregivers, including bereavement support following the death of the
patient.

e\. **[Medicare and/or Medicaid Certification]{.underline}.** Medicare
and/or Medicaid certification is the process of inspection,
certification, and monitoring that home health care agencies undergo to
be approved for Medicare or Medicaid payment from Centers for Medicare
and Medicaid Services (CMS). This process is generally administered by
the State in which the home health care agency is licensed.

f\. **[Low Utilization Payment Adjustment (LUPA)]{.underline}.** LUPA is
CMS's alternate payment structure for home health care services, based
on per visit rates. Medicare's primary payment system is a prospective
per episode structure. VA's use of LUPA rates is unrelated to the use of
LUPA in Medicare.

6\. HOME CARE REIMBURSEMENT

a\. VA uses locally calculated, discipline-specific, Medicare LUPA rates
as the maximum cap for skilled home care and home health aide services.
In those states that reimburse separately for homemaker services, VA's
rate will not exceed 110 percent of the established state rate for that
home care agency or geographic area. VA uses LUPA Home Care rates
without regard to the number of visits or the length of the home care
episode.

b\. The fee basis statute, Title 38 United States Code (U.S.C.) 1703, is
not to be used in the purchase of home care services; however, the use
of the fee package to process placements and obligations will continue.

c\. Current negotiated VA payment rates that are less than the maximum
will not automatically rise to the new ceiling as a result of this
policy. Any rate increases must use the Medical-CPI, or the new maximum
cap, whichever approach yields the lower rate for VA.

d\. Multiple-skilled home health care visits provided by a single
provider or discipline on a single day will be paid at 80 percent of the
LUPA maximum, after the first visit or intervention of the day is paid
at the full rate.

e\. Requests for exemptions to the policies in subparagraphs 6a and 6d
may be developed by VA health care facilities. VHA's Office of
Geriatrics and Extended Care may grant exemptions to the maximum rates
on the recommendation of a Veterans Integrated Services Network (VISN)
Director. A similar exemption may be granted for homemaker services,
based on documentation.

f\. The total annual VHA costs for an individual veteran's home and
community based care services, to include skilled home health care,
H/HHA services, community adult day health care, and non-institutional
respite services, will not exceed 65 percent of the monthly average per
patient cost in the nearest VA Nursing Home Care Unit (NHCU). VA NHCU
rates are available from the Office of Geriatrics and Extended Care (see
subpar. 6e for exemptions).

g\. VHA utilization of the Medicare LUPA rate for H/HHA service rates is
based on 2-hours of care per visit.

7\. HOSPICE CARE REIMBURSEMENT

a\. Hospice services may be provided at home or in an inpatient setting.

b\. The fee basis statute, 38 U.S.C. 1703, will not be used in the
purchase of hospice care services; however, use of the fee package to
process placements and obligations will continue.

c\. VA uses locally calculated, Medicare hospice payment rates as the
maximum reimbursement rates to purchase a comprehensive package of
bundled home hospice services. The appropriate geographic wage index is
applied to the national Medicare hospice home care or hospice inpatient
care rates to determine the maximum rate.

d\. Hospice Care rates are reflective of a per day reimbursement, not
per visit. The rate is paid for a designated period of consecutive days,
without regard to the volume or intensity of services provided on a
given day.

e\. When inpatient hospice services become necessary, there are three
options for its provision.

\(1\) Generally VA provides inpatient hospice services at a VA facility.
This is the preferred option for many veterans.

\(2\) VA may utilize Community Nursing Home (CNH) contracts to purchase
inpatient hospice services. Only CNHs with established hospice agency
relationships will be used. When a veteran is placed in a CNH for
hospice care, the nursing home portion of that care is covered by the VA
hospice benefit.

\(a\) To ensure the proper continuation of the hospice care plan upon
admission to the CNH, VA will pay, to the hospice care agency, a \$60.00
per diem rate for hospice consultation services; or

\(b\) The full home hospice care rate will continue to be paid while the
patient remains in CNH, if the hospice agency provides consultative
services, as well as hospice diagnosis-related medications, biologicals,
and durable medical equipment. The consultation fee will not be paid in
those cases.

\(3\) VA may purchase inpatient hospice services from a community
provider at local negotiated rates, in accordance with subparagraph 7c.

f\. Requests for exemptions to the policies in subparagraphs 7c and 7e
may be developed by VA Health Care Facilities. VHA's Office of
Geriatrics and Extended Care may grant exemptions to the maximum rates
on the recommendation of a VISN Director.

g\. VA may add up to \$1.00 per day to the negotiated hospice per diem
rate for physician hospice coverage.

8\. REIMBURSEMENT RATE PUBLICATION, VERIFICATION, AND REVIEW

a\. Medicare LUPA rates, hospice rates and wage index changes are
published annually in the Federal Register by the Department of Health
and Human Services.

b\. The Office of Geriatrics and Extended Care (114A), VA Central
Office, must provide verification of reimbursement rates by discipline
for skilled home health care, H/HHA services, and hospice services upon
request.

c\. The Office of Geriatrics and Extended Care (114A), VA Central
Office, in collaboration with the VISNs, conducts quarterly reviews to
ensure that average facility payments for home health and hospice care
services do not exceed established Medicare-based rates without specific
exemption.

9\. REIMBURSEMENT RATE CALCULATION EXAMPLE

The following demonstrates local calculation of home health care
benchmark Medicare (LUPA) rate for VHA use:

  ------------------------ ------------- ------------------ --------------
  **Home Health            **Fiscal Year **Geographic Wage  **Final VA
  Discipline**             (FY) 2004     Index**            Payment Rate**
                           LUPA Rate**                      

  Home Health Aide         \$ 42.68      1.10 (Chicago)     \$ 46.95

  Skilled Nursing          \$ 94.27      1.10 (Chicago)     \$103.70

  Home Health Aide         \$ 42.68      0.99 (Houston)     \$ 42.25

  Skilled Nursing          \$ 94.27      0.99 (Houston)     \$ 93.33

  Routine Home Care        \$118.08      1.0394 (Portland,  \$122.73
  (Hospice)                              ME)                
  ------------------------ ------------- ------------------ --------------

10\. RESPONSIBILITIES

a\. **[VISN Director.]{.underline}** The VISN Director, or designee, is
responsible for ensuring that the medical facilities within the VISN use
the approved process for determining reimbursement rates for home health
and hospice care services.

b\. **[Office of Geriatrics and Extended Care.]{.underline}** The Office
of Geriatrics and Extended Care (114A), is responsible for monitoring
and providing feedback regarding compliance with established processes
and guidelines for home health care and hospice reimbursement rates.

**11. REFERENCES**

a\. Public Law 106-117, "Veterans Millennium Health Care Benefits Act."

b\. [Federal Register]{.underline}, Vol. 68, No. 127, July 2, 2003,
Notices, Medicare Program; Home Health Prospective Payment System Rate
Update for FY 2004.

c\. [Federal Register,]{.underline} Vol. 68, No. 189, September 30,
2003, Notices, Medicare Program; Hospice Wage Index for Fiscal Year
2004.

d\. Consumer Price Index. <http://www.bls.gov/cpi/#news>. Use current
consumer price index, Table 1, Unadjusted Percent Change.