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[Federal Register Volume 75, Number 141 (Friday, July 23, 2010)]
[Proposed Rules]
[Pages 43236-43306]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-17753]

[[Page 43235]]

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Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 409, 418, 424, et al.

Medicare Program; Home Health Prospective Payment System Rate Update 
for Calendar Year 2011; Changes in Certification Requirements for Home 
Health Agencies and Hospices; Proposed Rule

Federal Register / Vol. 75 , No. 141 / Friday, July 23, 2010 / 
Proposed Rules

[[Page 43236]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 418, 424, 484, and 489

[CMS-1510-P]
RIN 0938-AP88

Medicare Program; Home Health Prospective Payment System Rate 
Update for Calendar Year 2011; Changes in Certification Requirements 
for Home Health Agencies and Hospices

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth an update to the Home 
Health Prospective Payment System (HH PPS) rates, including: The 
national standardized 60-day episode rates, the national per-visit 
rates, the non-routine medical supply (NRS) conversion factors, and the 
low utilization payment amount (LUPA) add-on payment amounts, under the 
Medicare prospective payment system for HHAs effective January 1, 2011. 
This rule also proposes to update the wage index used under the HH PPS 
and, in accordance with The Affordable Care Act of 2010 (The Affordable 
Care Act), Public Law 111-148, to update the HH PPS outlier policy. In 
addition, this rule proposes changes to the home health agency (HHA) 
capitalization requirements. This rule further proposes to add 
clarifying language to the ``skilled services'' section. Finally, this 
rule incorporates new legislative requirements regarding face-to-face 
encounters with providers related to home health and hospice care.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on September 14, 
2010.

ADDRESSES: In commenting, please refer to file code CMS-1510-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1510-P, P.O. Box 1850, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1510-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
please call (410) 786-7195 in advance to schedule your arrival with one 
of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Randy Throndset, (410) 786-0131 (overall HH PPS).
James Bossenmeyer, (410) 786-9317 (for information related to payment 
safeguards).
Doug Brown, (410) 786-0028 (for quality issues).
Kathleen Walch, (410) 786-7970 (for skilled services requirements and 
clinical issues).

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. EST. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Background
    A. Statutory Background
    B. System for Payment of Home Health Services
    C. Updates to the HH PPS
II. Provisions of the Proposed Regulation
    A. Case-Mix Measurement
    B. Hypertension Diagnosis Coding Under the HH-PPS
    C. Therapy Coverage Requirements
    D. Collecting Additional Claims Data for Future HH PPS 
Enhancements and Soliciting Comments on HH PPS Improvements
    E. Outlier Policy
    1. Background
    2. Regulatory Update
    3. Statutory Update
    4. Outlier Cap
    5. Loss Sharing Ratio and Fixed Dollar Ratio
    6. Solicitation of Comments Regarding Imputed Costs
    F. Proposed CY 2011 Payment Update
    1. Home Health Market Basket Update
    2. Home Health Care Quality Improvement
    a. OASIS
    b. Home Health Care CAHPS Survey (HH CAHPS)
    3. Home Health Wage Index
    4. Proposed CY 2011 Payment Update
    a. National Standardized 60-Day Episode Rate
    b. Proposed Updated CY 2011 National Standardized 60-Day Episode 
Payment Rate
    c. Proposed National Per-Visit Rates Used To Pay LUPA's and 
Compute Imputed Costs Used in Outlier Calculations

[[Page 43237]]

    d. Proposed LUPA Add-On Payment Amount Update
    e. Non-Routine Medical Supply Commission Factor Update
    5. Rural Add-On
    G. Enrollment Provisions for HHAs
    1. HHA Capitalization
    2. Change of Ownership
    3. Change in Majority Ownership Within 36 Months of Initial 
Enrollment or Change in Ownership
    H. Home Health Face-to-Face Encounter
    I. Solicitation of Comments: Future Plans To Group HH PPS Claims 
Centrally During Claims Processing
    J. Proposed New Requirements Affecting Hospice Certifications 
and Recertification
III. Collection of Information Requirements
IV. Regulatory Impact Analysis

I. Background

A. Statutory Background

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) enacted on 
August 5, 1997, significantly changed the way Medicare pays for 
Medicare home health services. Section 4603 of the BBA mandated the 
development of the home health prospective payment system (HH PPS). 
Until the implementation of a HH PPS on October 1, 2000, home health 
agencies (HHAs) received payment under a retrospective reimbursement 
system.
    Section 4603(a) of the BBA mandated the development of a HH PPS for 
all Medicare-covered home health services provided under a plan of care 
(POC) that were paid on a reasonable cost basis by adding section 1895 
of the Social Security Act (the Act), entitled ``Prospective Payment 
for Home Health Services''. Section 1895(b)(1) of the Act requires the 
Secretary to establish a HH PPS for all costs of home health services 
paid under Medicare.
    Section 1895(b)(3)(A) of the Act requires that: (1) The computation 
of a standard prospective payment amount include all costs for home 
health services covered and paid for on a reasonable cost basis and 
that such amounts be initially based on the most recent audited cost 
report data available to the Secretary, and (2) the standardized 
prospective payment amount be adjusted to account for the effects of 
case-mix and wage level differences among HHAs.
    Section 1895(b)(3)(B) of the Act addresses the annual update to the 
standard prospective payment amounts by the home health applicable 
percentage increase. Section 1895(b)(4) of the Act governs the payment 
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act 
require the standard prospective payment amount to be adjusted for 
case-mix and geographic differences in wage levels. Section 
1895(b)(4)(B) of the Act requires the establishment of an appropriate 
case-mix change adjustment factor that adjusts for significant 
variation in costs among different units of services.
    Similarly, section 1895(b)(4)(C) of the Act requires the 
establishment of wage adjustment factors that reflect the relative 
level of wages, and wage-related costs applicable to home health 
services furnished in a geographic area compared to the applicable 
national average level. Pursuant to 1895(b)(4)(C), the wage-adjustment 
factors used by the Secretary may be the factors used under section 
1886(d)(3)(E) of the Act.
    Section 1895(b)(5) of the Act, as amended by Section 3131 of the 
Affordable Care Act signed by the President on March 23, 2010 (Pub. L. 
111-148), gives the Secretary the option to make additions or 
adjustments to the payment amount otherwise paid in the case of 
outliers because of unusual variations in the type or amount of 
medically necessary care. Section 3131(b) revised Section 1895(b)(5) so 
that total outlier payments in a given fiscal year (FY) or year may not 
exceed 2.5 percent of total payments projected or estimated.
    In accordance with the statute, as amended by the BBA, we published 
a final rule (65 FR 41128) in the Federal Register on July 3, 2000, to 
implement the 1997 HH PPS legislation. The July 2000 final rule 
established requirements for the new HH PPS for home health services as 
required by section 4603 of the BBA, as subsequently amended by section 
5101 of the Omnibus Consolidated and Emergency Supplemental 
Appropriations Act (OCESAA) for Fiscal Year 1999 (Pub. L. 105-277), 
enacted on October 21, 1998; and by sections 302, 305, and 306 of the 
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 
1999 (Pub. L. 106-113), enacted on November 29, 1999. The requirements 
include the implementation of a HH PPS for home health services, 
consolidated billing requirements, and a number of other related 
changes. The HH PPS described in that rule replaced the retrospective 
reasonable cost-based system that was used by Medicare for the payment 
of home health services under Part A and Part B. For a complete and 
full description of the HH PPS as required by the BBA, see the July 
2000 HH PPS final rule (65 FR 41128 through 41214).
    On February 8, 2006, the Deficit Reduction Act of 2005 (Pub. L. 
109-171) (DRA) was enacted. Section 5201 of the DRA added new Section 
1895(b)(3)(B)(v) to the Act, which requires HHAs to submit data for 
purposes of measuring health care quality, and links the quality data 
submission to payment. This requirement is applicable for CY 2007 and 
each subsequent year. If an HHA does not submit quality data, the home 
health market basket percentage increase is reduced 2 percentage 
points. In accordance with the statute, we published a final rule (71 
FR 65884, 65935) in the Federal Register on November 9, 2006, to 
implement the pay-for-reporting requirement of the DRA, which was 
codified at 42 CFR 484.225(h) and (i).
    The Affordable Care Act made additional changes to the HH PPS. One 
of the changes in section 3131 of the Affordable Care Act is the 
amendment to section 421(a) of the Medicare Prescription Drug, 
Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-173) as 
amended by section 5201(b) of the Deficit Reduction Act of 2005 (Pub. 
L. 109-171). The amended section 421(a) of the MMA requires, for home 
health services furnished in a rural area (as defined in section 
1886(d)(2)(D) of the Act) with respect to episodes and visits ending on 
or after April 1, 2010 and before January 1, 2016, that the Secretary 
increase by 3 percent the payment amount otherwise made under section 
1895 of the Act.

B. System for Payment of Home Health Services

    Generally, Medicare makes payment under the HH PPS on the basis of 
a national standardized 60-day episode payment rate that is adjusted 
for the applicable case-mix and wage index. The national standardized 
60-day episode rate includes the six home health disciplines (skilled 
nursing, home health aide, physical therapy, speech-language pathology, 
occupational therapy, and medical social services). Payment for non-
routine medical supplies (NRS) is no longer part of the national 
standardized 60-day episode rate and is computed by multiplying the 
relative weight for a particular NRS severity level by the NRS 
conversion factor (See section III.C.4.e). Payment for durable medical 
equipment covered under the home health benefit is made outside the HH 
PPS payment. To adjust for case-mix, the HH PPS uses a 153-category 
case-mix classification to assign patients to a home health resource 
group (HHRG). Clinical needs, functional status, and service 
utilization are computed from responses to selected data elements in 
the OASIS assessment instrument.
    For episodes with four or fewer visits, Medicare pays on the basis 
of a national

[[Page 43238]]

per-visit rate by discipline; an episode consisting of four or fewer 
visits within a 60-day period receives what is referred to as a low 
utilization payment adjustment (LUPA). Medicare also adjusts the 
national standardized 60-day episode payment rate for certain 
intervening events that are subject to a partial episode payment 
adjustment (PEP adjustment). For certain cases that exceed a specific 
cost threshold, an outlier adjustment may also be available.

C. Updates to the HH PPS

    As required by section 1895(b)(3)(B) of the Act, we have 
historically updated the HH PPS rates annually in the Federal Register.
    Our August 29, 2007 final rule with comment period set forth an 
update to the 60-day national episode rates and the national per-visit 
rates under the Medicare prospective payment system for HHAs for CY 
2008. For analysis performed on CY 2005 home health claims data 
indicated a 12.78 percent increase in the observed case-mix since 2000. 
The case-mix represented the variations in conditions of the patient 
population served by the HHAs. Then a more detailed analysis was 
performed on the 12.78 percent increase in case-mix to see if any 
portion of that increase was associated with a real change in the 
actual clinical condition of home health patients. CMS examined data on 
demographics, family severity, and non-home health Part A Medicare 
expenditure data to predict the average case-mix weight for 2005. As a 
result of that analysis, CMS recognized that an 11.75 percent increase 
in case-mix was 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 were not related to an 
underlying change in patient health status, CMS implemented a reduction 
over 4 years in the national standardized 60-day episode payment rates 
and the NRS conversion factor. That reduction was to be taken at 2.75 
percent per year for three years beginning in CY 2008 and at 2.71 
percent for the fourth year in CY 2011. CMS indicated that it would 
continue to monitor for any further increase in case-mix that was not 
related to a change in patient status, and would adjust the percentage 
reductions and/or implement further case-mix change adjustments in the 
future.
    Most recently, we published a final rule in the Federal Register on 
November 10, 2009 (74 FR 58077) that set forth the update to the 60-day 
national episode rates and the national per-visit rates under the 
Medicare prospective payment system for home health services for CY 
2010.

II. Provisions of the Proposed Regulation

A. Case-Mix Measurement

    Since the HH PPS CY 2008 proposed rule, we have stated in HH PPS 
rulemaking that we would continue to monitor case-mix changes in the HH 
PPS and to update our analysis to measure change in case-mix, both 
nominal and real. We have continued to monitor case-mix changes, and 
our latest analysis continues to support the payment adjustments which 
we implemented in the CY 2008 HH PPS. As discussed in the CY 2010 rule, 
the analysis then indicated a 15.03 percent increase in the overall 
observed case-mix since 2000. We next determined what portion of that 
increase was associated with a real change in the actual clinical 
condition of home health patients.
    As was done for the CY 2008 final rule, we used data from the pre-
PPS period to estimate a regression-based, predictive model of 
individual case-mix weights based on measures of patients' demographic 
characteristics, clinical status, inpatient history, and Medicare costs 
in the time period leading up to their home health episodes. The 
regression coefficients from this model were applied to later episodes, 
allowing estimation of how much of the change in observed case-mix is 
attributable to changes in patient characteristics over time. We 
classify the sources of case-mix change into two major types: predicted 
and unpredicted. Predicted (or real) change is based on the 
relationship between patient characteristics and case-mix (that is 
coefficients from the regression model) and changes in the 
characteristics of patients over time (that is the change in mean 
values of the model covariates). Unpredicted (or nominal) change is the 
portion of case-mix change that cannot be explained by changes in 
patient characteristics. Nominal case-mix change is assumed to reflect 
differences over time in agency coding practices.
    Our best estimate in the CY 2010 rule was that approximately 9.77 
percent of the 15.03 percent increase in the overall observed case-mix 
between the IPS baseline and 2007 was real, that is, due to actual 
changes in patient characteristics. Our estimate was that a 13.56 
percent nominal increase (15.03--(15.03 x 0.0977)) in case-mix was due 
to changes in coding procedures and documentation rather than to 
treatment of more resource-intensive patients.
    We have since updated that analysis to include an additional year 
of data (CY 2008) for this CY 2011 proposed rule. This analysis was 
based on regression coefficients from CY 2008 episodes that reflect the 
relationship between model covariates and case-mix using the HHRG153 
system. We used these regression coefficients combined with changes in 
patient characteristics to measure the amount of predicted case mix 
change for 2007 through 2008.
    Our analyses indicate a 19.40 percent increase in the overall 
observed case-mix since 2000. Our estimate is that approximately 10.07 
percent of the total increase in the overall observed case-mix between 
the IPS baseline and 2008 is real, that is, associated with actual 
changes in patient characteristics. Specifics regarding this analysis 
are described later in this section.
    The estimate of real case-mix change is a small proportion of the 
total change in case mix since the IPS baseline. With each successive 
sample, beginning with 2005 data (in the CY 2008 final rule), the 
predicted average national case-mix weight has changed very little 
because the variables (such as preadmission location, non-home health 
Part A Medicare expenditures, and inpatient stay classification, as 
mentioned above) in the model used to predict case-mix are not changing 
much. At the same time, the actual average case-mix has continued to 
grow steadily. Thus, the gap between the predicted case-mix value, 
which is based on information external to the OASIS, and the actual 
case-mix value, has increased with each successive year of data. 
Consequently, as a result of this analysis, we recognize that a 17.45 
percent nominal increase (19.40 - (19.40 x 0.1007)) in case-mix is due 
to changes in coding practices and documentation rather than to 
treatment of more resource-intensive patients. This 17.45 percent 
increase in case mix reflects a much larger increase in nominal case-
mix from the IPS baseline to 2008 than had been previously been 
occurring under the HH PPS. Specifically, from 2000 to 2007, we 
observed about a 1 percent per year increase in total average case-mix. 
However, that annual change increased to slightly more than 4 percent 
between 2007 and 2008.
    We wanted to determine how this growth in case-mix weight from 2007 
to 2008 was affected by the changes implemented with the 2008 
refinements. We identified these average case-mix values by estimating 
the average case mix weight on the 2007 claims of a random 20 percent 
sample of HH beneficiaries. We used two groupers--the 80-group 2007 
grouper

[[Page 43239]]

(average = 1.2606) and the 153-group 2008 grouper (average = 1.2552). 
The difference in averages was -0.0054, indicating that the changeover 
to the new 2008 grouper algorithm itself slightly reduced the average 
case mix weight.
    Next, to assess behavioral changes which may have been incentivized 
by the 2008 refinements, we estimated the average case mix weights on 
both 2007 claims data and 2008 claims data for a random 20 percent 
sample of HH beneficiaries, using the 2008 grouper. (Only non-LUPA 
episodes are included in this analysis, as LUPA episodes are not paid 
using case mix weights.) We compared the resulting averages. The total 
change using the 2008 grouper was 0.0533: the 2007 average was 1.2552 
and the 2008 average was 1.3085. It is important to note that this 
comparison of the 2007 and 2008 claims data uses the same grouper (the 
153-group system, which includes co-morbid conditions), and that this 
estimate of national average case-mix on the 2007 sample differs very 
little (that is -.0054) from the estimate we derived from using the 
actual grouper in effect in 2007.
    We decomposed the change in average case-mix weight, 0.0533, into 
an effect of the 2007-2008 shift in the distribution of the number of 
therapy visits per episode, and an effect of the 2007-2008 change in 
the average case-mix weight at each count of therapy visits in the 
distribution. The latter is assumed to result mostly from the 
incentives to report co-morbid conditions, stemming from the 
introduction of the 153 group system.
    The former is assumed to result mostly from a behavioral response 
on the part of agencies to the new system of therapy thresholds 
introduced in 2008. Prior to 2008, case mix weights were generally 
highest for episodes that met the single, 10-visit therapy threshold. 
Under the system in place since 2008, multiple thresholds above and 
below 10 therapy visits were created. By creating multiple thresholds 
and severity steps between thresholds, we intended to move incentives 
away from payment-driven therapy treatment plans to clinically driven 
ones. However, creating a new set of high therapy thresholds above 13 
therapy visits, to adequately compensate agencies for treating the 
relatively few patients needing such large amounts of therapy, also may 
have had unintended consequences. One such consequence may have been 
that agencies responded by padding treatment plans to reach the new, 
higher thresholds. Episodes which would require such high numbers of 
therapy visits generally would have very high case mix weights (mostly 
weights of 2 or higher).
    The decomposition method first holds the average case mix weight 
constant (at the 2007 values) at each level of therapy visits, and 
measures the effect of the shift to the new distribution of therapy 
visits. The method then holds the distribution of therapy visits 
constant (at the 2007 distribution) and measures the effect of the 
change in average case mix weight at each level of therapy visits. The 
results were that .0205, or 38 percent (.0205/.0533=.38), of the total 
change in average case-mix weights from 2007 to 2008 was due to the 
shift in distribution of therapy visits per episode.
    Figure 1 illustrates the 2007 through 2008 change in the proportion 
of episodes delivering each individual number of therapy visits. 
Several changes are notable. First, the percentage of episodes 
increased at the new, higher therapy visit thresholds (14-19 and 20+). 
The share of episodes at 20 visits or more increased from 4.4 percent 
in 2007 to 5.3 percent in 2008, a substantial increase of about 20 
percent. The large shift towards therapy visit levels of 14 and higher 
was unexpected.
    Second, the percentage of episodes at the single therapy threshold 
(10 visits) that existed before 2008 decreased, as did the percentage 
of episodes between 11 and 13 therapy visits. In 2007, as a proportion 
of all episodes with at least one therapy visit, episodes with 10 to 13 
therapy visits were 32 percent; by 2008, only 21 percent of all therapy 
episodes were in this range. (Note: Figure 1 displays percents of total 
non-LUPA episodes, not just episodes with at least one therapy visit.) 
Third, the proportion of episodes at the new threshold below 10 visits, 
which is 6 visits, increased, as did the proportion of episodes with 7, 
8, or 9 visits. The system of therapy steps we defined for the 2008 
refinements included a step for 7-9 visits (see Table 4 of The August 
29, 2007 final rule [72 FR 49762]). Finally, the proportion of total 
episodes receiving any therapy visits increased slightly, from 54 
percent to 55 percent. The average number of therapy visits per episode 
increased from 5.63 to 5.83 (data not shown).
BILLING CODE 4120-01-P

[[Page 43240]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.000

BILLING CODE 4120-01-C

[[Page 43241]]

    The remaining .0328, or 62 percent of the total change 
(.0328/.0533=.62) in overall average case-mix weight from 2007 to 2008 
was due to an increase in the average case-mix weight at each level of 
therapy visits per episode. Table 1 shows the increases.
[GRAPHIC] [TIFF OMITTED] TP23JY10.001

    The averages increased for all levels of therapy visits per 
episode, with the change ranging from 0.02 to 0.05. The percentage 
changes appear to decline with more therapy visits, because the level 
of the average case mix value increases with each number of therapy 
visits; however, there was no rising trend in the absolute change as 
the number of therapy visits increased.
    Looking directly into the reporting of comorbidities, we examined 
the proportion of episodes that had nonblank diagnoses reported in 
M0240 (Diagnoses and Severity Index). Our concern was that agencies 
were reporting more comorbidities, since the refined system allocates 
case mix points for secondary diagnoses, whereas the system prior to 
the refinements did not. Longstanding OASIS manual language instructs 
providers to encode diagnosis on the OASIS only when the condition is 
unresolved and only when the condition has an impact on the home health 
care. The data comparing the percentages are shown in Table 2.
    The results were a substantial increase in the percentage of 
episodes with a reported diagnosis code in M0240: A 10.4 percentage 
point increase from 2007-2008 in M0240d; a 16.4 percentage point 
increase in M0240e; and a 19.9 percentage point increase in M0240f. 
Table 2 also indicates that these changes represented a significantly 
larger increase in completion rates in these diagnosis fields compared 
to annual increases of about 3.0 percentage points in 2005-2006, and 
about 7.0 percentage points in 2006-2007. We note that we published the 
proposed refinements in the May 2007 Federal Register (72 FR 25356). 
Release of the proposal around mid-year could have been a factor in the 
higher growth of these episodes during the period 2006 through 2007, 
relative to 2005 through 2006.
    We believe it is unlikely that the actual disease burden of home 
health patients, as indicated by reported comorbidities, changed so 
dramatically in a single year; instead, we believe the incentives to 
report more comorbidities under the refined case mix system are the 
reason for the large increases in reported comorbidities.

[[Page 43242]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.002

    An illustrative instance of diagnosis coding change under the HH 
PPS refinements is hypertension. Our analysis of 8 years of claims 
shows that reporting of this diagnosis grew exceedingly quickly in 
2008. Table 3 shows the proportion of HH PPS claims reporting essential 
hypertension, according to ICD-9-CM hypertension code, for 2001 to 
2008. The data indicate a sudden jump of approximately 12 percentage 
points in reporting of unspecified hypertension when the refined HH PPS 
added hypertension as a case mix code in 2008. Annual changes in use of 
this code were small up until 2005 (in the range of 0.1 to 2.4 
percentage points), after which there were two years of 6-percentage 
point increases, followed by the 12-percentage point increase 
coincident with the 2008 refinements. Malignant hypertension is 
unusual; it has been falling as a percentage of episodes. Reporting of 
benign hypertension, which is somewhat more common than malignant 
hypertension, has been slowly rising since 2001.
[GRAPHIC] [TIFF OMITTED] TP23JY10.003

    At the same time, there are indications that the services 
utilization associated with the most commonly reported hypertension 
diagnosis code, hypertension, unspecified, no longer is responsible for 
added resource requirements in home care. Originally, hypertension was 
selected for inclusion in the refined HH PPS system because data 
suggested it elevated utilization. Table 4a illustrates the trends; it 
shows the average number of visits per episode, according to type of 
hypertension diagnosis code. (We exclude outlier cases because of the 
effect that growing numbers of outlier episodes may have had beginning 
around 2005 and 2006; extremely large numbers of visits in the 
distribution can distort the average.)
    Generally episodes reporting malignant or benign hypertension 
exhibit a decline in number of visits per episode during the middle of 
the 8-year

[[Page 43243]]

period. The averages then rise slightly. The averages for episodes 
reporting unspecified hypertension declined until 2005, and then 
stabilized.
    Comparing these data with averages for episodes not reporting 
hypertension, we see that hypertension is generally associated with 
more visits, especially if the hypertension was reported as malignant 
or benign. However, in 2007, the unspecified hypertension episodes had 
an average number of visits equivalent to that of the non-HBP episodes. 
By 2008, the average number of visits for episodes not reporting 
hypertension rose slightly, while the average for unspecified 
hypertension did not. As a result, by 2008, the average number of 
visits for claims reporting unspecified hypertension is slightly lower 
than the average for claims not reporting hypertension. Further, the 
benign hypertension episodes, with a slightly increased share of the 
sample between 2007 and 2008, exhibited a small reduction in the 
average number of visits.
[GRAPHIC] [TIFF OMITTED] TP23JY10.004

    This pattern illustrates an expected effect of nominal coding 
change. We observe a 12-percentage point increase in use of unspecified 
hypertension, but no longer do these hypertension patients use more 
resources than others. These results appear possibly consistent with a 
phenomenon in which agencies increased their reporting of hypertension 
in situations where it did not meet the home health diagnosis reporting 
criteria. More generally, the results are suggestive of changed coding 
practice in which less-severe episodes are being reported with 
hypertension in 2008 than used to be the case.
    These analyses of the change in the therapy visit distribution, 
change in average case mix weights at each level of therapy visits, 
increased use of secondary diagnosis fields, and the change in 
reporting of hypertension all suggest that the refinements which were 
implemented in 2008 affected case-mix weights, with greater therapy 
visits and reporting of co-morbidities each as contributing factors. 
However, as described below, the analyses do not indicate a significant 
increase in real case-mix. Experience with previous analyses reported 
in our past regulations shows that relatively small proportions of the 
total case mix change since the IPS baseline can be considered real 
case mix change.
    Our estimate that 10.07 percent of the total percentage change in 
the national average case mix weight since the IPS baseline is due to 
real change in case mix, is consistent with past results. Most of the 
case mix change has been due to improved coding, coding practice 
changes, and other behavioral responses to the prospective payment 
system, such as more use of high therapy treatment plans. We are 
therefore proposing to exercise authority to compensate for nominal 
case mix change by making reductions to the PPS rates, as we have done 
since 2008.
    For this year's analysis, we used the same approach, a model 
designed to measure real change in case mix, which we developed for the 
CY 2008 HH PPS final rule (72 FR 49841) and continue to use for HH PPS 
rulemaking. For this year's analyses, we utilized a fuller version of 
the 3M APR-DRG grouper that allowed us to expand the number of APR-DRG-
related groups in the model. As previously, we included indicators for 
each APR-DRG group's different severity level if at least 25 episodes 
had the APR-DRG/severity combination in the IPS period file. This 
expanded APR-DRG model was used to re-estimate the IPS period model of 
case-mix weight.
    We also rebased the expanded APR-DRG model on CY2008 data, using 
case-mix weights produced by the refined (153-group) HH PPS grouper. 
One slight difference in the rebased model is that because we are using 
2008 data, the ``living arrangement'' variables are missing on follow-
up OASIS assessments. Consequently, we were not able to use this 
variable in the re-based model.
    We used the results of that rebasing to predict real case mix for 
2007. The national average case mix weight in 2008 was 1.3085. The 
rebased model of real case mix predicts a quantity change in real case 
mix of -0.0025 when working backwards from 2008 (1.3085) to 2007 
(1.3060). The predicted level of real case mix in 2007, which we 
derived from the IPS-based model is 1.1152. To compute a predicted real 
case mix level for 2008, we increased the predicted level of real case 
mix in 2007, 1.1152, by the percentage growth (1.3085/1.3060) in real 
case mix that we estimated from the rebased model. The result is a 
predicted level of real case

[[Page 43244]]

mix in 2008 of 1.1173 ((1.3085/1.3060) x 1.1152 = 1.1173).
    To compute the predicted quantity change in real case mix from the 
IPS baseline to 2008, we subtracted from the IPS baseline average case 
mix weight from the predicted level the real case mix in IPS, for a 
quantity change of 0.0214 (1.1173 - 1.0959 = 0.0214). The total 
difference in case mix from baseline to 2008 is 0.2126 (1.3085 - 1.0959 
= 0.2126). Therefore, the quantity change from baseline to 2008 in real 
case mix represents a 10.07 percent increase (0.0214/0.2126 = 0.1007 or 
10.07 percent).
    The percent change in overall case mix from the IPS baseline to 
2008 is 19.40 percent ((1.3085/1.0959) - 1 = 0.1940 or 19.40 percent). 
To estimate the percent growth in case mix due to nominal change (that 
is, change in case mix not due to actual changes in patient acuity), we 
reduced the overall 19.40 percent change in case mix by the 10.07 
percent increase due to real case mix change, which yielded a residual 
of 17.45 percent ((1 - 0.1007) * 0.1940 = 0.1745).
    As we fully described earlier in this proposed rule, our August 29, 
2007, final rule for CY 2008 finalized a reduction over 4 years in the 
national standardized 60-day episode payments rates to account for an 
11.75 percent increase in case-mix which was not related to treatment 
of more resource intense patients. The 11.75 percent increase was based 
on an analysis of data through 2005. We finalized a 2.75 percent 
reduction each year for 2008, 2009 and 2010, and 2.71 percent reduction 
for CY 2011 to account for this growth in case-mix. We have stated in 
HH PPS rulemaking, since the CY 2008 HH PPS proposed rule, that we 
might find it necessary to adjust the annual offsets (case-mix 
reduction percentages) as new data became available. Because our 
current analysis reveals that nominal case-mix has continued to grow, 
we are faced with having to account for the additional increase in 
nominal case-mix beyond that which was identified for CY 2008 
rulemaking. If we were to account for the remainder of the 17.45 
percent residual increase in nominal case-mix over CY 2011 and CY 2012, 
we estimate that the percentage reduction to the national standardized 
60-day episode rates and the NRS conversion factor for nominal case-mix 
change for each of the two calendar years (2011 and 2012) of the case-
mix change adjustment would be 3.79 percent per year. If we were to 
fully account for the remaining residual increase in nominal case-mix 
in CY 2011, we estimate that the percentage reduction to the national 
standardized 60-day episode rates and the NRS conversion factor would 
be 7.43 percent. Because the Affordable Care Act contains other 
provisions which have an effect on HH PPS payments, we are not 
proposing to account for the entire residual increase in nominal case-
mix in CY 2011, instead we propose to account for the identified 
increase over CY 2011 and CY 2012. We propose to impose a 3.79 percent 
reduction per year to the national standardized 60-day episode rates 
and the NRS conversion factor for CY 2011 and CY 2012. Should we 
identify further increases in nominal case-mix as more current data 
become available, it is our intent to account fully for those increases 
when they are identified, rather than continuing to phase-in the 
reductions over more than 1 year. We will continue to monitor any 
future changes in case-mix as more current data become available and 
make updates as appropriate.

B. Hypertension Diagnosis Coding Under the HH PPS

    As part of this rule, we are proposing to remove ICD-9-CM code 
401.9, Unspecified Essential Hypertension, and ICD-9-CM code 401.1, 
Benign Hypertension, from the HH PPS case mix model's hypertension 
group, originally reflected in Table 2B of the August 29, 2007, CY 2008 
HH PPS final rule (72 FR 49762) (subsequent updates to Table 2B have 
been provided in HH PPS grouper software releases). In this section we 
explain the basis for this proposal.
    As part of our refinements to the HH PPS, beginning in CY 2008, 
unspecified hypertension and benign hypertension were included as 
diagnoses in our HH PPS case mix system. Recent analysis of home health 
diagnosis coding shows a significant change in the frequency of 
assigning certain hypertension diagnoses during CY 2008. Specifically, 
our analysis of HH PPS claims from 2001 to 2008 shows a sudden increase 
in the reporting of unspecified hypertension and benign hypertension on 
home health claims in CY 2008 (see Table 3: Percent of episodes 
reporting hypertension ICD-9-CM diagnosis codes: 2001-2008, of this 
proposed rule).
    Classification of blood pressure (BP) was revised in 2003 by the 
National Heart, Lung and Blood Institute (NHLBI) in their ``Seventh 
Report of the Joint National Committee on Prevention, Detection, 
Evaluation, and Treatment of High Blood Pressure'' (the JNC 7 report) 
and published in the May 21, 2003, Journal of the American Medical 
Association. These revisions provided specific clinical guidelines for 
prevention, detection, and treatment of high blood pressure. The 
guidelines, approved by the Coordinating Committee of the NHLBI's 
National High Blood Pressure Education Program (NHBPEP), also 
streamlined the steps by which doctors diagnose and treat patients. A 
key aspect of the guidelines includes the introduction of a ``pre-
hypertension'' level for individuals with a systolic blood pressure of 
120-139 mm Hg or a diastolic blood pressure of 80-89 mm Hg. This 
recognition represented a change from traditional medical views on the 
implications of blood pressures slightly above 120/80. Traditionally, 
such low levels were not considered a significant clinical finding. No 
diagnosis was reportable. There was no medical treatment ordered; nor 
was a change of lifestyle recommended.
    Based upon our review of the revised clinical guidelines, and our 
review of the ICD-9-CM classification of essential hypertension, if the 
patient is considered ``pre-hypertensive,'' some may conclude that a 
diagnosis of benign hypertension may be assigned. If an individual is 
designated as pre-hypertensive, the guidelines stipulate that this 
individual will generally require health promoting lifestyle 
modifications to prevent cardiovascular disease. Additional treatments 
may or may not be appropriate.
    The impact of the new guidelines for hypertension is the 
reclassification of certain patients to a hypertension diagnosis, 
whereas prior to the guidelines, no hypertension diagnosis was 
indicated. Furthermore, under the guidelines, some of the patients 
deemed hypertensive may not need skilled services. Moreover, as we 
described above, we see a substantial increase in the reporting of 
unspecified hypertension, along with some evidence that home health 
patients with either unspecified or benign hypertension no longer 
require extra resources. Given the new guidelines for hypertension and 
their impact on coding, along with coding behavior changes in 2008, we 
believe including unspecified and benign hypertension in the HH PPS 
case mix model reduces the model's accuracy. As such we do not believe 
that we should be including these diagnoses in our case-mix system.
    We also believe that the developments in clinical guidelines of 
recent years may have led to ambiguity in the definition of 
hypertension in the ICD-9-CM classification system. The ``ICD-9-CM 
Official Guidelines for Coding and Reporting'', and the alphabetic and 
tabular indexes of the ICD-9-CM published after May 2003 (effective 
date

[[Page 43245]]

of the ``NHLBI Guidelines for Hypertension''), fail to include the 
NHLBI Blood Pressure (BP) guidelines and classification terminology. 
The NHLBI specific BP mmHg measurements and BP terms are not included 
in the ICD-9-CM classification system.
    In the August 29, 2007, CY 2008 HH PPS final rule, we removed 
diagnosis codes proposed in the NPRM if the code was assigned to a 
minor condition or mild symptom that may be found in the elderly 
population; codes that are non-specific or ambiguous; and codes that 
lack consensus for clear diagnostic criteria within the medical 
community. Due to their unclear relationship with NHLIB guidelines, the 
unspecified and benign hypertension codes fail to meet the criteria we 
laid out in 2007.
    In summary, continued inclusion of the unspecified and benign 
hypertension codes in the HH PPS case mix system threatens to move the 
HH PPS case-mix model away from a foundation of reliable and meaningful 
diagnosis codes that are appropriate for home care. Therefore, we are 
proposing to remove ICD-9-CM code 401.9, Unspecified Essential 
Hypertension, and ICD-9-CM code 401.1, Benign Essential Hypertension, 
from the HH PPS case mix model's hypertension group, in order to 
correlate with the goals of our HH PPS case-mix system.

C. Therapy Coverage Requirements

    With the inception of the HH PPS, as set forth in the July 3, 2000 
final rule (65 FR 41128), patients were grouped according to their 
therapy utilization status in order to ensure that patients who 
required therapy would maintain access to appropriate services. In the 
final rule, we described that we had performed research regarding how 
to use assessment information to predict how much therapy a patient 
would need over the course of a 60-day period. The research found that 
the assessment data could not predict the amount of required therapy 
with sufficient accuracy for use in the payment system. Knowing that 
under a PPS there is significant risk that providers might skimp on 
high-cost services such as therapy, we decided to establish a therapy 
threshold to ensure that therapy would not be under-provided. We used 
clinical judgment to determine what amount of therapy would need to be 
provided to ensure a meaningful amount of rehabilitation services to 
patients who could clearly benefit from it. We determined that this 
amount would be at least 8 hours of therapy services during the 60-day 
episode. Since the average therapy visit was 48 minutes long, it would 
take 10 visits to provide at least 8 hours worth of therapy. Therefore, 
we established a corresponding 10-visit therapy threshold to identify 
``high'' therapy cases, and paid home health agencies significantly 
more for patients receiving high therapy.
    In the years following the adoption of the HH PPS, we have 
continued to analyze the effectiveness of the 10-visit therapy 
threshold in ensuring that rehabilitation services were being provided 
to patients who could clearly benefit from them. Our analyses suggested 
that therapy was not being under-provided, but rather suggested that in 
many cases therapy was being over-provided. As described in the May 4, 
2007 HH PPS proposed rule (72 FR 25356), our analysis of the evidence 
suggested that the single 10-visit threshold offered too strong a 
financial incentive to provide 10 therapy visits when a lower amount of 
therapy was more clinically appropriate. In other words, the data 
suggested that financial incentives to provide 10 therapy visits 
overpowered clinical considerations in therapy prescriptions. During 
this time we conducted further research to model therapy need, but it 
was again unsuccessful. We explained in our proposed rule in May 2007 
that a return to per-visit payment for therapy visits did not meet our 
objectives for having a prospective payment system. Therefore, in the 
CY 2008 final rule, we established a system of three thresholds with 
graduated steps in between which met our objectives of retaining 
prospectivity in the payment system, reducing the strong incentive 
resulting from a single threshold, restoring clinical considerations in 
therapy provision, and paying more accurately for therapy utilization 
below the original 10-visit threshold. Those three thresholds are at 6 
therapy visits, 14 therapy visits, and 20 therapy visits. As a 
disincentive for agencies to deliver more than the appropriate, 
clinically determined number of therapy visits, payment for additional 
therapy visits between the three thresholds increases gradually, 
incorporating a declining rather than a constant payment amount per 
added therapy visit. In our May 4, 2007 HH PPS proposed rule, at 72 FR 
25363, we provided further details explaining the selection of these 
thresholds.
    Analysis of CY 2008 data continues to suggest that some HHAs may be 
providing unnecessary therapy. The 2008 data show a 30 percent increase 
in episodes with between 6-9 therapy visits, which suggests that the 
2008 changes may have been successful in improving clinical 
considerations in the volume of therapy provided. In their March 2010 
report MedPAC states that 2008 data also reveal a 26 percent increase 
of episodes with 14 or more therapy visits (MedPAC, Report to Congress: 
Medicare Payment Policy, Section B, Chapter 3, March 2010, p. 203). The 
increase in episodes with 14 or more therapy visits is especially 
evident in areas of the country where home health fraud is suspected, 
such as Miami-Dade, Florida.
    While this suggests that the therapy payment policies are 
vulnerable to fraud and abuse, the swift, across-the-board therapy 
utilization changes suggest another, more fundamental concern. MedPAC 
wrote that the magnitude of therapy utilization changes and their 
correlations with the payment threshold changes suggest that payment 
incentives continue to influence treatment patterns [MedPAC, 2010, p. 
206]. The Commissioners believed that payment policy is such a 
significant factor in treatment patterns because the criteria for 
receipt of the home health benefit are ill-defined. They suggested that 
improved guidelines that more specifically identify patients who are 
most appropriate for HH care would facilitate more appropriate and 
uniform use of the benefit [MedPAC, 2010, p. 203]. To address the 
concerns of MedPAC, we are proposing to clarify our policies regarding 
coverage of therapy services at 409.44(c) in order to assist HHAs, and 
to curb misuse of the benefit.
    We believe these clarifications also could slow the case-mix growth 
which is unrelated to real changes in patient acuity (nominal case-
mix). As we described above in Section A (``Case Mix Measurement''), 
between 2007 and 2008 we observed a case-mix increase of more than 4 
percent. An analysis of this growth revealed that approximately 38 
percent of the total case mix change between 2007 and 2008 was due to 
the shift in distribution of therapy visits. By describing more clearly 
the therapy coverage criteria in the home health setting, thereby 
enabling providers to better understand when providing therapy to home 
health patients is appropriate, we believe that beginning in calendar 
year 2011, a slower rate of nominal case-mix growth may be achieved.
Proposed Clarifications to 42 CFR 409.44(c)(1)
    Regulations at Sec.  409.44(c)(1) mandate that for physical 
therapy, speech language pathology, or occupational therapy to be 
covered under the home health benefit, therapy services must

[[Page 43246]]

relate directly and specifically to a treatment regimen, be established 
by the physician (after any needed consultation with a qualified 
therapist), that is designed to treat the beneficiary's illness or 
injury. A qualified therapist is one who meets the personnel 
requirements in the CoPs at 42 CFR 484.4. To ensure that therapy 
services relate directly and specifically to a treatment regimen 
designed to treat the beneficiary's illness or injury, we are proposing 
to clarify our coverage requirements. Specifically, we are proposing to 
revise Sec.  409.44(c)(1) so that, with respect to physical therapy, 
occupational therapy, and speech language pathology, we may clarify 
that:
     The patient's plan of care would include a course of 
therapy and therapy goals which would be consistent with the patient's 
functional assessment, both of which are included in the patient's 
clinical record. The patient's clinical record would document the 
necessity for the course of therapy described in the plan of care. 
Specifically, the clinical record would document how the course of 
therapy for the beneficiary's illness or injury is in accordance with 
accepted standards of clinical practice.
     Therapy treatment goals would be described in the plan of 
care, and they would be measurable. Specifically, therapy treatment 
goals would be such that progress toward those goals could be 
objectively measured. The goals would also pertain directly to the 
patient's illness or injury and the patient's resultant functional 
impairments.
     The patient's clinical record would demonstrate that the 
method used to assess a patient's function included the objective 
measurement of function in accordance with accepted standards of 
clinical practice. As such, successive functional assessments would 
enable comparison of successive measurements, thus enabling objective 
measurement of therapy progress.
    One example of objective measures is functional assessment 
individual item and summary findings (and comparisons to prior 
assessment results/clinical findings) from OASIS functional items or 
other commercially available therapy outcomes instruments. Similarly, 
another example would be functional assessment findings (and 
comparisons to prior assessment results/clinical findings) from tests 
and measurements validated in the professional literature, or used as 
part of accepted standards of clinical practice that are appropriate 
for the condition/function being measured.
Proposed Clarifications to 42 CFR 409.44(c)(2)(i)
    Current regulations at Sec.  409.44(c)(2)(i) mandate that for 
physical therapy, speech language pathology, or occupational therapy 
services to be covered in the home health setting, the services must be 
considered under accepted practices to be a specific, safe, and 
effective treatment for the beneficiary's condition.
    To clarify what we mean by ``accepted practice'' and ``effective 
treatment'', we are proposing to clarify home health therapy coverage 
criteria at Sec.  409.44(c)(2)(i). These clarifications describe our 
expectations that HHAs would regularly reassess a therapy patient's 
physical function, and would objectively measure a patient's progress 
toward therapy goals to determine whether therapy services continued to 
be effective, or whether therapy ceased to be covered. These 
clarifications also describe clinical record documentation expectations 
associated with documenting effective therapy progress.
    We are proposing to revise Sec.  409.44(c)(2)(i) as follows:
Functional Reassessment Expectations
    In order to ensure that a patient receiving home health therapy 
services appropriately remained eligible for the benefit in accordance 
with accepted practice, and that the services continued to be 
effective, the patient's function would be periodically reassessed by a 
qualified therapist. As we described above, for therapy to be covered 
in the home health setting, the method used to assess a patient's 
function would include objective measurement of function in accordance 
with accepted standards of clinical practice. As such, progress toward 
therapy goals would be objectively measurable by comparing measurements 
obtained at successive functional assessment time points. The objective 
measurements obtained from the periodic reassessment of function would 
reflect progress (or lack of progress) toward therapy goals, or 
achievement of therapy goals and the measurements would be documented 
in the clinical record.
    While a qualified therapist could include, as part of the 
functional assessment or reassessment, objective measurements or 
observations made by a PTA or OTA within their scope of practice, the 
qualified therapist would have to actively and personally participate 
in the functional assessment, and measure the patient's progress.
     For those patients requiring 13 or 19 therapy visits, the 
patient would be functionally re-assessed by a qualified therapist, 
minimally, on the 13th and the 19th therapy visit (thus requiring 
reassessment prior to the HH PPS therapy thresholds of 14 and 20 
therapy visits), and at least every 30 days.
     No subsequent therapy visits would be covered until the 
qualified therapist has completed the reassessment, objectively 
measured progress (or lack of progress) toward goals, determine if 
goals have been achieved or require updating, and documented the 
therapy progress in the clinical record. If the objective measurements 
of the reassessment do not reveal progress toward goals, the qualified 
therapist, together with the physician, would determined whether the 
therapy is still effective or should be discontinued. If therapy is 
continued, the clinical record would be documented, as described below, 
with a clinically supportable statement of why there is an expectation 
that anticipated improvement is attainable in a reasonable and 
generally predictable period of time.
    These reassessments would ensure that the patient was receiving 
effective care while also ensuring that, except for covered maintenance 
therapy as described later in this section, patients were not remaining 
on the benefit and continuing to receive therapy services after the 
therapy goals were met, or after improvement could no longer be 
expected.
Documenting ``Effective'' Therapy Progress
Assistant's Participation in Documenting ``Effective'' Therapy Progress
    We are proposing that physical therapist assistants or occupational 
therapy assistants could objectively document progress between the 
functional reassessments by a qualified therapist and/or physician. 
Clinical notes written by assistants are not complete functional 
assessments of progress.
    Only a qualified therapist would be able to document a patient's 
progress towards goals as measured during a functional reassessment, 
regardless of whether the assistant wrote other clinical notes. 
However, notes written by assistants are part of the clinical record 
and need not be copied into the reassessment documentation. Clinical 
notes written by assistants would supplement the functional 
reassessment documentation of qualified therapist and would include:
     The date that the clinical note was written; the 
assistant's signature and job title, or for dictated documentation, the 
identification of the assistant who

[[Page 43247]]

composed the clinical note, and the date on which it was dictated;
     Objective measurements (preferred) or description of 
changes in status relative to each goal currently being addressed in 
treatment, if they occurred. Note that assistants would not make 
clinical judgments about why progress was or was not made, but could 
report the progress objectively.

Descriptions would make identifiable reference to the goals in the 
current plan of care.
Qualified Therapist's Responsibility in ``Effective'' Progress 
Documentation
    In addition to the proposed requirements above for clinical 
documentation by assistants, we are also proposing in Sec.  
409.44(c)(2)(i) that the patient's progress documentation by a 
qualified therapist would also include:
     Documentation of objective measurement obtained during the 
functional assessment and extent of progress (or lack thereof) toward 
each therapy goal.
     Plans for continuing or discontinuing treatment, with 
reference to evaluation results, and/or treatment plan revisions.
     Changes to goals or an updated plan of care that is sent 
to the physician for signature or for discharge.
     Documentation of objective evidence or a clinically 
supportable statement of expectation that: (1) The patient's condition 
has the potential to improve or is improving in response to therapy; or 
(2) maximum improvement is yet to be attained, and there is an 
expectation that the anticipated improvement is attainable in a 
reasonable and generally predictable period of time. Objective evidence 
would consist of standardized patient assessments, outcome measurement 
tools, or measurable assessments of functional outcome. Use of 
objective measures at the beginning of treatment, and during and/or 
after treatment would be required to quantify progress and support 
justifications for continued treatment.
Proposed Clarifications to 42 CFR 409.44(c)(2)(iii)
    Regulations at Sec.  409.44(c)(2)(iii) presently mandate that for 
therapy services to be covered in the home health setting, there must 
be an expectation that the beneficiary's condition will improve 
materially in a reasonable (and generally predictable) period of time 
based on the physician's assessment of the beneficiary's restoration 
potential and unique medical condition, or the services must be 
necessary to establish a safe and effective maintenance program 
required in connection with a specific disease, or the skills of a 
therapist must be necessary to establish a safe and effective 
maintenance program in connection with a specific disease or the skills 
of a therapist must be necessary to perform a safe and effective 
maintenance program. We would clarify these requirements:
     The first sentence currently states, ``There must be an 
expectation that the beneficiary's condition will improve materially in 
a reasonable (and generally predictable) period of time based on the 
physician's assessment of the beneficiary's restoration potential and 
unique medical condition.''
    We propose clarifying the regulatory text to clarify that 
``material'' improvement requires that the clinical record demonstrate 
that the patient is making functional improvements that are ongoing and 
of practical value, when measured against his or her condition at the 
start of treatment.
    We are proposing to clarify that the concept of rehabilitative 
therapy includes recovery or improvement in function and, when 
possible, restoration to a previous level of health and well-being.
    Covered therapy services under the home health benefit shall be 
rehabilitative therapy services unless they meet the criteria for 
maintenance therapy requiring the skills of a therapist as described 
below.
    We are proposing to clarify the regulatory text so that if an 
individual's expected rehabilitation potential would be insignificant 
in relation to the extent and duration of therapy services required to 
achieve such potential, therapy would not be considered reasonable and 
necessary, and therefore would not be covered as rehabilitative therapy 
services.
    We are also proposing to clarify the regulatory text to describe 
that therapy is covered as rehabilitative therapy when the skills of a 
therapist are necessary to safely and effectively furnish or supervise 
a recognized therapy service whose goal is improvement of an impairment 
or functional limitation.
    We are proposing to clarify in regulatory text that therapy would 
not be covered to effect improvement or restoration of function where a 
patient suffered a transient and easily reversible loss or reduction of 
function (e.g., temporary weakness which may follow a brief period of 
bed rest following surgery) which could reasonably be expected to 
improve spontaneously as the patient gradually resumes normal 
activities. Therapy furnished in such situations would not be 
considered reasonable and necessary for the treatment of the 
individual's illness or injury, and the services would not be covered.
    If at any point in the treatment of an illness, it was determined 
that the treatment was not rehabilitative and did not legitimately 
require the services of a qualified therapist for management of a 
maintenance program as described below, the services would no longer be 
considered reasonable and necessary and therapy would cease to be 
covered.
     As currently stated, Sec.  409.44(c)(2)(iii) also covers 
occupational therapy, physical therapy, or speech language pathology if 
the services are ``necessary to establish a safe and effective 
maintenance program required in connection with a specific disease.''
    We are proposing to clarify the existing regulatory text by adding 
that the specialized skill, knowledge and judgment of a therapist would 
be required in developing a maintenance program, and services would be 
covered to design or establish the plan, to ensure patient safety, to 
train the patient, family members and/or unskilled personnel in 
carrying out the maintenance plan, and to make periodic reevaluations 
of the plan.
    When indicated, during the last visit(s) for rehabilitative 
treatment, the clinician may develop a maintenance program for the 
patient. The goals of a maintenance program would be, for example, to 
maintain functional status or to prevent decline in function.
    We are also proposing to clarify that if a maintenance program was 
initiated after the rehabilitative therapy program had been completed 
(rather than by a clinician at the last rehabilitative therapy 
session), development of a maintenance program would not be considered 
reasonable and necessary for the treatment of the patient's condition, 
with one exception. We propose that when a patient qualifies for 
Medicare's home health benefit based on an intermittent skilled nursing 
need, a qualified therapist may develop a maintenance program to 
maintain functional status or to prevent decline in function, at any 
point in the episode.
    The services of a qualified therapist would not be necessary to 
carry out a maintenance program, and would not be covered under 
ordinary circumstances. The patient could perform such a program 
independently or with the assistance of unskilled personnel or family 
members.
    We also are proposing to clarify circumstances under which CMS 
would cover therapy services for carrying out

[[Page 43248]]

a maintenance program. If the clinical condition of the patient were 
such that the services required to maintain function involved the use 
of complex and sophisticated therapy procedures to be delivered by the 
therapist himself/herself (and not an assistant) in order to provide 
both a safe and effective maintenance program and to ensure patient 
safety, those reasonable and necessary services would be covered, even 
if the skills of a therapist were not ordinarily needed to carry out 
the activities performed as part of the maintenance program.
Clarifications to Sec.  409.44(c)(2)(iv)
    In order to clarify Sec.  409.44(c)(2)(iv), which mandates that for 
therapy to be covered in the home health setting, the amount, 
frequency, and duration of the services must be reasonable, we propose 
to revise Sec.  409.44(c)(2)(iv) to require that:
     The amount, frequency and duration of therapy services 
must be reasonable and necessary, as determined by a qualified 
therapist and/or physician, using accepted standards of clinical 
practice.
     The plan of care or the functional assessment would 
include any variable factors that influence the patient's condition or 
affect the patient's response to treatment, especially those factors 
that influence the clinician's decision to provide more services than 
are typical for the patient's condition.
     The clinical record documentation would have to include 
objective measurements that demonstrated that the patient was making 
progress toward goals. If progress could not be measured, and continued 
improvement cannot be expected, therapy services would cease to be 
covered, with two exceptions. First, therapy could still be considered 
reasonable and necessary (and thus covered) if therapy progress 
regressed or plateaued, if the reason(s) for lack of progress were 
documented, and the justification supporting the expectation that 
progress would be regained and maintained with continued therapy was 
also documented. Second, therapy could be considered reasonable and 
necessary (and thus covered) under specific circumstances when 
maintenance therapy is established or provided, as explained previously 
in this section.

D. Collecting Additional Claims Data for Future HH PPS Enhancements and 
Soliciting Comments on HH PPS Improvements

    The 2009 MedPAC report recommended that CMS improve the HH PPS to 
mitigate vulnerabilities such as payment incentives to provide 
unnecessary services. We believe that we need more specific resource 
use data to fully address these vulnerabilities. Therefore, we are 
planning to require HHAs to report additional data on the HH claim 
beginning in CY 2011. Data collection requirements are handled via a 
separate administrative process, and are not part of this rulemaking.
    In their March 2010 report, MedPAC suggested that the HH PPS case-
mix weights needed adjustment. Our current therapy weights are 
calibrated assuming that 79 percent of the time, HH therapy is provided 
by therapists. We believe that the current mix of therapy services may 
have changed. To ensure we accurately update the case-mix weights, we 
believe there is a need to collect additional data on the HH claim to 
differentiate between the therapy visits provided by therapy assistants 
versus therapists.
    We typically consider skilled nursing services to involve direct 
skilled nursing care to a patient, and therapy services to be 
restorative therapy. However, in limited situations, regulations deem a 
set of nursing services which are not direct care skilled nursing as 
skilled services and also deem a set of therapy services which are not 
restorative therapy as skilled therapy. Therefore, we are planning to 
require HHAs to report additional data on the HH claim to differentiate 
between these deemed skilled services and direct care skilled nursing 
or restorative therapy. We believe that these data will help us better 
understand services provided, enabling us to more accurately address 
overutilization vulnerabilities.
    Currently, we use the following G-codes to define therapy services 
in the home health setting:
     G0151 Services of physical therapist in home health 
setting, each 15 minutes.
     G0152 Services of an occupational therapist in home health 
setting, each 15 minutes.
     G0153 Services of a speech-language pathologist in home 
health setting, each 15 minutes.
    We are planning to revise the current definitions for existing G-
codes for physical therapists (G0151), occupational therapists (G0152), 
and speech-language pathologists (G0153), to include in the 
descriptions that they are intended for the reporting of services 
provided by a qualified physical or occupational therapist or speech-
language pathologist. A qualified therapist is one who meets the 
personnel requirements in the CoPs at 42 CFR 484.4. Additionally, we 
are planning to require the reporting of two additional G-codes to 
report the delivery of therapy services by assistants. The following 
are draft descriptions for those revised and new G-codes, for the 
reporting of restorative therapy visits by qualified therapists and 
qualified assistants. Since these new G-codes do not yet exist, we have 
entitled all the new G-codes as G-CodeX, with the `X' being a number to 
indicate which new code.
     G0151 Services performed by a qualified physical therapist 
in the home health setting, each 15 minutes.
     G0152 Services performed by a qualified occupational 
therapist in the home health setting, each 15 minutes.
     G0153 Services performed by a qualified speech-language 
pathologist in the home health setting, each 15 minutes.
     G-Code1 Services performed by a qualified physical 
therapist assistant in the home health setting, each 15 minutes.
     G-Code2 Services performed by a qualified occupational 
therapist assistant in the home health setting, each 15 minutes.
    We are also planning to require new G-codes for the reporting of 
the establishment or delivery of therapy maintenance programs by 
qualified therapists. The following are draft descriptions for those 
new G-codes, for the reporting of the establishment or delivery of 
therapy maintenance programs by therapists:
     G-Code3 Services performed by a qualified physical 
therapist, in the home health setting, in the establishment or delivery 
of a safe and effective therapy maintenance program, each 15 minutes.
     G-Code4 Services performed by a qualified occupational 
therapist, in the home health setting, in the establishment or delivery 
of a safe and effective therapy maintenance program, each 15 minutes.
     G-Code5 Services performed by a qualified speech-language 
pathologist, in the home health setting, in the establishment or 
deliver of a safe and effective therapy maintenance program, each 15 
minutes.
    Currently we use the following G-code for the reporting of skilled 
nursing services in the home:
     G0154 Skilled services of a nurse in the home health 
setting, each 15 minutes.
    We are planning to revise the current definition for the existing 
G-code for skilled nursing services (G0154), and require HHAs to use 
G0154 only for the reporting of direct skilled nursing care to the 
patient by a licensed nurse. Additionally, we are planning to require 
two new G-codes: One for the reporting

[[Page 43249]]

of the skilled services of a licensed nurse in the management and 
evaluation of the care plan or the observation and assessment of a 
patient's conditions when only the specialized skills of a licensed 
nurse can determine the patient's status until the treatment regimen is 
essentially stabilized; and another for the reporting of the training 
or education of a patient, a patient's family, or caregiver:
     G0154 Skilled services of a licensed nurse in the home 
health setting, each 15 minutes.
     G-Code6 Skilled services by a licensed nurse, in the 
delivery of management & evaluation of the plan of care, or the 
observation and assessment of the patient's condition while a patient's 
treatment regime is stabilized, in the home health setting, each 15 
minutes.
     G-Code7 Skilled services of a licensed nurse, in the 
training and/or education of a patient or family member, in the home 
health setting, each 15 minutes.

In addition to our plans for collecting additional claims data for 
future HH PPS enhancements, we are considering other possible changes 
to the HH PPS. As such, we are also soliciting comments on options to 
restructure the HH PPS to mitigate the overutilization and up-coding 
risks that current data suggest. Specifically, we are soliciting 
comments on possible policy options such as using the new claims data 
to better account for therapy resource use and limiting the use of co-
morbid conditions in payment algorithms.

E. Outlier Policy

1. Background
    Section 1895(b)(5) of the Act allows for the provision of an 
addition or adjustment to the regular 60-day case-mix and wage-adjusted 
episode payment amounts in the case of episodes that incur unusually 
high costs due to patient home health care needs. Prior to the 
enactment of The Affordable Care Act, this section stipulated that 
total outlier payments could not exceed 5 percent of total projected or 
estimated HH payments in a given year. Under the HH PPS, outlier 
payments are made for episodes for which the estimated costs exceed a 
threshold amount. The wage adjusted fixed dollar loss (FDL) amount 
represents the amount of loss that an agency must absorb before an 
episode becomes eligible for outlier payments. As outlined in our FY 
2000 HH PPS final rule (65 FR 41188-41190), we provided for outlier 
payments projected to not exceed 5 percent of total payments and we 
adjusted the payment rates accordingly.
2. Regulatory Update
    In our November 10, 2009 HH PPS final rule for CY 2010 (74 FR 
58080-58087), we explained that our analysis revealed excessive growth 
in outlier payments in a few discrete areas of the country. Despite 
program integrity efforts associated with excessive outlier payments in 
targeted areas of the country, we discovered that outlier expenditures 
exceeded the 5 percent statutory limit. Consequently, we assessed the 
appropriateness of taking action to curb outlier abuse.
    In order to mitigate possible billing vulnerabilities associated 
with excessive outlier payments, and to adhere to our statutory limit 
on outlier payments, we adopted an outlier policy that included a 10 
percent agency level cap on outlier payments in concert with a reduced 
FDL ratio of 0.67. This resulted in a projected target outlier pool of 
approximately 2.5 percent (the previous outlier pool was 5 percent of 
total HH expenditures). For CY 2010, we first returned 5 percent back 
into the national standardized 60-day episode rates, the national per-
visit rates, the LUPA add-on payment amount, and the NRS conversion 
factor. Then we reduced the CY 2010 rates by 2.5 percent to account for 
the new outlier pool of 2.5 percent. This outlier policy was adopted 
for CY 2010 only.
3. Statutory Update
    Section 3131(b)(1) of the The Affordable Care Act amended Section 
1895(b)(3)(C), ``Adjustment for outliers''; that subparagraph now 
reads, ``The Secretary shall reduce the standard prospective payment 
amount (or amounts) under this paragraph applicable to home health 
services furnished during a period by such proportion as will result in 
an aggregate reduction in payments for the period equal to 5 percent of 
the total payments estimated to be made based on the prospective 
payment system under this subsection for the period.'' In addition, 
Section 3131(b)(2) of The Affordable Care Act amends Section 1895(b)(5) 
of the Act by taking the existing language, re-designating it as 
1895(b)(5)(A) of the Act, and revising it such that it states that the 
Secretary, ``may provide for an addition or adjustment to the payment 
amount otherwise made in the case of outliers because of unusual 
variations in the type or amount of medically necessary care. The total 
amount of the additional payments or payment adjustments made under 
this paragraph with respect to a fiscal year or year may not exceed 2.5 
percent of the total payments projected or estimated to be made based 
on the prospective payment system under this subsection in that year.'' 
As such, we are required to implement a HH PPS outlier policy whereby 
we reduce the standard episode payment by 5 percent, and target up to 
2.5 percent of total projected estimated HH PPS payments to be paid as 
outlier payments. We would first return the 2.5 percent that we took 
out of the national standardized 60-day episode rates, the national 
per-visit rates, the LUPA add-on payment amount, and the NRS conversion 
factor for CY 2010 that paid for the CY 2010 outlier pool of 2.5 
percent. We will then reduce those rates by 5 percent as required by 
Section 1895(b)(3)(C) of the Act as amended by Section 3131(b)(1) of 
The Affordable Care Act. For CY 2011 and subsequent calendar years, the 
total amount of the additional payments or payment adjustments made may 
not exceed 2.5 percent of the total payments projected or estimated to 
be made based on the prospective payment system in that year as 
required by Section 1895(b)(5)(A) of the Act as amended by Section 
3131(b)(2)(B) of The Affordable Care Act.
4. Outlier Cap
    As stated earlier, for CY 2010 only, we capped home health outlier 
payments at a maximum of 10 percent per agency (74 FR 58080-58087). 
Section 3131(b)(2)(C) of The Affordable Care Act adds a paragraph, (B) 
``Program Specific Outlier Cap'', to Section 1895(b)(5) of the Act. The 
new paragraph states, ``The estimated total amount of additional 
payments or payment adjustments made * * * with respect to a home 
health agency for a year (beginning with 2011) may not exceed an amount 
equal to 10 percent of the estimated total amount of payments made 
under this section * * * with respect to the home health agency for the 
year.'' Therefore, the 10 percent per agency outlier cap would continue 
in CY 2011 and subsequent calendar years as required by section 
1895(b)(5)(B) of the Act as amended by section 3131(b)(2)(C) of The 
Affordable Care Act. Section 3131(b) requires that we (1) Reduce the 
standard payment rates by 5 percent, (2) pay no more than 2.5 percent 
of total estimated payments for outliers, and (3) apply a 10% agency 
aggregate outlier cap.
5. Loss-Sharing Ratio and Fixed Dollar Loss Ratio
    The July 2000 final rule (65 FR 41189) described a methodology for 
determining outlier payments. Under this system, outlier payments are 
made

[[Page 43250]]

for episodes whose estimated cost exceeds a threshold amount. The 
episode's estimated cost is the sum of the national wage-adjusted per-
visit rate amounts for all visits delivered during the episode. The 
outlier threshold is defined as the national standardized 60-day 
episode payment rate for that case-mix group plus a fixed dollar loss 
(FDL) amount. Both components of the outlier threshold are wage-
adjusted. The wage adjusted FDL amount represents the amount of loss 
that an agency must experience before an episode becomes eligible for 
outlier payments. The wage adjusted FDL amount is computed by 
multiplying the national standardized 60-day episode payment amount by 
the FDL ratio, and wage-adjusting that amount. That wage-adjusted FDL 
amount is added to the HH PPS payment amount to arrive at the wage 
adjusted outlier threshold amount.
    The outlier payment is defined to be a proportion of the wage-
adjusted estimated costs beyond the wage-adjusted outlier threshold 
amount. The proportion of additional costs paid as outlier payments is 
referred to as the loss-sharing ratio. The FDL ratio and the loss-
sharing ratio were selected so that the estimated total outlier 
payments would not exceed the 5 percent level. We chose a value of 0.80 
for the loss-sharing ratio, which is relatively high, but preserves 
incentives for agencies to attempt to provide care efficiently for 
outlier cases. With a loss-sharing ratio of 0.80, Medicare pays 80 
percent of the additional costs above the wage-adjusted outlier 
threshold amount. A loss-sharing ratio of 0.80 is also consistent with 
the loss-sharing ratios used in other Medicare PPS outlier policies, 
such as inpatient hospital, inpatient rehabilitation, long-term 
hospital, and inpatient psychiatric payment systems. As discussed in 
the October 1999 proposed rule (64 FR 58169) and the July 2000 final 
rule (65 FR 41189), the percentage constraint on total outlier payments 
creates a tradeoff between the values selected for the FDL amount and 
the loss-sharing ratio. For a given level of outlier payments, a higher 
FDL amount reduces the number of cases that receive outlier payments, 
but makes it possible to select a higher loss-sharing ratio and 
therefore increase outlier payments per episode. Alternatively, a lower 
FDL amount means that more episodes qualify for outlier payments but 
outlier payments per episode must be lower.
    Therefore, setting these two parameters involves policy choices 
about the number of outlier cases and their rate of payment. In the CY 
2010 HH PPS final rule (74 FR 58086), we implemented a FDL ratio of 
0.67.
    For this proposed rule, we have updated our analysis from the CY 
2010 HH PPS final rule and we estimate that maintaining a FDL ratio of 
0.67, in conjunction with a 10 percent cap on outlier payments at the 
agency level, would pay no more than the 2.5 percent target of outlier 
payments as a percentage of total HH PPS payments as required by 
Section 1895(b)(5)(A) of the Act, as amended by section 3131(b)(2)(B) 
of The Affordable Care Act.
6. Solicitation of Comments Regarding Imputed Costs
    The Affordable Care Act requires CMS to conduct a study which 
includes analysis of ways outlier payments might be revised to reflect 
costs of treating Medicare beneficiaries. CMS will produce a Report to 
Congress containing this study's recommendations no later than March 1, 
2014.
    To consider outlier policy improvements in the nearer term we are 
soliciting comments regarding alternate policy options and the 
methodologies to better account for high cost patients. In particular, 
we would like the industry's input on alternatives to how we impute 
costs in the calculation of the outlier payments.
    We have discussed and are exploring the possible use of visit 
intensity data in the imputing of costs as part of the outlier payment 
calculation and would be interested in the industry's views on such an 
alternative. In addition, we would like to receive feedback concerning 
the use of diagnoses codes (for example, diabetes) as a factor to be 
used to calculate the imputed costs associated with outlier payments. 
We believe that to modifying the fixed dollar loss ratio or the loss 
sharing ratio, at this point in time, would not improve the current 
policy, but we solicit industry comments on this as well.

F. Proposed CY 2011 Rate Update

1. Home Health Market Basket Update
    Section 1895(b)(3)(B) of the Act requires for CY 2011 that the 
standard prospective payment amounts be increased by a factor equal to 
the applicable home health market basket update for those HHAs that 
submit quality data as required by the Secretary. Section 3401(e) of 
The Affordable Care Act amended section 1895(b)(3)(B) of the Act by 
adding a new clause (vi) which states, ``After determining the home 
health market basket percentage increase * * * the Secretary shall 
reduce such percentage * * * for each of 2011, 2012, and 2013, by 1 
percentage point. The application of this clause may result in the home 
health market basket percentage increase under clause (iii) being less 
than 0.0 for a year, and may result in payment rates under the system 
under this subsection for a year being less than such payment rates for 
the preceding year.''
    The proposed HH PPS market basket update for CY 2011 is 2.4 
percent. This is based on Global Insight Inc.'s first quarter 2010 
forecast, utilizing historical data through the fourth quarter of 2009. 
A detailed description of how we derive the HHA market basket is 
available in the CY 2008 Home Health PPS proposed rule (72 FR 25356, 
25435). Due to the new requirement at section 1895(b)(3)(B)(vi) of the 
Act, the proposed CY 2011 market basket update of 2.4 percent must be 
reduced by 1 percentage point to 1.4 percent. In effect, the proposed 
CY 2011 market basket update becomes 1.4 percent. The law does not 
permit us to exercise any discretion with respect to the application of 
this reduction.
2. Home Health Care Quality Improvement
a. OASIS
    Section 1895(b)(3)(B)(v)(II) of the Act requires that ``each home 
health agency shall submit to the Secretary such data that the 
Secretary determines are appropriate for the measurement of health care 
quality. Such data shall be submitted in a form and manner, and at a 
time, specified by the Secretary for purposes of this clause.'' In 
addition, section 1895(b)(3)(B)(v)(I) of the Act dictates that ``for 
2007 and each subsequent year, in the case of a home health agency that 
does not submit data to the Secretary in accordance with sub clause 
(II) with respect to such a year, the home health market basket 
percentage increase applicable under such clause for such year shall be 
reduced by 2 percentage points.'' This requirement has been codified in 
regulations at Sec.  484.225(i).
    Accordingly, for CY 2011, we propose to continue to use a HHA's 
submission of OASIS data to meet the requirement that the HHA submit 
data appropriate for the measurement of health care quality. We are 
proposing for CY 2011 to consider OASIS assessments submitted by HHAs 
to CMS in compliance with HHA Conditions of Participation for episodes 
beginning on or after July 1, 2009 and before July 1, 2010 as 
fulfilling the quality reporting requirement for CY 2011. This time 
period would allow 12 full months of

[[Page 43251]]

data collection and would provide us the time necessary to analyze and 
make any necessary payment adjustments to the payment rates in CY 2011. 
We propose to reconcile the OASIS submissions with claims data in order 
to verify full compliance with the quality reporting requirements in CY 
2011 and each year thereafter on an annual cycle July 1 through June 30 
as described above.
    As set forth in the CY 2008 final rule, agencies do not need to 
submit quality data for those patients who are excluded from the OASIS 
submission requirements under the Home Health Conditions of 
Participation (CoP) (42 CFR 484.200 through 484.265) as well as those 
excluded, as described at 70 FR 76202:
     Those patients receiving only non-skilled services,
     Neither Medicare nor Medicaid is paying for home health 
care (patients receiving care under a Medicare or Medicaid Managed Care 
Plan are not excluded from the OASIS reporting requirement),
     Those patients receiving pre- or post-partum services, or
     Those patients under the age of 18 years.
    As set forth in the CY 2008 final rule at 72 FR 49863, agencies 
that become Medicare certified on or after May 31 of the preceding year 
(2009 for payments in 2011) are excluded from any payment penalty for 
quality reporting purposes for the following CY. Therefore, HHAs that 
are certified on or after May 1, 2010 are excluded from the quality 
reporting requirement for CY 2011 payments. These exclusions only 
affect quality reporting requirements and do not affect the HHA's 
reporting responsibilities under the CoP. HHAs that meet the quality 
data reporting requirements would be eligible for the full home health 
market basket percentage increase. HHAs that do not meet the reporting 
requirements would be subject to a 2 percent reduction to the home 
health market basket increase in conjunction with applicable provisions 
of The Affordable Care Act, as discussed in the section ``Proposed CY 
2011 Payment Update'' of this rule.
    Section 1895(b)(3)(B)(v)(III) of the Act further requires that 
``[t]he Secretary shall establish procedures for making data submitted 
under sub clause (II) available to the public. Such procedures shall 
ensure that a home health agency has the opportunity to review the data 
that is to be made public with respect to the agency prior to such data 
being made public.'' We propose to continue to use the subset of OASIS 
data that is utilized for quality measure development and publicly 
reported on Home Health Compare as the appropriate measure of home 
health quality.
    To meet the requirement for making such data public, we propose to 
continue using the Home Health Compare Web site, which lists HHAs 
geographically. Currently, the Home Health Compare Web site lists 12 
quality measures from the OASIS data set as described below. The Home 
Health Compare Web site, which will be redesigned by October 2010, is 
located at the following address: http://www.medicare.gov/HHCompare/Home.asp. Each HHA currently has pre-publication access, through the 
CMS contractor, to its own quality data that the contractor updates 
periodically. We propose to continue this process, to enable each 
agency to view its quality measures before public posting of data on 
Home Health Compare.
    The following twelve outcome measures are currently publicly 
reported:
     Improvement in ambulation/locomotion,
     Improvement in bathing,
     Improvement in transferring,
     Improvement in management of oral medications,
     Improvement in pain interfering with activity,
     Acute care hospitalization,
     Emergent care,
     Discharge to community,
     Improvement in dyspnea,
     Improvement in urinary incontinence,
     Improvement in status of surgical wounds, and
     Emergent care for wound infections, deteriorating wound 
status.
    We propose to continue to use specified measures derived from the 
OASIS data for purposes of measuring home health care quality. This 
would also ensure that providers would not have an additional burden of 
reporting quality of care measures through a separate mechanism, and 
that the costs associated with the development and testing of a new 
reporting mechanism would be avoided.
    CMS proposes to change the set of OASIS outcome measures that will 
be publicly reported beginning in July 2011. One new outcome measure 
will be added:
     Increase in number of pressure ulcers.
    This outcome measure is the percentage of patient episodes in which 
there was an increase in the number of unhealed pressure ulcers. This 
measure is viewed as important because pressure ulcers are key 
indicators of the effectiveness of care and are among the most common 
causes of harm to patients. Though consensus endorsement is not a 
requirement for public reporting of home health quality measures, this 
measure is endorsed by the National Quality Forum.
    As previously stated, although NQF endorsement is not required for 
public reporting, CMS proposes to discontinue public reporting of 
certain outcome measures which were previously reported on Home Health 
Compare and are no longer endorsed by NQF. Those measures are--
     Discharge to community,
     Improvement in Urinary Incontinence, and
     Emergent Care for Wound Infections, Deteriorating Wound 
Status.
    CMS welcomes comments regarding the public reporting of these 
measures. Additionally, the change to OASIS-C results in modifications 
to two of the outcome measures as shown below:
     Improvement in bed transferring: This measure replaces the 
previously reported measure improvement in transferring. It provides a 
more focused measurement of the ability to turn and position oneself in 
bed and transfer to and from the bed.
     Emergency Department Use Without Hospitalization: This 
measure replaces the previously reported measure: Emergent care. It 
excludes emergency department visits that result in a hospital 
admission because those visits are already captured in the acute care 
hospitalization measure.
    To summarize, we propose that the following outcome measures, which 
comprise measurement of home health care quality, would be publicly 
reported beginning in July 2011:
     Improvement in ambulation/locomotion,
     Improvement in bathing,
     Improvement in bed transferring,
     Improvement in management of oral medications,
     Improvement in pain interfering with activity,
     Acute care hospitalization,
     Emergency Department Use without Hospitalization,
     Improvement in dyspnea,
     Improvement in status of surgical wounds,
     Increase in number of pressure ulcers.
    We implemented use of the OASIS-C (Form Number CMS-R-245 
(OMB 0938-0760)) on January 1, 2010. This revision to OASIS 
was tested and has been distributed for public comment and other 
technical expert recommendations over the past few years. The OASIS-C 
can be found using

[[Page 43252]]

the following link: http://www.cms.hhs.gov/HomeHealthQualityInits/12_HHQIOASISDataSet.asp#TopOfPage.
    As a result of changes to the OASIS data set, process of care 
measures will be available as additional measures of home health 
quality. CMS published information about new process measures in the 
Federal Register as a proposed rule on August 13, 2009 (74 FR 40960) 
and as a final rule with comment period on November 10, 2009 (74 FR 
58096). We proposed and made final the decision to update Home Health 
Compare in October 2010 to reflect the addition of the following 13 new 
process measures:
     Timely initiation of care,
     Influenza immunization received for current flu season,
     Pneumococcal polysaccharide vaccine ever received,
     Heart failure symptoms addressed during short-term 
episodes,
     Diabetic foot care and patient education implemented 
during short-term episodes of care,
     Pain assessment conducted,
     Pain interventions implemented during short-term episodes,
     Depression assessment conducted,
     Drug education on all medications provided to patient/
caregiver during short-term episodes.
     Falls risk assessment for patients 65 and older,
     Pressure ulcer prevention plans implemented,
     Pressure ulcer risk assessment conducted, and
     Pressure ulcer prevention included in the plan of care.
    The implementation of OASIS-C impacts the schedule of quality 
measure reporting for CY 2010 and CY 2011. While sufficient OASIS-C 
data are collected and risk models are developed, the outcome reports 
(found on Home Health Compare and the contractor outcome reports used 
for HHA's performance improvement activities) will remain static with 
OASIS-B1 data. The last available OASIS B-1 reports will remain in the 
system and on the HHC site until they are replaced with OASIS-C 
reports. Sufficient numbers of patient episodes are needed in order to 
report measures based on new OASIS-C data. This is important because 
measures based on patient sample sizes taken over short periods of time 
can be inaccurate and misleading due to issues like seasonal variation 
and under-representation of long-stay home health patients. Once 
sufficient OASIS-C data have been collected and submitted to the 
national repository, CMS will begin producing new reports based on 
OASIS-C.
    December 2009 was the last month for which OBQI/M data was 
calculated for OASIS B1 data and OASIS B1 OBQI/M reports will continue 
to be available after March 2010. OASIS-C process measures will be 
available to preview in September 2010 and will be publicly reported in 
October 2010. OASIS-C outcome measures will be available to preview in 
May 2011 and will be publicly reported in July 2011.
b. Home Health Care CAHPS Survey (HHCAHPS)
    In the Home Health Prospective Payment System (HH PPS) Rate Update 
for Calendar Year 2010 Final Rule, published on November 10, 2009, we 
expanded the home health quality measures reporting requirements for 
Medicare-certified agencies to include the CAHPS[reg] Home 
Health Care (HHCAHPS) Survey for the CY 2012 annual payment update. CMS 
is maintaining its existing policy as promulgated in the HH PPS Rate 
Update for Calendar Year 2010, and is moving forward with its plans for 
HHCAHPS linkage to the pay-for-reporting requirement affecting the HH 
PPS rate update for CY 2012.
    As part of the U.S. Department of Health and Human Services' (DHHS) 
Transparency Initiative, CMS has implemented a process to measure and 
publicly report patient experiences with home health care using a 
survey developed by the Agency for Healthcare Research and Quality's 
(AHRQ's) Consumer Assessment of Healthcare Providers and Systems 
(CAHPS[reg]) program. The HHCAHPS survey is part of a family 
of CAHPS[reg] surveys that asks patients to report on and 
rate their experiences with health care. The HHCAHPS survey presents 
home health patients with a set of standardized questions about their 
home health care providers and about the quality of their home health 
care. Prior to this survey, there was no national standard for 
collecting information about patient experiences that would enable 
valid comparisons across all home health agencies (HHAs).
Background and Description of the HHCAHPS
    AHRQ, in collaboration with its CAHPS grantees, developed the 
CAHPS[reg] Home Health Care Survey with the assistance of 
many entities (for example, government agencies, professional 
stakeholders, consumer groups and other key individuals and 
organizations involved in home health care). The HHCAHPS survey was 
designed to measure and assess the experiences of those persons 
receiving home health care with the following three goals in mind:
     To produce comparable data on patients' perspectives of 
care that allow objective and meaningful comparisons between HHAs on 
domains that are important to consumers;
     To create incentives for agencies to improve their quality 
of care through public reporting of survey results; and
     To hold health care providers accountable by informing the 
public about the providers' quality of care.
    The development process for the survey began in 2006 and included a 
public call for measures, review of the existing literature, consumer 
input, stakeholder input, public response to Federal Register notices, 
and a field test conducted by AHRQ. AHRQ conducted this field test to 
validate the length and content of the CAHPS[supreg] Home Health Care 
Survey. We submitted the survey to the National Quality Forum (NQF) for 
consideration and endorsement via their consensus process. NQF 
endorsement represents the consensus opinion of many healthcare 
providers, consumer groups, professional organizations, health care 
purchasers, Federal agencies and research and quality organizations. 
The survey received NQF endorsement on March 31, 2009. The HHCAHPS 
survey received clearance from OMB on July 18, 2009, and the OMB number 
is 0938-1066.
    The HHCAHPS survey includes 34 questions covering topics such as 
specific types of care provided by home health providers, communication 
with providers, interactions with the HHA, and global ratings of the 
agency. For public reporting purposes, we will utilize composite 
measures and global ratings of care. Each composite measure consists of 
four or more questions regarding one of the following related topics:
    1. Patient care;
    2. Communications between providers and patients;
    3. Specific care issues (medications, home safety and pain).

There are also two global ratings; the first rating asks the patient to 
assess the care given by the HHA's care providers; and the second asks 
the patient about his/her willingness to recommend the HHA to family 
and friends.
    The survey is currently available in five languages. At the time of 
the Final Rule for CY 2010, we only provided HHCAHPS in English and 
Spanish translations. In the proposed rule for CY 2010, we proposed 
that CMS will provide additional translations of the

[[Page 43253]]

survey over time in response to suggestions for any additional language 
translations. We now offer HHCAHPS in English, Spanish, Chinese, 
Russian and Vietnamese languages. We will continue to consider 
additional translations of the HHCAHPS in response to the needs of the 
home health patient population.
    The following types of home health care patients are eligible to 
participate in the HHCAHPS survey:
     Current or discharged Medicare and/or Medicaid patients 
who had at least one skilled home health visit at any time during the 
sample month;
     Patients who were at least 18 years of age at any time 
during the sample period, and are believed to be alive;
     Patients who received at least two skilled care visits 
from HHA personnel during a 2 month look-back period. (Note that the 2 
month look-back period is defined as the 2 month period prior to and 
including the last day in the sample month);
     Patients who have not been selected for the monthly sample 
during any month in the current quarter or during the 5 months 
immediately prior to the sample month;
     Patients who are not currently receiving hospice care;
     Patients who do not have ``maternity'' as the primary 
reason for receiving home health care; and
     Patients who have not requested ``no publicity status.''
    We are maintaining for the CY 2012 annual payment update the 
existing requirements for Medicare-certified agencies to contract with 
an approved HHCAHPS survey vendor. Beginning in summer 2009, interested 
vendors applied to become approved HHCAHPS vendors. The application 
process is delineated online at https://www.homehealthcahps.org. 
Vendors are required to attend introductory and all update trainings 
conducted by CMS and the HHCAHPS Survey Coordination Team, as well as 
to pass a post-training certification test. We now have 42 approved 
HHCAHPS survey vendors. In this proposed rule, we propose to codify the 
requirements for HHCAHPS survey vendors for the CY 2013 annual payment 
update.
    HHAs started to participate in HHCAHPS on a voluntary basis 
beginning in October 2009. CMS defines ``voluntary participation'' as 
meaning that HHCAHPS participation is not attached to the quality 
reporting requirement for the annual payment update. These agencies 
selected a vendor from the list of HHCAHPS approved survey vendors. 
This listing is on the Web site https://www.homehealthcahps.org.
Public Display of the Home Health Care CAHPS Survey Data
    The Home Health Care CAHPS data will be incorporated into the Home 
Health Compare Web site to complement the clinical measures. The 
HHCAHPS data displays will be very similar to those of the Hospital 
CAHPS (HCAHPS) data displays and presentations on Hospital Compare, 
where the patients' perspectives of care data from HCAHPS are displayed 
along with the hospital clinical measures of quality. CMS believes that 
the HHCAHPS will enhance the information included in Home Health 
Compare by providing Medicare beneficiaries a greater ability to 
compare the quality of home health agencies. CMS anticipates that 
HHCAHPS data will first be reported sometime in spring/summer 2011. The 
first reporting of HHCAHPS data will include data that were collected 
in the voluntary period of HHCAHPS data collection and reporting, prior 
to the period when the HHCAHPS data count toward the 2012 APU.
Participation Requirements for CY 2012: The Consumer Assessment of 
Healthcare Providers and Systems (CAHPS[supreg]) Home Health Care 
Survey
    In the HH PPS Final Rule for CY 2010, we stated that HHCAHPS would 
not be required for the annual payment update for CY 2011. However, we 
stated that data collection should take place beginning in CY 2010 in 
order to meet the HHCAHPS reporting requirement for the CY 2012 annual 
payment update as stated in the HH PPS Final Rule for CY 2010 (58078, 
58099, 58100, 58103, and 58104). Medicare-certified agencies were asked 
to participate in a dry run for at least one month in third quarter of 
2010, and begin continuous monthly data collection in October 2010 in 
accordance with the Protocols and Guidelines Manual located on the 
HHCAHPS Web site https://www.homehealthcahps.org.
    The dry run data should be submitted to the Home Health 
CAHPS[supreg] Data Center by 11:59 p.m. EST on January 21, 2011. The 
dry run data will not be publicly reported on the CMS Home Health 
Compare Web site. The purpose of the dry run is to provide an 
opportunity for vendors and HHAs to acquire first-hand experience with 
data collection, including sampling and data submission to the Home 
Health CAHPS[supreg] Data Center. We previously stated that all 
Medicare-certified HHAs should continuously collect HHCAHPS survey data 
for every month in every quarter beginning with the fourth quarter 
(October, November, and December) of 2010, and submit these data for 
the fourth quarter of 2010 to the Home Health CAHPS[supreg] Data Center 
by 11:59 p.m. EST on April 21, 2011. These data submission deadlines 
are firm (that is, no late submissions will be accepted).
    The period of data collection for the CY 2012 annual payment update 
includes the dry run data in the third quarter 2010, the fourth quarter 
2010 (October, November and December 2010), and the first quarter 2011 
(January, February and March 2011). The data from the three months of 
the first quarter 2011 should be submitted to the Home Health 
CAHPS[supreg] Data Center by 11:59 p.m. EST on July 21, 2011. These 
periods (a dry run in third quarter 2010, and six months of data from 
October 2010 through March 2011) have been deliberately chosen to 
comprise the HHCAHPS reporting requirements for the CY 2012 APU because 
they coincide with the OASIS-C reporting requirements that are due by 
June 30, 2011 for the CY 2012 APU. In the previous rule, we stated that 
the HHCAHPS survey data would be submitted and analyzed quarterly, and 
that the sample selection and data collection would occur on a monthly 
basis. HHAs would target 300 HHCAHPS survey completes annually. Smaller 
agencies that are unable to reach 300 survey completes by sampling 
would survey all HHCAHPS eligible patients.
    We stated that survey vendors initiate the survey for each monthly 
sample within 3 weeks after the end of the sample month. We wrote that 
all data collection for each monthly sample would have to be completed 
within 6 weeks (42 calendar days) after data collection began. Three 
survey administration modes could be used: Mail only, telephone only, 
and mail with telephone follow-up (the ``mixed mode''). We also 
conveyed that for mail-only and mixed-mode surveys, data collection for 
a monthly sample would have to end 6 weeks after the first 
questionnaire was mailed. We stated that for telephone-only surveys, 
data collection would have to end 6 weeks following the first telephone 
attempt. These criteria would remain the same for HHCAHPS to meet the 
CY 2012 annual payment update requirements.
    As stated in the Home Health Prospective Payment System Rate Update 
for Calendar Year 2010; final rule (74 FR 58078), we would exempt 
Medicare-certified HHAs certified on or after April 1, 2011 from the 
HHCAHPS reporting requirement for CY 2012 as data submission and 
analysis will not be

[[Page 43254]]

possible for an agency this late in the CY 2012 reporting period.
    We would also exempt Medicare-certified agencies from the HHCAHPS 
reporting requirements if they have fewer than 60 HHCAHPS eligible 
unique patients from April 1, 2009 through March 31, 2010. In the CY 
2010 Final Rule, we stated that by June 16, 2010, HHAs would need to 
provide CMS with patient counts for the period of April 1, 2009 through 
March 31, 2010. We have posted a form that the HHAs need to use to 
submit their patient counts via the Web site https://www.homehealthcahps.org. This proposed requirement pertains only to 
Medicare-certified HHAs with fewer than 60 HHCAHPS eligible, 
unduplicated or unique patients for that time period. The 
aforementioned agencies would be exempt from conducting the HHCAHPS 
survey for the annual payment update in CY 2012. We propose to codify 
that if an HHA has less than 60 eligible unique HHCAHPS patients 
annually, then they must submit to CMS their total patient count in 
order to be exempt from the HHCAHPS reporting requirement.
    For CY 2012, we maintain our policy that all HHAs, unless covered 
by specific exclusions, meet the quality reporting requirements or be 
subject to a 2 percentage point reduction in the home health market 
basket percentage increase in accordance with section 
1895(b)(3)(B)(v)(I) of the Act.
    A reconsiderations and appeals process is being developed for HHAs 
that fail to meet the HHCAHPS reporting requirements. We proposed that 
these procedures will be detailed in the CY 2012 home health payment 
rule, the period for which HHCAHPS would be linked to the home health 
market basket percentage increase. We propose that in September through 
October 2011, we would compile a list of HHAs that were not compliant 
with OASIS-C and/or HHCAHPS for the 2012 APU reporting requirements. 
These HHAs would receive explicit instructions about how to prepare a 
request for reconsideration of the CMS decision, and these HHAs would 
have 30 days to file their requests for reconsiderations to CMS. By 
December 31, 2011, we would provide our final determination for the 
quality reporting requirements for calendar year 2012 payment. HHAs 
have a right to appeal to the Prospective Reimbursement Review Board 
(PRRB) if they are not satisfied with the CMS determination.
Oversight Activities for the Consumer Assessment of Healthcare 
Providers and Systems (CAHPS[supreg]) Home Health Care Survey
    We stated that vendors and HHAs would be required to participate in 
HHCAHPS oversight activities to ensure compliance with HHCAHPS 
protocols, guidelines and survey requirements. The purpose of the 
oversight activities is to ensure that HHAs and approved survey vendors 
follow the Protocols and Guidelines Manual. It was stated that all 
approved survey vendors develop a Quality Assurance Plan (QAP) for 
survey administration in accordance with the Protocols and Guidelines 
Manual. The QAP should include the following:
     An organizational chart;
     A work plan for survey implementation;
     A description of survey procedures and quality controls;
     Quality assurance oversight of on-site work and of all 
subcontractors' work; and
     Confidentiality/Privacy and Security procedures in 
accordance with the Health Insurance Portability and Accountability Act 
(HIPAA).
    As part of the oversight activities the HHCAHPS Survey Coordination 
Team would conduct on-site visits and/or conference calls. The HHCAHPS 
Survey Coordination Team would review the survey vendor's survey 
systems, and would assess administration protocols based on the 
Protocols and Guidelines Manual posted on https://www.homehealthcahps.org. We stated that all materials relevant to 
survey administration would be subject to review. The systems and 
program review would include, but not be limited to: (a) Survey 
management and data systems; (b) printing and mailing materials and 
facilities; (c) data receipt, entry and storage facilities; and (d) 
written documentation of survey processes. Organizations would be given 
a defined time period in which to correct any problems and provide 
follow-up documentation of corrections for review. Survey vendors would 
be subject to follow-up site visits as needed.
HHCAHPS Requirements for CY 2013
    For the CY 2013 annual payment update, we propose to begin to 
require that four quarters of data be submitted for HHCAHPS. This would 
include second quarter 2011 through first quarter 2012. We propose that 
HHAs be required to submit data for the second quarter 2011 by 11:59 
p.m. on October 21, 2011 to the Home Health CAHPS Data Center. We also 
propose that HHAs submit data for the third quarter 2011 by 11:59 p.m. 
EST January 21, 2012 to the Home Health CAHPS Data Center. We 
additionally propose that HHAs be required to submit data for the 
fourth quarter 2011 by 11:59 p.m. EST April 21, 2012 to the Home Health 
CAHPS Data Center. Finally, we propose that HHAs be required to submit 
data for the first quarter 2012 by 11:59 p.m. EST July 21, 2012 to the 
Home Health CAHPS Data Center.
    We propose to exempt Medicare-certified HHAs certified on or after 
April 1, 2012 from the HHCAHPS reporting requirement for CY 2013, as 
data submission and analysis would not be possible for an agency this 
late in the CY 2013 reporting period. For the CY 2013 annual payment 
update, we propose that new Medicare-certified HHAs that open during 
the year begin HHCAHPS data collection the quarter following receipt of 
the CMS Certification Number (CCN).
    We propose that all HHAs that have fewer than 60 HHCAHPS-eligible 
unduplicated or unique patients in the period of April 1, 2010 through 
March 31, 2011 be exempt from the HHCAHPS data collection requirements 
for the CY 2013 annual payment update. Agencies with fewer than 60 
HHCAHPS-eligible, unduplicated or unique patients would be required to 
submit their counts on the form posted on https://www.homehealthcahps.org, the Web site of Home Health Care CAHPS by June 
16, 2011. This would be a firm deadline as are all of the quarterly 
data submission deadlines.
    We are proposing to codify the HHCAHPS survey vendor requirements 
in the CY 2013 rule. In our regulation, we would revise Sec.  
484.250(c)(2) to codify that all applying survey vendors would have to 
have been in business for a minimum of three years and have conducted 
surveys of individuals for at least two years immediately preceding the 
application to CMS to become a survey vendor for HHCAHPS. For purposes 
of the HHCAHPS, a ``survey of individuals'' would be defined as the 
collection of data from individuals selected by statistical sampling 
methods and the data collected are used for statistical purposes. An 
applicant organization must:
     Have conducted surveys of individuals responding about 
their own experiences, not of individuals responding on behalf of a 
business or organizations (establishment or institution surveys);
     Be able to demonstrate that a statistical sampling process 
(that is, simple random sampling [SRS],

[[Page 43255]]

proportionate stratified random sampling [PSRS], or disproportionate 
stratified random sampling [DSRS]) was used in the conduct of 
previously or currently conducted survey(s);
     Be able to demonstrate that it, as an organization, has 
conducted surveys where a sample of individuals was selected for at 
least two years. If staff within the applicant organization has 
relevant experience obtained while in the employment of a different 
organization, that experience may not be counted toward the 2 year 
minimum of survey experience; and
     Currently possess all required facilities and systems to 
implement the HHCAHPS Survey.
    We are also proposing that the following examples of data 
collection activities would not satisfy the requirement of valid survey 
experience for vendors as defined for the HHCAHPS Survey, and these 
would not be considered as part of the experience that HHCAHPS will 
require:
     Polling questions administered to trainees or participants 
of training sessions or educational courses, seminars, or workshops;
     Focus groups, cognitive interviews, or any other 
qualitative data collection activities;
     Surveys of fewer than 600 individuals;
     Surveys conducted that did not involve using statistical 
sampling methods;
     Internet or Web-based surveys; and
     Interactive Voice Recognition Surveys.
    We are proposing to codify the criteria about which organizations 
are ineligible to become HHCAHPS approved survey vendors. CMS is 
proposing that any organization that owns, operates, or provides 
staffing for a HHA not be permitted to administer its own Home Health 
Care CAHPS (HHCAHPS) Survey or administer the survey on behalf of any 
other HHA. CMS began the HHCAHPS with the belief, based on input from 
many stakeholders and the public, that an independent third party (such 
as a survey vendor) will be best able to solicit unbiased responses to 
the HHCAHPS Survey. Since home health patients receive care in their 
homes, this survey population is particularly vulnerable and dependent 
upon their HHA caregivers. Therefore, in Sec.  484.250(c)(2) we are 
proposing that HHAs be required to contract only with an independent, 
approved HHCAHPS vendor to administer the HHCAHPS survey on their 
behalf.
    Specifically, we are proposing that the following types of 
organizations would not be eligible to administer the HHCAHPS Survey as 
an approved HHCAHPS vendor:
     Organizations or divisions within organizations that own 
or operate a HHA or provide home health services, even if the division 
is run as a separate entity to the HHA;
     Organizations that provide telehealth, monitoring of home 
health patients, or teleprompting services for HHAs; and
     Organizations that provide staffing to HHAs for providing 
care to home health patients, whether personal care aides or skilled 
services staff.

For Further Information on the HHCAHPS Survey
    We encourage HHAs interested in learning about the survey to view 
the HHCAHPS survey web site, at https://www.homehealthcahps.org. 
Agencies can also call toll-free (1-866-354-0985), or send an e-mail to 
the HHCAHPS Survey Coordination Team at HHCAHPS@rti.org for more 
information.
3. Home Health Wage Index
    Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the 
Secretary to establish area wage adjustment factors that reflect the 
relative level of wages and wage-related costs applicable to the 
furnishing of home health services and to provide appropriate 
adjustments to the episode payment amounts under the HH PPS to account 
for area wage differences. We apply the appropriate wage index value to 
the labor portion of the HH PPS rates based on the site of service for 
the beneficiary (defined by section 1861(m) of the Act as the 
beneficiary's place of residence). Generally, we determine each HHA's 
labor market area based on definitions of Metropolitan Statistical 
Areas (MSAs) issued by the Office of Management and Budget (OMB). We 
have consistently used the pre-floor, pre-reclassified hospital wage 
index data to adjust the labor portion of the HH PPS rates. We believe 
the use of the pre-floor, pre-reclassified hospital wage index data 
results in the appropriate adjustment to the labor portion of the costs 
as required by statute.
    In the November 9, 2005 final rule for CY 2006 (70 FR 68132), we 
adopted revised labor market area definitions based on Core-Based 
Statistical Areas (CBSAs). At the time, we noted that these were the 
same labor market area definitions (based on OMB's new CBSA 
designations) implemented under the Hospital Inpatient Prospective 
Payment System (IPPS). In adopting the CBSA designations, we identified 
some geographic areas where there are no hospitals and, thus, no 
hospital wage data on which to base the calculation of the home health 
wage index. We continue to use the methodology discussed in the 
November 9, 2006 final rule for CY 2007 (71 FR 65884) to address the 
geographic areas that lack hospital wage data on which to base the 
calculation of their home health wage index. For rural areas that do 
not have IPPS hospitals, we use the average wage index from all 
contiguous CBSAs as a reasonable proxy. This methodology is used to 
calculate the wage index for rural Massachusetts. However, we could not 
apply this methodology to rural Puerto Rico due to the distinct 
economic circumstances that exist there, but instead continue using the 
most recent wage index previously available for that area (from CY 
2005). For urban areas without IPPS hospitals, we use the average wage 
index of all urban areas within the State as a reasonable proxy for the 
wage index for that CBSA. The only urban areas without IPPS hospital 
wage data are Anderson, South Carolina (CBSA 11340) and Hinesville-Fort 
Stewart, Georgia (CBSA 25980).
    On December 1, 2009, OMB issued Bulletin No. 10-02 located at Web 
address http://www.whitehouse.gov/omb/assets/bulletins/b10-02.pdf. This 
bulletin highlights three geographic areas whose principal city has 
changed therefore causing the CBSA names to change and requiring new 
CBSA numbers. Bradenton-Sarasota-Venice, FL (CBSA 14600) is replaced by 
North Port-Bradenton-Sarasota, FL (CBSA 35840). Fort Walton Beach-
Crestview-Destin, FL (CBSA 23020) is replaced by Crestview-Fort Walton 
Beach-Destin, FL (CBSA 18880). Weirton-Steubenville, WV-OH Metropolitan 
Statistical Area (CBSA 48260) is replaced by Steubenville-Weirton, OH-
WV (CBSA 44600). The CBSAs and their associated wage index values are 
shown in Addendum B. The wage index values for rural areas are shown in 
Addendum A.
4. Proposed CY 2011 Payment Update
a. National Standardized 60-Day Episode Rate
    The Medicare HH PPS has been in effect since October 1, 2000. As 
set forth in the final rule published July 3, 2000 in the Federal 
Register (65 FR 41128), the unit of payment under the Medicare HH PPS 
is a national standardized 60-day episode rate. As set forth in Sec.  
484.220, we adjust the national standardized 60-day episode rate by a 
case-mix relative weight and a wage index value based on the site of 
service for the beneficiary.

[[Page 43256]]

    In the CY 2008 HH PPS final rule with comment period, we refined 
the case-mix methodology and also rebased and revised the home health 
market basket. The labor-related share of the case-mix adjusted 60-day 
episode rate is 77.082 percent and the non-labor-related share is 
22.918 percent. The proposed CY 2011 HH PPS rates use the same case-mix 
methodology and application of the wage index adjustment to the labor 
portion of the HH PPS rates as set forth in the CY 2008 HH PPS final 
rule with comment period. We multiply the national 60-day episode rate 
by the patient's applicable case-mix weight. We divide the case-mix 
adjusted amount into a labor and non-labor portion. We multiply the 
labor portion by the applicable wage index based on the site of service 
of the beneficiary. We add the wage-adjusted portion to the non-labor 
portion, yielding the case-mix and wage adjusted 60-day episode rate, 
subject to any additional applicable adjustments.
    In accordance with section 1895(b)(3)(B) of the Act, we update the 
HH PPS rates annually in a separate Federal Register document. The HH 
PPS regulations at 42 CFR 484.225 set forth the specific annual 
percentage update methodology. In accordance with Sec.  484.225(i), in 
the case of a HHA that does not submit home health quality data, as 
specified by the Secretary, the unadjusted national prospective 60-day 
episode rate is equal to the rate for the previous calendar year 
increased by the applicable home health market basket index amount 
minus two percentage points. Any reduction of the percentage change 
will apply only to the calendar year involved and will not be taken 
into account in computing the prospective payment amount for a 
subsequent calendar year.
    For CY 2011, we are proposing to base the wage index adjustment to 
the labor portion of the HH PPS rates on the most recent pre-floor and 
pre-reclassified hospital wage index. As discussed in the July 3, 2000 
HH PPS final rule, for episodes with four or fewer visits, Medicare 
pays the national per-visit amount by discipline, referred to as a 
LUPA. We propose to update the national per-visit rates by discipline 
annually by the applicable home health market basket percentage. We 
propose to adjust the national per-visit rate by the appropriate wage 
index based on the site of service for the beneficiary, as set forth in 
Sec.  484.230. We propose to adjust the labor portion of the updated 
national per-visit rates used to calculate LUPAs by the most recent 
pre-floor and pre-reclassified hospital wage index. We are also 
proposing to update the LUPA add-on payment amount and the NRS 
conversion factor by the proposed applicable home health market basket 
update of 1.4 percent for CY 2011.
    Medicare pays the 60-day case-mix and wage-adjusted episode payment 
on a split percentage payment approach. The split percentage payment 
approach includes an initial percentage payment and a final percentage 
payment as set forth in Sec.  484.205(b)(1) and Sec.  484.205(b)(2). We 
may base the initial percentage payment on the submission of a request 
for anticipated payment (RAP) and the final percentage payment on the 
submission of the claim for the episode, as discussed in Sec.  409.43. 
The claim for the episode that the HHA submits for the final percentage 
payment determines the total payment amount for the episode and whether 
we make an applicable adjustment to the 60-day case-mix and wage-
adjusted episode payment. The end date of the 60-day episode as 
reported on the claim determines which calendar year rates Medicare 
would use to pay the claim.
    We may also adjust the 60-day case-mix and wage-adjusted episode 
payment based on the information submitted on the claim to reflect the 
following:
     A low utilization payment provided on a per-visit basis as 
set forth in Sec.  484.205(c) and Sec.  484.230.
     A partial episode payment adjustment as set forth in Sec.  
484.205(d) and Sec.  484.235.
     An outlier payment as set forth in Sec.  484.205(e) and 
Sec.  484.240.
b. Proposed Updated CY 2011 National Standardized 60-Day Episode 
Payment Rate
    In calculating the annual update for the CY 2011 national 
standardized 60-day episode payment rates, we first look at the CY 2010 
rates as a starting point. The CY 2010 national standardized 60-day 
episode payment rate is $2,312.94.
    As previously discussed in section II.D. (``Outlier Policy'') of 
this proposed rule, in our proposed policy of targeting outlier 
payments to be approximately 2.5 percent of total HH PPS payments in CY 
2011, we are proposing to return 2.5 percent back into the HH PPS 
rates, to include the national standardized 60-day episode payment 
rate. Therefore, to calculate the proposed CY 2011 national 
standardized 60-day episode payment rate, we first increase the CY 2010 
national standardized 60-day episode payment rate ($2,312.94) to adjust 
for the 2.5 percent set aside in CY 2010 for outlier payments. We then 
reduce that adjusted payment amount by 5 percent, for outlier payments 
as a percentage of total HH PPS payment as mandated by Section 3131 of 
The Affordable Care Act. Next, we update the payment amount by the 
current proposed CY 2011 home health market basket update of 1.4 
percent.
    As previously discussed in Section II.A. (``Case-Mix Measurement 
Analysis'') of this proposed rule, our updated analysis of the change 
in case-mix that is not due to an underlying change in patient health 
status reveals additional increase in nominal change in case-mix. 
Therefore, we propose to reduce rates by 3.79 percent in CY 2011, 
resulting in a proposed updated CY 2011 national standardized 60-day 
episode payment rate of $2,198.58. The proposed updated CY 2011 
national standardized 60-day episode payment rate for an HHA that 
submits the required quality data is shown in Table 4. The proposed 
updated CY 2011 national standardized 60-day episode payment rate for 
an HHA that does not submit the required quality data (home health 
market basket update of 1.4 percent is reduced by 2 percentage points) 
is shown in Table 5.
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[[Page 43257]]

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BILLING CODE 4120-01-C

[[Page 43258]]

c. Proposed National Per-Visit Rates Used To Pay LUPAs and Compute 
Imputed Costs Used in Outlier Calculations
    In calculating the proposed CY 2011 national per-visit rates used 
to calculate payments for LUPA episodes and to compute the imputed 
costs in outlier calculations, we start with the CY 2010 national per-
visit rates. We first adjust the CY 2010 national per-visit rates to 
adjust for the 2.5 percent set aside during CY 2011 for outlier 
payments. We then reduce those national per-visit rates by 5 percent as 
mandated by section 1895(b)(3)(C) of the Act, as amended by Section 
3131 of The Affordable Care Act. Next we update the national per-visit 
rates by the current proposed CY 2011 home health market basket update 
of 1.4 percent. National per-visit rates are not subject to the 3.79 
percent reduction related to the nominal increase in case-mix. The 
proposed CY 2011 national per-visit rates per discipline are shown in 
Table 6. The six home health disciplines are Home Health Aide (HH 
aide), Medical Social Services (MSS), Occupational Therapy (OT), 
Physical Therapy (PT), Skilled Nursing (SN), and Speech Language 
Pathology Therapy (SLP).
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[[Page 43259]]

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[[Page 43260]]

d. Proposed LUPA Add-On Payment Amount Update
    Beginning in CY 2008, LUPA episodes that occur as the only episode 
or initial episode in a sequence of adjacent episodes are adjusted by 
adding an additional amount to the LUPA payment before adjusting for 
area wage differences. As previously discussed, we are returning 2.5 
percent back into the LUPA add-on payment. We then reduce the LUPA add-
on payment by 5 percent outlier adjustment as mandated by Section 
1895(b)(3)(C) of the Act as amended by Section 3131 of The Affordable 
Care Act. Next we update the LUPA payment amount by the current 
proposed CY 2011 home health market basket update percentage of 1.4 
percent. The LUPA add-on payment amount is not subject to the 3.79 
percent reduction related to the nominal increase in case-mix. For CY 
2011, we propose that the add-on to the LUPA payment to HHAs that 
submit the required quality data would be updated by the proposed home 
health market basket update of 1.4 percent. The proposed CY 2011 LUPA 
add-on payment amount is shown in Table 7 below. We propose that the 
add-on to the LUPA payment to HHAs that do not submit the required 
quality data would be updated by the home health market basket update 
(1.4 percent) minus two percentage points.
[GRAPHIC] [TIFF OMITTED] TP23JY10.007

e. Non-Routine Medical Supply Conversion Factor Update
    Payments for non-routine medical supplies (NRS) are computed by 
multiplying the relative weight for a particular severity level by the 
NRS conversion factor. We first adjust the CY 2010 NRS conversion 
factor ($53.34) for the 2.5 percent set aside for outlier payments in 
CY 2010. We then reduce that amount by the 5 percent outlier adjustment 
as mandated by Section 1895(b)(3)(C), as amended by Section 3131 of The 
Affordable Care Act. Next we update by the proposed market basket 
update of 1.4 percent. Finally, we then reduce that adjusted payment 
amount by 3.79 percent to account for the increase in nominal case-mix. 
The final updated CY 2011 NRS conversion factor for CY 2011 in Table 8a 
below. For CY 2011, the proposed NRS conversion factor is $50.70.
[GRAPHIC] [TIFF OMITTED] TP23JY10.008

    Using the proposed NRS conversion factor ($50.70) for CY 2011, the 
payment amounts for the various severity levels are shown in Table 8b.

[[Page 43261]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.044

    For HHAs that do not submit the required quality data, we again 
begin with the CY 2010 NRS conversion factor. We first adjust the CY 
2010 NRS conversion factor ($53.34) for the 2.5 percent set aside for 
outlier payments in CY 2010. We then reduce that amount by the 5 
percent outlier adjustment as mandated by Section 1895(b)(3)(C) of the 
Act, as amended by Section 3131 of The Affordable Care Act. Next we 
update the conversion factor by the proposed CY 2011 home health market 
basket update percentage of 1.4 percent minus 2 percentage points. 
Finally, we reduce that adjusted payment amount by 3.79 percent to 
account for the increase in nominal case-mix. The proposed CY 2011 NRS 
conversion factor for HHAs that do not submit quality data is shown in 
Table 9a below.
[GRAPHIC] [TIFF OMITTED] TP23JY10.009

    The payment amounts for the various severity levels based on the 
updated conversion factor for HHAs that do not submit quality data are 
calculated in Table 9b below.
[GRAPHIC] [TIFF OMITTED] TP23JY10.010

[[Page 43262]]

5. Rural Add-On
    Section 3131(c) of The Affordable Care Act amended section 421(a) 
of the Medicare Prescription Drug, Improvement, and Modernization Act 
(MMA) of 2003 (Pub. L. 108-173) as amended by section 5201(b) of the 
Deficit Reduction Act of 2005 (Pub. L. 109-171). The amended section 
421(a) of the MMA provides an increase of 3 percent of the payment 
amount otherwise made under section 1895 of the Act for home health 
services furnished in a rural area (as defined in section 1886(d)(2)(D) 
of the Act), with respect to episodes and visits ending on or after 
April 1, 2010 and before January 1, 2016. The statute waives budget 
neutrality related to this provision as it specifically states that the 
Secretary shall not reduce the standard prospective payment amount (or 
amounts) under section 1895 of the Act applicable to home health 
services furnished during a period to offset the increase in payments 
resulting in the application of this section of the statute. The 3 
percent rural add-on is applied to the national standardized 60-day 
episode rate, national per-visit rates, LUPA add-on payment, and NRS 
conversion factor when home health services are provided in rural (non-
CBSA) areas. We implemented this provision for CY 2010, for episodes 
and visits ending on or after April 1, 2010 and ending before January 
1, 2011 through Program Memorandum ``Temporary 3 Percent Rural Add-On 
for the Home Health Prospective payment System (HH PPS)'' (Transmittal 
674/Change Request 6955, issued April 23, 2010). 
Refer to Tables 10 thru 13b below for these payment rates.
[GRAPHIC] [TIFF OMITTED] TP23JY10.011

[[Page 43263]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.012

[[Page 43264]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.013

G. Enrollment Provisions for HHAs

1. HHA Capitalization
    On January 5, 1998, we published a final rule in the Federal 
Register (63 FR 291) requiring newly-enrolling HHAs to submit proof 
that they have available sufficient funds--or ``initial reserve 
operating funds'' (IROF)--to operate the HHA for the three-month period 
after its provider agreement becomes effective (exclusive of actual or 
projected accounts receivable from Medicare and other health insurers). 
This rule, which added a new section 42 CFR 489.28, was prompted by our 
concerns about underfunded HHAs entering the Medicare program. We 
elaborated on this point in the preamble to the final rule (63 FR 291, 
at 295 (Jan. 5, 1998)):

    New HHAs generally are small businesses and have the same need 
for adequate capitalization as have other small businesses which are 
just starting. As with other small businesses, a lack of funds in 
reserve to operate the business until a stream of revenues can be 
established can seriously threaten the viability of the business. In 
addition, for new HHAs, which are in business to render patient care 
services, any condition threatening the viability of the new 
business can adversely affect the quality of care to their patients 
and, in turn, the health and safety of those patients. That is, if 
lack of funds forces an HHA to close its business, to reduce staff, 
or to skimp on patient care services because it lacks sufficient 
capital to pay for the services, the overall well-being of the HHA's 
patients could be compromised. In fact, there could be the risk of 
serious ill effects as a result of patients not receiving adequate 
services.
    The level of services provided to an HHA's patients is of 
serious concern to us for the following reason. The process by which 
an HHA participates in the Medicare program is one that involves a 
survey by us or an accrediting organization. This survey is 
essentially a snapshot of the agency's activities. For a new agency 
that is undercapitalized, it may be unable to sustain the level of 
services it is able to provide at the time of the survey over the 
period of time necessary for it to begin receiving a steady stream 
of revenue from Medicare. The period in question could last as long 
as two or even three months. Since a survey has already been 
conducted, the new HHA's services are not routinely inspected during 
this period and so there is increased danger that lack of operating 
funds could result in inadequate care that is not discovered.

    The preamble also cited a 1997 OIG report entitled: ``Home Health: 
Problem Providers and their Impact on Medicare'' (OEI-09-96-00110), in 
which the OIG expressed similar worries about undercapitalized HHAs. 
The OIG stated:

    If it were not for Medicare accounts receivable, problem 
agencies would have almost nothing to report as assets. Agencies 
tend to lease their office space, equipment, and vehicles. They are 
not required by Medicare to own anything, and they are almost always 
undercapitalized. On average, cash on hand and fixed assets amount 
to only one-fourth of total assets for HHAs, while Medicare accounts 
receivable frequently equal 100 percent of total assets. These 
agencies are almost totally dependent on Medicare to pay their 
salaries and other operating expenses. For a home health agency, 
there are virtually no startup or capitalization requirements. In 
many instances, the problem agencies lease everything without 
collateral. They do not even have enough cash on hand to meet their 
first payroll.

    Medicare contractors have been carrying out the provisions of 42 
CFR 489.28 since their enactment in 1998. Traditionally, the contractor 
has determined the provider's compliance with 489.28 prior to making 
its recommendation for approval to the State Agency and the CMS 
Regional Office (RO), which can occur several months or more before the 
actual provider agreement is signed by a prospective home health 
agency. We have worked to ensure that our contractors are consistently 
applying its capitalization regulations found in 42 CFR 489.28(a) which 
states,

    An HHA entering the Medicare program on or after January 1,1998, 
including a new HHA as a result of a change of ownership, if the 
change of ownership results in a new provider number being issued, 
must have available sufficient funds, which we term ``initial 
reserve operating funds,'' to operate the HHA for the three month 
period after its Medicare provider agreement becomes effective, 
exclusive of actual or projected accounts receivable from Medicare 
or other health care insurers.

    Verifying the capitalization amount at various points in the 
enrollment process

[[Page 43265]]

can help CMS ensure that a prospective home health agency will have 
sufficient funds to operate prior to receiving approval from CMS that 
it is approved to participate in the Medicare program and has been 
conferred Medicare billing privileges. In addition, confirming 
capitalization more than one time during the process would address our 
concern that a provider that may have redirected these funds--which had 
originally been secured exclusively to meet the capitalization 
requirements--for a purpose other than to operate the business. Indeed, 
situations have arisen in which the HHA no longer has sufficient 
capitalization at the time it signs its Medicare provider agreement. 
This circumstance completely defeats the policy behind Sec.  489.28 
which is to ensure that an HHA is adequately capitalized when it 
becomes a Medicare provider. Accordingly, we believe that a prospective 
HHA must meet and maintain adequate capitalization during the entire 
period between when it first submits its enrollment application to the 
Medicare contractor and when the contractor conveys Medicare billing 
privileges to the HHA. This will ensure that the home health agency has 
sufficient operating funds at the time of application submission, 
during the period in which a State Agency or deemed accrediting 
organization is ensuring that the HHA meets the Conditions of 
Participation, prior to the issuance of a provider agreement and the 
conveyance of Medicare billing privileges.
    To that end, we propose to require a prospective HHA to meet the 
capitalization requirements from the time of application submission 
through three months past the conveyance of Medicare billing privileges 
by the Medicare contractor. Further, CMS and/or its Medicare contractor 
must be able to verify an applicant's capitalization data at any time 
prior to the point at which the Medicare contractor conveys billing 
privileges to the HHA as well as three months thereafter. Accordingly, 
we are proposing that a prospective HHA be required to submit 
verification of compliance with Sec.  489.28: (1) At the time of 
application submission, (2) during the period in which a State Agency 
or CMS-approved accreditation organization is making a determination as 
to whether the provider is in compliance with the Conditions of 
Participation; and (3) within the three months immediately following 
the issuance of a Medicare billing privileges. And while we believe 
that a prospective HHA should submit verification of compliance with 
Sec.  489.28 within 30 days of a Medicare contractor's request, we 
believe that the Medicare contractor should have the ability to request 
and verify that an HHA continues to meet the capitalization 
requirements. This final step is especially important, because it would 
allow CMS to verify that the HHA actually had--rather than simply 
projecting to have had--adequate funds during the three-month period 
following issuance of Medicare billing privileges.
    We believe that a Medicare contractor should verify that the 
prospective HHA is in compliance with all enrollment requirements when 
an enrollment application is submitted, during the period in which it 
is undergoing a State survey or accreditation review to determine 
compliance with the HHA Conditions of Participation, and before and 
after the issuance of Medicare billing privileges and within three 
months thereafter. Moreover, if a prospective HHA is determined to be 
out of compliance with Medicare enrollment requirements, including not 
meeting capitalization requirements at any time prior to the issuance 
of Medicare billing privileges, we believe that the Medicare contractor 
may deny such privileges using the specific denial reason for failing 
to meet this requirement which can be found in 42 CFR 424.530(a)(8) and 
afford the HHA with applicable Medicare appeal rights pursuant to part 
498. Finally, we believe if an enrolled HHA is determined to be out of 
compliance with the capitalization requirements within three months 
after we have conveyed Medicare billing privileges, then that the 
Medicare contractor can revoke Medicare billing privileges using the 
specific revocation reason for failing to meet this requirement which 
can be found in Sec.  424.535(a)(11) and afford the HHA with applicable 
Medicare appeal rights.
    Accordingly, we are proposing to revise Sec.  489.28(a) to include 
additional capitalization verification by us or its Medicare contractor 
during the enrollment process. Specifically, we are proposing to revise 
Sec.  489.28(a) to read as set out in the regulatory text of this 
proposed rule.
    Since it is not possible for the Medicare program to assess whether 
a prospective HHA is receiving reimbursement for other health care 
insurers, we are proposing to remove, ``or other health care 
insurers.'' from Sec.  489.28(a). In addition, we do not believe that 
it is necessary to require HHAs to project the number of visits within 
the initial three month operating period because there are incentives 
for prospective HHAs to under report the number of visits in order to 
reduce the capitalization amount. Accordingly, rather than accepting 
the number of site visits furnished by a prospective HHA as the basis 
for capitalization amount, we believe that it would be more appropriate 
to compare a prospective HHA with similarly situated HHAs that are 
already enrolled in the Medicare program. Sections Sec.  1815(a), 
1833(e), and 1861(v)(1)(A) of the Act require that providers of 
services participating in the Medicare program submit annual 
information to achieve settlement of costs for health care services 
rendered to Medicare beneficiaries. Also, 42 CFR 413.20 requires cost 
reports from providers on an annual basis. In accordance with these 
provisions, all home health agencies (HHAs) must complete Form HCFA-
1728-94, which provides data used by the fiscal intermediaries in 
determining program reimbursement.
    We believe that this change will deter or limit the number of 
undercapitalized individuals and organizations from seeking to enroll 
in the Medicare program. In addition, we believe that this change will 
help to ensure that prospective HHAs establish and maintain the amount 
of capital to furnish quality services to eligible beneficiaries 
without reimbursement from the Medicare program during the first three 
months of operations.
    In Sec.  489.28(c), we propose to add a new paragraph (1) to 
emphasize that the Medicare contractor, in selecting comparative HHAs 
for the purpose of calculating the enrolling HHA's required level of 
capitalization, shall only select HHAs that have submitted cost reports 
to Medicare. By reviewing the cost report, a Medicare contractor can 
audit costs and reimbursements. Medicare contractors have been 
selecting comparable HHAs using this methodology for purposes of the 
current requirement, but we believe that the current language in 
paragraph (c) should be clarified.
    In 489.28(g), we propose to amend this provision to establish that 
CMS will only convey Medicare billing privileges to an HHA that 
satisfies its initial reserve operating funds requirement.
    In 42 CFR 424.510, we propose to add meeting the initial reserve 
operating funds requirement found in Sec.  489.28(a) as an enrollment 
requirement for prospective home health providers.
    In 42 CFR 424.530(a)(8), we propose to deny Medicare billing 
privileges to a prospective HHA if they cannot furnish supporting 
documentation within 30 days of a contractor request that verifies that 
the HHA meets the initial reserve operating funds requirement found in

[[Page 43266]]

42 CFR 489.28(a). In addition, we propose to deny Medicare billing 
privileges to a prospective home health provider that fails to meet the 
initial reserve operating funds requirement found in 489.28(a).
    Similarly, at 42 CFR 424.535(a)(8), we propose to revoke Medicare 
billing privileges and the corresponding provider agreement if the 
enrolled HHA is not able to furnish supporting documentation within 30 
days of a contractor request that verifies that the HHA meets the 
initial reserve operating funds requirement found in 42 CFR 489.28(a).
2. Change of Ownership
    In last year's home health prospective payment system final rule 
titled, ``Medicare Program: Home Health Prospective Payment System Rate 
Update for Calendar Year 2010,'' we finalized several home health 
program integrity provisions. Specifically, we finalized a provision in 
42 CFR 424.550(b)(1) stating that if an owner of an HHA sells 
(including asset sales or stock transfers), transfers or relinquishes 
ownership of the HHA within 36 months after the effective date of the 
HHA's enrollment in Medicare, the provider agreement and Medicare 
billing privileges do not convey to the new owner. The prospective 
provider/owner of the HHA must instead: (i) Enroll in the Medicare 
program as a new HHA under the provisions of Sec.  424.510, and (ii) 
Obtain a State survey or an accreditation from an approved 
accreditation organization.
    We received several comments supporting the establishment of the 
36-month provision and did not receive any specific recommendations 
that we establish exceptions to the implementation of this provision.
    However, since the implementation of 42 CFR 424.550(b)(1) in 
January 2010, we have received a number of comments regarding the 
impact of this provision on bona fide ownership transactions. 
Accordingly, we are proposing exemptions to the 36-month provision for 
certain legitimate transactions related to HHAs. In particular, we are 
proposing to revise 42 CFR 424.550(b) by adding subparagraph (2) as 
exemptions to 42 CFR 424.550(b)(1):
     A publicly-traded company is acquiring another HHA and 
both entities have submitted cost reports to Medicare for the previous 
five (5) years.
     An HHA parent company is undergoing an internal corporate 
restructuring, such as a merger or consolidation, and the HHA has 
submitted a cost report to Medicare for the previous five (5) years.
     The owners of an existing HHA decide to change the 
existing business structure (e.g., partnership to a limited liability 
corporation or sole proprietorship to subchapter S corporation), the 
individual owners remain the same, and there is no change in majority 
ownership (i.e., 50 percent or more ownership in the HHA.)
     The death of an owner who owns 49 percent or less (where 
several individuals and/or organizations are co-owners of an HHA and 
one of the owners dies) interest in an HHA.
    It is important to note that while we are proposing the 
aforementioned exceptions, we remain concerned that a significant 
number of HHAs have--and will continue to attempt to--participate in a 
practice often referred to as a ``certificate mill.'' Under this 
scenario, which we addressed in the 2010 HH PPS rule, entrepreneurs 
apply for Medicare certification, undergo a survey, and, become 
enrolled in Medicare, but then immediately sell the agency without 
having seen a single Medicare beneficiary or hired a single employee. 
These brokers, in other words, enroll in Medicare exclusively to sell 
the HHA, rather than to provide services to beneficiaries. This 
practice allows a purchaser of an HHA from the broker to enter the 
Medicare program without having to undergo a State survey, which, in 
turn, often leads to that owner selling the business very soon 
thereafter to someone else. The ``flipping'' mechanism is used to 
circumvent the State survey process. It is for this reason, that we 
maintain that 42 CFR 424.550(b)(1) is necessary to eliminate the 
``certificate mill'' process. 3.
3. Change in Majority Ownership Within 36 Months of Initial Enrollment 
or Change in Ownership
    Section 1124 of the Social Security Act requires that: (1) All 
persons and organizations with a 5 percent or greater ownership 
interest in the provider, and (2) all partners in a partnership (if, of 
course, the provider is established as a partnership), be reported to 
us. Accordingly, we believe that HHAs and other provider organizations 
must report a change of ownership of 5 percent of more of the equity in 
the company.
    However, we recognize that in many cases a small change in 
ownership (e.g., 5 percent) does not result in fundamental change of 
ownership by the majority owner or owner(s) and should not necessarily 
require a new enrollment and State survey or meet the deemed-
accreditation status. However, we are concerned that prospective HHA 
owners can circumvent the spirit and intent of Sec.  424.550(b)(1) by 
incrementally increasing their level of ownership to the point where 
they could effectively assume 51 percent or more ownership of an HHA 
without having to enroll as a new provider or undergo a State survey or 
obtain deemed accreditation status by a CMS-approved accreditation 
organization. For instance, an owner, with a 30 percent ownership 
interest could purchase an additional 20 percent, plus one (1) share 
stake in the company by submitting four separate changes of information 
to the Medicare contractor. The end result is that the HHA would then 
be owned by an individual or organization for whom--because of his or 
her ability to avoid having to undergo a State survey or obtain 
accreditation due to his or her incremental purchases--we cannot 
determine their commitment to furnishing quality services to Medicare 
beneficiaries.
    Accordingly, in Sec.  424.550(a)(1) we are proposing that any 
change in majority control and/or ownership during the first 36 months 
of when the HHA is initially conveyed Medicare billing privileges or 
the last change of ownership (including asset sale, stock transfer, 
merger or consolidation) would trigger the provisions of Sec.  
424.550(b)(1). We believe that this approach would allow individuals or 
organizations to purchase or sell an ownership interest in an HHA as 
long as it did not change majority ownership or control within the 
first 36 months of ownership.
    Consequently, we are proposing a definition of ``Change in Majority 
Ownership'' to mean an individual or organization acquires more than 50 
percent interest in an HHA during the 36 following the initial 
enrollment into the Medicare program or a change of ownership 
(including asset sale, stock transfer, merger, or consolidation). This 
includes an individual or organization that acquires majority ownership 
in an HHA through the cumulative effect of asset sales, stock 
transfers, consolidations, and/or mergers during a 36-month period.

H. Home Health Face-to-Face Encounter

    Sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act require a plan 
of care for furnishing home health services be established and 
periodically reviewed by a physician in order for Medicare payments for 
those services to be made. The physician is responsible for certifying 
that the individual is confined to his or her home and needs skilled 
nursing care on an intermittent basis or physical or speech therapy. 
The

[[Page 43267]]

plan for furnishing such services has to be established, and updated 
when appropriate, by the beneficiary's physician.
    In recent years MedPAC has reported that the Medicare eligibility 
criteria for the home health benefit are broad and open to different 
interpretations by clinicians. See Report to the Congress: Medicare 
Payment Policy (March 2004). The 2010 MedPAC report continues to cite 
the complexity of Medicare's requirements for home health eligibility, 
and recommends that physicians may benefit from the information gained 
by an in-person examination. MedPAC further states that ``establishing 
clear expectations for the purpose of these examinations would be 
critical to ensuring their effectiveness'' [MedPAC report dated March 
2010, p. 216].
    On March 23, 2010, the Patient Protection and Affordable Care Act 
(The Affordable Care Act) of 2010 (Pub. L. 111-148) was enacted. 
Section 6407(a) (amended by section 10605) of The Affordable Care Act 
amends the requirements for physician certification of home health 
services contained in Sections 1814(a)(2)(C) and 1835(a)(2)(A) by 
requiring that, prior to making such certification, the physician must 
document that the physician himself or herself or specified non-
physician practitioner has had a face-to-face encounter (including 
through the use of telehealth, subject to the requirements in section 
1834(m) of the Act), with the patient incident to the services 
involved.
    The Affordable Care Act describes non-physician practitioners who 
may perform this face-to-face patient encounter as a nurse practitioner 
or clinical nurse specialist (as those terms are defined in section 
1861(aa)(5) of the Act), who is working in collaboration with the 
physician in accordance with State law, or a certified nurse-midwife 
(as defined in section 1861(gg) of the Act, as authorized by State 
law), or a physician assistant (as defined in section 1861(aa)(5) of 
the Act), in accordance with State law and under the supervision of the 
physician. The Affordable Care Act provision does not amend the 
statutory requirement that a physician must certify a patient's 
eligibility for Medicare's home health benefit. Rather the provision 
allows for specific non-physician practitioners to perform the face-to-
face encounter with the patient in lieu of the certifying physician, 
and inform the physician making the initial certification for 
eligibility for the Medicare home health benefit. The certifying 
physician must document the face-to-face encounter regardless of 
whether the physician himself or herself or one of the permitted non-
physician practitioners perform the face-to-face encounter. The 
Affordable Care Act gives the Secretary the discretion to set a 
reasonable timeframe for this encounter.
    We believe that the face-to-face encounter statutory provision was 
enacted to strengthen physician accountability in certifying that home 
health patients meet home health eligibility requirements. We also 
believe that in order to achieve this goal, the encounter must occur 
close enough to the home health start of care to ensure that the 
clinical conditions exhibited by the patient during the encounter are 
related to the primary reason for the patient's need for home health 
care. As such, we believe that encounters would need to occur closer to 
the start of home health care than the six month period prior to 
certification recommended, but not required by The Affordable Care Act 
for Part B services. Therefore we propose revising Sec.  
424.22(a)(1)(v) such that for initial certifications, prior to a 
physician signing that certification and thus certifying a patient's 
eligibility for the Medicare home health benefit, the physician 
responsible for certifying the patient for home health services must 
document that a face-to-face patient encounter (including through the 
use of telehealth if appropriate) has occurred no more than 30 days 
prior to the home health start-of-care date by himself or herself, or 
by an authorized non-physician practitioner (as specified in sections 
1814(a)(2)(C) and 1835(a)(2)(A) of the Act) working in collaboration 
with or under the supervision of the certifying physician as described 
above.
    We believe that in many cases, a face-to-face encounter with a 
patient within the 30 days prior to the home health episode start of 
care will provide the certifying physician a current clinical 
presentation of the patient's condition such that the physician can 
accurately certify home health eligibility, and in conjunction with the 
home health agency, can establish an effective care plan. We also 
believe that a face-to-face encounter which occurs within 30 days prior 
to the home health start of care would be generally relevant to the 
reason for the patient's need for home health services, and therefore 
such a face-to-face would be sufficient to meet the goals of this 
statutory requirement. However, if a face-to-face encounter occurs 
within 30 days of the start of the home health episode, but the 
clinical condition of the patient changes significantly between the 
time of the face-to-face encounter and the home health episode of care 
such that the primary reason the patient requires home health care is 
unrelated to the patient's condition at the time of the face-to-face 
encounter, this encounter would not satisfy the requirement. Rather, in 
this case, we propose revising Sec.  424.22(a)(1)(v)(B) such that the 
certifying physician, or authorized non-physician practitioner, must 
have another face-to-face encounter (which may include the use of 
telehealth, subject to the requirements in section 1834(m) of the Act 
and subject to the list of Medicare telehealth services established in 
the most recent year's physician fee schedule regulations) with the 
patient within two weeks after the start of the home health episode. 
The certifying physician must document the face-to-face encounter, 
along with the clinical findings of that encounter as part of the 
signed and dated certification. This documentation must be clearly 
titled, dated, and signed by the certifying physician. Because the 
patient's clinical condition significantly changed, we believe that a 
more contemporaneous visit is needed to ensure the certifying physician 
can accurately certify the patient's eligibility for services, and 
effectively plan the patient's care.
    Similarly, we propose to revise Sec.  424.22(a)(1)(v)(B) to reflect 
that if a home health patient has not seen the certifying physician or 
one of the specified non-physician practitioners as described above, in 
the 30 days prior to the home health episode start of care, the 
certifying physician or non-physician practitioner, would be required 
to have a face-to-face encounter (including the use of telehealth, 
subject to the requirements in section 1834(m) of the Act and subject 
to the list of Medicare telehealth services established in the most 
recent year's physician fee schedule regulations) with the patient 
within two weeks after the start of the home health episode to comply 
with the requirements for payment under the Medicare Program.
    We also propose to revise Sec.  424.22(a)(1)(v) so that the 
certifying physician's documentation of the face-to-face encounter 
would clearly state that either the certifying physician himself or 
herself, or the applicable non-physician practitioner has had a face-
to-face encounter with the patient and would include the date of that 
encounter. The documentation would also describe how the clinical 
findings of that encounter supported the patient's eligibility for the 
Medicare home health benefit. Specifically, the physician would 
document how the clinical findings of the encounter supported findings 
that the patient was homebound and in need of intermittent

[[Page 43268]]

skilled nursing and/or therapy services, as defined in Sec.  409.42(a) 
and Sec.  409.42(c) respectively. The certifying physician would be 
required to sign and date the documentation entry into the 
certification and document the face-to-face encounter in his/her 
practice's medical record. As such the physician's medical keeping for 
that patient must be consistent with, and supportive of, the required 
documentation of the face-to-face encounter as part of the 
certification.
    Again, the certifying physician's documentation of the face-to-face 
patient encounter would be either a separate and distinct area on the 
certification or a separate and distinct addendum to the certification 
that was easily identifiable and clearly titled.
    If an allowed non-physician practitioner was conducting the face-
to-face visit, that practitioner would have to document the clinical 
findings of the face-to-face patient encounter and communicate those 
findings to the certifying physician, so that the certifying physician 
could document the face-to-face encounter accordingly, as part of the 
signed certification. Section 409.41 of the CFR states that in order 
for home health services to qualify for payment under the Medicare 
program the physician certification requirements for home health 
services must be met in compliance with Sec.  424.22. Therefore, if the 
patient's certifying physician did not document that a face-to-face 
encounter occurred no more than 30 days prior to the home health start 
of care date or two weeks after the start of care date, the services 
would not qualify for payment under the Medicare program.
    Additionally our regulations at Sec.  424.22 require a physician's 
signature for certification and recertification of the need for home 
health care. To strengthen our regulations to mirror our longstanding 
manual policy and to achieve consistency with the proposed timing and 
documentation of the face-to-face encounter, we propose to revise our 
certification and recertification requirements at Sec.  424.22 to 
require that these documents must include the date and signature of the 
physician.
    As defined in 42 CFR 411.354, certifying physicians are not 
permitted to have a financial relationship with the HHA, unless one of 
the exceptions in section 1877 of the Act is met. Similarly, we would 
preclude non-physician practitioners from performing a face-to-face 
encounter for the purpose of informing the certifying physician, as 
described in sections 1814 and 1835 of the Act, if the non-physician 
practitioner was an employee of the HHA. We propose to apply this 
prohibition by revising Sec.  424.22(d) to not allow non-physician 
practitioners to perform a face-to-face encounter, if employed by the 
HHA, as defined by Section 210(j) of the Act.
    When a physician is certifying a patient for home health services, 
the physician is certifying that the patient is confined to his home 
and in need of intermittent skilled nursing or therapy services. 
Therefore, physicians must utilize their intimate knowledge of the 
patient's medical condition to determine the patient's health care 
needs. We believe that physician involvement is very important in 
maintaining quality of care under the Medicare home health benefit and 
ensure appropriate use of the benefit. Thus, the fundamental goals of 
physician certification are strengthened by the new requirement for a 
face-to-face patient encounter.
    As such, we are proposing to revise 42 CFR 424.22(a)(1) by adding 
language to set timing requirements for the face-to-face patient 
encounter, to ensure that the face-to-face patient encounter is related 
to the primary reason the patient requires home health services, and to 
set encounter documentation requirements. We are also proposing that 
non-physician practitioners be precluded from performing a face-to-face 
encounter for the purpose of informing the certifying physician, as 
described in sections 1814 and 1835 of the Act, if the non-physician 
practitioner is an employee of the HHA, as defined by Section 210(j) of 
the Act.
    We propose implementing the above face-to-face patient encounters 
provisions as they relate to home health episodes beginning 1/1/2011 
and later.

I. Solicitation of Comments: Future Plans to Group HH PPS Claims 
Centrally During Claims Processing

    Generally speaking, Medicare makes payment under the HH PPS on the 
basis of a national standardized 60-day episode payment rate that is 
adjusted for case-mix and geographic wage variations. The national 
standardized 60-day episode payment rate includes the six home health 
disciplines (skilled nursing, home health aide, physical therapy, 
speech language pathology, occupational therapy, and medical social 
services) and non-routine medical supplies. Durable medical equipment 
covered under home health is paid for outside the HH PPS payment. To 
adjust for case-mix, the HH PPS uses a 153-category case-mix 
classification to assign patients to a home health resource group 
(HHRG). Clinical needs, functional status, and service utilization are 
computed from responses to selected data elements in the Outcome & 
Assessment Information Set (OASIS) instrument. On Medicare claims, the 
HHRGs are represented as Health Insurance Prospective Payment System 
(HIPPS) codes.
    At a patient's start of care, and at the start of each subsequent 
60 day episode, and when a patient's condition changes significantly, 
the HHA is required to perform a comprehensive clinical assessment of 
the patient and complete the OASIS assessment instrument. The OASIS 
instrument collects data concerning 3 dimensions of the patient's 
condition: (1) Clinical severity (orthopedic, neurological or diabetic 
conditions, etc.), (2) Functional status (comprised of 6 activities of 
daily living {ADL{time} ), and (3) Service utilization (therapy visits 
provided during episode). HHAs enter data collected from their 
patients' OASIS assessments into a data collection software tool. For 
Medicare patients, the data collection software invokes HH PPS Grouper 
software to assign a HIPPS code to the patient's OASIS assessment. The 
HHA includes this HIPPS code on the Medicare HH PPS bill, ultimately 
enabling CMS' claims processing system to reimburse the HHA for 
services provided to patients receiving Medicare's home health benefit.
    Additionally, the HHA is required to electronically submit OASIS 
assessments for their Medicare and Medicaid patients to CMS via their 
State agency. On the HH PPS public Web site at http://www.cms.gov/homehealthpps/01_overview.asp, CMS provides a free OASIS assessment 
data collection tool (HAVEN) which includes the HH PPS grouper 
software, a separate HH PPS grouper program which can be incorporated 
into an HHA's own data collection software, and HH PPS data 
specifications for use by HHAs or software vendors desiring to build 
their own HH PPS grouper. Most HHAs do not use the HAVEN freeware, 
instead preferring to employ software vendors to create and maintain a 
customized assessment data collection tool which can be integrated into 
the HHA's billing software. Likewise, many vendors employed by HHAs do 
not utilize the HH PPS grouper freeware, instead preferring to build 
their own HH PPS grouper from the data specifications which CMS 
provides.
    In 2008, CMS deployed the first refinements to the HH PPS since its 
inception in 2000. Prior to the 2008 refinements, CMS made infrequent, 
minor changes to the HH PPS grouper software. Effective with the 
refinements, the HH PPS grouper became more

[[Page 43269]]

complex and more sensitive to the yearly ICD-9-CM code changes. As a 
result, since 2008 HHAs have been required to update their HH PPS 
grouper software at least once each year. Most HHAs employ software 
vendors to effectuate these updates. HHAs have expressed concerns to 
CMS that the frequent grouper updates coupled with the additional 
complexity of the grouper has resulted in unexpected costs and an 
increased burden to them.
    Also, since the 2008 refinements were implemented, CMS has 
identified a significant increase in OASIS assessments submitted with 
erroneous HIPPS codes. These errors occur when HHAs and/or their 
software vendors inaccurately replicate the HH PPS grouper algorithm 
into the HHA's customized software. The significant increase in these 
errors since 2008 suggests that many HHA software vendors are 
struggling to accurately replicate the complex algorithms in the HH PPS 
grouper. CMS informs HHAs when the submitted HIPPS on the OASIS is 
inaccurate and provides HHAs with the correct HIPPS to enable the HHA 
to accurately bill Medicare. However, HHAs have expressed concerns that 
the HH PPS grouper complexities increase their vulnerability to submit 
an inaccurate HIPPS code on the Medicare bill. Further, some HHAs have 
expressed concern that this vulnerability will further increase when 
CMS begins requiring use of ICD-10-CM codes instead of ICD-9-CM codes 
because the ICD-10-CM migration will require major changes to an 
already complex HH PPS grouper.
    Because of these concerns, we have begun analyzing options to 
streamline the process which assigns HIPPS codes. We are analyzing 
options which would enable CMS to assign HIPPS codes to the HH PPS 
bills during claims processing. If we were successful in implementing 
this option, OASIS assessment data collection tools would no longer 
invoke HH PPS grouper software to assign HIPPS codes to the OASIS 
assessments. Further, HHAs would no longer be required to include HIPPS 
codes on HH PPS bills. Such a process would relieve the HHA of all 
responsibility associated with the HH PPS grouper. If we can centralize 
the assignment of the HIPPS code to the HH PPS bill during claims 
processing, we will achieve process efficiencies, improve payment 
accuracy by improving the accuracy of the bill's HIPPS code, decrease 
costs and burden to HHAs, while also better position HHAs and CMS for 
an easier transition from ICD-9 to ICD-10 codes in the future.
    Several changes have occurred recently that allow us to consider 
this option. National claims coding standards have expanded the number 
of positions of data available in the treatment authorization field on 
the bill from 18 to 30. In addition, the National Uniform Billing 
Committee has created occurrence code 50 for assessment reference 
dates. This new code will allow a separate field for HHAs to report the 
M0090 assessment date currently carried in the treatment authorization 
field. These two changes provide enough space on the HH PPS bill for 
HHAs to encode all the OASIS payment items on the bill, potentially 
enabling CMS to compute the HIPPS code during claims processing.
    However, a major challenge exists with the feasibility of computing 
the HH PPS group during claims processing. A centralized HH PPS grouper 
would look to the diagnoses on the HH PPS bill for grouping. The Health 
Insurance Portability and Accountability Act (HIPAA) authorized us to 
require that all diagnoses on the bill comply with ICD-9-CM coding 
guidelines as set out at 45 CFR 162.1002 (65 FR 50370, August 17, 
2000). Currently, when certain conditions apply, to prevent the loss of 
case mix points, the HH PPS grouper will award case-mix points to some 
diagnoses reported as a secondary diagnosis when the assignment is 
performed to comply with ICD-9-CM coding requirements. CMS currently 
instructs HHAs to report these diagnoses in M1024 (previously M0246) on 
the OASIS to prevent loss of case mix points.
    We provide detailed guidance on this topic in page 5 of Appendix D 
within the OASIS Implementation Manual, which can be accessed at http://www.cms.gov/HomeHealthQualityInits/downloads/HHQIAttachmentD.pdf. This 
coding guidance has been provided to prevent the loss of case mix 
points when an underlying case mix diagnosis is associated with the 
primary V-code diagnosis.
    As required by 45 CFR 162.1002, those diagnoses currently encoded 
in M1024 (formerly M0246) which should not be reported as primary or 
secondary diagnoses cannot be reported on the bill. In an attempt to 
solve this challenge, CMS is analyzing options to map diagnoses 
currently reported in M1024 (formerly M0246) to diagnoses that are 
reportable as primary and secondary diagnoses in the home health 
setting, per ICD-9-CM coding guidelines. We have been encouraged with 
our ability to map some trauma codes reported in M1024 to after-care 
codes which are reportable as primary and secondary diagnoses in the 
home health setting. However, additional analysis and mapping are 
needed to fully resolve this challenge.
    We are soliciting public comment on this potential enhancement, 
described above, to assign the HIPPS code to the HH PPS bill during 
claim processing. This would require HHAs to report all the OASIS items 
necessary to group the episode on the HH PPS bill. As stated above, 
doing so would address the costs and burden HHAs currently experience 
with regards to frequent updates of a complex HH PPS grouper, address 
vulnerabilities that HHAs have associated with the possible submission 
of inaccurate HIPPS codes on the claim, while better positioning HHAs 
and CMS for the ICD-9 to ICD-10 transition. We are in the early stages 
of assessing the feasibility of such changes, and wanted to seize the 
opportunity to solicit the public for their comments on this topic.

J. Proposed New Requirements Affecting Hospice Certifications and 
Recertifications

    In its March 2009 Report to Congress, MedPAC wrote that additional 
controls are needed to ensure adequate accountability for the hospice 
benefit. MedPAC reported that greater physician engagement is needed in 
the process of certifying and recertifying patients' eligibility for 
the Medicare hospice benefit. The Commission reported that measures to 
ensure accountability would also help ensure that hospice is used to 
provide the most appropriate care for eligible patients. They 
recommended these measures be directed at hospices that tend to enroll 
very long-stay patients. Specifically, MedPAC recommended that a 
hospice physician or advanced practice nurse visit the patient to 
determine continued eligibility prior to the 180-day recertification 
and each subsequent recertification, and attest that such visits took 
place. MedPAC, Report to the Congress: Medicare Payment Policy, Chapter 
6, March 2009, pp. 365-371.
    Section 3132 of The Affordable Care Act requires hospices to adopt 
MedPAC's hospice program eligibility recertification recommendations. 
Specifically, the bill amends section 1814(a)(7) of the Social Security 
Act to require that on and after January 1, 2011, a hospice physician 
or nurse practitioner (NP) must have a face-to-face encounter with 
every hospice patient to determine the continued eligibility of that 
patient prior to the 180-day recertification, and prior to each 
subsequent recertification. Furthermore, the bill requires that the 
hospice physician or NP attest that such

[[Page 43270]]

a visit took place, in accordance with procedures established by the 
Secretary of the Department of Health and Human Services. The 
Affordable Care Act provision does not amend the statutory requirement 
that a physician must certify and recertify a patient's terminal 
illness, and thus NPs continue to not be allowed to certify the 
terminal illness. Rather, the provision allows for a NP to furnish a 
face-to-face encounter; the NP would then provide the clinical findings 
from that encounter to the physician who is considering recertifying 
the patient. This new statutory requirement will better enable hospices 
to comply with hospice eligibility criteria, and to identify and 
discharge patients who do not meet those criteria.
    Hospices which admit a patient who received hospice services 
previously (from the admitting hospice or from another hospice) must 
consider the patient's entire Medicare hospice stay to determine which 
benefit period the patient is in, and whether a face-to-face visit will 
be required for recertification.
    As required by the Affordable Care Act, we are making several 
proposals regarding 42 CFR 418.22(a)(3), (a)(4), (b)(3), (b)(4), and 
(b)(5) in order to implement this new statutory requirement. Required 
visits should be fairly close to the recertification date, so that the 
visit allows a current assessment of the patient's continued 
eligibility for hospice services. These visits can be scheduled in 
advance, particularly for those patients with diagnoses where life 
expectancy is harder to predict. At Sec.  418.22(a)(4) we propose that 
hospice physicians or NPs make these required visits no more than 15 
calendar days prior to the 180-day recertifications and subsequent 
recertifications, and that the visit findings be used by the certifying 
physician to determine continued eligibility for hospice care. This 15-
day timeframe also aligns the timeframes for recertification visits 
with that required for the comprehensive assessment update, as 
specified in our Conditions of Participation (CoPs) at Sec.  418.54(d). 
This timeframe requirement is also consistent with the timeframe 
required for the review of the plan of care, as specified in our CoPs 
at Sec.  418.56(d). The 15-day timeframe provides a balance between 
flexibility in scheduling the visit, and enabling a relatively current 
assessment of continued eligibility while also allowing efficiency in 
update and review processes as required by the hospice CoPs.
    As noted above, the statute requires that the face-to-face 
encounter be used to determine the patient's continued eligibility for 
hospice services. We propose that the clinical findings gathered by the 
NP or by the physician during the face-to-face encounter with the 
patient be used in the physician narrative to justify why the physician 
believes that the patient has a life expectancy of 6 months or less. We 
propose to add this requirement to 418.22(b)(3) as subparagraph(v).
    The statute also requires the hospice physician or NP to attest 
that the face-to-face encounter occurred. Again we reiterate that while 
NPs can make these visits and attest to them, by statute only a 
physician may certify the terminal illness. Therefore, at Sec.  
418.22(b)(4) we propose that the face-to-face attestation and signature 
be either a separate and distinct area on the recertification form, or 
a separate and distinct addendum to the recertification form, that is 
easily identifiable and clearly titled. We also propose that the 
attestation language be located directly above the physician or NP 
signature and date line.
    The attestation is a statement from the physician or NP which 
attests that he or she had a face-to-face encounter with the patient, 
and that the clinical findings of that encounter have been provided to 
the certifying physician for use in determining continued eligibility 
for hospice care. The attestation should include the name of the 
patient visited, the date of the visit, and be signed and dated by the 
NP or physician who made the visit. Hospices are free to use other 
attestation language, provided that it incorporates these required 
elements. These elements would be suitable whether the visit is made by 
an NP or a physician. It is possible that the certifying hospice 
physician is the same physician who made the visit.
    We propose revising our regulations at Sec.  418.22 to incorporate 
these requirements. Specifically, we propose adding subsections (a)(4) 
and (b)(4) to implement the requirements for a face-to-face encounter 
with long-stay hospice patients and the attestation of that face-to-
face encounter.
    In proposing a required timeframe in which the face-to-face 
encounter must occur, for consistency, we believe it is important to 
also propose to clarify required timeframes for all certifications and 
recertifications. Long-standing guidance in our Medicare Benefit Policy 
Manual's chapter on hospice benefit policy allows the initial 
certification to be completed up to 14 days in advance of the election, 
but is silent on the timeframe for advance completion of 
recertifications (see CMS Pub. No. 100-02, chapter 9, section 20.1). To 
clarify our policy in the regulations, and to be consistent with the 
proposed timeframe for the newly legislated face-to-face encounter for 
recertifications, we propose that both certifications and 
recertifications must be completed no more than 15 calendar days prior 
to either the effective date of hospice election (for initial 
certifications), or the start date of a subsequent benefit period (for 
recertifications). This proposal is also in keeping with the CoP 
timeframe for updating the comprehensive assessment (418.56(d)), and 
with the CoP timeframe for reviewing the plan of care (418.54(d)). 
Finally, this proposed 15-day advance certification or recertification 
timeframe would also help ensure that the decision to recertify is 
based on current clinical findings, enabling greater compliance with 
Medicare eligibility criteria. Congress' desire for increased 
compliance with Medicare eligibility criteria is one factor which we 
believe led to the new statutory requirements. We propose to revise 
Sec.  418.22(a)(3) to reflect the above proposals.
    Furthermore, longstanding manual guidance stipulates that the 
physician(s) must sign and date the certification or recertification. 
However, the HHS Office of Inspector General recently found that 
certifications for some hospice patients failed to meet Federal 
requirements, including those with no signatures [HHS OIG, ``Medicare 
Hospice Care for Beneficiaries in Nursing Facilities: Compliance with 
Medicare Coverage Requirements, September 2009'']. In keeping with 
Congress's desire for increased compliance with Medicare eligibility 
criteria, and to achieve consistency with the proposed 180-day 
recertification attestation requirements, we propose to add language to 
the certification requirements in our regulations to clarify that these 
documents must include the signature(s) of the physician(s) and the 
date each physician signed.
    With the new statutory requirements for a face-to-face encounter 
prior to the 180-day recertification, and for every recertification 
thereafter, it is important for hospices to easily identify which 
benefit periods require a recertification visit. Because hospice 
patients are allowed two 90-day benefit periods followed by an 
unlimited number of 60-day benefit periods, every 60-day benefit period 
is by definition beyond the 180-day recertification. We do not 
currently require that certifications or recertifications show the 
dates of the benefit period to which they apply, so we propose to add 
language to our certification and recertification regulations to make 
this a requirement for all hospices. While many hospices already 
include this information, there are some that do not. Having the 
benefit

[[Page 43271]]

period dates on the certification makes it easier for the hospice to 
identify those benefit periods which require a face-to-face encounter 
and will ease enforcement of this new statutory requirement.
    A valid certification or recertification is a requirement for 
Medicare coverage under the Social Security Act at section 
1814(a)(7)(A). Additionally, the Act at 1814(a)(7)(D) now also requires 
a face-to-face encounter with patients who reach the 180-day 
recertification. Changing our regulations to require the physician's 
signature(s), date signed, and benefit period dates on the 
certification or recertification is necessary to determine if these 
documents are valid, and to ease the implementation of the new 
statutory requirements. Because we believe these proposed requirements 
establish in regulation that which are current practice in the hospice 
industry, we do not believe that these proposals will be burdensome to 
hospices. As such, we propose adding Sec.  418.22(b)(5) to our 
regulations to incorporate these signature and date requirements.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information (COI) requirement is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the Paperwork 
Reduction Act of 1995 requires that we solicit comment on the following 
issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

A. ICRs Regarding Therapy Coverage Requirements

    As described previously in this proposed rule, we are clarifying 
our coverage requirements for skilled services provided by therapists, 
which are described in 42 CFR 409.44(c). Our proposed clarifications 
include requirements to: document necessity for a course of therapy 
(Sec.  409.44(c)(1)); include clinic notes which reflect progress 
toward goals, which incorporate the functional assessment and 
reassessments, which justify medical necessity, which describe the 
content of progress notes, and which include objective evidence of the 
expectation that the patient's condition will improve (Sec.  
409.44(c)(2)(i)); document any variable factors that influence the 
patient's condition or affect the patient's response to treatment, and 
include objective measurements of progress toward goals in the clinical 
record (409.44(c)(2)(iv)).
    These proposed clarifications to our coverage requirements in Sec.  
409.44(c) are already part of our current Conditions of Participation 
(CoPs) and are approved under OMB 0938-1083. The current CoPs 
at Sec.  484.12 already require that the HHA and its staff comply with 
accepted professional standards and principles that apply to 
professionals furnishing services in an HHA. Those accepted 
professional standards include complete and effective documentation, 
such as we described in our proposals. Additionally, Sec.  484.32 of 
the CoPs already requires in part that the therapist prepare clinical 
and progress notes. Section 484.55 of the CoPs already requires that 
HHAs provide a comprehensive assessment that ``accurately reflects the 
patient's current health status and includes information that may be 
used to demonstrate progress toward achievement of desired outcomes''. 
Because these proposed clarifications to our coverage requirements in 
Sec.  409.44(c) reflect longstanding policy from our CoPs as well as 
from accepted standards of clinical practice, we believe that these 
proposed requirements will not create any additional burden on HHAs.
    Additionally, our coverage regulations at Sec.  409.44(c)(2)(i) 
already mandate that for therapy services to be covered in the home 
health setting, the services must be considered under accepted practice 
to be a specific, safe, and effective treatment for the beneficiary's 
condition. We proposed revising Sec.  409.44(c)(2)(i) to require a 
functional assessment on the 13th and 19th therapy visit, and at least 
every 30 days, to determine continued need for therapy services, and to 
ensure material progress toward goals. The functional assessment does 
not require a special visit to the patient, but is conducted as part of 
a regularly scheduled therapy visit. Functional assessments are 
necessary to demonstrate progress (or the lack thereof) toward therapy 
goals, and are already part of accepted standards of clinical practice, 
which include assessing a patient's function on an ongoing basis as 
part of each visit.
    Our current CoPs at Sec.  484.55 already require that HHAs 
``identify the patient's continuing need for home care * * *''. 
Functional assessments of therapy need guide HHAs in determining 
whether continued therapy is necessary. Therefore, we believe that the 
proposed requirement to perform a functional assessment at the 13th and 
19th visits, and at least every 30 days, will also not create any 
burden on HHAs. Rather, we have clarified the minimum timeframes for 
functional assessments in the coverage regulations. Longstanding CoP 
policy at Sec.  484.55 requires HHAs to document progress toward goals; 
therefore, we again do not believe that performing or documenting 
functional assessments at these 3 time-points would create a new 
burden. Both the functional assessment and its accompanying 
documentation are already part of existing HHA practices and accepted 
standards of clinical practice, and are approved under OMB 
0938-1083. Therefore, we do not believe these proposed requirements 
place any new documentation requirements on HHAs. We also believe that 
a prudent home health agency would self-impose these requirements in 
the course of doing business.
    We are revising the currently approved PRA package (OMB 
0938-1083) to describe these clarifications to the regulatory 
text.

B. ICRs Regarding HHA Capitalization

    As stated above, we propose to revise Sec.  489.28(a) to clarify 
that a newly enrolling HHA must consistently maintain sufficient 
capitalization between the time it submits its enrollment application 
until three months after its provider agreement becomes effective. This 
means the HHA will be required to submit proof of capitalization at 
multiple points during this period. For purposes of these collection 
requirements only, we estimate that a newly enrolling HHA will be 
required to submit such proof 3 times prior to receiving Medicare 
billing privileges, and that the burden involved in doing so will be 
1.5 hours on each occasion. We further project that 500 newly enrolling 
HHAs (of which 200 will ultimately become enrolled) will be asked to 
provide this data. The total annual burden will therefore be 2,250 
hours (500 HHAs x 3 submissions x 1.5 hours), as reflected in Table 14 
below.

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[GRAPHIC] [TIFF OMITTED] TP23JY10.014

C. ICRs Regarding the Home Health Face-To-Face Encounter Requirement

    The Affordable Care Act of 2010 amends the requirements for 
physician certification of home health services contained in sections 
1814(a)(2)(C) and 1835(a)(2)(A) by requiring that prior to certifying a 
patient as eligible for home health services, the physician must 
document that the physician himself or herself or specified non-
physician practitioner has had a face-to-face encounter (including 
through the use of telehealth). The Affordable Care Act provision does 
not amend the statutory requirement that a physician must certify a 
patient's eligibility for Medicare's home health benefit (see sections 
1814(a)(2)(C) and 1835(a)(2)(A) of the Act). In this proposed rule, we 
propose that Sec.  424.22(a)(1)(v) require the certifying physician 
sign and date the documentation entry into the certification that the 
face-to-face patient encounter occurred no more than thirty days prior 
to the home health start of care date by himself or herself, or by an 
allowed non-physician practitioner for initial certifications. We are 
proposing that the certifying physician's documentation of the face-to-
face patient encounter be either a separate and distinct area on the 
certification, or a separate and distinct addendum to the 
certification, that is easily identifiable and clearly titled, dated, 
and signed by the certifying physician, and that it include the 
clinical findings of that encounter.
    The burden associated with the documentation requirement for the 
patient's face-to-face encounter by the physician and certain allowed 
non-physician practitioners includes the time for each home health 
agency to develop a revised certification form or certification 
addendum which the HHA provides to the physician. The revised 
certification form or addendum to the certification must allow the 
physician to record that a face-to-face patient encounter has occurred. 
The revised form or addendum must also include the patient's name, a 
designated space for the physician to provide the date of the patient 
encounter, a designated space for the physician's documentation of the 
face-to-face encounter, and a designated space for the physician to 
provide his/her signature and the date signed.
    There were 9,432 home health agencies that filed claims in CY 2008. 
We estimate it would take each HHA 15 minutes of the home health 
administrator's time to develop and review the above described form 
language and 15 minutes of clerical time for each HHA to revise their 
existing initial certification form or to create an addendum with that 
form language. The estimated total one-time burden for developing the 
patient encounter form would be 4,716 hours.
    The certifying physician's burden for composing the face-to-face 
documentation which includes how the clinical findings of the encounter 
support eligibility; writing, typing, or dictating the face-to-face 
documentation; signing, and dating the patient's face-to-face encounter 
is estimated at 5 minutes for each certification. We estimate that 
there would be 2,926,420 initial home health episodes in a year based 
on our 2008 claims data. As such, the estimated burden for documenting, 
signing, and dating the patient's face-to-face encounter would be 
243,868 hours for CY 2011.
    We reiterate that our longstanding policy has been that physicians 
must sign and date the certification statement that the patient is in 
need of home health services and meets the eligibility requirements to 
receive the benefit. Therefore, our making this requirement explicit in 
the regulation poses no additional burden to home health agencies.
    Additionally, it has been our longstanding manual policy that 
physicians must sign and date the certification and any 
recertifications. Our current regulations only address the physician's 
signing of the certification and recertification. In this rulemaking, 
we are proposing to strengthen our regulations at Sec.  424.22 to 
achieve consistency with the proposed timing and documentation of the 
face-to-face encounter and to mirror our longstanding manual policy by 
revising our regulations to make it a requirement that physicians not 
only sign, but also date certifications and recertifications. Because 
it has been our longstanding manual policy that physicians sign and 
date certifications and recertifications, and we are merely making this 
requirement explicit in our regulations, there is no additional burden 
to physicians.
    Based on the criteria for payment of physician supervision of a 
patient receiving Medicare-covered services provided by a participating 
home health agency as stipulated in the description of HCPC code G0181, 
our making the patient encounter requirement explicit in the regulation 
poses no additional burden to physician offices. Table 15a and 16a 
below summarizes the burden estimate associated with these 
requirements.

[[Page 43273]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.015

Details of our burden estimates are available in the Paperwork 
Reduction Act (PRA) package approved under OMB 0938-1083. We 
are revising this currently approved package to incorporate these 
requirements.

D. ICRs Regarding the Requirements for Hospice Certification Changes

    As described previously in this proposed rule, as of January 1, 
2011 the Affordable Care Act requires physicians or NPs to attest that 
they determined continued hospice eligibility through a face-to-face 
encounter with all hospice patients prior to the 180-day 
recertification. We proposed that Sec.  418.22(b)(4) require the 
physician or NP to sign and date an attestation statement that he or 
she had a face-to-face encounter with the patient, and include the date 
of that visit. This attestation would be a separate and distinct part 
of the physician recertification, or an addendum to the physician 
recertification.
    The burden associated with this attestation requirement would be 
the time for each hospice to develop simple attestation language to 
attach as an addendum or include as part of the recertification 
document, and the time for the physician or NP to include the patient 
name, the date that the patient was visited, the visiting physician or 
NP signature, and the date signed. As of February 2010, there were 
3,429 hospices with claims filed in FY 2009. We estimate it would take 
each hospice 15 minutes of administrative time to develop and review 
the attestation language, and 15 minutes of clerical time to revise 
their existing recertification form or to create an addendum. The 
estimated total one-time burden for developing the attestation form 
would be 1,714 hours.
    The burden for completing the attestation form is estimated at 30 
seconds for each recertification at 180 days or beyond. We used the 
distribution of lengths of stay from hospice claims data to estimate 
the percentage of patients who required recertification at 180 days, 
and at subsequent 60-day benefit periods. We estimated that there would 
be 457,382 recertifications at 180 days or beyond, each of which 
requires an attestation. We assume that ninety percent of the visits 
were performed by physicians and ten percent by nurse practitioners, 
based on our analysis of FY 2009 physician and NP hospice billing data, 
with 30 seconds time allowed to sign and date the attestation 
statement, and to write in the name of the patient and the date of the 
visit, resulting in an estimated total burden to complete the 
attestation form of 3,811 hours for CY 2011. In the FY 2010 hospice 
rule (74 FR 39384) we finalized a requirement that the recertifying 
physician include a brief narrative explanation of the clinical 
findings which support continued hospice eligibility. Effective January 
1, 2011 we propose regulation text changes that this narrative would 
describe why the clinical findings of the face-to-face encounter, 
occurring at the 180-day recertification and all subsequent 
recertifications, continue to support hospice eligibility. However, 
these proposed regulation changes are for clarification. The narrative 
requirement finalized in FY 2010 requires that the narrative include 
why the clinical findings of any physician/NP/patient encounter support 
continued hospice eligibility. Therefore, the only documentation burden 
associated with this requirement is the signed and dated attestation 
that the encounter occurred.
    We reiterate that our longstanding policy has been that physicians 
must sign and date the certification and any recertifications. 
Therefore, our making this requirement explicit in the regulation poses 
no additional burden to hospices. We also proposed to clarify the 
timeframe which the certifications and recertifications cover by 
requiring physicians to include the dates of the benefit period to 
which the certification or recertification applies. We believe this is 
already standard practice at nearly all hospices, but are addressing it 
in regulation. Using the distribution of lengths of stay from 2007 and 
2008 claims data, we estimate that there would be 1,733,663 initial 
certifications and recertifications during the course of a year. We 
estimate that it would take a physician 30 seconds at most to include 
the benefit period dates. We estimate that the time to require 
physicians to include the benefit period dates on the certification or 
recertification would be 30 seconds per certification or 
recertification, for a total burden of 14,447 hours for CY 2011. Table 
17 below summarizes the burden estimate associated with these 
requirements.

[[Page 43274]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.016

    Details of our burden estimates are available in the PRA package 
approved under OMB 0938-1067. We are revising this currently 
approved package to incorporate these requirements.

E. ICRs Regarding the Home Health Care CAHPS Survey (HHCAHPS)

    As part of the DHHS Transparency Initiative on Quality Reporting, 
CMS is implementing a process to measure and publicly report patients' 
experiences with home health care they receive from Medicare-certified 
home health agencies with the Home Health Care CAHPS (HHCAHPS) survey. 
The HHCAHPS was developed and tested by the Agency for Healthcare 
Research and Quality (AHRQ) and is part of the family of CAHPS surveys, 
is a standardized survey for home health patients to assess their home 
health care providers and the quality of the home health care they 
received. Prior to the HHCAHPS, there was no national standard for 
collecting data about home health care patients' perspectives of their 
home health care.
    It is proposed that Section 484.250, Patient Assessment Data, will 
require an HHA to submit to CMS HHCAHPS data in order for CMS to 
administer the payment rate methodologies described in Sec. Sec.  
484.215, 484.230, and 484.235. The burden associated with this is the 
time and effort put forth by the HHA to submit the HHCAHPS data, the 
patient burden to respond to the survey, and the cost to the HHA to pay 
the survey vendor to collect the data on their behalf. This burden is 
currently accounted for under OMB 0938-1066.
    The HHCAHPS survey received OMB clearance on July 18, 2009, and the 
number is 0938-1066. In that PRA package, we did not state the burden 
to the HHAs concerning the hours that they would need to secure an 
approved HHCAHPS vendor and to pay for that vendor. In this proposed 
rule, we have included the burden directly affecting HHAs, which is the 
burden to select a survey vendor from http://www.homehealthcahps.org 
and to sign a contract with that survey vendor, that will conduct 
HHCAHPS on behalf of the HHA. We have determined that this would take 
16.0 hours for each HHA. It is noted that 91% of all HHAs (9,890 HHAs 
of a total of 10,998 HHAs) would be conducting HHCAHPS, since about 9% 
of HHAs will be exempt from conducting HHCAHPS because they have less 
than 60 eligible patients in the year. In TABLE 18, we have listed this 
burden to the HHAs:
[GRAPHIC] [TIFF OMITTED] TP23JY10.017

    OMB Number 0938-1066 will be revised to reflect the update 
concerning burden to the HHAs for vendor services for HHCAHPS.
    On February 8, 2006, the Deficit Reduction Act of 2005 (Pub. L. 
109-171) (DRA) was enacted. Section 5201 of the DRA requires HHAs to 
submit data for purposes of measuring health care quality, and links 
the quality data submission to payment. This requirement is applicable 
for CY 2007 and each subsequent year. If an HHA does not submit quality 
data, the home health market basket percentage increase will be reduced 
2 percentage points. In accordance with the statute, we published a 
final rule (71 FR 65884, 65935) in the Federal Register on November 9, 
2006, to implement the pay-for-reporting requirement of the DRA, 
codified at 42 CFR 484.225(h) and (i).
    In the Home Health Prospective Payment System Rate Update for 
Calendar Year 2010 (August 13, 2009), we proposed to expand the home 
health quality measures reporting requirements to include the 
CAHPS[supreg] Home Health Care (HHCAHPS) Survey, as initially discussed 
in the May 4, 2007, proposed rule (72 FR 25356, 25452) and in the 
November 3, 2008, Notice (73 FR 65357, 65358). As part of the DHHS 
Transparency Initiative, we proposed to implement a process to measure 
and publicly report patient experiences with home health care using a 
survey developed by AHRQ in its CAHPS[supreg] program. In the Final 
Rule for CY 2010, published on November 10, 2009, we stated our 
intention to move forward with the HHCAHPS and link the survey to the 
CY 2012 annual payment update under the DRA ``pay-for-reporting'' 
requirement.
    As part of this requirement, each HHA sponsoring a HHCAHPS Survey 
must

[[Page 43275]]

prepare and submit to its survey vendor a file containing patient data 
on patients served the preceding month that will be used by the survey 
vendor to select the sample and field the survey. This file 
(essentially the sampling frame) for most home health agencies can be 
generated from existing databases with minimal effort. For some small 
HHAs, preparation of a monthly sample frame may require more time. 
However, data elements needed on the sample frame will be kept at a 
minimum to reduce the burden on all HHAs.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget.
    Attention: CMS Desk Officer [CMS-1510-P];
    Fax: (202) 395-6974; or
    E-mail: OIRA_submission@omb.eop.gov.

IV. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, section 202 of the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 
804(2)).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). We estimate 
that this rulemaking is ``economically significant'' as measured by the 
$100 million threshold, and hence also a major rule under the 
Congressional Review Act. Accordingly, we have prepared a Regulatory 
Impact Analysis that to the best of our ability presents the costs and 
benefits of the rulemaking.
1. CY 2011 Update
    The update set forth in this proposed rule applies to Medicare 
payments under HH PPS in CY 2011. Accordingly, the following analysis 
describes the impact in CY 2011 only. We estimate that the net impact 
of the proposals in this rule is approximately $900 million in CY 2011 
savings. The $900 million impact to the proposed CY 2011 HH PPS 
reflects the distributional effects of an updated wage index ($20 
million increase), the 1.4 percent home health market basket update 
($270 million increase), the 3.79 percent case-mix adjustment 
applicable to the national standardized 60-day episode rates and the 
NRS conversion factor ($700 million decrease), as well as the 2.5 
percent returned from the outlier provisions of the Affordable Care Act 
($490 million decrease). The $900 million in savings is reflected in 
the first row of column 3 of Table 15 below as a 4.63 percent decrease 
in expenditures when comparing the current CY 2010 HH PPS to the 
proposed CY 2011 HH PPS.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses, if a rule has a significant impact on a 
substantial number of small entities. For purposes of the RFA, small 
entities include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other providers and 
suppliers are small entities, either by nonprofit status or by having 
revenues of less than $7.0 million to $34.5 million in any 1 year. The 
Secretary has determined that this proposed rule would not have a 
significant economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603. For purposes of 
section 1102(b) of the Act, we define a small rural hospital as a 
hospital that is located outside of a metropolitan statistical area and 
has fewer than 100 beds. This proposed rule applies to HHAs. Therefore, 
the Secretary has determined that this proposed rule would not have a 
significant economic impact on the operations of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2010, that 
threshold is approximately $135 million. This proposed rule is not 
anticipated to have an effect on State, local, or Tribal governments in 
the aggregate, or by the private sector, of $135 million or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this proposed rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it would not have substantial direct effects on the rights, roles, and 
responsibilities of States, local or Tribal governments.

B. Anticipated Effects

    This proposed rule sets forth updates to the HH PPS rates contained 
in the CY 2010 notice published on November 10, 2009. The impact 
analysis of this proposed rule presents the estimated expenditure 
effects of policy changes proposed in this rule. We use the latest data 
and best analysis available, but we do not make adjustments for future 
changes in such variable as number of visits or case-mix.
    This analysis incorporates the latest estimates of growth in 
service use and payments under the Medicare home health benefit, based 
on Medicare claims from 2008. We note that certain events may combine 
to limit the scope or accuracy of our impact analysis, because such an 
analysis is future-oriented and, thus, susceptible to errors resulting 
from other changes in the impact time period assessed. Some examples of 
such possible events are newly-legislated general Medicare program 
funding changes made by the Congress, or changes specifically related 
to HHAs. In addition, changes to the Medicare program may continue to 
be made as a result of the BBA, the BBRA, the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Protection Act of 2000, the MMA, the 
DRA, The Affordable Care Act of 2020, or new statutory provision. 
Although these changes may not be specific to the HH PPS, the nature of 
the Medicare program is such that the changes may interact, and the 
complexity of the interaction of these changes could make it difficult 
to predict accurately the full scope of the impact upon HHAs.
    Table 15 below represents how HHA revenues are likely to be 
affected by the policy changes proposed in this rule. For this 
analysis, we used linked home

[[Page 43276]]

health claims and OASIS assessments; the claims represented a 20-
percent sample of 60-day episodes occurring in CY 2008. The first 
column of Table 15 classifies HHAs according to a number of 
characteristics including provider type, geographic region, and urban 
and rural locations. The second column shows the payment effects of the 
wage index only. The third column shows the payment effects of all the 
proposed policies outlined earlier in this rule. For CY 2011, the 
average impact for all HHAs is a .11 percent increase in payments due 
to the effects of the wage index. The overall impact, for all HHAs, in 
estimated total payments from CY 2010 to CY 2011, is a decrease of 
approximately 4.75 percent.
    Section 3131(c) of the Affordable Care Act amended section 421(a) 
of the MMA of 2003. The amended section 421(a) provides an increase of 
3 percent of the payment amount otherwise made for home health services 
furnished in a rural area, with respect to episodes and visits ending 
on or after April 1, 2010 and before January 1, 2016. Column 3 of Table 
19 displays a comparison of estimated payments in CY 2010, including a 
3 percent rural add-on for the last three quarters of CY 2010, to 
estimated payments in CY 2011, including a 3 percent rural add-on for 
all four quarters of CY 2011.
BILLING CODE 4120-01-P

[[Page 43277]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.018

[[Page 43278]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.019

BILLING CODE 4120-01-C

[[Page 43279]]

C. Accounting Statement and Table

    Whenever a rule is considered a significant rule under Executive 
Order 12866, we are required to develop an Accounting Statement showing 
the classification of the expenditures associated with the provisions 
of this proposed rule.
    Table 20 below provides our best estimate of the decrease in 
Medicare payments under the HH PPS as a result of the changes presented 
in this proposed rule based on the best available data. The 
expenditures are classified as a transfer to the Federal Government of 
$930 million.
[GRAPHIC] [TIFF OMITTED] TP23JY10.020

D. Conclusion

    In conclusion, we estimate that the net impact of the proposals in 
this rule is approximately $900 million in CY 2011 savings. The $900 
million impact to the proposed CY 2011 HH PPS reflects the 
distributional effects of an updated wage index ($20 million increase), 
the 1.4 percent home health market basket update ($270 million 
increase), the 3.79 percent case-mix adjustment applicable to the 
national standardized 60-day episode rates and the NRS conversion 
factor ($700 million decrease), as well as the 2.5 percent returned 
from the outlier provisions of The Affordable Care Act ($490 million 
decrease). This analysis above, together with the remainder of this 
preamble, provides a Regulatory Impact Analysis.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

42 CFR Part 418

    Health facilities, Hospice care, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 484

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 409--HOSPITAL INSURANCE BENEFITS: GENERAL PROVISIONS

    1. The authority citation for part 409 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. Amend Sec.  409.44 by--
    A. Revising paragraph (c)(1).
    B. Republishing paragraph (c)(2) introductory text.
    C. Revising paragraph (c)(2)(i).
    D. Revising paragraph (c)(2)(iii).
    E. Revising paragraph (c)(2)(iv).
    The revisions read as follows:

Sec.  409.44  Skilled services requirements.

* * * * *
    (c) * * *
    (1) Speech-language pathology services and physical or occupational 
therapy services must relate directly and specifically to a treatment 
regimen (established by the physician, after any needed consultation 
with the qualified therapist) that is designed to treat the 
beneficiary's illness or injury. Services related to activities for the 
general physical welfare of beneficiaries (for example, exercises to 
promote overall fitness) do not constitute physical therapy, 
occupational therapy, or speech-language pathology services for 
Medicare purposes. To be covered by Medicare, all of the requirements 
apply as follows:
    (i) The patient's plan of care must describe a course of therapy 
treatment and therapy goals which are consistent with the evaluation of 
the patient's function, and both must be included in the clinical 
record.
    (ii) The patient's clinical record must include documentation 
describing how the course of therapy treatment for the patient's 
illness or injury is in accordance with accepted standards of clinical 
practice.
    (iii) Therapy treatment goals described in the plan of care must be 
measurable, and must pertain directly to the patient's illness or 
injury, and the patient's resultant functional impairments.
    (iv) The patient's clinical record must demonstrate that the method 
used to assess a patient's function included objective measurements of 
function in accordance with accepted standards of clinical practice, 
enabling comparison of successive measurements to determine progress.
    (2) Physical and occupational therapy and speech-language pathology 
services must be reasonable and necessary. To be considered reasonable 
and necessary, the following conditions must be met:
    (i) The services must be considered under accepted standards of 
clinical practice to be a specific, safe, and effective treatment for 
the beneficiary's condition. Each of the following requirements must 
also be met:
    (A) The patient's function must be initially assessed and 
periodically reassessed by a qualified therapist, using a method which 
would include objective measurement of function and progress as 
described in paragraph (c)(1)(iv) of this section. The measurement 
results and corresponding progress, or lack of progress, must be 
documented in the clinical record.
    (B) If a patient requires 13 or 19 therapy visits, at a minimum, 
the patient must be functionally reassessed by a qualified therapist on 
the 13th and 19th therapy visits and at least every 30 days. Subsequent 
therapy visits will not be covered until:
    (1) The qualified therapist has completed the reassessment and

[[Page 43280]]

objectively measured progress (or lack of progress), towards therapy 
goals.
    (2) The qualified therapist has determined if goals have been 
achieved or require updating.
    (3) The qualified therapist has documented measurement results and 
corresponding therapy progress in the clinical record in accordance 
with paragraph (c)(2)(i)(D) of this section.
    (4) If the objective measurements of the reassessment do not reveal 
progress toward goals, the qualified therapist together with the 
physician have determined whether the therapy is still effective or 
should be discontinued. If therapy is to be continued in accordance 
with paragraph (c)(2)(iv)(B)(1) of this section, the clinical record 
must document with a clinically supportable statement why there is an 
expectation that anticipated improvement is attainable in a reasonable 
and generally predictable period of time in accordance with paragraph 
(c)(2)(iii)(A) of this section.
    (C) Clinical notes written by therapy assistants may supplement the 
clinical record, and if included, must include the date written, the 
signature and job title of the writer, and objective measurements or 
description of changes in status (if any) relative to each goal being 
addressed by treatment. Assistants may not make clinical judgments 
about why progress was or was not made, but must report the progress 
(or lack thereof) objectively.
    (D) Progress documentation by a qualified therapist must include:
    (1) The therapist's assessment of improvement and extent of 
progress (or lack thereof) toward each therapy goal;
    (2) Plans for continuing or discontinuing treatment with reference 
to evaluation results and or treatment plan revisions;
    (3) Changes to therapy goals or an updated plan of care that is 
sent to the physician for signature or discharge;
    (4) Documentation of objective evidence or a clinically supportable 
statement of expectation that the patient's condition has the potential 
to improve or is improving in response to therapy or that maximum 
improvement is yet to be attained, and there is an expectation that the 
anticipated improvement is attainable in a reasonable and generally 
predictable period of time.
* * * * *
    (iii) For therapy services to be covered in the home health 
setting, one of the following three criteria must be met:
    (A) There must be an expectation that the beneficiary's condition 
will improve materially in a reasonable (and generally predictable) 
period of time based on the physician's assessment of the beneficiary's 
restoration potential and unique medical condition.
    (1) Material improvement requires that the clinical record 
demonstrate that the patient is making functional improvements that are 
ongoing, as well as of practical value, when measured against his or 
her condition at the start of treatment.
    (2) Covered therapy services under the home health benefit shall be 
rehabilitative therapy service unless they meet the criteria for 
maintenance therapy in paragraph (c)(2)(iii)(B) or (c)(2)(iii)(C) of 
this section.
    (3) Therapy is covered as rehabilitative therapy when the skills of 
a therapist are necessary to safely and effectively furnish or 
supervise a recognized therapy service whose goal is improvement of an 
impairment or functional limitation. Rehabilitative therapy includes 
recovery or improvement in function and, when possible, restoration to 
a previous level of health and well being.
    (4) If an individual's expected rehabilitation potential would be 
insignificant in relation to the extent and duration of therapy 
services required to achieve such potential, therapy would not be 
considered reasonable and necessary, and thus would not be covered as 
rehabilitative therapy services.
    (5) Where a patient suffers a transient and easily reversible loss 
or reduction of function which could reasonably be expected to improve 
spontaneously as the patient gradually resumes normal activities, 
therapy would not be considered reasonable and necessary and the 
services would not be covered.
    (B) The specialized skills, knowledge, and judgment of a qualified 
therapist may be required to design or establish a safe and effective 
maintenance program required in connection with a specific disease, 
ensure patient safety, train the patient, family members and/or 
unskilled personnel, and make periodic reevaluations of the maintenance 
program.
    (1) When indicated, the therapist may develop a maintenance program 
to maintain functional status or to prevent decline in function, during 
the last visit(s) for rehabilitative therapy.
    (2) When a patient qualifies for Medicare's home health benefit 
based on an intermittent skilled nursing need, a qualified therapist 
may develop a maintenance program to maintain functional status or to 
prevent decline in function, at any point in the episode.
    (3) Where the establishment of a maintenance program is initiated 
after the rehabilitative therapy program has been completed, 
development of a maintenance program would not be considered reasonable 
and necessary for the treatment of the patient's condition.
    (4) If the services are for the establishment of a maintenance 
program, they must include the design of the program, the instruction 
of the beneficiary, family, or home health aides, and the necessary 
periodic reevaluations of the beneficiary and the program to the degree 
that the specialized knowledge and judgment of a physical therapist, 
speech-language pathologist, or occupational therapist is required.
    (C) The skills of a therapist must be necessary to perform a safe 
and effective maintenance program required in connection with a 
specific disease. Where the clinical condition of the patient is such 
that the services required to maintain function involve the use of 
complex and sophisticated therapy procedures to be delivered by the 
therapist himself/herself (and not an assistant) in order to ensure the 
patient's safety and to provide both a safe and effective maintenance 
program, then those reasonable and necessary services shall be covered.
    (iv) The amount, frequency, and duration of the services must be 
reasonable and necessary, as determined by a qualified therapist and/or 
physician, using accepted standards of clinical practice.
    (A) Where factors exist that would influence the amount, frequency 
or duration of therapy services, especially factors that influence the 
clinical decisions to provide more services than are typical for the 
patient's condition, those factors must be included in the plan of care 
and/or functional assessment.
    (B) Clinical records must include documentation using objective 
measures that the patient continues to progress towards goals. If 
progress cannot be measured, and continued improvement cannot be 
expected, therapy services cease to be covered except when
    (1) Therapy progress regresses or plateaus, and the reasons for 
lack of progress are documented to include justification that continued 
therapy treatment will lead to resumption of progress toward goals; or
    (2) Therapy can be considered reasonable and necessary when 
maintenance therapy is established or provided, as described in 
paragraph (c)(2)(iii)(B) or (C) of this section.

PART 418--HOSPICE CARE

    3. The authority citation for part 418 continues to read as 
follows:

[[Page 43281]]

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    4. Amend Sec.  418.22 by--
    A. Revising paragraph (a)(3).
    B. Adding paragraphs (a)(4), (b)(3)(v), (b)(4), and (b)(5).
    The revisions and additions read as follows:

Sec.  418.22  Certification of terminal illness.

    (a) * * *
    (3) Exceptions. (i) If the hospice cannot obtain the written 
certification within 2 calendar days, after a period begins, it must 
obtain an oral certification within 2 calendar days and the written 
certification before it submits a claim for payment.
    (ii) Certifications may be completed no more than 15 calendar days 
prior to the effective date of election.
    (iii) Recertifications may be completed no more than 15 calendar 
days prior to the start of the subsequent benefit period.
    (4) Face-to-face encounter. As of January 1, 2011, a hospice 
physician or hospice nurse practitioner must visit each hospice 
patient, whose total stay across all hospices is anticipated to reach 
180 days, no more than 15 calendar days prior to the 180-day 
recertification, and must continue to visit that patient no more than 
15 calendar days prior to every recertification thereafter, to gather 
clinical findings to determine continued eligibility for hospice care.
    (b) * * *
    (3) * * *
    (v) The narrative associated with the 180-day recertification and 
every subsequent recertification must include an explanation of why the 
clinical findings of the face-to-face encounter support a life 
expectancy of 6 months or less.
    (4) The physician or nurse practitioner who performs the face-to-
face encounter with the patient described in paragraph (a)(4) of this 
section, must attest in writing that he or she had a face-to-face 
encounter with the patient, including the date of that visit. The 
attestation of the nurse practitioner shall state that the clinical 
findings of that visit were provided to the certifying physician, for 
use in determining whether the patient continues to have a life 
expectancy of 6 months or less, should the illness run its normal 
course. The attestation, its accompanying signature, and the date 
signed, must be a separate and distinct section of, or an addendum to, 
the recertification form, and must be clearly titled.
    (5) All certifications and recertifications must be signed and 
dated by the physician(s), and must include the benefit period dates to 
which the certification or recertification applies.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

    5. The authority citation for part 424 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    6. Amend Sec.  424.22 by--
    A. Adding paragraph (a)(1)(v).
    B. Revising paragraph (a)(2).
    C. Revising paragraph (b)(1) introductory text.
    D. Revising paragraph (d).
    The revisions and additions read as follows:

Sec.  424.22  Requirements for home health services.

* * * * *
    (a) * * *
    (1) * * *
    (v) The physician responsible for performing the initial 
certification must document that the face-to-face patient encounter, 
which is related to the primary reason the patient requires home health 
services, has occurred no more than thirty days prior to the home 
health start of care date or within two weeks of the start of the home 
health care by including the date of the encounter, and including an 
explanation of why the clinical findings of such encounter support that 
the patient is homebound and in need of either intermittent skilled 
nursing services or therapy services as defined in Sec.  409.42(a) and 
(c) respectively. The physician's documentation of the face-to-face 
encounter in his/her practice's medical recordkeeping for that patient 
must be consistent with, and supportive of, the required documentation 
of the face-to-face encounter as part of the certification. Pursuant to 
sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, the face-to-face 
encounter must be performed by the certifying physician himself or 
herself or by a nurse practitioner, a clinical nurse specialist (as 
those terms are defined in section 1861(aa)(5) of the Act) who is 
working in collaboration with the physician in accordance with State 
law, a certified nurse midwife (as defined in section 1861(gg)of the 
Act) as authorized by State law, or a physician assistant (as defined 
in section 1861(aa)(5) of the Act) under the supervision of the 
physician. The documentation of the face-to-face patient encounter must 
be a separate and distinct section of, or an addendum to, the 
certification, and must be clearly titled, dated and signed by the 
certifying physician.
    (A) The non-physician practitioner performing the face-to-face 
encounter must document the clinical findings of that face-to-face 
patient encounter and communicate those findings to the certifying 
physician.
    (B) If a face-to-face patient encounter occurred within 30 days of 
the start of care but is not related to the primary reason the patient 
requires home health services, or the patient has not seen the 
certifying physician or allowed non-physician practitioner within the 
30 days prior to the start of the home health episode, the certifying 
physician or non-physician practitioner must have a face to face 
encounter with the patient within two weeks of the start of the home 
health care.
    (C) The face-to-face patient encounter may occur through 
telehealth, in compliance with Section 1834(m) of the Act and subject 
to the list of payable Medicare telehealth services established by the 
applicable physician fee schedule regulation.
    (D) To assure clinical correlation between the face-to-face patient 
encounter and the associated home health episode of care, the physician 
responsible for certifying the patient for home care must document the 
face-to-face encounter on the certification itself, or as an addendum 
to the certification (as described in paragraph (a)(1)(v) of this 
section), that the condition for which the patient was being treated in 
the face-to-face patient encounter is related to the primary reason the 
patient requires home health services, and why the clinical findings of 
such encounter support that the patient is homebound and in need of 
either intermittent skilled nursing services or therapy services as 
defined in Sec.  409.42(a) and (c) of this chapter respectively. The 
documentation must be clearly titled, dated and signed by the 
certifying physician.
    (2) Timing & signature. The certification of need for home health 
services must be obtained at the time the plan of care is established 
or as soon thereafter as possible and must be signed and dated by the 
physician who establishes the plan.
    (b) * * *
    (1) Timing and signature of recertification. Recertification is 
required at least every 60 days, preferably at the time the plan is 
reviewed, and must be signed and dated by the physician who reviews the 
plan

[[Page 43282]]

of care. The recertification is required at least every 60 days when 
there is a--
* * * * *
    (d) Limitation of the performance of physician certification and 
plan of care functions. The need for home health services to be 
provided by an HHA may not be certified or recertified, and a plan of 
care may not be established and reviewed, by any physician who has a 
financial relationship as defined in Sec.  411.354 of this chapter, 
with that HHA, unless the physician's relationship meets one of the 
exceptions in section 1877 of the Act, which sets forth general 
exceptions to the referral prohibition related to both ownership/
investment and compensation; exceptions to the referral prohibition 
related to ownership or investment interests; and exceptions to the 
referral prohibition related to compensation arrangements. Non-
physician practitioners would be precluded from performing a face-to-
face encounter for the purpose of informing the certifying physician, 
as described in sections 1814 and 1835 of the Act, if the non-physician 
practitioner is an employee of the HHA, as defined by Section 210(j) of 
the Act.
    7. Amend Sec.  424.502 by adding the definition of ``Change in 
majority ownership'' to read as follows:

Sec.  424.502  Definitions.

* * * * *
    Change in majority ownership occurs when an individual or 
organization acquires more than 50 percent interest in an HHA during 
the 36 following the initial enrollment into the Medicare program or a 
change of ownership (including asset sale, stock transfer, merger, or 
consolidation). This includes an individual or organization that 
acquires majority ownership in an HHA through the cumulative effect of 
asset sales, stock transfers, consolidations, mergers during a 36 month 
period.
* * * * *
    8. Section 424.510 is amended by adding paragraph (d)(9) to read as 
follows:

Sec.  424.510  Requirements for enrolling in the Medicare program.

* * * * *
    (d) * * *
    (9) In order to obtain enrollment and to maintain enrollment for 
the first three months after Medicare billing privileges are conveyed, 
a home health provider must satisfy the home health ``initial reserve 
operating funds'' requirement as set forth in Sec.  489.28 of this 
chapter.
* * * * *
    9. Section 424.530 is amended by adding paragraph (a)(8) to read as 
follows:

Sec.  424.530  Denial of enrollment in the Medicare program.

    (a) * * *
    (8) Initial reserve operating funds. (i) CMS or its designated 
Medicare contractor may deny Medicare billing privileges if within 30 
days of a CMS or Medicare contractor request, a home health agency 
cannot furnish supporting documentation which verifies that the HHA 
meets the initial reserve operating funds requirement found in 42 CFR 
489.28(a).
    (ii) CMS may deny Medicare billing privileges upon an HHA 
applicant's failure to satisfy the initial reserve operating funds 
requirement found in 42 CFR 489.28(a)
* * * * *
    10. Section 424.535 is amended by adding paragraph (a)(11) to read 
as follows:

Sec.  424.535  Revocation of enrollment and billing privileges in the 
Medicare program.

    (a) * * *
    (11) Initial reserve operating funds. CMS or its designated 
Medicare contractor may revoke the Medicare billing privileges of a 
home health agency (HHA) and the corresponding provider agreement if 
within 30 days of a CMS or Medicare contractor request, the HHA cannot 
furnish supporting documentation verifying that the HHA meets the 
initial reserve operating funds requirement found in 42 CFR 489.28(a).
* * * * *
    11. Section 424.550 is amended by adding paragraphs (b)(1) and 
(b)(2) to read as follows:

Sec.  424.550  Prohibitions on the sale or transfer of billing 
privileges.

    (b) * * *
    (1) Unless an exception in paragraph (b)(2) of this section 
applies, if there is a change in majority ownership of a home health 
agency by sale (including asset sales, stock transfers, mergers, 
consolidations) within 36 months after the effective date of the HHA's 
enrollment in Medicare, the provider agreement and Medicare billing 
privileges do not convey to the new owner. The prospective provider/
owner of the HHA must instead:
    (i) Enroll in the Medicare program as a new HHA under the 
provisions of Sec.  424.510.
    (ii) Obtain a State survey or an accreditation from an approved 
accreditation organization.
    (2)(i) A publicly-traded company is acquiring another HHA and both 
entities have submitted cost reports to Medicare for the previous five 
(5) years.
    (ii) An HHA's parent company is undergoing an internal corporate 
restructuring, such as a merger or consolidation, and the HHA has 
submitted a cost report to Medicare for the previous five (5) years.
    (iii) The owners of an existing HHA decide to change the existing 
business structure (for example, partnership to a limited liability 
corporation or sole proprietorship to subchapter S corporation), the 
individual owners remain the same, and there is no change in majority 
ownership.
    (iv) The death of an owner who owns 49 percent or less interest in 
an HHA (where several individuals and/or organizations are co-owners of 
an HHA and one of the owners dies).
* * * * *

PART 484--HOME HEALTH SERVICES

    12. The authority citation for part 484 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh)).

Subpart E--Prospective Payment System for HHAs

    13. Revise Sec.  484.250 to read as follows:

Sec.  484.250  Patient assessment data.

    (a) An HHA must submit to CMS the OASIS-C data described at Sec.  
484.55 (b)(1) and Home Health Care CAHPS data in order for CMS to 
administer the payment rate methodologies described in Sec. Sec.  
484.215, 484.230, and 484.235, and meet the quality reporting 
requirements of section 1895(b)(3)(B)(v) of the Act.
    (b) An HHA that has less than 60 eligible unique HHCAHPS patients 
annually must submit to CMS their total HHCAHPS patient count to CMS in 
order to be exempt from the HHCAHPS reporting requirements.
    (c) An HHA must contract with an approved, independent HHCAHPS 
survey vendor to administer the HHCAHPS on its behalf.
    (1) CMS approves an HHCAHPS survey vendor if such applicant has 
been in business for a minimum of three years and has conducted surveys 
of individuals and samples for at least two years. For HHCAHPS, a 
``survey of individuals'' is defined as the collection of data from at 
least 600 individuals selected by statistical sampling methods and the 
data collected are used for statistical purposes. All applicants that 
meet these requirements will be approved by CMS.

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    (2) No organization, firm, or business that owns, operates, or 
provides staffing for a HHA is permitted to administer its own Home 
Health Care CAHPS (HHCAHPS) Survey or administer the survey on behalf 
of any other HHA in the capacity as an HHCAHPS survey vendor. Such 
organizations will not be approved by CMS as HHCAHPS survey vendors.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

    14. The authority citation for part 489 continues to read as 
follows:

    Authority: Secs. 1102, 1819, 1820(e), 1861, 1864(m), 1866, 1869, 
and 1871 of the Social Security Act (42 U.S.C. 1302, 1395i-3, 1395x, 
1395aa(m), 1395cc, 1395ff, and 1395hh).

    15. Amend Sec.  489.28 by--
    A. Revising paragraph (a).
    B. Adding paragraph (c)(1).
    B. Adding and reserving paragraph (c)(2).
    C. Revising paragraph (g).
    The addition and revisions read as follows:

Sec.  489.28  Special capitalization requirements for HHAs.

    (a) Basic rule. An HHA entering the Medicare program on or after 
January 1, 1998, including a new HHA as a result of a change of 
ownership, if the change of ownership results in a new provider number 
being issued, must have available sufficient funds, which we term 
``initial reserve operating funds,'' at the time of application 
submission and at all times during the enrollment process to operate 
the HHA for the three month period after Medicare billing privileges 
are conveyed by the Medicare contractor, exclusive of actual or 
projected accounts receivable from Medicare.
* * * * *
    (c) * * *
    (1) In selecting the comparative HHAs as described in this 
paragraph (c), the CMS contractor shall only select HHAs that have 
provided cost reports to Medicare.
    (2)[Reserved]
* * * * *
    (g) Billing privileges. (1) CMS may deny Medicare billing 
privileges to an HHA unless the HHA meets the initial reserve operating 
funds requirement of this section.
    (2) CMS may revoke the Medicare billing privileges of an HHA that 
fails to meet the initial reserve operations funds requirements of this 
section within three months of receiving its billing privileges.

(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--
Hospital Insurance; and Program No. 93.774, Medicare--Supplementary 
Medical Insurance Program)

    Dated: May 18, 2010.
Marilyn Tavenner,
Acting Administrator and Chief Operating Officer, Centers for Medicare 
& Medicaid Services.
    Approved: July 14, 2010.
Kathleen Sebelius,
Secretary.

    Note: The following addenda will not be published in the Code of 
Federal Regulations.

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[FR Doc. 2010-17753 Filed 7-16-10; 4:15 pm]
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