```

[Federal Register Volume 79, Number 129 (Monday, July 7, 2014)]
[Proposed Rules]
[Pages 38365-38420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15736]

[[Page 38365]]

Vol. 79

Monday,

No. 129

July 7, 2014

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, 424, 484, et al.

 Medicare and Medicaid Programs; CY 2015 Home Health Prospective 
Payment System Rate Update; Home Health Quality Reporting Requirements; 
and Survey and Enforcement Requirements for Home Health Agencies; 
Proposed Rule

Federal Register / Vol. 79 , No. 129 / Monday, July 7, 2014 / 
Proposed Rules

[[Page 38366]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 424, 484, 488, 498

[CMS-1611-P]
RIN 0938-AS14

Medicare and Medicaid Programs; CY 2015 Home Health Prospective 
Payment System Rate Update; Home Health Quality Reporting Requirements; 
and Survey and Enforcement Requirements for Home Health Agencies

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the Home Health Prospective 
Payment System (HH PPS) rates, including the national, standardized 60-
day episode payment rates, the national per-visit rates, and the non-
routine medical supply (NRS) conversion factor under the Medicare 
prospective payment system for home health agencies (HHAs), effective 
January 1, 2015. As required by the Affordable Care Act, this rule 
implements the second year of the four-year phase-in of the rebasing 
adjustments to the HH PPS payment rates. This rule provides information 
on our efforts to monitor the potential impacts of the rebasing 
adjustments and the Affordable Care Act mandated face-to-face encounter 
requirement. This rule also proposes: Changes to simplify the face-to-
face encounter regulatory requirements; changes to the HH PPS case-mix 
weights; changes to the home health quality reporting program 
requirements; changes to simplify the therapy reassessment timeframes; 
a revision to the Speech-Language Pathology (SLP) personnel 
qualifications; minor technical regulations text changes; and 
limitations on the reviewability of the civil monetary penalty 
provisions. Finally, this proposed rule also discusses Medicare 
coverage of insulin injections under the HH PPS, the delay in the 
implementation of ICD-10-CM, and solicits comments on a HH value-based 
purchasing (HH VBP) model.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on September 2, 
2014.

ADDRESSES: In commenting, please refer to file code CMS-1611-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-1611-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    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-1611-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.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Hillary Loeffler, (410) 786-0456, for 
general information about the HH PPS.
    Joan Proctor, (410) 786-0949, for information about the HH PPS 
Grouper, ICD-9-CM coding, and ICD-10-CM Conversion.
    Kristine Chu, (410) 786-8953, for information about rebasing and 
the HH PPS case-mix weights.
    Hudson Osgood, (410) 786-7897, for information about the HH market 
basket.
    Caroline Gallaher, (410) 786-8705, for information about the HH 
quality reporting program.
    Lori Teichman, (410) 786-6684, for information about HHCAHPS.
    Peggye Wilkerson, (410) 786-4857, for information about survey and 
enforcement requirements for HHAs.
    Robert Flemming, (410) 786-4830, for information about the HH VBP 
model.
    Danielle Shearer, (410) 786-6617, for information about SLP 
personnel qualifications.

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. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Costs and Benefits
II. Background
    A. Statutory Background
    B. System for Payment of Home Health Services
    C. Updates to the HH PPS
III. Provisions of the Proposed Rule
    A. Monitoring for Potential Impacts--Affordable Care Act 
Rebasing Adjustments and the Face-to-Face Encounter Requirement
    1. Affordable Care Act Rebasing Adjustments

[[Page 38367]]

    2. Affordable Care Act Face-to-Face Encounter Requirement
    B. Proposed Changes to the Face-to-Face Encounter Documentation 
Requirements
    1. Statutory and Regulatory Requirements
    2. Proposed Changes to the Face-to-Face Encounter Narrative 
Requirement and Non-Coverage of Associated Physician Certification/
Re-Certification Claims
    3. Proposed Clarification on When Documentation of a Face-to-
Face Encounter is Required
    C. Proposed Recalibration of the HH PPS Case-Mix Weights
    D. CY 2015 Rate Update
    1. Proposed CY 2015 Home Health Market Basket Update
    2. Home Health Care Quality Reporting Program (HHQRP)
    a. General Considerations Used for Selection of Quality Measures 
for the HHQRP
    b. Background and Quality Reporting Requirements
    c. OASIS Data Submission and OASIS Data for Annual Payment 
Update
    d. Updates to HH QRP Measures Which Are Made as a Result of 
Review by the NQF Process
    e. Home Health Care CAHPS Survey (HHCAHPS)
    3. Proposed CY 2015 Home Health Wage Index
    4. Home Health Wage Index
    a. Background
    b. Update
    c. Proposed Implementation of New Labor Market Delineations
    5. Proposed CY 2015 Annual Payment Update
    a. Background
    b. Proposed CY 2015 National, Standardized 60-Day Episode 
Payment Rate
    c. Proposed CY 2015 National Per-Visit Rates
    d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
    e. Proposed CY 2015 Nonroutine Medical Supply Conversion Factor 
and Relative Weights
    f. Rural Add-On
    E. Payments for High-Cost Outliers under the HH PPS
    1. Background
    2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing Ratio
    F. Medicare Coverage of Insulin Injections under the HH PPS
    G. Implementation of the International Classification of 
Diseases, 10th Revision, Clinical Modification (ICD-10-CM)
    H. Proposed Change to the Therapy Reassessment Timeframes
    I. HHA Value-Based Purchasing Model
    J. Advancing Health Information Exchange
    K. Proposed Revisions to the Speech-Language Pathologist 
Personnel Qualifications
    L. Proposed Technical Regulations Text Changes
    M. Survey and Enforcement Requirements for Home Health Agencies
    1. Statutory Background and Authority
    2. Reviewability Pursuant to Appeals
    3. Technical Adjustment
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis
VII. Federalism Analysis
    Regulations Text

Acronyms

    In addition, because of the many terms to which we refer by 
abbreviation in this proposed rule, we are listing these abbreviations 
and their corresponding terms in alphabetical order below:

ACH LOS Acute Care Hospital Length of Stay
ADL Activities of Daily Living
APU Annual Payment Update
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Pub. L. 106-113
CAD Coronary Artery Disease
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CASPER Certification and Survey Provider Enhanced Reports
CHF Congestive Heart Failure
CMI Case-Mix Index
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
CoPs Conditions of Participation
COPD Chronic Obstructive Pulmonary Disease
CVD Cardiovascular Disease
CY Calendar Year
DM Diabetes Mellitus
DRA Deficit Reduction Act of 2005, Pub. L. 109-171, enacted February 
8, 2006
FDL Fixed Dollar Loss
FI Fiscal Intermediaries
FR Federal Register
FY Fiscal Year
HAVEN Home Assessment Validation and Entry System
HCC Hierarchical Condition Categories
HCIS Health Care Information System
HH Home Health
HHA Home Health Agency
HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers 
and Systems Survey
HH PPS Home Health Prospective Payment System
HHRG Home Health Resource Group
HIPPS Health Insurance Prospective Payment System
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
IH Inpatient Hospitalization
IRF Inpatient Rehabilitation Facility
LTCH Long-Term Care Hospital
LUPA Low-Utilization Payment Adjustment
MEPS Medical Expenditures Panel Survey
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173, enacted December 8, 2003
MSA Metropolitan Statistical Area
MSS Medical Social Services
NQF National Quality Forum
NRS Non-Routine Supplies
OASIS Outcome and Assessment Information Set
OBRA Omnibus Budget Reconciliation Act of 1987, Pub. L. 100-2-3, 
enacted December 22, 1987
OCESAA Omnibus Consolidated and Emergency Supplemental 
Appropriations Act, Pub. L. 105-277, enacted October 21, 1998
OES Occupational Employment Statistics
OIG Office of Inspector General
OT Occupational Therapy
OMB Office of Management and Budget
MFP Multifactor productivity
PAMA Protecting Access to Medicare Act of 2014
PAC-PRD Post-Acute Care Payment Reform Demonstration
PEP Partial Episode Payment Adjustment
PT Physical Therapy
QAP Quality Assurance Plan
PRRB Provider Reimbursement Review Board
RAP Request for Anticipated Payment
RF Renal Failure
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHHIs Regional Home Health Intermediaries
RIA Regulatory Impact Analysis
SAF Standard Analytic File
SLP Speech-Language Pathology
SN Skilled Nursing
SNF Skilled Nursing Facility
UMRA Unfunded Mandates Reform Act of 1995.

I. Executive Summary

A. Purpose

    This proposed rule would update the payment rates for HHAs for 
calendar year (CY) 2015, as required under section 1895(b) of the 
Social Security Act (the Act). This would reflect the second year of 
the four-year phase-in of the rebasing adjustments to the national, 
standardized 60-day episode payment rate, the national per-visit rates, 
and the NRS conversion factor finalized in the CY 2014 HH PPS final 
rule (78 FR 72256), required under section 3131(a) of the Patient 
Protection and Affordable Care Act of 2010 (Pub. L. 111-148), as 
amended by the Health Care and Education Reconciliation Act of 2010 
(Pub. L. 111-152) (collectively referred to as the ``Affordable Care 
Act''). Updates to payment rates under the HH PPS would also include a 
proposal to change the home health wage index to incorporate the new 
Office of Management and Budget (OMB) core-based statistical area 
(CBSA) definitions and updates to the payment rates by the home health 
payment update percentage, which would reflect the productivity 
adjustment mandated by 3401(e) of the Affordable Care Act.
    This proposed rule also discusses: Our efforts to monitor the 
potential

[[Page 38368]]

impacts of the Affordable Care Act mandated rebasing adjustments and 
the face-to-face encounter requirement (sections 3131(a) and 6407, 
respectively, of the Affordable Care Act); coverage of insulin 
injections under the HH PPS; and the delay in the implementation of the 
International Classification of Diseases, 10th Edition, Clinical 
Modification (ICD-10-CM) as a result of recent Congressional action 
(section 212 of the Protecting Access to Medicare Act, Public Law 113-
93 (``PAMA'')). This proposed rule also proposes changes to simplify 
the regulations at Sec.  424.22(a)(1)(v) that govern the face-to-face 
encounter requirement mandated by section 6407 of the Affordable Care 
Act; changes to the HH PPS case-mix weights under section 
1895(b)(4)(A)(i) and (b)(4)(B) of the Act; changes to the home health 
quality reporting program requirements under section 
1895(b)(3)(B)(v)(II) of the Act; changes to simplify the therapy 
reassessment timeframes specified in regulation at Sec.  
409.44(c)(2)(C) and (D); a revision to the personnel qualifications for 
SLP at Sec.  484.4; and minor technical regulations text changes at 
Sec.  424.22(b)(1) and Sec.  484.250(a)(1). This proposed rule would 
also place limitations on the reviewability of CMS's decision to impose 
a civil monetary penalty for noncompliance with federal participation 
requirements. Finally, the proposed rule discusses and solicits 
comments on a HH VBP model.

B. Summary of the Major Provisions

    As required by section 3131(a) of the Affordable Care Act and 
finalized in the CY 2014 HH final rule, ``Medicare and Medicaid 
Programs; Home Health Prospective Payment System Rate Update for CY 
2014, Home Health Quality Reporting Requirements, and Cost Allocation 
of Home Health Survey Expenses'' (78 FR 77256, December 2, 2013), we 
are implementing the second year of the four-year phase-in of the 
rebasing adjustments to the national, standardized 60-day episode 
payment amount, the national per-visit rates and the NRS conversion 
factor in section III.D.4. The rebasing adjustments for CY 2015 would 
reduce the national, standardized 60-day episode payment amount by 
$80.95, increase the national per-visit payment amounts by 3.5 percent 
of the national per-visit payment amounts in CY 2010 with the increases 
ranging from $6.34 for medical social services to $1.79 for home health 
aide services as described in section III.A, and reduce the NRS 
conversion factor by 2.82 percent.
    This proposed rule also discusses our efforts to monitor the 
potential impacts of the rebasing adjustments and the Affordable Care 
Act mandated face-to-face encounter requirement in section III.A and, 
in section III.B. We would propose changes to the face-to-face 
encounter narrative requirement. In addition, we are proposing that 
associated physician claims for certification/re-certification of 
eligibility (patient not present) not be eligible to be paid when a 
patient does not meet home health eligibility criteria. We would also 
clarify in sub-regulatory guidance when the face-to-face encounter 
requirement would be applicable. In section III.C, we are proposing to 
recalibrate the HH PPS case-mix weights, using the most current cost 
and utilization data available, in a budget neutral manner. In section 
III.D.1, we propose to update the payment rates under the HH PPS by the 
home health payment update percentage of 2.2 percent (using the 2010-
based Home Health Agency (HHA) market basket update of 2.6 percent, 
minus a 0.4 percentage point reduction for productivity as required by 
1895(b)(3)(B)(vi)(I) of the Act. In section III.D.3, we propose to 
update the home health wage index using a 50/50 blend of the existing 
core-based statistical area (CBSA) designations and the new CBSA 
designations outlined in a February 28, 2013, Office of Management and 
Budget (OMB) bulletin, respectively. In section III.E, we propose no 
changes to the fixed-dollar loss (FDL) and loss-sharing ratios used in 
calculating high-cost outlier payments under the HH PPS.
    This proposed rule also proposes changes to the home health quality 
reporting program in section III.D.2, including the establishment of a 
minimum threshold for submission of OASIS assessments for purposes of 
quality reporting compliance, the establishment of a policy for the 
adoption of changes to measures that occur in-between rulemaking cycles 
as a result of the NQF process, and submission dates for the HHCAHPS 
Survey moving forward through CY 2017. In section III.F, we discuss 
recent analysis of home health claims identified with skilled nursing 
visits likely done for the sole purpose of insulin injection 
assistance, and the lack of any secondary diagnoses on the home health 
claim to support that the patient was physically or mentally unable to 
self-inject. We discuss, in section III.G, the delay in the 
implementation of ICD-10-CM as a result of section 212 of PAMA. In 
section III.H we seek to simplify the therapy reassessment regulations 
by proposing that therapy reassessments are to occur every 14 calendar 
days rather than before the 14th and 20th visits and once every 30 
calendar days. Finally, in section III.I, we plan to discuss and 
solicit comments on an HH VBP model; in section III.J, we propose to 
revise the personnel qualifications for SLP; in section III.K we are 
proposing minor technical regulations text changes; and in section 
III.L we are proposing to place limitations on the reviewability of the 
civil monetary penalty that is imposed on a HHA for noncompliance with 
federal participation requirements.

C. Summary of Costs and Transfers

                 Table 1--Summary of Costs and Transfers
------------------------------------------------------------------------
    Provision Description             Costs               Transfers
------------------------------------------------------------------------
CY 2015 HH PPS Payment Rate   A net reduction in    The overall economic
 Update.                       burden of $21.55      impact of this
                               million associated    proposed rule is an
                               with certifying       estimated $58
                               patient eligibility   million in
                               for home health       decreased payments
                               services &            to HHAs.
                               certification form
                               revisions.
------------------------------------------------------------------------

II. Background

A. Statutory Background

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted 
August 5, 1997), significantly changed the way Medicare pays for 
Medicare HH services. Section 4603 of the BBA mandated the development 
of the HH PPS. Until the implementation of the HH PPS on October 1, 
2000, 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 HH 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

[[Page 38369]]

PPS for all costs of HH services paid under Medicare.
    Section 1895(b)(3)(A) of the Act requires the following: (1) The 
computation of a standard prospective payment amount include all costs 
for HH 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 levels among HHAs.
    Section 1895(b)(3)(B) of the Act addresses the annual update to the 
standard prospective payment amounts by the HH 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 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 HH services 
furnished in a geographic area compared to the applicable national 
average level. Under section 1895(b)(4)(C) of the Act, 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 gives the Secretary the option to 
make additions or adjustments to the payment amount otherwise paid in 
the case of outliers due to unusual variations in the type or amount of 
medically necessary care. Section 3131(b)(2) of the Patient Protection 
and Affordable Care Act of 2010 (the Affordable Care Act) (Pub. L. 111-
148, enacted March 23, 2010) revised section 1895(b)(5) of the Act so 
that total outlier payments in a given year would not exceed 2.5 
percent of total payments projected or estimated. The provision also 
made permanent a 10 percent agency-level outlier payment cap.
    In accordance with the statute, as amended by the BBA, we published 
a final rule in the July 3, 2000 Federal Register (65 FR 41128) to 
implement the HH PPS legislation. The July 2000 final rule established 
requirements for the new HH PPS for HH 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 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 November 29, 1999). The requirements include the implementation 
of a HH PPS for HH 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 HH 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).
    Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v) 
to the Act, requiring HHAs to submit data for purposes of measuring 
health care quality, and links the quality data submission to the 
annual applicable percentage increase. This data submission requirement 
is applicable for CY 2007 and each subsequent year. If an HHA does not 
submit quality data, the HH market basket percentage increase is 
reduced by 2 percentage points. In the November 9, 2006 Federal 
Register (71 FR 65884, 65935), we published a final rule to implement 
the pay-for-reporting requirement of the DRA, which was codified at 
Sec.  484.225(h) and (i) in accordance with the statute. The pay-for-
reporting requirement was implemented on January 1, 2007.
    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 of 2003 (MMA) (Pub. L. 108-173, 
enacted on December 8, 2003) as amended by section 5201(b) of the DRA. 
The amended section 421(a) of the MMA now requires, for HH 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 HH disciplines (skilled nursing, 
HH aide, physical therapy, speech-language pathology, occupational 
therapy, and medical social services). Payment for non-routine 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 
II.D.4.e). Payment for durable medical equipment covered under the HH 
benefit is made outside the HH PPS payment system. To adjust for case-
mix, the HH PPS uses a 153-category case-mix classification system to 
assign patients to a home health resource group (HHRG). The clinical 
severity level, functional severity level, and service utilization are 
computed from responses to selected data elements in the OASIS 
assessment instrument and are used to place the patient in a particular 
HHRG. Each HHRG has an associated case-mix weight which is used in 
calculating the payment for an episode.
    For episodes with four or fewer visits, Medicare pays national per-
visit rates based on the discipline(s) providing the services. 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. 
The 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 HH PPS for CY 2008. The CY 2008 HH PPS final rule included an 
analysis performed on CY 2005 HH claims data, which indicated a 12.78 
percent increase in the observed case-mix since 2000. Case-mix 
represents the variations in conditions of the patient population 
served by the HHAs. Subsequently, a more detailed analysis was 
performed on the 2005 case-mix data to evaluate if any portion of the 
12.78 percent increase was associated with a change in the actual 
clinical condition of HH patients. We

[[Page 38370]]

examined data on demographics, family severity, and non-HH Part A 
Medicare expenditures to predict the average case-mix weight for 2005. 
We identified 8.03 percent of the total case-mix change as real, and 
therefore, decreased the 12.78 percent of total case-mix change by 8.03 
percent to get a final nominal case-mix increase measure of 11.75 
percent (0.1278 * (1 - 0.0803) = 0.1175).
    To account for the changes in case-mix that were not related to an 
underlying change in patient health status, we implemented a reduction, 
over 4 years, to the national, standardized 60-day episode payment 
rates. That reduction was to be 2.75 percent per year for 3 years 
beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011. 
In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses 
of case-mix change and finalized a reduction of 3.79 percent, instead 
of 2.71 percent, for CY 2011 and deferred finalizing a payment 
reduction for CY 2012 until further study of the case-mix change data 
and methodology was completed.
    In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-
day national episode rates and the national per-visit rates. In 
addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528), 
our analysis indicated that there was a 22.59 percent increase in 
overall case-mix from 2000 to 2009 and that only 15.76 percent of that 
overall observed case-mix percentage increase was due to real case-mix 
change. As a result of our analysis, we identified a 19.03 percent 
nominal increase in case-mix. At that time, to fully account for the 
19.03 percent nominal case-mix growth identified from 2000 to 2009, we 
finalized a 3.79 percent payment reduction in CY 2012 and a 1.32 
percent payment reduction for CY 2013.
    In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a 
1.32 percent reduction to the payment rates for CY 2013 to account for 
nominal case-mix growth from 2000 through 2010. When taking into 
account the total measure of case-mix change (23.90 percent) and the 
15.97 percent of total case-mix change estimated as real from 2000 to 
2010, we obtained a final nominal case-mix change measure of 20.08 
percent from 2000 to 2010 (0.2390 * (1 - 0.1597) = 0.2008). To fully 
account for the remainder of the 20.08 percent increase in nominal 
case-mix beyond that which was accounted for in previous payment 
reductions, we estimated that the percentage reduction to the national, 
standardized 60-day episode rates for nominal case-mix change would be 
2.18 percent. Although we considered proposing a 2.18 percent reduction 
to account for the remaining increase in measured nominal case-mix, we 
finalized the 1.32 percent payment reduction to the national, 
standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 
FR 68532).
    Section 3131(a) of the Affordable Care Act requires that, beginning 
in CY 2014, CMS apply an adjustment to the national, standardized 60-
day episode rate and other amounts that reflect factors such as changes 
in the number of visits in an episode, the mix of services in an 
episode, the level of intensity of services in an episode, the average 
cost of providing care per episode, and other relevant factors. 
Additionally, CMS must phase in any adjustment over a four-year period 
in equal increments, not to exceed 3.5 percent of the amount (or 
amounts) as of the date of enactment of the Affordable Care Act, and 
fully implement the rebasing adjustments by CY 2017. The statute 
specifies that the maximum rebasing adjustment is to be no more than 
3.5 percent per year of the CY 2010 rates. Therefore, in the CY 2014 HH 
PPS final rule (78 FR 72256) for each year, CY 2014 through CY 2017, we 
finalized a fixed-dollar reduction to the national, standardized 60-day 
episode payment rate of $80.95 per year, increases to the national per-
visit payment rates per year as reflected in Table 2, and a decrease to 
the NRS conversion factor of 2.82 percent per year. We also finalized 
three separate LUPA add-on factors for skilled nursing, physical 
therapy, and speech-language pathology and removed 170 diagnosis codes 
from assignment to diagnosis groups in the HH PPS Grouper.

  Table 2--Maximum Adjustments to the National Per-Visit Payment Rates
         [Not to exceed 3.5 percent of the amount(s) in CY 2010]
------------------------------------------------------------------------
                                                            Maximum
                                    2010 National per-  adjustments per
                                      visit payment      year  (CY 2014
                                          rates         through CY 2017)
------------------------------------------------------------------------
Skilled Nursing...................            $113.01              $3.96
Home Health Aide..................              51.18               1.79
Physical Therapy..................             123.57               4.32
Occupational Therapy..............             124.40               4.35
Speech-Language Pathology.........             134.27               4.70
Medical Social Services...........             181.16               6.34
------------------------------------------------------------------------

III. Provisions of the Proposed Rule

A. Monitoring for Potential Impacts--Affordable Care Act Rebasing 
Adjustments and the Face-to-Face Encounter Requirement

1. Affordable Care Act Rebasing Adjustments
    As stated in the CY 2014 HH PPS final rule, we plan to monitor 
potential impacts of rebasing. Although we do not have enough CY 2014 
home health claims data to analyze as part of our effort in monitoring 
the potential impacts of the rebasing adjustments finalized in the CY 
2014 HH PPS final rule (78 FR 72293), we have analyzed 2012 home health 
agency cost report data to determine whether the average cost per 
episode was higher using 2012 cost report data compared to the 2011 
cost report data used in calculating the rebasing adjustments. 
Specifically, we re-estimated the cost of a 60-day episode using 2012 
cost report and 2012 claims data, rather than using 2011 cost report 
and 2012 claims data. To determine the 2012 average cost per visit per 
discipline, we applied the same trimming methodology outlined in the CY 
2014 HH PPS proposed rule (78 FR 40284) and weighted the costs per 
visit from the 2012 cost reports by size,

[[Page 38371]]

facility type, and urban/rural location so the costs per visit were 
nationally representative. The 2012 average number of visits was taken 
from 2012 claims data. We estimate the cost of a 60-day episode to be 
$2,413.82 using 2012 cost report data (Table 3).

               Table 3--Average Costs per Visit and Average Number of Visits for a 60-Day Episode
----------------------------------------------------------------------------------------------------------------
                                                            2012 Average       2012 Average       2012 60-day
                       Discipline                         costs per visit    number of visits    episode costs
----------------------------------------------------------------------------------------------------------------
Skilled Nursing........................................            $130.49               9.55          $1,246.18
Home Health Aide.......................................              61.62               2.60             160.21
Physical Therapy.......................................             160.03               4.80             768.14
Occupational Therapy...................................             157.78               1.09             171.98
Speech-Language Pathology..............................             172.08               0.22              37.86
Medical Social Services................................             210.36               0.14              29.45
                                                        --------------------------------------------------------
    Total..............................................  .................  .................           2,413.82
----------------------------------------------------------------------------------------------------------------
Source: FY 2012 Medicare cost report data and 2012 Medicare claims data from the standard analytic file (as of
  June 2013) for episodes ending on or before December 31, 2012 for which we could link an OASIS assessment.

    Using the most current claims data--CY 2013 data (as of December 
31, 2013), we re-examined the 2012 visit distribution and re-calculated 
the 2013 estimated cost per episode using the updated 2013 visit 
profile. We estimate the 2013 60-day episode cost to be $2,477.01(Table 
4).

                                    Table 4--2013 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
                                                   2012 Average    2013 Average                   2013 Estimated
                   Discipline                        costs per       number of    2013 HH market     cost per
                                                       visit          visits          basket          episode
----------------------------------------------------------------------------------------------------------------
Skilled Nursing.................................         $130.49            9.30           1.023       $1,241.47
Home Health Aide................................           61.62            2.42           1.023          152.55
Physical Therapy................................          160.03            4.99           1.023          816.92
Occupational Therapy............................          157.78            1.20           1.023          193.69
Speech-Language Pathology.......................          172.08            0.24           1.023           42.25
Medical Social Services.........................          210.36            0.14           1.023           30.13
                                                 ---------------------------------------------------------------
    Total.......................................  ..............  ..............  ..............        2,477.01
----------------------------------------------------------------------------------------------------------------
Source: FY 2012 Medicare cost report data and 2013 Medicare claims data from the standard analytic file (as of
  December 2013) for episodes ending on or before December 31, 2013 for which we could link an OASIS assessment.

    In the CY 2014 HH PPS final rule (78 FR 72277), using 2011 cost 
report data, we estimated the 2012 60-day episode cost to be about 
$2,507.83 ($2,453.71 * 0.9981 * 1.024) and the 2013 60-day episode cost 
to be $2,565.51 ($2,453.71 * 0.9981 * 1.024 * 1.023). Using 2012 cost 
report data, the 2012 and 2013 estimated cost per episode ($2,413.82 
and $2,477.01, respectively) are lower than the episode costs we 
estimated using 2011 cost report data for the CY 2014 HH PPS final 
rule. We note that the proposed CY 2015 national, standardized 60-day 
episode payment rate is $2,922.76 as described in section III.D.4. of 
this proposed rule.
    In the CY 2014 HH PPS final rule, we stated that our analysis of 
2011 cost report data and 2012 claims data indicated a need for a -3.45 
percent rebasing adjustment to the national, standardized 60-day 
episode payment rate each year for four years. However, as specified by 
statute, the rebasing adjustment is limited to 3.5 percent of the CY 
2010 national, standardized 60-day episode payment rate of $2,312.94 
(74 FR 58106), or $80.95. We stated that given that a -3.45 percent 
adjustment for CY 2014 through CY 2017 would result in larger dollar 
amount reductions than the maximum dollar amount allowed under section 
3131(a) of the Affordable Care Act of $80.95, we are limited to 
implementing a reduction of $80.95 (approximately 2.8 percent) to the 
national, standardized 60-day episode payment amount each year for CY 
2014 through CY 2017. Our latest analysis of 2012 cost report data 
suggests that an even larger reduction (4.29 percent) than the 
reduction described in the CY 2014 final rule (3.45 percent) would be 
needed in order to align payments to costs. We will continue to monitor 
potential impacts of rebasing.
2. Affordable Care Act Face-to-Face Encounter Requirement
    Effective January 1, 2011, section 6407 the Affordable Care Act 
requires that as a condition for payment, prior to certifying a 
patient's eligibility for the Medicare home health benefit, the 
physician must document that the physician himself or herself, or an 
allowed nonphysician practitioner (NPP), as described below, had a 
face-to-face encounter with the patient. The regulations at 
424.22(a)(1)(v) currently require that that the face-to-face encounter 
be related to the primary reason the patient requires home health 
services and occur no more than 90 days prior to the home health start 
of care date or within 30 days of the start of the home health care. In 
addition, as part of the certification of eligibility, the certifying 
physician must document the date of the encounter and include an 
explanation (narrative) of why the clinical findings of such encounter 
support that the patient is homebound, as defined in subsections 
1814(a) and 1835(a) of the Act, and in need of either intermittent 
skilled nursing services or therapy services, as defined in Sec.  
409.42(c). The face-to-face encounter requirement was enacted, in part, 
to discourage physicians certifying patient eligibility for the 
Medicare home health benefit from relying solely on

[[Page 38372]]

information provided by the HHAs when making eligibility determinations 
and other decisions about patient care.
    In the CY 2011 HH PPS final rule, in which we implemented the face-
to-face encounter provision of the Affordable Care Act, some commenters 
expressed concern that this requirement would diminish access to home 
health services (75 FR 70427). We examined home health claims data from 
before implementation of the face-to-face encounter requirement (CY 
2010), the year of implementation (CY 2011), and the years following 
implementation (CY 2012 and CY 2013), to determine whether there were 
indications of access issues as a result of this requirement. 
Nationally, utilization held relatively constant between CY 2010 and CY 
2011 and decreased slightly in CY 2012 (see Table 5). While Table 5 
contains preliminary CY 2013 data, the discussion in this section will 
focus mostly on CY 2010 through CY 2012 data. We will update our 
analysis with complete CY 2013 data in the final rule. Between CY 2010 
and CY 2011, there was a 0.81 percent decrease in number of episodes, 
and a 1.37 percent decrease in the number of episodes between CY 2011 
and CY 2012. However, there was a 0.51 percent increase in the number 
of beneficiaries with at least one home health episode between CY 2010 
and CY 2011 and between CY 2011 and CY 2012 the number of beneficiaries 
with at least one episode held relatively constant. Home health users 
(beneficiaries with at least one home health episode) as a percentage 
of Part A and/or Part B fee-for-service (FFS) beneficiaries decreased 
slightly from 9.3 percent in CY 2010 to 9.2 percent in CY 2011to 9.0 
percent in CY 2012 and the number of episodes per Part A and/or Part B 
FFS beneficiaries decreased slightly between CY 2010 and CY 2011, but 
remained relatively constant 0.18 or 18 episodes per 100 Medicare Part 
A FFS beneficiaries for CY 2012). We note these observed decreases 
between CY 2010 and CY 2012, for the most part, are likely the result 
of increases in FFS enrollment between CY 2010 and CY 2012. Newly 
eligibly Medicare beneficiaries are typically not of the age where home 
health services are needed and therefore, without any changes in 
utilization, we would expect home health users and the number of 
episodes per Part A and/or B FFS beneficiaries to decrease with an 
increase in the number of newly enrolled FFS beneficiaries. The number 
of HHAs providing at least one home health episode increased steadily 
from CY 2010 through CY 2013 (see Table 5).

                            Table 5--Home Health Statistics, CY 2010 Through CY 2013
----------------------------------------------------------------------------------------------------------------
                                                                                                       2013
                                                       2010            2011            2012        (Preliminary)
----------------------------------------------------------------------------------------------------------------
Number of episodes..............................       6,833,669       6,821,459       6,727,875       6,600,631
Beneficiaries receiving at least 1 episode (Home       3,431,696       3,449,231       3,446,122       3,432,571
 Health Users)..................................
Part A and/or B FFS beneficiaries...............      36,818,078      37,686,526      38,224,640      38,501,512
Episodes per Part A and/or B FFS beneficiaries..            0.19            0.18            0.18            0.17
Home health users as a percentage of Part A and/            9.3%            9.2%            9.0%            8.9%
 or B FFS beneficiaries.........................
HHAs providing at least 1 episode...............          10,916          11,446          11,746          11,820
----------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14,
  2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are
  the total number of beneficiaries in a given year with at least 1 month of Part A or Part B Fee For Service
  Coverage without having any months of Medicare Advantage Coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from
  outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year
  specified are included. Episodes with a claim frequency code equal to ``0'' (``Non-payment/zero claims'') and
  ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states
  within a year the beneficiary is counted within each state's unique number of beneficiaries served.

    Although home health utilization at the national level appears to 
have held relatively constant between CY 2010 and CY 2011 with a slight 
decrease in utilization in CY 2012, the decrease in utilization in CY 
2012 did not occur in all states. For example, the number of episodes 
increased between CY 2010 and CY 2011 and again, in some instances, 
between CY 2011 and CY 2012 in Alabama, California, and Virginia, to 
name a few. The number of episodes per Part A and/or Part B FFS 
beneficiaries for these states also remained roughly the same between 
CY 2010 through CY 2012 (see Table 6).

               Table 6--Home Health Statistics for Select States With Increasing Numbers of Home Health Episodes, CY 2010 Through CY 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Year         AL              CA              MA              NJ              VA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Episodes.............................................     2010         149,242         428,491         183,271         142,328         142,660
                                                                    2011         151,131         451,749         186,849         143,127         149,154
                                                                    2012         151,812         477,732         183,625         142,129         154,677
Beneficiaries Receiving at Least 1 Episode (Home Health Users).     2010          68,949         259,013         103,954          95,804          83,933
                                                                    2011          70,539         270,259         107,520          97,190          86,796
                                                                    2012          71,186         281,023         106,910          96,534          89,879
Part A and/or Part B FFS Beneficiaries.........................     2010         689,302       3,199,845         890,472       1,205,049       1,014,248
                                                                    2011         717,413       3,294,574         934,312       1,228,239       1,055,516
                                                                    2012         732,952       3,397,936         959,015       1,232,950       1,086,474
Episodes per Part A and/or Part B FFS beneficiaries............     2010            0.22            0.13            0.21            0.12            0.14
                                                                    2011            0.21            0.14            0.20            0.12            0.14
                                                                    2012            0.21            0.14            0.19            0.12              14
Home Health Users as a Percentage of Part A and/or B FFS            2010          10.00%           8.09%          11.67%           7.95%           8.28%
 beneficiaries.................................................

[[Page 38373]]

 
                                                                    2011           9.83%           8.20%          11.51%           7.91%           8.22%
                                                                    2012           9.71%           8.27%          11.15%           7.83%           8.27%
Providers Providing at Least 1 Episode.........................     2010             148             925             138              49             196
                                                                    2011             150           1,013             150              48             209
                                                                    2012             148           1,073             160              47             219
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014. Medicare enrollment information
  obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of
  Part A or Part B Fee For Service Coverage without having any months of Medicare Advantage Coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
  District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
  (``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
  a year the beneficiary is counted within each state's unique number of beneficiaries served.

    In general, between CY 2010 and CY 2012 the number of episodes for 
states with the highest utilization of Medicare home health (as 
measured by the number of episodes per Part A and/or Part B FFS 
beneficiary) decreased; however, even with this decrease between CY 
2010 and CY 2012, the five states listed in Table 7 continue to be 
among the states with the highest utilization of Medicare home health 
nationally (see Figure 1). If we were to exclude the five states listed 
in Table 7 from the national figures in Table 5, home health users 
(beneficiaries with at least one home health episode) as a percentage 
of Part A and/or Part B fee-for-service (FFS) beneficiaries would 
decrease from to 9.0 percent to 8.1 percent for CY 2012 and the number 
of episodes per Part A and/or Part B FFS beneficiaries would decrease 
from 0.18 (or 18 episodes per 100 Medicare Part A and/or Part B FFS 
beneficiaries) to 0.14 (or 14 episodes per 100 Medicare Part A and/or 
Part B FFS beneficiaries) for CY 2012. We also note that two of the 
states with the greatest number of home health episodes per Part A and/
or Part B FFS beneficiaries (Table 7 and Figure 1) have areas with 
suspect billing practices. Moratoria on enrollment of new HHAs, 
effective January 30, 2014, were put in place for: Miami, FL; Chicago, 
IL; Fort Lauderdale, FL; Detroit, MI; Dallas, TX; and Houston, TX.

   Table 7--Home Health Statistics for the States With the Highest Number of Home Health Episodes per Part A and/or Part B FFS Beneficiaries, CY 2010
                                                                     Through CY 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Year         TX              FL              OK              MS              LA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Episodes.............................................     2010       1,127,852         689,183         208,555         153,169         256,014
                                                                    2011       1,107,605         701,426         203,112         153,983         249,479
                                                                    2012       1,054,244         691,255         196,887         148,516         230,115
Beneficiaries Receiving at Least 1 Episode (Home Health Users).     2010         366,844         355,181          68,440          55,132          77,976
                                                                    2011         363,474         355,900          67,218          55,818          77,677
                                                                    2012         350,803         354,838          65,948          55,438          74,755
Part A and/or Part B FFS Beneficiaries.........................     2010       2,500,237       2,422,141         533,792         465,129         544,555
                                                                    2011       2,597,406       2,454,124         549,687         476,497         561,531
                                                                    2012       2,604,458       2,451,790         558,500         480,218         568,483
Episodes per Part A and/or Part B FFS beneficiaries............     2010            0.45            0.28            0.39            0.33            0.47
                                                                    2011            0.43            0.29            0.37            0.32            0.44
                                                                    2012            0.40            0.28            0.35            0.31            0.40
Home Health Users as a Percentage of Part A and/or Part B FFS       2010          14.67%          14.66%          12.82%          11.85%          14.32%
 Beneficiaries.................................................
                                                                    2011          13.99%          14.50%          12.23%          11.71%          13.83%
                                                                    2012          13.47%          14.47%          11.81%          11.54%          13.15%
Providers Providing at Least 1 Episode.........................     2010           2,352           1,348             240              53             213
                                                                    2011           2,472           1,426             252              51             216
                                                                    2012           2,549           1,430             254              48             213
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014. Medicare enrollment information
  obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of
  Part A or Part B Fee For Service Coverage without having any months of Medicare Advantage Coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
  District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
  (``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
  a year the beneficiary is counted within each state's unique number of beneficiaries served.

[[Page 38374]]

[GRAPHIC] [TIFF OMITTED] TP07JY14.000

    For CY 2011, in addition to the implementation of the Affordable 
Care Act face-to-face encounter requirement, HHAs were also subject to 
new therapy reassessment requirements, payments were reduced to account 
for increases in nominal case-mix, and the Affordable Care Act mandated 
that the HH PPS payment rates be reduced by 5 percent to pay up to, but 
no more than 2.5 percent of total HH PPS payments as outlier payments. 
The estimated net impact to HHAs for CY 2011 was a decrease in total HH 
PPS payments of 4.78 percent. Therefore, any changes in utilization 
between CY 2010 and CY 2011 cannot be solely attributable to the 
implementation of the face-to-face encounter requirement. For CY 2012 
we recalibrated the case-mix weights, including the removal of two 
hypertension codes from scoring points in the HH PPS Grouper and 
lowering the case-mix weights for high therapy cases estimated net 
impact to HHAs, and reduced HH PPS rates in CY 2012 by 3.79 percent to 
account for additional growth in aggregate case-mix that was unrelated 
to changes in patients' health status. The estimated net impact to HHAs 
for CY 2012 was a decrease in total HH PPS payments of 2.31 percent. 
Again, any changes in utilization between CY 2011 and CY 2012 cannot be 
solely attributable to the implementation of the face-to-face encounter 
requirement. Given that a decrease in the number of episodes between CY 
2010 and CY 2012 occurred in states that have the highest home health 
utilization (number of episodes per Part A and/or Part B FFS 
beneficiaries) and not all states experienced declines in episode 
volume during that time period, we believe that the implementation of 
the face-to-face encounter requirement could be considered a 
contributing factor. We will continue to monitor for potential impacts 
due to the implementation of the face-to-face encounter requirements 
and other policy changes in the future. Independent effects of any one 
policy may be difficult to discern in years where multiple policy 
changes occur in any given year.

B. Proposed Changes to the Face-to-Face Encounter Requirements

1. Statutory and Regulatory Requirements
    As a condition for payment, section 6407 of the Affordable Care Act 
requires that, prior to certifying a patient's eligibility for the 
Medicare home health benefit, the physician must document that the 
physician himself or herself or an allowed nonphysician practitioner 
(NPP) had a face-to-face encounter with the patient. Specifically, 
sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, as amended by the 
Affordable Care Act, state that a nurse practitioner or clinical nurse 
specialist, as those terms are defined in section 1861(aa)(5) of the 
Act, 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) under the supervision of the 
physician may perform the face-to-face encounter.
    The goal of the Affordable Care Act provision was to achieve 
greater physician accountability in certifying a

[[Page 38375]]

patient's eligibility and in establishing a patient's plan of care. We 
believed this goal could be better achieved if the face-to-face 
encounter occurred closer to the start of home health care, increasing 
the likelihood that the clinical conditions exhibited by the patient 
during the encounter are related to the primary reason the patient 
comes to need home health care. The certifying physician is responsible 
for determining whether the patient meets the eligibility criteria 
(that is, homebound and skilled need) and for understanding the current 
clinical needs of the patient such that he or she can establish an 
effective plan of care. As such, CMS regulations at Sec.  
424.22(a)(1)(v) require that that the face-to-face encounter be related 
to the primary reason the patient requires home health services and 
occur no more than 90 days prior to the home health start of care date 
or within 30 days of the start of the home health care. In addition, as 
part of the certification of eligibility, the certifying physician must 
document the date of the encounter and include an explanation 
(narrative) of why the clinical findings of such encounter support that 
the patient is homebound, as defined in sections 1835(a) and 1814(a) of 
the Act, and in need of either intermittent skilled nursing services or 
therapy services, as defined in Sec.  409.42(c).
    The ``Requirements for Home Health Services'' describes certifying 
a patient's eligibility for the Medicare home health benefit, and as 
stated in the ``Content of the Certification'' under Sec.  424.22 
(a)(1), a physician must certify that:
     The individual needs or needed intermittent skilled 
nursing care, physical therapy, and/or speech-language pathology 
services as defined in Sec.  409.42(c).
     Home health services are or were required because the 
individual was confined to the home (as defined in sections 1835(a) and 
1814(a) of the Act), except when receiving outpatient services.
     A plan for furnishing the services has been established 
and is or will be periodically reviewed by a physician who is a doctor 
of medicine, osteopathy, or podiatric medicine (a doctor of podiatric 
medicine may perform only plan of treatment functions that are 
consistent with the functions he or she is authorized to perform under 
state law).\1\
---------------------------------------------------------------------------

    \1\ The physician cannot have 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.
---------------------------------------------------------------------------

     Home health services will be or were furnished while the 
individual is or was under the care of a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine.
     A face-to-face patient encounter occurred no more than 90 
days prior to the home health start of care date or within 30 days of 
the start of the home health care and was related to the primary reason 
the patient requires home health services. This also includes 
documenting the date of the encounter and including an explanation of 
why the clinical findings of such encounter support that the patient is 
homebound (as defined in Sec.  1835(a) and Sec.  1814(a) of the Act) 
and in need of either intermittent skilled nursing services or therapy 
services as defined in Sec.  409.42(c). The documentation must be 
clearly titled and dated and the documentation must be signed by the 
certifying physician.
    For instances where the physician orders skilled nursing visits for 
management and evaluation of the patient's care plan,\2\ the physician 
must include a brief narrative that describes the clinical 
justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the certification form, in addition to the 
physician's signature on the certification form, the physician must 
sign immediately after the narrative in the addendum.
---------------------------------------------------------------------------

    \2\ Skilled nursing visits for management and evaluation of the 
patient's care plan are reasonable and necessary where underlying 
conditions or complications require that only a registered nurse can 
ensure that essential unskilled care is achieving its purpose. For 
skilled nursing care to be reasonable and necessary for management 
and evaluation of the patient's plan of care, the complexity of the 
necessary unskilled services that are a necessary part of the 
medical treatment must require the involvement of skilled nursing 
personnel to promote the patient's recovery and medical safety in 
view of the patient's overall condition (reference Sec.  409.33 and 
section 40.1.2.2 in Chapter 7 of the Medicare Benefits Policy Manual 
(Pub. 100-02)).
---------------------------------------------------------------------------

    When there is a continuous need for home health care after an 
initial 60-day episode of care, a physician is also required to 
recertify the patient's eligibility for the home health benefit. In 
accordance with Sec.  424.22 (b), a 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 of care. 
In recertifying the patient's eligibility for the home health benefit, 
the recertification must indicate the continuing need for skilled 
services and estimate how much longer the skilled services will be 
required. The need for occupational therapy may be the basis for 
continuing services that were initiated because the individual needed 
skilled nursing care or physical therapy or speech-language pathology 
services. Again, for instances where the physician ordering skilled 
nursing visits for management and evaluation of the patient's care 
plan, the physician must include a brief narrative that describes the 
clinical justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the recertification form, in addition to the 
physician's signature on the recertification form, the physician must 
sign immediately after the narrative in the addendum.
    In the CY 2012 HH PPS final rule (76 FR 68597), we stated that, in 
addition to the certifying physician and allowed NPPs (as defined by 
the Act and outlined above), the physician who cared for the patient in 
an acute or post-acute care facility from which the patient was 
directly admitted to home health care, and who had privileges in such 
facility, could also perform the face-to-face encounter. In the CY 2013 
HH PPS final rule (77 FR 67068) we revised our regulations so that an 
allowed NPP, collaborating with or under the supervision of the 
physician who cared for the patient in the acute/post-acute care 
facility, can communicate the clinical findings that support the 
patient's needs for skilled care and homebound status to the acute/
post-acute care physician. In turn, the acute/post-acute care physician 
would communicate the clinical findings that support the patient's 
needs for skilled care and homebound status from the encounter 
performed by the NPP to the certifying physician to document. Policy 
always permitted allowed NPPs in the acute/post-acute care setting from 
which the patient is directly admitted to home health care to perform 
the face-to-face encounter and communicate directly with the certifying 
physician the clinical findings from the encounter and how such 
findings support that the patient is homebound and needs skilled 
services (77 FR 67106).
2. Proposed Changes to the Face-to-Face Encounter Narrative Requirement 
and Non-Coverage of Associated Physician Certification/Re-Certification 
Claims
    Each year, the CMS' Office of Financial Management (OFM), under the 
Comprehensive Error Rate Testing (CERT) program, calculates the 
Medicare Fee-for-Service (FFS) improper payment rate. For the FY 2013

[[Page 38376]]

report period (reflecting claims processed between July 2011 and June 
2012), the national Medicare FFS improper payment rate was calculated 
to be 10.1 percent.\3\ For that same report period, the improper 
payment rate for home health services was 17.3 percent, representing a 
projected improper payment amount of approximately $3 billion.\4\ The 
improper payments identified by the CERT program represent instances in 
which a health care provider fails to comply with the Medicare coverage 
and billing requirements and are not necessarily a result of fraudulent 
activity.\5\
---------------------------------------------------------------------------

    \3\ U.S. Department of Health and Human Services, ``FY 2013 
Agency Financial Report'', accessed on April 23, 2014 at: http://www.hhs.gov/afr/2013-hhs-agency-financial-report.pdf.
    \4\ U.S. Department of Health and Human Services, ``The 
Supplementary Appendices for the Medicare Fee-for-Service 2013 
Improper Payment Rate Report'', accessed on April 23, 2014 at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/November2013ReportPeriodAppendixFinal12-13-2013_508Compliance_Approved12-27-13.pdf.
    \5\ The CERT improper payment rate is not a ``fraud rate,'' but 
is a measurement of payments made that did not meet Medicare 
requirements. The CERT program cannot label a claim fraudulent.
---------------------------------------------------------------------------

    The majority of home health improper payments were due to 
``insufficient documentation'' errors. ``Insufficient documentation'' 
errors occur when the medical documentation submitted is inadequate to 
support payment for the services billed or when a specific 
documentation element that is required (as described above) is missing. 
Most ``insufficient documentation'' errors for home health occurred 
when the narrative portion of the face-to-face encounter documentation 
did not sufficiently describe how the clinical findings from the 
encounter supported the beneficiary's homebound status and need for 
skilled services, as required by Sec.  424.22(a)(1)(v).
    The home health industry continues to voice concerns regarding the 
implementation of the Affordable Care Act face-to-face encounter 
documentation requirement. The home health industry cites challenges 
that HHAs face in meeting the face-to-face encounter documentation 
requirements regarding the required narrative, including a perceived 
lack of established standards for compliance that can be adequately 
understood and applied by the physicians and HHAs. In addition, the 
home health industry conveys frustration with having to rely on the 
physician to satisfy the face-to-face encounter documentation 
requirements without incentives to encourage physician compliance. 
Correspondence received to date has expressed concern over the 
``extensive and redundant'' narrative required by regulation for face-
to-face encounter documentation purposes when detailed evidence to 
support the physician certification of homebound status and medical 
necessity is available in clinical records. In addition, correspondence 
stated that the narrative requirement was not explicit in the 
Affordable Care Act provision requiring a face-to-face encounter as 
part of the certification of eligibility and that a narrative 
requirement goes beyond Congressional intent.
    We agree that there should be sufficient evidence in the patient's 
medical record to demonstrate that the patient meets the Medicare home 
health eligibility criteria. Therefore, in an effort to simplify the 
face-to-face encounter regulations, reduce burden for HHAs and 
physicians, and to mitigate instances where physicians and HHAs 
unintentionally fail to comply with certification requirements, we 
propose that:
    (1) The narrative requirement in regulation at Sec.  
424.22(a)(1)(v) would be eliminated. The certifying physician would 
still be required to certify that a face-to-face patient encounter, 
which is related to the primary reason the patient requires home health 
services, occurred no more than 90 days prior to the home health start 
of care date or within 30 days of the start of the home health care and 
was performed by a physician or allowed non-physician practitioner as 
defined in Sec.  424.22(a)(1)(v)(A), and to document the date of the 
encounter as part of the certification of eligibility.
    For instances where the physician is ordering skilled nursing 
visits for management and evaluation of the patient's care plan, the 
physician will still be required to include a brief narrative that 
describes the clinical justification of this need as part of the 
certification/re-certification of eligibility as outlined in Sec.  
424.22(a)(1)(i) and Sec.  424.22(b)(2). This requirement was 
implemented in the CY 2010 HH PPS final rule (74 FR 58111) and is not 
changing.
    (2) In determining whether the patient is or was eligible to 
receive services under the Medicare home health benefit at the start of 
care, we would review only the medical record for the patient from the 
certifying physician or the acute/post-acute care facility (if the 
patient in that setting was directly admitted to home health) used to 
support the physician's certification of patient eligibility, as 
described in paragraphs (a)(1) and (b) of this section. If the 
patient's medical record, used by the physician in certifying 
eligibility, was not sufficient to demonstrate that the patient was 
eligible to receive services under the Medicare home health benefit, 
payment would not be rendered for home health services provided.
    (3) Physician claims for certification/re-certification of 
eligibility for home health services (G0180 and G0179, respectively) 
would not be covered if the HHA claim itself was non-covered because 
the certification/re-certification of eligibility was not complete or 
because there was insufficient documentation to support that the 
patient was eligible for the Medicare home health benefit. However, 
rather than specify this in our regulations, this proposal would be 
implemented through future sub-regulatory guidance.
    We believe that these proposals are responsive to home health 
industry concerns regarding the face-to-face encounter requirements 
articulated above. We invite comment on these proposals and the 
associated change in the regulation at Sec.  424.22 in section VI.
3. Proposed Clarification on When Documentation of a Face-to-Face 
Encounter Is Required
    In the CY 2011 HH PPS final rule (75 FR 70372), in response to a 
commenter who asked whether the face-to-face encounter is required only 
for the first episode, we stated that the Congress enacted the face-to-
face encounter requirement to apply to the physician's certification, 
not recertifications. In sub-regulatory guidance (face-to-face 
encounter Q&As on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf), response to Q&A 11 states that the 
face-to-face encounter requirement applies to ``initial episodes'' (the 
first in a series of episodes separated by no more than a 60-day gap). 
The distinction between what is considered a certification (versus a 
recertification) and what is considered an initial episode is important 
in determining whether the face-to-face encounter requirement is 
applicable.
    Recent inquiries question whether the face-to-face encounter 
requirement applies to situations where the beneficiary was discharged 
from home health with goals met/no expectation of return to home health 
care and readmitted to home health less than 60 days later. In this 
situation, the second episode would be considered a certification, not 
a recertification, because the HHA would be required to complete a new 
start of care OASIS to initiate care. However, for payment

[[Page 38377]]

purposes, the second episode would be considered a subsequent episode, 
because there was no gap of 60 days or more between the first and 
second episodes of care. Therefore, in order to determine when 
documentation of a patient's face-to-face encounter is required under 
sections 1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, we are proposing 
to clarify that the face-to-face encounter requirement is applicable 
for certifications (not recertifications), rather than initial 
episodes. A certification (versus recertification) is considered to be 
any time that a new start of care OASIS is completed to initiate care. 
Because we are proposing to clarify that a certification is considered 
to be any time a that a new start of care OASIS is completed to 
initiate care, we would also revise Q&A 11 on the CMS Web site 
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf) to reflect 
this proposed clarification. If a patient was transferred to the 
hospital and remained in the hospital after day 61 (or after the first 
day of the next certification period), once the patient returns home, a 
new start of care OASIS must be completed. Therefore, this new episode 
would not be considered continuous and a face-to-face encounter needs 
to be documented as part of the certification of patient 
eligibility.\6\
---------------------------------------------------------------------------

    \6\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/downloads/OASISConsiderationsforPPS.pdf.
---------------------------------------------------------------------------

C. Proposed Recalibration of the HH PPS Case-Mix Weights

    For CY 2012, we removed two hypertension codes from our case-mix 
system and recalibrated the case-mix weights in a budget neutral 
manner. When recalibrating the case-mix weights for the CY 2012 HH PPS 
final rule, we used CY 2005 data in the four-equation model used to 
determine the clinical and functional points for a home health episode 
and CY 2007 data in the payment regression model used to determine the 
case-mix weights. We estimated the coefficients for the variables in 
the four-equation model using CY 2005 data to maintain the same 
variables we used for CY 2008 when we implemented the four-equation 
model, thus minimizing substantial changes. Due to a noticeable shift 
in the number of therapy visits provided as a result of the 2008 
refinements, at the time, we decided to use CY 2007 data in the payment 
regression. As part of the CY 2012 recalibration, we lowered the high 
therapy weights and raised the low or no therapy weights to address 
MedPAC's concerns that the HH PPS overvalues therapy episodes and 
undervalues non-therapy episodes (March 2011 MedPAC Report to the 
Congress: Medicare Payment Policy, p. 176). These adjustments better 
aligned the case-mix weights with episode costs estimated from cost 
report data. The CY 2012 recalibration, itself, was implemented in a 
budget neutral manner. However, we note that in the CY 2012 HH PPS 
final rule, we also finalized a 3.79 percent reduction to payments in 
CY 2012 and a 1.32 percent reduction for CY 2013 to account for the 
nominal case-mix growth identified through CY 2009.
    For CY 2014, as part of the Affordable Care Act mandated rebasing 
effort, we reset the case-mix weights, lowering the average case-mix 
weight to 1.0000. To lower the case-mix weights to 1.0000, each case-
mix weight was decreased by the same factor (1.3464), thereby 
maintaining the same relative values between the weights. This 
resetting of the case-mix weights was done in a budget neutral manner, 
inflating the starting point for rebasing by the same factor that was 
used to decrease the weights. In the CY 2014 HH PPS final rule, we also 
finalized a reduction ($80.95) to the national, standardized 60-day 
episode payment amount each year from CY 2014 through CY 2017 to better 
align payments with costs (78 FR 72293).
    For CY 2015, we propose to recalibrate the case-mix weights, 
adjusting the weights relative to one another using more current data 
and aligning payments with current utilization data in a budget neutral 
manner. We are also proposing to recalibrate the case-mix weights in 
subsequent payment updates based on the methodology finalized in the CY 
2012 HH PPS final rule (76 FR 68526) and the 2008 refinements (72 FR 
25359-25392), with the proposed minor changes outlined below. We used 
preliminary CY 2013 home health claims data (as of December 31, 2013) 
to generate the proposed CY 2015 case-mix weights using the same 
methodology finalized in the CY 2012 HH PPS final rule, except where 
noted below. Similar to the CY 2012 recalibration, some exclusion 
criteria were applied to the CY 2013 home health claims data used to 
generate the proposed CY 2015 case-mix weights. Specifically, we 
excluded Request for Anticipated Payment (RAP) claims, claims without a 
matched OASIS, claims where total minutes equal 0, claims where the 
payment amount equals 0, claims where paid days equal 0, claims where 
covered visits equal 0, and claims without a HIPPS code. In addition, 
the episodes used in the recalibration were normal episodes. PEP, LUPA, 
outlier, and capped outlier (that is, episodes that are paid as normal 
episodes, but would have been outliers had the HHA not reached the 
outlier cap) episodes were dropped from the data file.\7\
---------------------------------------------------------------------------

    \7\ At a later point, when normalizing the weights, PEP episodes 
are included in the analysis.
---------------------------------------------------------------------------

    Similar to the CY 2012 recalibration, the first step in the 
proposed CY 2015 recalibration was to re-estimate the four-equation 
model used to determine the clinical and functional points for an 
episode. The dependent variable for the CY 2015 recalibration is the 
same as the CY 2012 recalibration, wage-weighted minutes of care. The 
wage-weighted minutes of care are determined using the CY 2012 Bureau 
of Labor Statistics national hourly wage plus fringe rates for the six 
home health disciplines and the minutes per visit from the claim.
    The CY 2012 four-equation model contained the same variables and 
restrictions as the four-equation model used in the CY 2008 refinements 
(http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/Coleman_Final_April_2008.pdf). 
The model was estimated using CY 2005 data, same data used in the CY 
2008 refinements, thereby minimizing changes in the points for the CY 
2012 four-equation model. For the CY 2015 four-equation model, we re-
examined all of the four-equation or ``leg'' variables for each of the 
51 grouper variables in the CY 2008 model. Therefore, a grouper 
variable that may have dropped out of the model in one of the four 
equations in CY 2008 may be in the CY 2015 four-equation model and vice 
versa. Furthermore, the specific therapy indicator variables that were 
in the CY 2012 four-equation model were dropped in the CY 2015 four-
equation model so that the number of therapy visits provided had less 
of an impact on the process used to create the case-mix weights.
    The steps used to estimate the four-equation model are similar to 
the steps used in the CY 2008 refinements. They are as follows: \8\
---------------------------------------------------------------------------

    \8\ All the regressions mentioned in steps 1-4 are estimated 
with robust standard errors clustered at the beneficiary ID level. 
This is to account for beneficiaries appearing in the data multiple 
times. When that occurs, the standard errors can be correlated 
causing the p-value to be biased downward. Clustered standard errors 
account for that bias.
---------------------------------------------------------------------------

    (1) We estimated a regression model where the dependent variable is 
wage-

[[Page 38378]]

weighted minutes of care. Independent variables were indicators for 
which equation or ``leg'' the episode is in. The four legs of the model 
are leg 1: Early episodes 0-13 therapy visits, leg 2: Early episodes 
14+ therapy visits, leg 3: Later episodes 0-13 therapy visits, and leg 
4: Later episodes 14+ therapy visits.\9\ Also, independent variables 
for each of the 51 grouper variables for each leg of the model are 
included in the model.
---------------------------------------------------------------------------

    \9\ Early episodes are defined as the 1st or 2nd episode in a 
sequence of adjacent covered episodes. Later episodes are defined as 
the 3rd episode and beyond in a sequence of adjacent covered 
episodes. Episodes are considered to be adjacent if they are 
separated by no more than a 60-day period between claims.
---------------------------------------------------------------------------

    (2) Once the four-equation model is estimated, we drop all grouper 
variables with a coefficient less than 5 from the model. We re-estimate 
the model and continue to drop variables and re-estimate until there 
are no grouper variables with a coefficient of 5 or less.
    (3) Taking the final iteration of the model in the previous step, 
we drop all grouper variables with a p-value greater than 0.10. We then 
re-estimate the model.
    (4) Taking the model in the previous step, we begin to apply 
restrictions to certain coefficients. Within a grouper variable we 
first look across the coefficients for leg1 and leg3. We perform an 
equality test on those coefficients. If the coefficients are not 
significantly different from one another (using a p-value of 0.05), we 
set a restriction for that grouper variable such that the coefficients 
are equal across leg1 and leg3. We run these tests for all grouper 
variables for leg1 and leg3. We also run these tests for all grouper 
variables for leg2 and leg4.\10\ After all restrictions are set, we re-
run the regression again taking those restrictions into account.
---------------------------------------------------------------------------

    \10\ In the CY 2008 rule, there was a further step taken to 
determine if the coefficients of a grouper variable are equal across 
all 4 legs. This step was not taken at this time.
---------------------------------------------------------------------------

    (5) Taking in the model from step 4, we drop variables that have a 
coefficient less than 5 and re-estimate the model a final time. Using 
preliminary 2013 claims data, there was only 1 grouper variable with a 
negative coefficient that was dropped from the model.
    The results from the final four-equation model are used to 
determine the clinical and functional points for an episode and place 
episodes in the different clinical and functional levels used to 
estimate the payment regression model. We take the coefficients from 
the four equation model, divide them by 10, and round to the nearest 
integer to determine the points associated with each variable. The 
points for each of the grouper variables for each leg of the model are 
shown in Table 8. The points for the clinical variables are added 
together to determine an episode's clinical score. The points for the 
functional variables are added together to determine an episode's 
functional score.

                                                    Table 8--Case-Mix Adjustment Variables and Scores
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
---------------------------------------------------------------------------------------------------------------------------------------------
                     Episode number within sequence of adjacent    1 or 2.............................       1 or 2           3+           3+
                      episodes.
                     Therapy visits..............................  0-13...............................          14+         0-13          14+
                     EQUATION:...................................  1..................................            2            3            4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              CLINICAL DIMENSION
--------------------------------------------------------------------------------------------------------------------------------------------------------
        1            Primary or Other Diagnosis = Blindness/Low    ...................................  ...........  ...........  ...........
                      Vision.
        2            Primary or Other Diagnosis = Blood disorders  ...................................            6  ...........            3
        3            Primary or Other Diagnosis = Cancer,          ...................................            8  ...........            8
                      selected benign neoplasms.
        4            Primary Diagnosis = Diabetes................  ...................................            8  ...........            8
        5            Other Diagnosis = Diabetes..................  1..................................  ...........  ...........  ...........
        6            Primary or Other Diagnosis = Dysphagia......  2..................................           16            1            9
                     AND.........................................
                     Primary or Other Diagnosis = Neuro 3--Stroke
        7            Primary or Other Diagnosis = Dysphagia......  2..................................            7  ...........            7
                     AND.........................................
                     M1030 (Therapy at home) = 3 (Enteral).......
        8            Primary or Other Diagnosis =                  ...................................  ...........  ...........  ...........
                      Gastrointestinal disorders.
        9            Primary or Other Diagnosis =                  ...................................            5  ...........  ...........
                      Gastrointestinal disorders.
                     AND.........................................
                     M1630 (ostomy) = 1 or 2.....................
       10            Primary or Other Diagnosis =                  ...................................  ...........  ...........  ...........
                      Gastrointestinal disorders.
                     AND.........................................
                     Primary or Other Diagnosis = Neuro 1--Brain
                      disorders and paralysis, OR Neuro 2--
                      Peripheral neurological disorders, OR Neuro
                      3--Stroke, OR Neuro 4--Multiple Sclerosis.
       11            Primary or Other Diagnosis = Heart Disease    1..................................  ...........  ...........  ...........
                      OR Hypertension.
       12            Primary Diagnosis = Neuro 1--Brain disorders  3..................................           11            6           11
                      and paralysis.
       13            Primary or Other Diagnosis = Neuro 1--Brain   ...................................  ...........  ...........  ...........
                      disorders and paralysis.
                     AND.........................................
                     M1840 (Toilet transfer) = 2 or more.........
       14            Primary or Other Diagnosis = Neuro 1--Brain   2..................................            7            1            7
                      disorders and paralysis OR Neuro 2--
                      Peripheral neurological disorders.
                     AND.........................................
                     M1810 or M1820 (Dressing upper or lower
                      body) = 1, 2, or 3.
       15            Primary or Other Diagnosis = Neuro 3--Stroke  3..................................           10            2  ...........
       16            Primary or Other Diagnosis = Neuro 3--Stroke  ...................................            4  ...........            9
                      AND.
                     M1810 or M1820 (Dressing upper or lower
                      body) = 1, 2, or 3.
       17            Primary or Other Diagnosis = Neuro 3--Stroke  ...................................  ...........  ...........  ...........
                     AND.........................................
                     M1860 (Ambulation) = 4 or more..............

[[Page 38379]]

 
       18            Primary or Other Diagnosis = Neuro 4--        3..................................            8            6           14
                      Multiple Sclerosis AND AT LEAST ONE OF THE
                      FOLLOWING:.
                     M1830 (Bathing) = 2 or more.................
                     OR..........................................
                     M1840 (Toilet transfer) = 2 or more.........
                     OR..........................................
                     M1850 (Transferring) = 2 or more............
                     OR..........................................
                     M1860 (Ambulation) = 4 or more..............
       19            Primary or Other Diagnosis = Ortho 1--Leg     8..................................            1            8            4
                      Disorders or Gait Disorders.
                     AND.........................................
                     M1324 (most problematic pressure ulcer
                      stage) = 1, 2, 3 or 4.
       20            Primary or Other Diagnosis = Ortho 1--Leg OR  3..................................            4            3  ...........
                      Ortho 2--Other orthopedic disorders.
                     AND.........................................
                     M1030 (Therapy at home) = 1 (IV/Infusion) or
                      2 (Parenteral).
       21            Primary or Other Diagnosis = Psych 1--        ...................................  ...........  ...........  ...........
                      Affective and other psychoses, depression.
       22            Primary or Other Diagnosis = Psych 2--        ...................................  ...........  ...........  ...........
                      Degenerative and other organic psychiatric
                      disorders.
       23            Primary or Other Diagnosis = Pulmonary        ...................................  ...........  ...........  ...........
                      disorders.
       24            Primary or Other Diagnosis = Pulmonary        ...................................  ...........  ...........  ...........
                      disorders AND.
                     M1860 (Ambulation) = 1 or more..............
       25            Primary Diagnosis = Skin 1--Traumatic         4..................................           20            8           20
                      wounds, burns, and post-operative
                      complications.
       26            Other Diagnosis = Skin 1--Traumatic wounds,   5..................................           14            7           14
                      burns, post-operative complications.
       27            Primary or Other Diagnosis = Skin 1--         4..................................  ...........            1  ...........
                      Traumatic wounds, burns, and post-operative
                      complications OR Skin 2--Ulcers and other
                      skin conditions.
                     AND.........................................
                     M1030 (Therapy at home) = 1 (IV/Infusion) or
                      2 (Parenteral).
       28            Primary or Other Diagnosis = Skin 2--Ulcers   2..................................           17            8           17
                      and other skin conditions.
       29            Primary or Other Diagnosis = Tracheostomy...  4..................................           16            4           16
       30            Primary or Other Diagnosis = Urostomy/        ...................................           18  ...........           14
                      Cystostomy.
       31            M1030 (Therapy at home) = 1 (IV/Infusion) or  ...................................           17            5           17
                      2 (Parenteral).
       32            M1030 (Therapy at home) = 3 (Enteral).......  ...................................           16  ...........            7
       33            M1200 (Vision) = 1 or more..................  ...................................  ...........  ...........  ...........
       34            M1242 (Pain) = 3 or 4.......................  2..................................  ...........            1  ...........
       35            M1308 = Two or more pressure ulcers at stage  4..................................            7            4            7
                      3 or 4.
       36            M1324 (Most problematic pressure ulcer        3..................................           18            7           15
                      stage) = 1 or 2.
       37            M1324 (Most problematic pressure ulcer        8..................................           31           11           26
                      stage) = 3 or 4.
       38            M1334 (Stasis ulcer status) = 2.............  4..................................           12            7           22
       39            M1334 (Stasis ulcer status) = 3.............  7..................................           17           10           17
       40            M1342 (Surgical wound status) = 2...........  1..................................            7            6           14
       41            M1342 (Surgical wound status) = 3...........  ...................................            6            5           10
       42            M1400 (Dyspnea) = 2, 3, or 4................  ...................................            2  ...........            3
       43            M1620 (Bowel Incontinence) = 2 to 5.........  ...................................            3  ...........            3
       44            M1630 (Ostomy) = 1 or 2.....................  4..................................           11            3           11
       45            M2030 (Injectable Drug Use) = 0, 1, 2, or 3.  ...................................  ...........  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             FUNCTIONAL DIMENSION
--------------------------------------------------------------------------------------------------------------------------------------------------------
       46            M1810 or M1820 (Dressing upper or lower       2..................................  ...........            1  ...........
                      body) = 1, 2, or 3.
       47            M1830 (Bathing) = 2 or more.................  6..................................            3            5  ...........
       48            M1840 (Toilet transferring) = 2 or more.....  1..................................            3  ...........            3
       49            M1850 (Transferring) = 2 or more............  3..................................            4            2  ...........
       50            M1860 (Ambulation) = 1, 2 or 3..............  7..................................  ...........            3  ...........
       51            M1860 (Ambulation) = 4 or more..............  7..................................            8            6            8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2013 home health claims data as of December 31, 2013 from the home health Standard Analytic File (SAF). We excluded LUPA episodes, outlier
  episodes, and episodes with PEP adjustments.
Note(s): Points are additive, however points may not be given for the same line item in the table more than once. Please see Medicare Home Health
  Diagnosis Coding guidance at: http://www.cms.hhs.gov/HomeHealthPPS/03_coding&billing.asp for definitions of primary and secondary diagnoses.

    In updating the four-equation model with 2013 data (the last update 
to the four-equation model used 2005 data), there were significant 
changes to the point values for the variables in the four-equation 
model. These reflect changes in the relationship between the grouper 
variables and resource use since 2005. The CY 2015 four-equation model 
resulted in 121 point-giving variables being used in the model (as 
compared to the 164 variables for the 2012 recalibration). There were 
19 variables that were added to the model and 62 variables that were 
dropped from the

[[Page 38380]]

model due to the lack of additional resources associated with the 
variable. The points for 56 variables increased in the CY 2015 four-
equation model and the points for 28 variables in decreased in the CY 
2015 four-equation model.
    Since there were a number of significant changes to the point 
values associated with the four-equation model, we are proposing to 
redefine the clinical and functional thresholds so that they would be 
reflective of the new points associated with the CY 2015 four-equation 
model. Specifically, after estimating the points for each of the 
variables and summing the clinical and functional points for each 
episode, we looked at the distribution of the clinical score and 
functional score, breaking the episodes into different steps. The 
categorizations for the steps are as follows:
     Step 1: First and second episodes, 0-13 therapy visits.
     Step 2.1: First and second episodes, 14-19 therapy visits.
     Step 2.2: Third episodes and beyond, 14-19 therapy visits.
     Step 3: Third episodes and beyond, 0-13 therapy visits.
     Step 4: Episodes with 20+ therapy visits.
    Similar to the methodology used in the CY 2008 refinements, we then 
divide the distribution of the clinical score for episodes within a 
step such that a third of episodes are classified as low clinical 
score, a third of episodes are classified as medium clinical score, and 
a third of episodes are classified as high clinical score. The same 
approach is then done looking at the functional score. It was not 
always possible to evenly divide the episodes within each level, by 
step, into thirds due to many episodes being clustered around one 
particular score.\11\ Also, we looked at the average resource use 
associated with each clinical and functional score and used that to 
guide where we placed our thresholds. We tried to group scores with 
similar average resource use within the same level (even if it means 
that more or less than a third of episodes are placed within a level by 
step). The new thresholds based off of the CY 2015 four-equation model 
points are shown in Table 9.
---------------------------------------------------------------------------

    \11\ For Step 1, 55% of episodes were in the medium functional 
level (All with score 15).
    For Step 2.1, 60.9% of episodes were in the low functional level 
(Most with score 3, some with score 0).
    For Step 2.2, 70.3% of episodes were in the low functional level 
(All with score 0).
    For Step 3, 52.3% of episodes were in the medium functional 
level (all with score 9).
    For Step 4, 41.6% of episodes were in the medium functional 
level (almost all with score 3).

                                                   Table 9--CY 2015 Clinical and Functional Thresholds
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               1st and 2nd episodes                        3rd+ episodes                 All episodes
                                                    ----------------------------------------------------------------------------------------------------
                                                       0 to 13 therapy     14 to 19 therapy     0 to 13 therapy    14 to 19 therapy
                                                            visits              visits              visits              visits        20+ therapy visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grouping Step:                    1..................  2.................  3.................  4.................  5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equation(s) used to calculate points: (see Table 8)  1..................  2.................  3.................  4.................  (2&4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dimension......................  Severity Level....
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clinical.......................  C1................  0 to 1.............  0.................  0.................  0 to 3............  0 to 3.
                                 C2................  2 to 3.............  1 to 7............  1.................  4 to 12...........  4 to 16.
                                 C3................  4+.................  8+................  2+................  13+...............  17+.
Functional.....................  F1................  0 to 14............  0 to 3............  0 to 8............  0.................  0 to 2.
                                 F2................  15.................  4 to 12...........  9.................  1 to 7............  3 to 4.
                                 F3................  16+................  13+...............  10+...............  8+................  5+.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Once the thresholds were determined and each episode was assigned a 
clinical and functional level, the payment regression was estimated 
with an episode's wage-weighted minutes of care as the dependent 
variable. Independent variables in the model were indicators for the 
step of the episode as well for the clinical and functional levels 
within each step of the episode. Like the four-equation model, the 
payment regression model is also estimated with robust standard errors 
that are clustered at the beneficiary level. Table 10 shows the 
regression coefficients for the variables in the proposed payment 
regression model. The R-squared value for the payment regression model 
is 0.4691 (an increase from 0.3769 for the CY 2012 recalibration).

               Table 10--Proposed Payment Regression Model
------------------------------------------------------------------------
                                                        Proposed CY 2015
                                                            payment
                 Variable description                      regression
                                                          coefficients
------------------------------------------------------------------------
Step 1, Clinical Score Medium........................             $24.43
Step 1, Clinical Score High..........................              59.46
Step 1, Functional Score Medium......................              81.03
Step 1, Functional Score High........................             120.87
Step 2.1, Clinical Score Medium......................              56.61
Step 2.1, Clinical Score High........................             175.83
Step 2.1, Functional Score Medium....................              25.84
Step 2.1, Functional Score High......................              90.77
Step 2.2, Clinical Score Medium......................              90.83
Step 2.2, Clinical Score High........................             201.06
Step 2.2, Functional Score Medium....................              18.50

[[Page 38381]]

 
Step 2.2, Functional Score High......................              91.18
Step 3, Clinical Score Medium........................              10.42
Step 3, Clinical Score High..........................              85.74
Step 3, Functional Score Medium......................              49.62
Step 3, Functional Score High........................              84.57
Step 4, Clinical Score Medium........................              77.85
Step 4, Clinical Score High..........................             237.87
Step 4, Functional Score Medium......................              38.26
Step 4, Functional Score High........................              93.84
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy                  438.76
 Visits..............................................
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits.....             448.05
Step 3, 3rd+ Episodes, 0-13 Therapy Visits...........             -65.84
Step 4, All Episodes, 20+ Therapy Visits.............             857.63
Intercept............................................             368.93
------------------------------------------------------------------------
Source: CY 2013 home health claims data as of December 31, 2013 from the
  home health standard analytic file (SAF).

    The method used to derive the proposed CY 2015 case-mix weights 
from the payment regression model coefficients is the same as the 
method used to derive the CY 2012 case-mix weights. This method is 
described below.
    (1) We used the coefficients from the payment regression model to 
predict each episode's wage-weighted minutes of care (resource use). We 
then divided these predicted values by the mean of the dependent 
variable (that is, the average wage-weighted minutes of care across all 
episodes used in the payment regression). This division constructs the 
weight for each episode, which is simply the ratio of the episode's 
predicted wage-weighted minutes of care divided by the average wage-
weighted minutes of care in the sample. Each episode was then 
aggregated into one of the 153 home health resource groups (HHRGs) and 
the ``raw'' weight for each HHRG was calculated as the average of the 
episode weights within the HHRG.
    (2) In the next step of weight revision, the weights associated 
with 0 to 5 therapy visits were increased by 3.75 percent. Also, the 
weights associated with 14-15 therapy visits were decreased by 2.5 
percent and the weights associated with 20+ therapy visits were 
decreased by 5 percent. These adjustments were made to discourage 
inappropriate use of therapy while addressing concerns that non-therapy 
services are undervalued. These adjustments to the case-mix weights are 
the same as the ones used in the CY 2012 recalibration (76 FR 68557).
    (3) After the adjustments in step (2) were applied to the raw 
weights, the weights were further adjusted to create an increase in the 
payment weights for the therapy visit steps between the therapy 
thresholds. Weights with the same clinical severity level, functional 
severity level, and early/later episode status were grouped together. 
Then within those groups, the weights for each therapy step between 
thresholds were gradually increased. We did this by interpolating 
between the main thresholds on the model (from 0-5 to 14-15 therapy 
visits, and from 14-15 to 20+ therapy visits). We used a linear model 
to implement the interpolation so the payment weight increase for each 
step between the thresholds (such as the increase between 0-5 therapy 
visits and 6 therapy visits and the increase between 6 therapy visits 
and 7-9 therapy visits) was constant. This interpolation is the 
identical to the process finalized in the CY 2012 final rule (76 FR 
68555).
    (4) The interpolated weights were then adjusted so that the average 
case-mix for the weights was equal to 1.\12\ This last step creates the 
proposed CY 2015 case-mix weights shown in Table 11.
---------------------------------------------------------------------------

    \12\ When computing the average, we compute a weighted average, 
assigning a value of one to each normal episode and a value equal to 
the episode length divided by 60 for PEPs.

                               Table 11--Proposed CY 2015 Case-Mix Payment Weights
----------------------------------------------------------------------------------------------------------------
                                                                    Clinical and functional
           Payment group                 Step (episode and/or        levels  (1 = Low;  2 =     CY 2015 proposed
                                        therapy visit ranges)          Medium;  3= High)        case-mix weights
----------------------------------------------------------------------------------------------------------------
10111..............................  1st and 2nd Episodes, 0 to   C1F1S1                                  0.5984
                                      5 Therapy Visits.
10112..............................  1st and 2nd Episodes, 6      C1F1S2                                  0.7250
                                      Therapy Visits.
10113..............................  1st and 2nd Episodes, 7 to   C1F1S3                                  0.8515
                                      9 Therapy Visits.
10114..............................  1st and 2nd Episodes, 10     C1F1S4                                  0.9781
                                      Therapy Visits.
10115..............................  1st and 2nd Episodes, 11 to  C1F1S5                                  1.1046
                                      13 Therapy Visits.
10121..............................  1st and 2nd Episodes, 0 to   C1F2S1                                  0.7299
                                      5 Therapy Visits.
10122..............................  1st and 2nd Episodes, 6      C1F2S2                                  0.8380
                                      Therapy Visits.
10123..............................  1st and 2nd Episodes, 7 to   C1F2S3                                  0.9461
                                      9 Therapy Visits.
10124..............................  1st and 2nd Episodes, 10     C1F2S4                                  1.0543
                                      Therapy Visits.
10125..............................  1st and 2nd Episodes, 11 to  C1F2S5                                  1.1624
                                      13 Therapy Visits.
10131..............................  1st and 2nd Episodes, 0 to   C1F3S1                                  0.7945
                                      5 Therapy Visits.
10132..............................  1st and 2nd Episodes, 6      C1F3S2                                  0.9095
                                      Therapy Visits.

[[Page 38382]]

 
10133..............................  1st and 2nd Episodes, 7 to   C1F3S3                                  1.0245
                                      9 Therapy Visits.
10134..............................  1st and 2nd Episodes, 10     C1F3S4                                  1.1395
                                      Therapy Visits.
10135..............................  1st and 2nd Episodes, 11 to  C1F3S5                                  1.2545
                                      13 Therapy Visits.
10211..............................  1st and 2nd Episodes, 0 to   C2F1S1                                  0.6381
                                      5 Therapy Visits.
10212..............................  1st and 2nd Episodes, 6      C2F1S2                                  0.7739
                                      Therapy Visits.
10213..............................  1st and 2nd Episodes, 7 to   C2F1S3                                  0.9098
                                      9 Therapy Visits.
10214..............................  1st and 2nd Episodes, 10     C2F1S4                                  1.0457
                                      Therapy Visits.
10215..............................  1st and 2nd Episodes, 11 to  C2F1S5                                  1.1816
                                      13 Therapy Visits.
10221..............................  1st and 2nd Episodes, 0 to   C2F2S1                                  0.7695
                                      5 Therapy Visits.
10222..............................  1st and 2nd Episodes, 6      C2F2S2                                  0.8870
                                      Therapy Visits.
10223..............................  1st and 2nd Episodes, 7 to   C2F2S3                                  1.0044
                                      9 Therapy Visits.
10224..............................  1st and 2nd Episodes, 10     C2F2S4                                  1.1219
                                      Therapy Visits.
10225..............................  1st and 2nd Episodes, 11 to  C2F2S5                                  1.2394
                                      13 Therapy Visits.
10231..............................  1st and 2nd Episodes, 0 to   C2F3S1                                  0.8341
                                      5 Therapy Visits.
10232..............................  1st and 2nd Episodes, 6      C2F3S2                                  0.9585
                                      Therapy Visits.
10233..............................  1st and 2nd Episodes, 7 to   C2F3S3                                  1.0828
                                      9 Therapy Visits.
10234..............................  1st and 2nd Episodes, 10     C2F3S4                                  1.2071
                                      Therapy Visits.
10235..............................  1st and 2nd Episodes, 11 to  C2F3S5                                  1.3315
                                      13 Therapy Visits.
10311..............................  1st and 2nd Episodes, 0 to   C3F1S1                                  0.6949
                                      5 Therapy Visits.
10312..............................  1st and 2nd Episodes, 6      C3F1S2                                  0.8557
                                      Therapy Visits.
10313..............................  1st and 2nd Episodes, 7 to   C3F1S3                                  1.0166
                                      9 Therapy Visits.
10314..............................  1st and 2nd Episodes, 10     C3F1S4                                  1.1775
                                      Therapy Visits.
10315..............................  1st and 2nd Episodes, 11 to  C3F1S5                                  1.3383
                                      13 Therapy Visits.
10321..............................  1st and 2nd Episodes, 0 to   C3F2S1                                  0.8263
                                      5 Therapy Visits.
10322..............................  1st and 2nd Episodes, 6      C3F2S2                                  0.9688
                                      Therapy Visits.
10323..............................  1st and 2nd Episodes, 7 to   C3F2S3                                  1.1112
                                      9 Therapy Visits.
10324..............................  1st and 2nd Episodes, 10     C3F2S4                                  1.2537
                                      Therapy Visits.
10325..............................  1st and 2nd Episodes, 11 to  C3F2S5                                  1.3961
                                      13 Therapy Visits.
10331..............................  1st and 2nd Episodes, 0 to   C3F3S1                                  0.8909
                                      5 Therapy Visits.
10332..............................  1st and 2nd Episodes, 6      C3F3S2                                  1.0403
                                      Therapy Visits.
10333..............................  1st and 2nd Episodes, 7 to   C3F3S3                                  1.1896
                                      9 Therapy Visits.
10334..............................  1st and 2nd Episodes, 10     C3F3S4                                  1.3389
                                      Therapy Visits.
10335..............................  1st and 2nd Episodes, 11 to  C3F3S5                                  1.4882
                                      13 Therapy Visits.
21111..............................  1st and 2nd Episodes, 14 to  C1F1S1                                  1.2312
                                      15 Therapy Visits.
21112..............................  1st and 2nd Episodes, 16 to  C1F1S2                                  1.4280
                                      17 Therapy Visits.
21113..............................  1st and 2nd Episodes, 18 to  C1F1S3                                  1.6249
                                      19 Therapy Visits.
21121..............................  1st and 2nd Episodes, 14 to  C1F2S1                                  1.2706
                                      15 Therapy Visits.
21122..............................  1st and 2nd Episodes, 16 to  C1F2S2                                  1.4732
                                      17 Therapy Visits.
21123..............................  1st and 2nd Episodes, 18 to  C1F2S3                                  1.6759
                                      19 Therapy Visits.
21131..............................  1st and 2nd Episodes, 14 to  C1F3S1                                  1.3695
                                      15 Therapy Visits.
21132..............................  1st and 2nd Episodes, 16 to  C1F3S2                                  1.5667
                                      17 Therapy Visits.
21133..............................  1st and 2nd Episodes, 18 to  C1F3S3                                  1.7639
                                      19 Therapy Visits.
21211..............................  1st and 2nd Episodes, 14 to  C2F1S1                                  1.3175
                                      15 Therapy Visits.
21212..............................  1st and 2nd Episodes, 16 to  C2F1S2                                  1.5241
                                      17 Therapy Visits.
21213..............................  1st and 2nd Episodes, 18 to  C2F1S3                                  1.7307
                                      19 Therapy Visits.
21221..............................  1st and 2nd Episodes, 14 to  C2F2S1                                  1.3569
                                      15 Therapy Visits.
21222..............................  1st and 2nd Episodes, 16 to  C2F2S2                                  1.5693
                                      17 Therapy Visits.
21223..............................  1st and 2nd Episodes, 18 to  C2F2S3                                  1.7817
                                      19 Therapy Visits.
21231..............................  1st and 2nd Episodes, 14 to  C2F3S1                                  1.4558
                                      15 Therapy Visits.
21232..............................  1st and 2nd Episodes, 16 to  C2F3S2                                  1.6628
                                      17 Therapy Visits.
21233..............................  1st and 2nd Episodes, 18 to  C2F3S3                                  1.8698
                                      19 Therapy Visits.
21311..............................  1st and 2nd Episodes, 14 to  C3F1S1                                  1.4992
                                      15 Therapy Visits.
21312..............................  1st and 2nd Episodes, 16 to  C3F1S2                                  1.7245
                                      17 Therapy Visits.
21313..............................  1st and 2nd Episodes, 18 to  C3F1S3                                  1.9498
                                      19 Therapy Visits.
21321..............................  1st and 2nd Episodes, 14 to  C3F2S1                                  1.5386
                                      15 Therapy Visits.
21322..............................  1st and 2nd Episodes, 16 to  C3F2S2                                  1.7697
                                      17 Therapy Visits.
21323..............................  1st and 2nd Episodes, 18 to  C3F2S3                                  2.0008
                                      19 Therapy Visits.
21331..............................  1st and 2nd Episodes, 14 to  C3F3S1                                  1.6376
                                      15 Therapy Visits.
21332..............................  1st and 2nd Episodes, 16 to  C3F3S2                                  1.8632
                                      17 Therapy Visits.
21333..............................  1st and 2nd Episodes, 18 to  C3F3S3                                  2.0888
                                      19 Therapy Visits.
22111..............................  3rd+ Episodes, 14 to 15      C1F1S1                                  1.2454
                                      Therapy Visits.
22112..............................  3rd+ Episodes, 16 to 17      C1F1S2                                  1.4375
                                      Therapy Visits.
22113..............................  3rd+ Episodes, 18 to 19      C1F1S3                                  1.6296
                                      Therapy Visits.
22121..............................  3rd+ Episodes, 14 to 15      C1F2S1                                  1.2736
                                      Therapy Visits.
22122..............................  3rd+ Episodes, 16 to 17      C1F2S2                                  1.4752
                                      Therapy Visits.
22123..............................  3rd+ Episodes, 18 to 19      C1F2S3                                  1.6769
                                      Therapy Visits.
22131..............................  3rd+ Episodes, 14 to 15      C1F3S1                                  1.3843
                                      Therapy Visits.
22132..............................  3rd+ Episodes, 16 to 17      C1F3S2                                  1.5766
                                      Therapy Visits.

[[Page 38383]]

 
22133..............................  3rd+ Episodes, 18 to 19      C1F3S3                                  1.7689
                                      Therapy Visits.
22211..............................  3rd+ Episodes, 14 to 15      C2F1S1                                  1.3838
                                      Therapy Visits.
22212..............................  3rd+ Episodes, 16 to 17      C2F1S2                                  1.5683
                                      Therapy Visits.
22213..............................  3rd+ Episodes, 18 to 19      C2F1S3                                  1.7529
                                      Therapy Visits.
22221..............................  3rd+ Episodes, 14 to 15      C2F2S1                                  1.4120
                                      Therapy Visits.
22222..............................  3rd+ Episodes, 16 to 17      C2F2S2                                  1.6061
                                      Therapy Visits.
22223..............................  3rd+ Episodes, 18 to 19      C2F2S3                                  1.8001
                                      Therapy Visits.
22231..............................  3rd+ Episodes, 14 to 15      C2F3S1                                  1.5228
                                      Therapy Visits.
22232..............................  3rd+ Episodes, 16 to 17      C2F3S2                                  1.7074
                                      Therapy Visits.
22233..............................  3rd+ Episodes, 18 to 19      C2F3S3                                  1.8921
                                      Therapy Visits.
22311..............................  3rd+ Episodes, 14 to 15      C3F1S1                                  1.5518
                                      Therapy Visits.
22312..............................  3rd+ Episodes, 16 to 17      C3F1S2                                  1.7596
                                      Therapy Visits.
22313..............................  3rd+ Episodes, 18 to 19      C3F1S3                                  1.9673
                                      Therapy Visits.
22321..............................  3rd+ Episodes, 14 to 15      C3F2S1                                  1.5800
                                      Therapy Visits.
22322..............................  3rd+ Episodes, 16 to 17      C3F2S2                                  1.7973
                                      Therapy Visits.
22323..............................  3rd+ Episodes, 18 to 19      C3F2S3                                  2.0146
                                      Therapy Visits.
22331..............................  3rd+ Episodes, 14 to 15      C3F3S1                                  1.6908
                                      Therapy Visits.
22332..............................  3rd+ Episodes, 16 to 17      C3F3S2                                  1.8987
                                      Therapy Visits.
22333..............................  3rd+ Episodes, 18 to 19      C3F3S3                                  2.1065
                                      Therapy Visits.
30111..............................  3rd+ Episodes, 0 to 5        C1F1S1                                  0.4916
                                      Therapy Visits.
30112..............................  3rd+ Episodes, 6 Therapy     C1F1S2                                  0.6424
                                      Visits.
30113..............................  3rd+ Episodes, 7 to 9        C1F1S3                                  0.7931
                                      Therapy Visits.
30114..............................  3rd+ Episodes, 10 Therapy    C1F1S4                                  0.9439
                                      Visits.
30115..............................  3rd+ Episodes, 11 to 13      C1F1S5                                  1.0946
                                      Therapy Visits.
30121..............................  3rd+ Episodes, 0 to 5        C1F2S1                                  0.5721
                                      Therapy Visits.
30122..............................  3rd+ Episodes, 6 Therapy     C1F2S2                                  0.7124
                                      Visits.
30123..............................  3rd+ Episodes, 7 to 9        C1F2S3                                  0.8527
                                      Therapy Visits.
30124..............................  3rd+ Episodes, 10 Therapy    C1F2S4                                  0.9930
                                      Visits.
30125..............................  3rd+ Episodes, 11 to 13      C1F2S5                                  1.1333
                                      Therapy Visits.
30131..............................  3rd+ Episodes, 0 to 5        C1F3S1                                  0.6288
                                      Therapy Visits.
30132..............................  3rd+ Episodes, 6 Therapy     C1F3S2                                  0.7799
                                      Visits.
30133..............................  3rd+ Episodes, 7 to 9        C1F3S3                                  0.9310
                                      Therapy Visits.
30134..............................  3rd+ Episodes, 10 Therapy    C1F3S4                                  1.0821
                                      Visits.
30135..............................  3rd+ Episodes, 11 to 13      C1F3S5                                  1.2332
                                      Therapy Visits.
30211..............................  3rd+ Episodes, 0 to 5        C2F1S1                                  0.5085
                                      Therapy Visits.
30212..............................  3rd+ Episodes, 6 Therapy     C2F1S2                                  0.6836
                                      Visits.
30213..............................  3rd+ Episodes, 7 to 9        C2F1S3                                  0.8586
                                      Therapy Visits.
30214..............................  3rd+ Episodes, 10 Therapy    C2F1S4                                  1.0337
                                      Visits.
30215..............................  3rd+ Episodes, 11 to 13      C2F1S5                                  1.2088
                                      Therapy Visits.
30221..............................  3rd+ Episodes, 0 to 5        C2F2S1                                  0.5890
                                      Therapy Visits.
30222..............................  3rd+ Episodes, 6 Therapy     C2F2S2                                  0.7536
                                      Visits.
30223..............................  3rd+ Episodes, 7 to 9        C2F2S3                                  0.9182
                                      Therapy Visits.
30224..............................  3rd+ Episodes, 10 Therapy    C2F2S4                                  1.0828
                                      Visits.
30225..............................  3rd+ Episodes, 11 to 13      C2F2S5                                  1.2474
                                      Therapy Visits.
30231..............................  3rd+ Episodes, 0 to 5        C2F3S1                                  0.6457
                                      Therapy Visits.
30232..............................  3rd+ Episodes, 6 Therapy     C2F3S2                                  0.8211
                                      Visits.
30233..............................  3rd+ Episodes, 7 to 9        C2F3S3                                  0.9965
                                      Therapy Visits.
30234..............................  3rd+ Episodes, 10 Therapy    C2F3S4                                  1.1720
                                      Visits.
30235..............................  3rd+ Episodes, 11 to 13      C2F3S5                                  1.3474
                                      Therapy Visits.
30311..............................  3rd+ Episodes, 0 to 5        C3F1S1                                  0.6307
                                      Therapy Visits.
30312..............................  3rd+ Episodes, 6 Therapy     C3F1S2                                  0.8149
                                      Visits.
30313..............................  3rd+ Episodes, 7 to 9        C3F1S3                                  0.9992
                                      Therapy Visits.
30314..............................  3rd+ Episodes, 10 Therapy    C3F1S4                                  1.1834
                                      Visits.
30315..............................  3rd+ Episodes, 11 to 13      C3F1S5                                  1.3676
                                      Therapy Visits.
30321..............................  3rd+ Episodes, 0 to 5        C3F2S1                                  0.7112
                                      Therapy Visits.
30322..............................  3rd+ Episodes, 6 Therapy     C3F2S2                                  0.8850
                                      Visits.
30323..............................  3rd+ Episodes, 7 to 9        C3F2S3                                  1.0587
                                      Therapy Visits.
30324..............................  3rd+ Episodes, 10 Therapy    C3F2S4                                  1.2325
                                      Visits.
30325..............................  3rd+ Episodes, 11 to 13      C3F2S5                                  1.4063
                                      Therapy Visits.
30331..............................  3rd+ Episodes, 0 to 5        C3F3S1                                  0.7679
                                      Therapy Visits.
30332..............................  3rd+ Episodes, 6 Therapy     C3F3S2                                  0.9525
                                      Visits.
30333..............................  3rd+ Episodes, 7 to 9        C3F3S3                                  1.1370
                                      Therapy Visits.
30334..............................  3rd+ Episodes, 10 Therapy    C3F3S4                                  1.3216
                                      Visits.
30335..............................  3rd+ Episodes, 11 to 13      C3F3S5                                  1.5062
                                      Therapy Visits.
40111..............................  All Episodes, 20+ Therapy    C1F1S1                                  1.8217
                                      Visits.
40121..............................  All Episodes, 20+ Therapy    C1F2S1                                  1.8786
                                      Visits.
40131..............................  All Episodes, 20+ Therapy    C1F3S1                                  1.9611
                                      Visits.
40211..............................  All Episodes, 20+ Therapy    C2F1S1                                  1.9374
                                      Visits.

[[Page 38384]]

 
40221..............................  All Episodes, 20+ Therapy    C2F2S1                                  1.9942
                                      Visits.
40231..............................  All Episodes, 20+ Therapy    C2F3S1                                  2.0767
                                      Visits.
40311..............................  All Episodes, 20+ Therapy    C3F1S1                                  2.1750
                                      Visits.
40321..............................  All Episodes, 20+ Therapy    C3F2S1                                  2.2319
                                      Visits.
40331..............................  All Episodes, 20+ Therapy    C3F3S1                                  2.3144
                                      Visits.
----------------------------------------------------------------------------------------------------------------

    To ensure the changes to the case-mix weights are implemented in a 
budget neutral manner, we propose to apply a case-mix budget neutrality 
factor to the CY 2015 national, standardized 60-day episode payment 
rate (see section III.D.4. of this proposed rule). The case-mix budget 
neutrality factor is calculated as the ratio of total payments when CY 
2015 case-mix weights are applied to CY 2013 utilization (claims) data 
to total payments when CY 2014 case-mix weights are applied to CY 2013 
utilization data. This produces the proposed case-mix budget neutrality 
factor for CY 2015 of 1.0237. We note that the CY 2013 data used to 
develop the proposed case-mix weights is preliminary (CY 2013 claims 
data as of December 31, 2013) and we propose to update the case-mix 
weights with more complete CY 2013 data (as of June 30, 2014) in the 
final rule. Therefore, the points associated with each of the grouper 
variables, the new clinical and functional thresholds, and the CY 2015 
case-mix weights may change between the CY 2015 HH PPS proposed and 
final rules.
    Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to 
implement payment reductions for nominal case-mix growth (that is, 
changes in case-mix that are not related to actual changes in patient 
characteristics over time). Previously, we accounted for nominal case-
mix growth from 2000 to 2009 through case-mix reductions implemented 
from 2008 through 2013 (76 FR 68528-68543). In the CY 2013 HH PPS 
proposed rule, we stated that we found that 15.97 percent of the total 
case-mix change was real from 2000 to 2010 (77 FR 41553). In the CY 
2014 HH PPS final rule, we used 2012 claims data to rebase payments (78 
FR 72277). Since we were resetting the payment amounts with 2012 data, 
we did not take into account nominal case-mix growth from 2009 through 
2012.
    For this proposed rule, we examined case-mix growth from CY 2012 to 
CY 2013 using CY 2012 and preliminary CY 2013 claims data. In applying 
the 15.97 percent estimate of real case-mix growth to the total 
estimated case-mix growth from CY 2012 to CY 2013 (2.37 percent), we 
estimate that a case-mix reduction of 2.00 percent, to account for 
nominal case-mix growth, would be warranted. We considered adjusting 
the case-mix budget neutrality factor to take into account the 2.00 
percent growth in nominal case-mix, which would result in a case-mix 
budget neutrality adjustment of 1.0037 rather than 1.0237. However, we 
are proposing to apply the full 1.0237 case-mix budget neutrality 
factor to the national, standardized 60-day episode payment rate. We 
will continue to monitor case-mix growth and may consider whether to 
propose nominal case-mix reductions in future rulemaking.

D. Proposed CY 2015 Rate Update

1. Proposed CY 2015 Home Health Market Basket Update
    Section 1895(b)(3)(B) of the Act, as amended by section 3401(e) of 
the Affordable Care Act, adds 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.'' Therefore, as mandated by 
the Affordable Care Act, for CYs 2011, 2012, and 2013, the HH market 
basket update was reduced by 1 percentage point.
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2015 be increased by a factor equal 
to the applicable HH market basket update for those HHAs that submit 
quality data as required by the Secretary. The proposed HH PPS market 
basket update for CY 2015 is 2.6 percent. This is based on Global 
Insight Inc.'s first quarter 2014 forecast of the 2010-based HH market 
basket, with historical data through the fourth quarter of 2013. A 
detailed description of how we derive the HHA market basket is 
available in the CY 2013 HH PPS final rule (77 FR 67080-67090).
    For CY 2015, section 3401(e) of the Affordable Care Act, requires 
that, in CY 2015 (and in subsequent calendar years), the market basket 
percentage under the HHA prospective payment system as described in 
section 1895(b)(3)(B) of the Act be annually adjusted by changes in 
economy-wide productivity. The statute defines the productivity 
adjustment, described in section 1886(b)(3)(B)(xi)(II) of the Act, to 
be equal to the 10-year moving average of change in annual economy-wide 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, calendar year, cost reporting period, or other annual 
period) (the ``MFP adjustment''). The Bureau of Labor Statistics (BLS) 
is the agency that publishes the official measure of private nonfarm 
business MFP. Please see http://www.bls.gov/mfp to obtain the BLS 
historical published MFP data. We note that the proposed methodology 
for calculating and applying the MFP adjustment to the HHA payment 
update is similar to the methodology used in other Medicare provider 
payment systems as required by section 3401 of the Affordable Care Act.
    The projection of MFP is currently produced by IHS Global Insight, 
Inc.'s (IGI), an economic forecasting firm. To generate a forecast of 
MFP, IGI replicated the MFP measure calculated by the BLS using a 
series of proxy variables derived from IGI's U.S. macroeconomic models. 
These models take into account a very broad range of factors that 
influence the total U.S. economy. IGI forecasts the underlying proxy 
components such as gross domestic product (GDP), capital, and labor 
inputs required to estimate MFP and then combines those projections 
according to the BLS methodology. In Table 12, we identify each of the 
major

[[Page 38385]]

MFP component series employed by the BLS to measure MFP. We also 
provide the corresponding concepts forecasted by IGI and determined to 
be the best available proxies for the BLS series.

   Table 12--Multifactor Productivity Component Series Employed by the
            Bureau of Labor Statistics and IHS Global Insight
------------------------------------------------------------------------
                BLS series                           IGI series
------------------------------------------------------------------------
Real value-added output...................  Non-housing non-government
                                             non-farm real GDP.
Private non-farm business sector labor      Hours of all persons in
 input.                                      private non-farm
                                             establishments adjusted for
                                             labor composition.
Aggregate capital inputs..................  Real effective capital stock
                                             used for full employment
                                             GDP.
------------------------------------------------------------------------

    IGI found that the historical growth rates of the BLS components 
used to calculate MFP and the IGI components identified are consistent 
across all series and therefore suitable proxies for calculating MFP. 
For more information regarding the BLS method for estimating 
productivity, please see the following link: http://www.bls.gov/mfp/mprtech.pdf.
    During the development of this proposed rule, the BLS published a 
historical time series of private nonfarm business MFP for 1987 through 
2012. Using this historical MFP series and the IGI forecasted series, 
IGI has developed a forecast of MFP for 2013 through 2024, as described 
below.
    To create a forecast of the BLS' MFP index, the forecasted annual 
growth rates of the ``non-housing, nongovernment, non-farm, real GDP,'' 
``hours of all persons in private nonfarm establishments adjusted for 
labor composition,'' and ``real effective capital stock'' series 
(ranging from 2013 to 2024) are used to ``grow'' the levels of the 
``real value-added output,'' ``private non-farm business sector labor 
input,'' and ``aggregate capital input'' series published by the BLS. 
Projections of the ``hours of all persons'' measure are calculated 
using the difference between the projected growth rates of real output 
per hour and real GDP. This difference is then adjusted to account for 
changes in labor composition in the forecast interval. Using these 
three key concepts, MFP is derived by subtracting the contribution of 
labor and capital inputs from output growth. However, to estimate MFP, 
we need to understand the relative contributions of labor and capital 
to total output growth. Therefore, two additional measures are needed 
to operationalize the estimation of the IGI MFP projection: Labor 
compensation and capital income. The sum of labor compensation and 
capital income represents total income. The BLS calculates labor 
compensation and capital income (in current dollar terms) to derive the 
nominal values of labor and capital inputs. IGI uses the 
``nongovernment total compensation'' and ``flow of capital services 
from the total private non-residential capital stock'' series as 
proxies for the BLS' income measures. These two proxy measures for 
income are divided by total income to obtain the shares of labor 
compensation and capital income to total income. To estimate labor's 
contribution and capital's contribution to the growth in total output, 
the growth rates of the proxy variables for labor and capital inputs 
are multiplied by their respective shares of total income. These 
contributions of labor and capital to output growth is subtracted from 
total output growth to calculate the ``change in the growth rates of 
multifactor productivity:''

MFP = Total output growth - ((labor input growth * labor compensation 
share) + (capital input growth * capital income share))

    The change in the growth rates (also referred to as the compound 
growth rates) of the IGI MFP are multiplied by 100 to calculate the 
percent change in growth rates (the percent change in growth rates are 
published by the BLS for its historical MFP measure). Finally, the 
growth rates of the IGI MFP are converted to index levels to be 
consistent with the BLS' methodology. For benchmarking purposes, the 
historical growth rates of IGI's proxy variables were used to estimate 
a historical measure of MFP, which was compared to the historical MFP 
estimate published by the BLS. The comparison revealed that the growth 
rates of the components were consistent across all series, and 
therefore validated the use of the proxy variables in generating the 
IGI MFP projections. The resulting MFP index was then interpolated to a 
quarterly frequency using the Bassie method for temporal 
disaggregation. The Bassie technique utilizes an indicator (pattern) 
series for its calculations. IGI uses the index of output per hour 
(published by the BLS) as an indicator when interpolating the MFP 
index.
    As described previously, the proposed CY 2015 HHA market basket 
percentage update would be 2.6 percent. Section 3401(e) of the 
Affordable Care Act amends section 1895(b)(3)(B) of the Act by adding a 
new clause, which requires that after establishing the percentage 
update for calendar year 2015 (and each subsequent year), ``the 
Secretary shall reduce such percentage by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II)'' (which we refer to as the 
multifactor productivity adjustment or MFP adjustment).
    To calculate the MFP-adjusted update for the HHA market basket, we 
propose that the MFP percentage adjustment be subtracted from the CY 
2015 market basket update calculated using the CY 2010-based HHA market 
basket. We propose that the end of the 10-year moving average of 
changes in the MFP should coincide with the end of the appropriate CY 
update period. Since the market basket update is reduced by the MFP 
adjustment to determine the annual update for the HH PPS, we believe it 
is appropriate for the data and time period associated with both 
components of the calculation (the market basket and the productivity 
adjustment) to end on December 15, 2015, so that changes in market 
conditions are aligned.
    Therefore, for the CY 2015 update, we propose that the MFP 
adjustment be calculated as the 10-year moving average of changes in 
MFP for the period ending December 31, 2015. We propose to round the 
final annual adjustment to the one-tenth of one percentage point level 
up or down as applicable according to conventional rounding rules (that 
is, if the number we are rounding is followed by 5, 6, 7, 8, or 9, we 
will round the number up; if the number we are rounding is followed by 
1, 2, 3, or 4, we will round the number down).
    The market basket percentage we are proposing for CY 2015 for the 
HHA market basket is based on the 1st quarter 2014 forecast of the CY 
2010-based HHA market basket update, which is estimated to be 2.6 
percent. This market basket percentage would then be reduced by the MFP 
adjustment (the 10-year moving average of MFP for the period ending 
December 31, 2015) of 0.4 percent, which is calculated as described 
above and based on IGI's 1st quarter 2014 forecast. The resulting MFP-
adjusted HHA market basket update is equal to 2.2 percent, or 2.6 
percent less 0.4 percent. We propose that if more recent data are 
subsequently available (for example, a more recent estimate of the 
market basket and MFP adjustment), we would use such data, if 
appropriate, to determine the CY 2015 market basket update and MFP 
adjustment in the CY 2015 HHA PPS final rule.

[[Page 38386]]

    Section 1895(b)(3)(B) of the Act requires that the home health 
market basket percentage increase be decreased by 2 percentage points 
for those HHAs that do not submit quality data as required by the 
Secretary. For HHAs that do not submit the required quality data for CY 
2015, the home health market basket update will be 0.2 percent (2.2 
percent minus 2 percent). As noted previously, the home health market 
basket was rebased and revised in CY 2013. A detailed description of 
how we derive the HHA market basket is available in the CY 2013 HH PPS 
final rule (77 FR 67080, 67090).
2. Home Health Care Quality Reporting Program (HH QRP)
a. General Considerations Used for Selection of Quality Measures for 
the HH QRP
    The successful development of the Home Health Quality Reporting 
Program (HH QRP) that promotes the delivery of high quality healthcare 
services is our paramount concern. We seek to adopt measures for the HH 
QRP that promote more efficient and safer care. Our measure selection 
activities for the HH QRP takes into consideration input we receive 
from the Measure Applications Partnership (MAP), convened by the 
National Quality Forum (NQF) as part of a pre-rulemaking process that 
we have established and are required to follow under section 1890A of 
the Act. The MAP is a public-private partnership comprised of multi-
stakeholder groups convened for the primary purpose of providing input 
to CMS on the selection of certain categories of quality and efficiency 
measures, as required by section 1890A(a)(3) of the Act. By February 
1st of each year, the NQF must provide that input to CMS.
    More details about the pre-rulemaking process can be found at 
http://www.qualityforum.org/map.
    MAP reports to view and download are available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
    Our measure development and selection activities for the HH QRP 
take into account national priorities, such as those established by the 
National Priorities Partnership (http://www.qualityforum.org/Setting_Priorities/NPP/National_Priorities_Partnership.aspx), the Department 
of Health & Human Services (HHS) Strategic Plan (http://www.hhs.gov/secretary/about/priorities/priorities.html, the National Quality 
Strategy (NQS) (http://www.ahrq.gov/workingforquality/reports.htm), and 
the CMS Quality Strategy (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html).
    To the extent practicable, we have sought to adopt measures that 
have been endorsed by the national consensus organization under 
contract to endorse standardized healthcare quality measures pursuant 
to section 1890 of the Act, recommended by multi-stakeholder 
organizations, and developed with the input of patients, providers, 
purchasers/payers, and other stakeholders. At this time, the National 
Quality Forum (NQF) is the national consensus organization that is 
under contract with HHS to provide review and endorsement of quality 
measures.
b. Background and Quality Reporting Requirements
    Section 1895(b)(3)(B)(v)(II) of the Act states 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 states 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 
subclause (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). HHAs that meet the quality 
data reporting requirements are eligible for the full home health (HH) 
market basket percentage increase. HHAs that do not meet the reporting 
requirements are subject to a 2 percentage point reduction to the HH 
market basket increase.
    Section 1895(b)(3)(B)(v)(III) of the Act further states that 
``[t]he Secretary shall establish procedures for making data submitted 
under subclause (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.''
    Medicare home health regulations, as codified at Sec.  484.250(a), 
require HHAs to submit OASIS assessments and Home Health Care Consumer 
Assessment of Healthcare Providers and Systems Survey (HH 
CAHPS[supreg]) data to meet the quality reporting requirements of 
section 1895(b)(3)(B)(v) of the Act. We provide quality measure data to 
HHAs via the Certification and Survey Provider Enhanced Reports (CASPER 
reports) which are available on the CMS Health Care Quality Improvement 
System (QIES). A subset of the HH quality measures has been publicly 
reported on the Home Health Compare (HH Compare) Web site since 2003. 
The CY 2012 HH PPS final rule (76 FR 68576), identifies the current HH 
QRP measures. The selected measures that are made available to the 
public can be viewed on the HH Compare Web site located at http://www.medicare.gov/HHCompare/Home.asp. As stated in the CY 2012 and 
CY2013 HH PPS final rules (76 FR 68575 and 77 FR 67093, respectively), 
we finalized that we will also use measures derived from Medicare 
claims data to measure HH quality.
    In the CY 2014 HH PPS final rule, we finalized a proposal to add 
two claims-based measures to the HH QRP, and also stated that we would 
begin reporting the data from these measures to HHAs beginning in CY 
2014. These claims based measures are: (1) Rehospitalization during the 
first 30 days of HH; and (2) Emergency Department Use without Hospital 
Readmission during the first 30 days of HH. Also, in this rule, we 
finalized our proposal to reduce the number of process measures 
reported on the CASPER reports by eliminating the stratification by 
episode length for 9 process measures. While no timeframe was given for 
the removal of these measures, we have scheduled them for removal from 
the CASPER folders in October 2014. In addition, five short stay 
measures which had previously been reported on Home Health Compare were 
recently removed from public reporting and replaced with non-stratified 
``all episodes of care'' versions of these measures.
c. OASIS Data Submission and OASIS Data for Annual Payment Update
(1) Statutory Authority
    The Home Health conditions of participation (CoPs) at Sec.  
484.55(d) require that the comprehensive assessment must be updated and 
revised (including the administration of the OASIS) no less frequently 
than: (1) The last 5 days of every 60 days beginning with the start of 
care date, unless there is a beneficiary elected transfer, significant 
change in condition, or discharge and return to the same HHA during the 
60-day episode; (2) within 48 hours of the patient's return to the home 
from a hospital admission of 24 hours

[[Page 38387]]

or more for any reason other than diagnostic tests; and (3) at 
discharge.
    It is important to note that to calculate quality measures from 
OASIS data, there must be a complete quality episode, which requires 
both a Start of Care (initial assessment) or Resumption of Care OASIS 
assessment and a Transfer or Discharge OASIS assessment. Failure to 
submit sufficient OASIS assessments to allow calculation of quality 
measures, including transfer and discharge assessments, is failure to 
comply with the CoPs.
    HHAs do not need to submit OASIS data for those patients who are 
excluded from the OASIS submission requirements. As described in the 
December 23, 2005 Medicare and Medicaid Programs: Reporting Outcome and 
Assessment Information Set Data as Part of the Conditions of 
Participation for Home Health Agencies final rule (70 FR 76202), we 
define the exclusion as those patients:
     Receiving only non-skilled services;
     For whom neither Medicare nor Medicaid is paying for HH 
care (patients receiving care under a Medicare or Medicaid Managed Care 
Plan are not excluded from the OASIS reporting requirement);
     Receiving pre- or post-partum services; or
     Under the age of 18 years.
    As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs 
that become Medicare-certified on or after May 31 of the preceding year 
are not subject to the OASIS quality reporting requirement nor any 
payment penalty for quality reporting purposes for the following year. 
For example, HHAs certified on or after May 31, 2013 are not subject to 
the 2 percentage point reduction to their market basket update for CY 
2014. These exclusions only affect quality reporting requirements and 
do not affect the HHA's reporting responsibilities as announced in the 
December 23, 2005 final rule, ``Medicare and Medicaid Programs; 
Reporting Outcome and Assessment Information Set Data as Part of the 
Conditions of Participation for Home Health Agencies'' (70 FR 76202).
(2) Home Health Quality Reporting Program Requirements for CY 2015 
Payment and Subsequent Years
    In the CY 2014 Home Health Final rule (78 FR 72297), we finalized a 
proposal to consider OASIS assessments submitted by HHAs to CMS in 
compliance with HH CoPs and Conditions for Payment for episodes 
beginning on or after July 1, 2012, and before July 1, 2013 as 
fulfilling one portion of the quality reporting requirement for CY 
2014. In addition, we finalized a proposal to continue this pattern for 
each subsequent year beyond CY 2014, considering OASIS assessments 
submitted for episodes beginning on July 1st of the calendar year 2 
years prior to the calendar year of the Annual Payment Update (APU) 
effective date and ending June 30th of the calendar year 1 year prior 
to the calendar year of the APU effective date as fulfilling the OASIS 
portion of the HH quality reporting requirement.
(3) Establishing a ``Pay-for-Reporting'' Performance Requirement for 
Submission of OASIS Quality Data
    Section 1895(b)(3)(B)(v)(I) of the Act states 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 subclause (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 ``pay-for-reporting'' requirement was 
implemented on January 1, 2007. However, to date, the quantity of OASIS 
assessments each HHA must submit to meet this requirement has never 
been proposed and finalized through rulemaking or through the sub-
regulatory process. We believe that this matter should be addressed for 
several reasons.
    We believe that defining a more explicit performance requirement 
for the submission of OASIS data by HHAs would better meet section 
5201(c)(2) of the Deficit Reduction Act of 2005 (DRA), which 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 February 2012, the Department of Health & Human Services Office 
of the Inspector General (OIG) performed a study to: (1) Determine the 
extent to which home health agencies (HHAs) meet Federal reporting 
requirements for the Outcome and Assessment Information Set (OASIS) 
data; (2) to determine the extent to which states meet federal 
reporting requirements for OASIS data; and (3) to determine the extent 
to which the Centers for Medicare & Medicaid Services (CMS) oversees 
the accuracy and completeness of OASIS data submitted by HHAs. In a 
report entitled, ``Limited Oversight of Home Health Agency OASIS 
Data,'' \13\ the OIG stated their finding that ``CMS did not ensure the 
accuracy or completeness of OASIS data.'' The OIG recommended that we 
``identify all HHAs that failed to submit OASIS data and apply the 2-
percent payment reduction to them''. We believe that establishing a 
performance requirement for submission of OASIS quality data would be 
responsive to the recommendations of the OIG.
---------------------------------------------------------------------------

    \13\ http://oig.hhs.gov/oei/reports/oei-01-10-00460.asp.
---------------------------------------------------------------------------

    In response to these requirements and the OIG report, we directed 
one of our contractors (the University of Colorado, Anschutz Medical 
Campus) to design a pay-for-reporting performance system model that 
could accurately measure the level of an HHA's submission of OASIS 
quality data. After review and analysis of several years of OASIS data, 
the researchers at the University of Colorado were able to develop a 
performance system which is driven by the principle that each HHA would 
be expected to submit a minimum set of two ``matching'' assessments for 
each patient admitted to their agency. These matching assessments 
together create what is considered a ``quality episode of care'', which 
would ideally consist of a Start of Care (SOC) or Resumption of Care 
(ROC) assessment and a matching End of Care (EOC) assessment. However, 
the researchers at the University of Colorado determined that there are 
several scenarios that could meet this ``matching assessment 
requirement'' of the new pay-for-reporting performance requirement. 
These scenarios have been defined as ``quality assessments'', which are 
defined as assessments that create a quality episode of care during the 
reporting period or could create a quality episode if the reporting 
period were expanded to an earlier reporting period or into the next 
reporting period.
    Seven types of assessments submitted by an HHA fit this definition 
of a quality assessment. These are:
     A Start of Care (SOC) or Resumption of Care (ROC) 
assessment that has a matching End of Care (EOC) assessment. EOC 
assessments are assessments that are conducted at transfer to an 
inpatient facility (with or without discharge), death, or discharge 
from home health care. These two assessments (the SOC or ROC assessment 
and the EOC assessment) create a regular quality episode of care and 
both count as quality assessments.
     An SOC/ROC assessment that could begin an episode of care, 
but occurs in the last 60 days of the performance

[[Page 38388]]

period. This is labeled as a ``Late SOC/ROC'' quality assessment.
    An EOC assessment that could end an episode of care that began in 
the previous reporting period, (that is, an EOC that occurs in the 
first 60 days of the performance period.) This is labeled as an ``Early 
EOC'' quality assessment.
     An SOC/ROC assessment that is followed by one or more 
follow-up assessments, the last of which occurs in the last 60 days of 
the performance period. This is labeled as an ``SOC/ROC Pseudo 
Episode'' quality assessment.
     An EOC assessment is preceded by one or more Follow-up 
assessments, the last of which occurs in the first 60 days of the 
performance period. This is labeled an ``EOC Pseudo Episode'' quality 
assessment.
     An SOC/ROC assessment that is part of a known one-visit 
episode. This is labeled as a ``One-visit episode'' quality assessment.
     SOC, ROC, and EOC assessments that do not meet any of 
these definitions are labeled as ``Non-Quality'' assessments.
     Follow-up assessments (that is, where the M0100 Reason for 
Assessment = `04' or `05') are considered ``Neutral'' assessments and 
do not count toward or against the pay for reporting performance 
requirement.
    Compliance with this performance requirement can be measured 
through the use of an uncomplicated mathematical formula. This Pay for 
Reporting performance requirement metric has been titled as the 
``Quality Assessments Only'' (QAO) formula because only those OASIS 
assessments that contribute, or could contribute, to creating a quality 
episode of care are included in the computation. The formula based on 
this definition is as follows:
[GRAPHIC] [TIFF OMITTED] TP07JY14.001

    Our ultimate goal is to require all HHAs to achieve a Pay-for-
Reporting performance requirement compliance rate of 90 percent or 
more, as calculated using the QAO metric illustrated above. However, we 
propose to implement this performance requirement in an incremental 
fashion over a 3 year period. We propose to require each HHA to reach a 
compliance rate of 70 percent or better during the first reporting 
period \14\ that the new Pay-for-Reporting performance requirement is 
implemented. We further propose to increase the Pay-for-Reporting 
performance requirement by 10 percent in the second reporting period, 
and then by an additional 10 percent in the third reporting period 
until a pay-for-reporting performance requirement of 90 percent is 
reached.
---------------------------------------------------------------------------

    \14\ The term ``reporting period'' is defined as the submission 
of OASIS assessments for episodes between July 1 (of the calendar 
year two years prior to the calendar year of the APU effective date) 
through the following June 30th (of the calendar year one year prior 
to the calendar year of the APU effective date) each year.
---------------------------------------------------------------------------

    To summarize, we propose to implement the pay-for- reporting 
performance requirement beginning with all episodes of care that occur 
on or after July 1, 2015, in accordance with the following schedule:
     For episodes beginning on or after July 1st, 2015 and 
before June 30th, 2016, HHAs must score at least 70 percent on the QAO 
metric of pay-for-reporting performance or be subject to a 2 percentage 
point reduction to their market basket update for CY 2017.
     For episodes beginning on or after July 1st, 2016 and 
before June 30th, 2017, HHAs must score at least 80 percent on the QAO 
metric of pay-for-reporting performance or be subject to a 2 percentage 
point reduction to their market basket update for CY 2018.
     For episodes beginning on or after July 1st, 2017, and 
thereafter, and before June 30th, 2018 and thereafter, HHAs must score 
at least 90 percent on the QAO metric of pay-for-reporting performance 
or be subject to a 2 percentage point reduction to their market basket 
update for CY 2019, and each subsequent year thereafter.
    We solicit public comment on our proposal to implement the Pay-for-
Reporting performance requirement, as described previously, for the 
Home Health Quality Reporting Program.
d. Updates to HH QRP Measures Which Are Made as a Result of Review by 
the NQF Process
    Section 1895(b)(3)(B)(v)(II) of the Act generally requires the 
Secretary to adopt measures that have been endorsed by the entity with 
a contract under section 1890(a) of the Act. This contract is currently 
held by the NQF. The NQF is a voluntary consensus standard-setting 
organization with a diverse representation of consumer, purchaser, 
provider, academic, clinical, and other health care stakeholder 
organizations. The NQF was established to standardize health care 
quality measurement and reporting through its consensus development 
process.\15\
---------------------------------------------------------------------------

    \15\ For more information about the NQF Consensus Development 
Process, please visit the NQF Web site using the following link: 
http://www.qualityforum.org/Measuring_Performance/Consensus_Development_Process.aspx.
---------------------------------------------------------------------------

    The NQF undertakes to: (1) Review new quality measures and national 
consensus standards for measuring and publicly reporting on 
performance; (2) provide for annual measure maintenance updates to be 
submitted by the measure steward for endorsed quality measures; (3) 
provide for measure maintenance endorsement on a 3-year cycle; (4) 
conduct a required follow-up review of measures with time limited 
endorsement for consideration of full endorsement; and (5) conduct ad 
hoc reviews of endorsed quality measures, practices, consensus 
standards, or events when there is adequate justification for a review. 
In the normal course of measure maintenance, the NQF solicits 
information from measure stewards for annual reviews to review measures 
for continued endorsement in a specific 3-year cycle. In this measure 
maintenance process, the measure steward is responsible for updating 
and maintaining the currency and relevance of the measure and for 
confirming existing specifications to the NQF on an annual basis. As 
part of the ad hoc review process, the ad hoc review requester and the 
measure steward are responsible for submitting evidence for review by a 
NQF Technical Expert panel which, in turn, provides input to the 
Consensus Standards Approval Committee which then makes a decision on 
endorsement status and/or specification changes for the measure, 
practice, or event.
    Through the NQF's measure maintenance process, the NQF endorsed 
measures are sometimes updated to incorporate changes that we believe 
do not substantially change the nature of the measure. With respect to 
what constitutes a substantive versus a non-substantive change, we 
expect to make this determination on a measure-by-measure basis. 
Examples of such non-substantive changes might include updated 
diagnosis or procedure codes, medication updates for categories of

[[Page 38389]]

medications, broadening of age ranges, and changes to exclusions for a 
measure. We believe that non-substantive changes may include updates to 
measures based upon changes to guidelines upon which the measures are 
based. These types of maintenance changes are distinct from more 
substantive changes to measures that result in what can be considered 
new or different measures, and that they do not trigger the same agency 
obligations under the Administrative Procedure Act.
    We are proposing that, if the NQF updates an endorsed measure that 
we have adopted for the HH QRP in a manner that we consider to not 
substantially change the nature of the measure, we would use a sub-
regulatory process to incorporate those updates to the measure 
specifications that apply to the program. Specifically, we would revise 
the information that is posted on the CMS Home Health Quality 
Initiatives Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html so that it clearly identifies the updates and 
provides links to where additional information on the updates can be 
found. In addition, we would refer HHAs to the NQF Web site for the 
most up-to date information about the quality measures (http://www.qualityforum.org/). We would provide sufficient lead time for HHAs 
to implement the changes where changes to the data collection systems 
would be necessary.
    We would continue to use the rulemaking process to adopt changes to 
measures that we consider to substantially change the nature of the 
measure. Examples of changes that we might consider to be substantive 
would be those in which the changes are so significant that the measure 
is no longer the same measure, or when a standard of performance 
assessed by a measure becomes more stringent, such as changes in 
acceptable timing of medication, procedure/process, test 
administration, or expansion of the measure to a new setting. We 
believe that our proposal adequately balances our need to incorporate 
NQF updates to NQF endorsed measures used in the HH QRP in the most 
expeditious manner possible, while preserving the public's ability to 
comment on updates to measures that so fundamentally change an endorsed 
measure that it is no longer the same measure that we originally 
adopted.
    We note that a similar policy was adopted for the Hospital IQR 
Program, the PPS-Exempt Cancer Hospital (PCH) Quality Reporting 
Program, the Long-Term Care Hospital Quality Reporting (LTCHQR) 
Program, the Inpatient Rehabilitation Facility Quality Reporting 
Program (IRF QRP) and the Inpatient Psychiatric Facility (IPF) Quality 
Reporting Program.
    We invite public comment on our proposal to adopt a policy in which 
NQF changes to a measure that are non-substantive in nature will be 
adopted using a sub-regulatory process and NQF changes that are 
substantive in nature will be adopted through the rulemaking process.
e. Home Health Care CAHPS[supreg] Survey (HHCAHPS)
    In the CY 2014 HH PPS final rule (78 FR 72294), we stated that the 
HH quality measures reporting requirements for Medicare-certified 
agencies includes the Home Health Care CAHPS[supreg] (HHCAHPS) Survey 
for the CY 2014 APU. We maintained the stated HHCAHPS data requirements 
for CY 2014 set out in previous rules, for the continuous monthly data 
collection and quarterly data submission of HHCAHPS data.
(1) Background and Description of HHCAHPS
    As part of the HHS Transparency Initiative, we 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[supreg]) program and endorsed by the NQF 
in March 2009 (NQF Number 0517). The HHCAHPS survey is part of a family 
of CAHPS[supreg] surveys that asks patients to report on and rate their 
experiences with health care. The Home Health Care CAHPS[supreg] 
(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 will enable valid 
comparisons across all HHAs. The history and development process for 
HHCAHPS has been described in previous rules and is also available on 
the official HHCAHPS Web site at https://homehealthcahps.org and in the 
annually-updated HHCAHPS Protocols and Guidelines Manual, which is 
downloadable from https://homehealthcahps.org.
    For public reporting purposes, we report five measures from the 
HHCAHPS Survey--three composite measures and two global ratings of care 
that are derived from the questions on the HHCAHPS survey. The publicly 
reported data are adjusted for differences in patient mix across HHAs. 
We update the HHCAHPS data on Home Health Compare on www.medicare.gov 
quarterly. Each HHCAHPS composite measure consists of four or more 
individual survey items regarding one of the following related topics:
     Patient care (Q9, Q16, Q19, and Q24);
     Communications between providers and patients (Q2, Q15, 
Q17, Q18, Q22, and Q23); and
     Specific care issues on medications, home safety, and pain 
(Q3, Q4, Q5, Q10, Q12, Q13, and Q14).
    The two global ratings are the overall rating of care given by the 
HHA's care providers (Q20), and the patient's willingness to recommend 
the HHA to family and friends (Q25).
    The HHCAHPS survey is currently available in English, Spanish, 
Chinese, Russian, and Vietnamese. The OMB number on these surveys is 
the same (0938-1066). All of these surveys are on the Home Health Care 
CAHPS[supreg] Web site, https://homehealthcahps.org. We will continue 
to consider additional language translations of the HHCAHPS in response 
to the needs of the home health patient population.
    All of the requirements about home health patient eligibility for 
the HHCAHPS survey and conversely, which home health patients are 
ineligible for the HHCAHPS survey are delineated and detailed in the 
HHCAHPS Protocols and Guidelines Manual, which is downloadable at 
https://homehealthcahps.org. Home health patients are eligible for 
HHCAHPS if they received at least two skilled home health visits in the 
past 2 months, which are paid for by Medicare or Medicaid.
    Home health patients are ineligible for inclusion in HHCAHPS 
surveys if one of these conditions pertains to them:
     Are under the age of 18;
     Are deceased prior to the date the sample is pulled;
     Receive hospice care;
     Receive routine maternity care only;
     Are not considered survey eligible because the state in 
which the patient lives restricts release of patient information for a 
specific condition or illness that the patient has; or
     No Publicity patients, defined as patients who on their 
own initiative at their first encounter with the HHAs make it very 
clear that no one outside of the agencies can be advised of their 
patient status, and no one outside of the HHAs can contact them for any 
reason.

[[Page 38390]]

    We stated in previous rules that Medicare-certified HHAs are 
required to contract with an approved HHCAHPS survey vendor. This 
requirement continues, and Medicare-certified agencies also must 
provide on a monthly basis a list of their patients served to their 
respective HHCAHPS survey vendors. Agencies are not allowed to 
influence at all how their patients respond to the HHCAHPS survey.
    As previously required, HHCAHPS survey 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 have approximately 30 approved HHCAHPS survey 
vendors. The list of approved HHCAHPS survey vendors is available at 
https://homehealthcahps.org.
(2) HHCAHPS Oversight Activities
    We stated in prior final rules that all approved HHCAHPS survey 
vendors are 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 
approved HHCAHPS survey vendors follow the HHCAHPS Protocols and 
Guidelines Manual. As stated previously in the five prior final rules 
to this proposed rule, all HHCAHPS approved survey vendors must develop 
a Quality Assurance Plan (QAP) for survey administration in accordance 
with the HHCAHPS Protocols and Guidelines Manual. An HHCAHPS survey 
vendor's first QAP must be submitted within 6 weeks of the data 
submission deadline date after the vendor's first quarterly data 
submission. The QAP must be updated and submitted annually thereafter 
and at any time that changes occur in staff or vendor capabilities or 
systems. A model QAP is included in the HHCAHPS Protocols and 
Guidelines Manual. The QAP must include the following:
     Organizational Background and Staff Experience;
     Work Plan;
     Sampling Plan;
     Survey Implementation Plan;
     Data Security, Confidentiality and Privacy Plan; and
     Questionnaire Attachments
    As part of the oversight activities, the HHCAHPS Survey 
Coordination Team conducts on-site visits to all approved HHCAHPS 
survey vendors. The purpose of the site visits is to allow the HHCAHPS 
Coordination Team to observe the entire HHCAHPS Survey implementation 
process, from the sampling stage through file preparation and 
submission, as well as to assess data security and storage. The HHCAHPS 
Survey Coordination Team reviews the HHCAHPS survey vendor's survey 
systems, and assesses administration protocols based on the HHCAHPS 
Protocols and Guidelines Manual posted at https://homehealthcahps.org. 
The systems and program site visit review includes, but is not limited 
to the following:
     Survey management and data systems;
     Printing and mailing materials and facilities;
     Telephone call center facilities;
     Data receipt, entry and storage facilities; and
     Written documentation of survey processes.
    After the site visits, HHCAHPS survey vendors are given a defined 
time period in which to correct any identified issues and provide 
follow-up documentation of corrections for review. HHCAHPS survey 
vendors are subject to follow-up site visits on an as-needed basis.
    In the CY 2013 HH PPS final rule (77 FR 67094, 67164), we codified 
the current guideline that all approved HHCAHPS survey vendors fully 
comply with all HHCAHPS oversight activities. We included this survey 
requirement at Sec.  484.250(c)(3).
(3) HHCAHPS Requirements for the CY 2015 APU
    In the CY 2014 HH PPS final rule (78 FR 72294), we stated that for 
the CY 2015 APU, we will require continued monthly HHCAHPS data 
collection and reporting for 4 quarters. The data collection period for 
CY 2015 APU includes the second quarter 2013 through the first quarter 
2014 (the months of April 2013 through March 2014). Although these 
dates are past, we wished to state them in this proposed rule so that 
HHAs are again reminded of what months constituted the requirements for 
the CY 2015 APU. HHAs are required to submit their HHCAHPS data files 
to the HHCAHPS Data Center for the HHCAHPS data from the first quarter 
of 2014 data by 11:59 p.m., e.d.t. on July 17, 2014. This deadline is 
firm; no exceptions are permitted.
(4) HHCAHPS Requirements for the CY 2016 APU
    For the CY 2016 APU, we require continued monthly HHCAHPS data 
collection and reporting for 4 quarters. The data collection period for 
the CY 2016 APU includes the second quarter 2014 through the first 
quarter 2015 (the months of April 2014 through March 2015). HHAs will 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2014 by 11:59 p.m., e.d.t. on October 16, 
2014; for the third quarter 2014 by 11:59 p.m., e.s.t. on January 15, 
2015; for the fourth quarter 2014 by 11:59 p.m., e.d.t. on April 16, 
2015; and for the first quarter 2015 by 11:59 p.m., e.d.t. on July 16, 
2015. These deadlines will be firm; no exceptions will be permitted.
    We will exempt HHAs receiving Medicare certification after the 
period in which HHAs do their patient count (April 1, 2013 through 
March 31, 2014) on or after April 1, 2014, from the full HHCAHPS 
reporting requirement for the CY 2016 APU, because these HHAs will not 
have been Medicare-certified throughout the period of April 1, 2013, 
through March 31, 2014. These HHAs will not need to complete a HHCAHPS 
Participation Exemption Request form for the CY 2016 APU.
    We require that all HHAs that had fewer than 60 HHCAHPS-eligible 
unduplicated or unique patients in the period of April 1, 2013 through 
March 31, 2014 are exempt from the HHCAHPS data collection and 
submission requirements for the CY 2016 APU, upon completion of the CY 
2016 HHCAHPS Participation Exemption Request form. Agencies with fewer 
than 60 HHCAHPS-eligible, unduplicated or unique patients in the period 
of April 1, 2013, through March 31, 2014, will be required to submit 
their patient counts on the HHCAHPS Participation Exemption Request 
form for the CY 2016 APU posted on https://homehealthcahps.org on April 
1, 2014, by 11:59 p.m., e.s.t. by March 31, 2015. This deadline will be 
firm, as will be all of the quarterly data submission deadlines.
(5) HHCAHPS Requirements for the CY 2017 APU
    For the CY 2017 APU, we require continued monthly HHCAHPS data 
collection and reporting for 4 quarters. The data collection period for 
the CY 2017 APU includes the second quarter 2015 through the first 
quarter 2016 (the months of April 2015 through March 2016). HHAs will 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2015 by 11:59 p.m., e.d.t. on October 15, 
2015; for the third quarter 2015 by 11:59 p.m., e.s.t. on January 12, 
2016; for the fourth quarter 2015 by 11:59 p.m., e.d.t. on April 21, 
2016; and for the first quarter 2016 by 11:59 p.m., e.d.t. on July 21, 
2016. These deadlines will be firm; no exceptions will be permitted.

[[Page 38391]]

    We will exempt HHAs receiving Medicare certification after the 
period in which HHAs do their patient count (April 1, 2014 through 
March 31, 2015) on or after April 1, 2015, from the full HHCAHPS 
reporting requirement for the CY 2016 APU, because these HHAs will not 
have been Medicare-certified throughout the period of April 1, 2014, 
through March 31, 2015. These HHAs will not need to complete a HHCAHPS 
Participation Exemption Request form for the CY 2017 APU.
    We require that all HHAs that had fewer than 60 HHCAHPS-eligible 
unduplicated or unique patients in the period of April 1, 2014, through 
March 31, 2015 are exempt from the HHCAHPS data collection and 
submission requirements for the CY 2017 APU, upon completion of the CY 
2017 HHCAHPS Participation Exemption Request form. Agencies with fewer 
than 60 HHCAHPS-eligible, unduplicated or unique patients in the period 
of April 1, 2014, through March 31, 2015, will be required to submit 
their patient counts on the HHCAHPS Participation Exemption Request 
form for the CY 2017 APU posted on https://homehealthcahps.org on April 
1, 2015, by 11:59 p.m., e.s.t. by March 31, 2016. This deadline will be 
firm, as will be all of the quarterly data submission deadlines.
(6) HHCAHPS Reconsiderations and Appeals Process
    HHAs should monitor their respective HHCAHPS survey vendors to 
ensure that vendors submit their HHCAHPS data on time, by accessing 
their HHCAHPS Data Submission Reports on https://homehealthcahps.org. 
This will help HHAs ensure that their data are submitted in the proper 
format for data processing to the HHCAHPS Data Center.
    We will continue HHCAHPS oversight activities as finalized in the 
CY 2014 rule. In the CY 2013 HH PPS final rule (77 FR 6704, 67164), we 
codified the current guideline that all approved HHCAHPS survey vendors 
must fully comply with all HHCAHPS oversight activities. We included 
this survey requirement at Sec.  484.250(c)(3).
    We will continue the HHCAHPS reconsiderations and appeals process 
that we have finalized and that we have used for prior periods for the 
CY 2012, CY 2013, and CY 2014 APU determinations. We have described the 
HHCAHPS reconsiderations process requirements in the Technical 
Direction Letter that we send to the affected HHAs, on or about the 
first Friday in September. HHAs have 30 days from their receipt of the 
Technical Direction Letter informing them that they did not meet the 
HHCAHPS requirements for the CY period, to send all documentation that 
supports their requests for reconsideration to CMS. It is important 
that the affected HHAs send in comprehensive information in their 
reconsideration letter/package because we will not contact the affected 
HHAs to request additional information or to clarify incomplete or 
inconclusive information. If clear evidence to support a finding of 
compliance is not present, the 2 percent reduction in the APU will be 
upheld. If clear evidence of compliance is present, the 2 percent 
reduction for the APU will be reversed. We will notify affected HHAs by 
about mid-December. If we determine to uphold the 2 percent reduction, 
the HHA may further appeal the 2 percent reduction via the Provider 
Reimbursement Review Board (PRRB) appeals process.
(7) Summary
    We are not proposing any changes to the participation requirements, 
or to the requirements pertaining to the implementation of the Home 
Health CAHPS[supreg] Survey (HHCAHPS). We again strongly encourage HHAs 
to learn about the survey and view the HHCAHPS Survey Web site at the 
official Web site for the HHCAHPS at https://homehealthcahps.org. HHAs 
can also send an email to the HHCAHPS Survey Coordination Team at 
HHCAHPS@rti.org, or telephone toll-free (1-866-354-0985) for more 
information about HHCAHPS.
4. Home Health Wage Index
a. Background
    Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the 
Secretary to provide appropriate adjustments to the proportion of the 
payment amount under the HH PPS that account for area wage differences, 
using adjustment factors that reflect the relative level of wages and 
wage-related costs applicable to the furnishing of HH services. Since 
the inception of the HH PPS, we have used inpatient hospital wage data 
in developing a wage index to be applied to HH payments. We propose to 
continue this practice for CY 2015, as we continue to believe that, in 
the absence of HH-specific wage data, using inpatient hospital wage 
data is appropriate and reasonable for the HH PPS. Specifically, we 
propose to continue to use the pre-floor, pre-reclassified hospital 
wage index as the wage adjustment to the labor portion of the HH PPS 
rates. For CY 2015, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2010 and before 
October 1, 2011 (FY 2011 cost report data).
    We would 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). Previously, we determined each HHA's labor market 
area based on definitions of metropolitan statistical areas (MSAs) 
issued by the OMB. In the CY 2006 HH PPS final rule (70 FR 68132), we 
began adopting revised labor market area definitions as discussed in 
the OMB Bulletin No. 03-04 (June 6, 2003). This bulletin announced 
revised definitions for MSAs and the creation of micropolitan 
statistical areas and core-based statistical areas (CBSAs). The 
bulletin is available online at www.whitehouse.gov/omb/bulletins/b03-04.html. In adopting the CBSA geographic designations, we provided a 
one-year transition in CY 2006 with a blended wage index for all sites 
of service. For CY 2006, the wage index for each geographic area 
consisted of a blend of 50 percent of the CY 2006 MSA-based wage index 
and 50 percent of the CY 2006 CBSA-based wage index. We referred to the 
blended wage index as the CY 2006 HH PPS transition wage index. As 
discussed in the CY 2006 HH PPS final rule (70 FR 68132), since the 
expiration of this one-year transition on December 31, 2006, we have 
used the full CBSA-based wage index values.
    We propose to continue to use the same methodology discussed in the 
CY 2007 HH PPS final rule (71 FR 65884) to address those geographic 
areas in which there are no inpatient hospitals, and thus, no hospital 
wage data on which to base the calculation of the CY 2015 HH PPS wage 
index. For rural areas that do not have inpatient hospitals, we will 
use the average wage index from all contiguous CBSAs as a reasonable 
proxy. For CY 2015, there are no rural areas that do not have inpatient 
hospitals, and thus, this methodology would not be applied. For rural 
Puerto Rico, we do not apply this methodology due to the distinct 
economic circumstances that exist there (for example, due to the close 
proximity to one another of almost all of Puerto Rico's various urban 
and non-urban areas, this methodology would produce a wage index for 
rural Puerto Rico that is higher than that in half of its urban areas). 
Instead, we would continue to use the most recent wage index previously 
available for that area. For urban areas without inpatient hospitals, 
we use the average wage index of all urban areas within the state as a

[[Page 38392]]

reasonable proxy for the wage index for that CBSA. For CY 2015, the 
only urban area without inpatient hospital wage data is Hinesville, 
Georgia (CBSA 25980).
b. Update
    On February 28, 2013, OMB issued Bulletin No. 13-01, announcing 
revisions to the delineations of MSAs, Micropolitan Statistical Areas, 
and CBSAs, and guidance on uses of the delineation of these areas. This 
bulletin is available online at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin states that 
it ``provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010, in the Federal Register (75 FR 37246-37252) and Census Bureau 
data.''
    While the revisions OMB published on February 28, 2013 are not as 
sweeping as the changes made when we adopted the CBSA geographic 
designations for CY 2006, the February 28, 2013 bulletin does contain a 
number of significant changes. For example, there are new CBSAs, urban 
counties that have become rural, rural counties that have become urban, 
and existing CBSAs that have been split apart.
    As discussed in the CY 2014 HH PPS final rule (78 FR 72302), the 
changes made by the bulletin and their ramifications required extensive 
review by CMS before using them for the HH PPS wage index. We have 
completed our assessment and in the FY 2015 IPPS proposed rule (79 FR 
27978), we proposed to use the most recent labor market area 
delineations issued by OMB for payments for inpatient stays at general 
acute care and long-term care hospitals (LTCHs). In addition, in the FY 
2015 Skilled Nursing Facility (SNF) PPS proposed rule (79 FR 25767), we 
proposed to use the new labor market delineations issued by OMB for 
payments for SNFs. We are proposing changes to the HH PPS wage index 
based on the newest OMB delineations, as described in OMB Bulletin No. 
13-01.
c. Proposed Implementation of New Labor Market Delineations
    We believe it is important for the HH PPS to use the latest OMB 
delineations available to maintain a more accurate and up-to-date 
payment system that reflects the reality of population shifts and labor 
market conditions. While CMS and other stakeholders have explored 
potential alternatives to the current CBSA-based labor market system 
(we refer readers to the CMS Web site at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no 
consensus has been achieved regarding how best to implement a 
replacement system. As discussed in the FY 2005 IPPS final rule (69 FR 
49027), ``While we recognize that MSAs are not designed specifically to 
define labor market areas, we believe they do represent a useful proxy 
for this purpose.'' We further believe that using the most current OMB 
delineations would increase the integrity of the HH PPS wage index by 
creating a more accurate representation of geographic variation in wage 
levels. We have reviewed our findings and impacts relating to the new 
OMB delineations, and have concluded that there is no compelling reason 
to further delay implementation.
    We propose incorporating the new CBSA delineations into the CY 2015 
HH PPS wage index in the same manner in which the CBSAs were first 
incorporated into the HH PPS wage index in CY 2006 (70 FR 68138). We 
propose to use a one-year blended wage index for CY 2015. We refer to 
this blended wage index as the CY 2015 HH PPS transition wage index. 
The transition wage index would consist of a 50/50 blend of the wage 
index values using OMB's old area delineations and the wage index 
values using OMB's new area delineations. That is, for each county, a 
blended wage index would be calculated equal to fifty percent of the CY 
2015 wage index using the old labor market area delineation and fifty 
percent of the CY 2015 wage index using the new labor market area 
delineation (both using FY 2011 hospital wage data). This ultimately 
results in an average of the two values.
    If we adopt the new OMB delineations, a total of 37 counties (and 
county equivalents) that are currently considered part of an urban CBSA 
would be considered rural beginning in CY 2015. Table 13 below lists 
the 37 urban counties that would change to rural status.

                                                  Table 13--Counties That Would Change to Rural Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             CBSA No. under
                 County                        State         CY 2014 HH PPS                                    CBSA Name
--------------------------------------------------------------------------------------------------------------------------------------------------------
Greene County..........................  IN                            14020  Bloomington, IN.
Anson County...........................  NC                            16740  Charlotte-Gastonia-Rock Hill, NC-SC.
Franklin County........................  IN                            17140  Cincinnati-Middletown, OH-KY-IN.
Stewart County.........................  TN                            17300  Clarksville, TN-KY.
Howard County..........................  MO                            17860  Columbia, MO.
Delta County...........................  TX                            19124  Dallas-Fort Worth-Arlington, TX.
Pittsylvania County....................  VA                            19260  Danville, VA.
Danville City..........................  VA                            19260  Danville, VA.
Preble County..........................  OH                            19380  Dayton, OH.
Gibson County..........................  IN                            21780  Evansville, IN-KY.
Webster County.........................  KY                            21780  Evansville, IN-KY.
Franklin County........................  AR                            22900  Fort Smith, AR-OK.
Ionia County...........................  MI                            24340  Grand Rapids-Wyoming, MI.
Newaygo County.........................  MI                            24340  Grand Rapids-Wyoming, MI.
Greene County..........................  NC                            24780  Greenville, NC.
Stone County...........................  MS                            25060  Gulfport-Biloxi, MS.
Morgan County..........................  WV                            25180  Hagerstown-Martinsburg, MD-WV.
San Jacinto County.....................  TX                            26420  Houston-Sugar Land-Baytown, TX.
Franklin County........................  KS                            28140  Kansas City, MO-KS.
Tipton County..........................  IN                            29020  Kokomo, IN.
Nelson County..........................  KY                            31140  Louisville/Jefferson County, KY-IN.
Geary County...........................  KS                            31740  Manhattan, KS.

[[Page 38393]]

 
Washington County......................  OH                            37620  Parkersburg-Marietta-Vienna, WV-OH.
Pleasants County.......................  WV                            37620  Parkersburg-Marietta-Vienna, WV-OH.
George County..........................  MS                            37700  Pascagoula, MS.
Power County...........................  ID                            38540  Pocatello, ID.
Cumberland County......................  VA                            40060  Richmond, VA.
King and Queen County..................  VA                            40060  Richmond, VA.
Louisa County..........................  VA                            40060  Richmond, VA.
Washington County......................  MO                            41180  St. Louis, MO-IL.
Summit County..........................  UT                            41620  Salt Lake City, UT.
Erie County............................  OH                            41780  Sandusky, OH.
Franklin County........................  MA                            44140  Springfield, MA.
Ottawa County..........................  OH                            45780  Toledo, OH.
Greene County..........................  AL                            46220  Tuscaloosa, AL.
Calhoun County.........................  TX                            47020  Victoria, TX.
Surry County...........................  VA                            47260  Virginia Beach-Norfolk-Newport News, VA-NC.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If we finalize our proposal to implement the new OMB delineations, 
a total of 105 counties (and county equivalents) that are currently 
located in rural areas would be considered part of an urban CBSA 
beginning in CY 2015. Table 14 lists the 105 rural counties that would 
change to urban status.

                                                  Table 14--Counties That Would Change to Urban Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 County                        State            CBSA No.                                       CBSA Name
--------------------------------------------------------------------------------------------------------------------------------------------------------
Utuado Municipio.......................  PR                            10380  Aguadilla-Isabela, PR.
Linn County............................  OR                            10540  Albany, OR.
Oldham County..........................  TX                            11100  Amarillo, TX.
Morgan County..........................  GA                            12060  Atlanta-Sandy Springs-Roswell, GA.
Lincoln County.........................  GA                            12260  Augusta-Richmond County, GA-SC.
Newton County..........................  TX                            13140  Beaumont-Port Arthur, TX.
Fayette County.........................  WV                            13220  Beckley, WV.
Raleigh County.........................  WV                            13220  Beckley, WV.
Golden Valley County...................  MT                            13740  Billings, MT.
Oliver County..........................  ND                            13900  Bismarck, ND.
Sioux County...........................  ND                            13900  Bismarck, ND.
Floyd County...........................  VI                            13980  Blacksburg-Christiansburg-Radford, VA.
De Witt County.........................  IL                            14010  Bloomington, IL.
Columbia County........................  PA                            14100  Bloomsburg-Berwick, PA.
Montour County.........................  PA                            14100  Bloomsburg-Berwick, PA.
Allen County...........................  KY                            14540  Bowling Green, KY.
Butler County..........................  KY                            14540  Bowling Green, KY.
St. Mary's County......................  MD                            15680  California-Lexington Park, MD.
Jackson County.........................  IL                            16060  Carbondale-Marion, IL.
Williamson County......................  IL                            16060  Carbondale-Marion, IL.
Franklin County........................  PA                            16540  Chambersburg-Waynesboro, PA.
Iredell County.........................  NC                            16740  Charlotte-Concord-Gastonia, NC-SC.
Lincoln County.........................  NC                            16740  Charlotte-Concord-Gastonia, NC-SC.
Rowan County...........................  NC                            16740  Charlotte-Concord-Gastonia, NC-SC.
Chester County.........................  SC                            16740  Charlotte-Concord-Gastonia, NC-SC.
Lancaster County.......................  SC                            16740  Charlotte-Concord-Gastonia, NC-SC.
Buckingham County......................  VA                            16820  Charlottesville, VA.
Union County...........................  IN                            17140  Cincinnati, OH-KY-IN.
Hocking County.........................  OH                            18140  Columbus, OH.
Perry County...........................  OH                            18140  Columbus, OH.
Walton County..........................  FL                            18880  Crestview-Fort Walton Beach-Destin, FL.
Hood County............................  TX                            23104  Dallas-Fort Worth-Arlington, TX.
Somervell County.......................  TX                            23104  Dallas-Fort Worth-Arlington, TX.
Baldwin County.........................  AL                            19300  Daphne-Fairhope-Foley, AL.
Monroe County..........................  PA                            20700  East Stroudsburg, PA.
Hudspeth County........................  TX                            21340  El Paso, TX.
Adams County...........................  PA                            23900  Gettysburg, PA.
Hall County............................  NE                            24260  Grand Island, NE.
Hamilton County........................  NE                            24260  Grand Island, NE.
Howard County..........................  NE                            24260  Grand Island, NE.
Merrick County.........................  NE                            24260  Grand Island, NE.
Montcalm County........................  MI                            24340  Grand Rapids-Wyoming, MI.
Josephine County.......................  OR                            24420  Grants Pass, OR.
Tangipahoa Parish......................  LA                            25220  Hammond, LA.

[[Page 38394]]

 
Beaufort County........................  SC                            25940  Hilton Head Island-Bluffton-Beaufort, SC.
Jasper County..........................  SC                            25940  Hilton Head Island-Bluffton-Beaufort, SC.
Citrus County..........................  FL                            26140  Homosassa Springs, FL.
Butte County...........................  ID                            26820  Idaho Falls, ID.
Yazoo County...........................  MS                            27140  Jackson, MS.
Crockett County........................  TN                            27180  Jackson, TN.
Kalawao County.........................  HI                            27980  Kahului-Wailuku-Lahaina, HI.
Maui County............................  HI                            27980  Kahului-Wailuku-Lahaina, HI.
Campbell County........................  TN                            28940  Knoxville, TN.
Morgan County..........................  TN                            28940  Knoxville, TN.
Roane County...........................  TN                            28940  Knoxville, TN.
Acadia Parish..........................  LA                            29180  Lafayette, LA.
Iberia Parish..........................  LA                            29180  Lafayette, LA.
Vermilion Parish.......................  LA                            29180  Lafayette, LA.
Cotton County..........................  OK                            30020  Lawton, OK.
Scott County...........................  IN                            31140  Louisville/Jefferson County, KY-IN.
Lynn County............................  TX                            31180  Lubbock, TX.
Green County...........................  WI                            31540  Madison, WI.
Benton County..........................  MS                            32820  Memphis, TN-MS-AR.
Midland County.........................  MI                            33220  Midland, MI.
Martin County..........................  TX                            33260  Midland, TX.
Le Sueur County........................  MN                            33460  Minneapolis-St. Paul-Bloomington, MN-WI.
Mille Lacs County......................  MN                            33460  Minneapolis-St. Paul-Bloomington, MN-WI.
Sibley County..........................  MN                            33460  Minneapolis-St. Paul-Bloomington, MN-WI.
Maury County...........................  TN                            34980  Nashville-Davidson-Murfreesboro-Franklin, TN.
Craven County..........................  NC                            35100  New Bern, NC.
Jones County...........................  NC                            35100  New Bern, NC.
Pamlico County.........................  NC                            35100  New Bern, NC.
St. James Parish.......................  LA                            35380  New Orleans-Metairie, LA.
Box Elder County.......................  UT                            36260  Ogden-Clearfield, UT.
Gulf County............................  FL                            37460  Panama City, FL.
Custer County..........................  SD                            39660  Rapid City, SD.
Fillmore County........................  MN                            40340  Rochester, MN.
Yates County...........................  NY                            40380  Rochester, NY.
Sussex County..........................  DE                            41540  Salisbury, MD-DE.
Worcester County.......................  MA                            41540  Salisbury, MD-DE.
Highlands County.......................  FL                            42700  Sebring, FL.
Webster Parish.........................  LA                            43340  Shreveport-Bossier City, LA.
Cochise County.........................  AZ                            43420  Sierra Vista-Douglas, AZ.
Plymouth County........................  IA                            43580  Sioux City, IA-NE-SD.
Union County...........................  SC                            43900  Spartanburg, SC.
Pend Oreille County....................  WA                            44060  Spokane-Spokane Valley, WA.
Stevens County.........................  WA                            44060  Spokane-Spokane Valley, WA.
Augusta County.........................  VA                            44420  Staunton-Waynesboro, VA.
Staunton City..........................  VA                            44420  Staunton-Waynesboro, VA.
Waynesboro City........................  VA                            44420  Staunton-Waynesboro, VA.
Little River County....................  AR                            45500  Texarkana, TX-AR.
Sumter County..........................  FL                            45540  The Villages, FL.
Pickens County.........................  AL                            46220  Tuscaloosa, AL.
Gates County...........................  NC                            47260  Virginia Beach-Norfolk-Newport News, VA-NC.
Falls County...........................  TX                            47380  Waco, TX.
Columbia County........................  WA                            47460  Walla Walla, WA.
Walla Walla County.....................  WA                            47460  Walla Walla, WA.
Peach County...........................  GA                            47580  Warner Robins, GA.
Pulaski County.........................  GA                            47580  Warner Robins, GA.
Culpeper County........................  VA                            47894  Washington-Arlington-Alexandria, DC-VA-MD-WV.
Rappahannock County....................  VA                            47894  Washington-Arlington-Alexandria, DC-VA-MD-WV.
Jefferson County.......................  NY                            48060  Watertown-Fort Drum, NY.
Kingman County.........................  KS                            48620  Wichita, KS.
Davidson County........................  NC                            49180  Winston-Salem, NC.
Windham County.........................  CT                            49340  Worcester, MA-CT.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition to rural counties becoming urban and urban counties 
becoming rural, several urban counties would shift from one urban CBSA 
to another urban CBSA under our proposal to adopt the new OMB 
delineations. In other cases, applying the new OMB delineations would 
involve a change only in CBSA name or number, while the CBSA continues 
to encompass the same constituent counties. For example, CBSA 29140 
(Lafayette, IN), would experience both a change to its number and its 
name, and would become CBSA 29200 (Lafayette-West Lafayette, IN), while 
all of its three constituent counties would remain the same. We are not 
discussing these proposed changes in this section because they are 
inconsequential changes with respect to the HH PPS wage index. However, 
in

[[Page 38395]]

other cases, if we adopt the new OMB delineations, counties would shift 
between existing and new CBSAs, changing the constituent makeup of the 
CBSAs.
    In one type of change, an entire CBSA would be subsumed by another 
CBSA. For example, CBSA 37380 (Palm Coast, FL) currently is a single 
county (Flagler, FL) CBSA. Flagler County would be a part of CBSA 19660 
(Deltona-Daytona Beach-Ormond Beach, FL) under the new OMB 
delineations.
    In another type of change, some CBSAs have counties that would 
split off to become part of or to form entirely new labor market areas. 
For example, CBSA 37964 (Philadelphia Metropolitan Division of MSA 
37980) currently is comprised of five Pennsylvania counties (Bucks, 
Chester, Delaware, Montgomery, and Philadelphia). If we adopt the new 
OMB delineations, Montgomery, Bucks, and Chester counties would split 
off and form the new CBSA 33874 (Montgomery County-Bucks County-Chester 
County, PA Metropolitan Division of MSA 37980), while Delaware and 
Philadelphia counties would remain in CBSA 37964.
    Finally, in some cases, a CBSA would lose counties to another 
existing CBSA if we adopt the new OMB delineations. For example, 
Lincoln County and Putnam County, WV would move from CBSA 16620 
(Charleston, WV) to CBSA 26580 (Huntington-Ashland, WV KY OH). CBSA 
16620 would still exist in the new labor market delineations with fewer 
constituent counties. Table 15 lists the urban counties that would move 
from one urban CBSA to another urban CBSA if we adopt the new OMB 
delineations.

        Table 15--Counties That Would Change to a Different CBSA
------------------------------------------------------------------------
        Previous CBSA              New CBSA           County       State
------------------------------------------------------------------------
11300........................             26900  Madison County.  IN
11340........................             24860  Anderson County  SC
14060........................             14010  McLean County..  IL
37764........................             15764  Essex County...  MA
16620........................             26580  Lincoln County.  WV
16620........................             26580  Putnam County..  WV
16974........................             20994  DeKalb County..  IL
16974........................             20994  Kane County....  IL
21940........................             41980  Ceiba Municipio  PR
21940........................             41980  Fajardo          PR
                                                  Municipio.
21940........................             41980  Luquillo         PR
                                                  Municipio.
26100........................             24340  Ottawa County..  MI
31140........................             21060  Meade County...  KY
34100........................             28940  Grainger County  TN
35644........................             35614  Bergen County..  NJ
35644........................             35614  Hudson County..  NJ
20764........................             35614  Middlesex        NJ
                                                  County.
20764........................             35614  Monmouth County  NJ
20764........................             35614  Ocean County...  NJ
35644........................             35614  Passaic County.  NJ
20764........................             35084  Somerset County  NJ
35644........................             35614  Bronx County...  NY
35644........................             35614  Kings County...  NY
35644........................             35614  New York County  NY
35644........................             20524  Putnam County..  NY
35644........................             35614  Queens County..  NY
35644........................             35614  Richmond County  NY
35644........................             35614  Rockland County  NY
35644........................             35614  Westchester      NY
                                                  County.
37380........................             19660  Flagler County.  FL
37700........................             25060  Jackson County.  MS
37964........................             33874  Bucks County...  PA
37964........................             33874  Chester County.  PA
37964........................             33874  Montgomery       PA
                                                  County.
39100........................             20524  Dutchess County  NY
39100........................             35614  Orange County..  NY
41884........................             42034  Marin County...  CA
41980........................             11640  Arecibo          PR
                                                  Municipio.
41980........................             11640  Camuy Municipio  PR
41980........................             11640  Hatillo          PR
                                                  Municipio.
41980........................             11640  Quebradillas     PR
                                                  Municipio.
48900........................             34820  Brunswick        NC
                                                  County.
49500........................             38660  Gu[aacute]nica   PR
                                                  Municipio.
49500........................             38660  Guayanilla       PR
                                                  Municipio.
49500........................             38660  Pe[ntilde]uelas  PR
                                                  Municipio.
49500........................             38660  Yauco Municipio  PR
------------------------------------------------------------------------

    As discussed in the FY 2015 SNF PPS proposed rule (79 FR 25767), we 
proposed to adopt OMB's new delineations in the SNF PPS in the same 
manner that we are proposing to adopt the new delineations in the HH 
PPS. The FY 2015 SNF PPS proposed rule includes extensive analysis of 
the application of OMB's new delineations as well as other alternatives 
considered.
    For the reasons discussed above, and based on provider reaction 
during the CY 2006 rulemaking cycle to the proposed adoption of the new 
CBSA definitions, we are proposing to apply a

[[Page 38396]]

one-year blended wage index in CY 2015 for all geographic areas to 
assist providers in adapting to these proposed changes. This transition 
policy would be for a one-year period, going into effect January 1, 
2015, and continuing through December 31, 2015. Thus, beginning January 
1, 2016, the wage index for all HH PPS payments would be fully based on 
the new OMB delineations. We invite comments on our proposed transition 
methodology, as well as on the other transition options discussed 
above.
    The wage index Addendum provides a crosswalk between the CY 2015 
wage index using the current OMB delineations in effect in CY 2014 and 
the CY 2015 wage index using the revised OMB delineations. Addendum A 
shows each state and county and its corresponding proposed transition 
wage index along with the previous CBSA number, the new CBSA number and 
the new CBSA name. Due to the calculation of the blended transition 
wage index, some CBSAs may have more than one transition wage index 
value associated with that CBSA. However, each county will have only 
one transition wage index. Therefore, for counties located in CBSAs 
that correspond to more than one transition wage index, a number other 
than the CBSA number would be used for claims submission for CY 2015 
only. These numbers are shown in the last column of Addendum A. The 
proposed CY 2015 transition wage index as set forth in Addendum A is 
available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html.
5. Proposed CY 2015 Annual Payment Update
a. Background
    The Medicare HH PPS has been in effect since October 1, 2000. As 
set forth in the July 3, 2000 final rule (65 FR 41128), the base unit 
of payment under the Medicare HH PPS is a national, standardized 60-day 
episode payment rate. As set forth in 42 CFR 484.220, we adjust the 
national, standardized 60-day episode payment rate by a case-mix 
relative weight and a wage index value based on the site of service for 
the beneficiary.
    To provide appropriate adjustments to the proportion of the payment 
amount 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. The labor-related share of the case-mix adjusted 60-day episode 
rate will continue to be 78.535 percent and the non-labor-related share 
will continue to be 21.465 percent as set out in the CY 2013 HH PPS 
final rule (77 FR 67068). The CY 2015 HH PPS rates would use the same 
case-mix methodology as set forth in the CY 2008 HH PPS final rule with 
comment period (72 FR 49762) and adjusted as described in section 
III.C. of this rule. The following are the steps we take to compute the 
case-mix and wage-adjusted 60-day episode rate:
    (1) Multiply the national 60-day episode rate by the patient's 
applicable case-mix weight.
    (2) Divide the case-mix adjusted amount into a labor (78.535 
percent) and a non-labor portion (21.465 percent).
    (3) Multiply the labor portion by the applicable wage index based 
on the site of service of the beneficiary.
    (4) 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, this document 
constitutes the annual update of the HH PPS rates. Section 484.225 sets 
forth the specific annual percentage update methodology. In accordance 
with Sec.  484.225(i), for a HHA that does not submit HH 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 HH 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 considered in 
computing the prospective payment amount for a subsequent calendar 
year.
    Medicare pays the national, standardized 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 will 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 adjustment (LUPA) is provided on 
a per-visit basis as set forth in Sec.  484.205(c) and Sec.  484.230.
     A partial episode payment (PEP) 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 CY 2015 National, Standardized 60-Day Episode Payment Rate
    Section 1895(3)(A)(i) of the Act required that the 60-day episode 
base rate and other applicable amounts be standardized in a manner that 
eliminates the effects of variations in relative case mix and area wage 
adjustments among different home health agencies in a budget neutral 
manner. To determine the proposed CY 2015 national, standardized 60-day 
episode payment rate, we would apply a wage index standardization 
factor, a case-mix budget neutrality factor described in section III.C, 
the rebasing adjustment described in section II.C, and the MFP-adjusted 
home health market basket update discussed in section III.D.1 of this 
proposed rule.
    To calculate the wage index standardization factor, henceforth 
referred to as the wage index budget neutrality factor, we simulated 
total payments for non-LUPA episodes using the 2015 wage index and 
compared it to our simulation of total payments for non-LUPA episodes 
using the 2014 wage index. By dividing the total payments for non-LUPA 
episodes using the 2015 wage index by the total payments for non-LUPA 
episodes using the 2014 wage index, we obtain a wage index budget 
neutrality factor of 1.0012. We would apply the wage index budget 
neutrality factor of 1.0012 to the CY 2015 national, standardized 60-
day episode rate.
    As discussed in section III.C of this proposed rule, to ensure the 
changes to the case-mix weights are implemented in a budget neutral 
manner, we would apply a case-mix weights budget neutrality factor to 
the CY 2015 national, standardized 60-day episode payment rate. The 
case-mix weights budget neutrality factor is calculated as the ratio of 
total payments when CY 2015 case-mix weights are applied to CY 2013 
utilization (claims) data to total payments when CY 2014 case-mix

[[Page 38397]]

weights are applied to CY 2013 utilization data. The case-mix budget 
neutrality factor for CY 2015 would be 1.0237 as proposed in section 
III.C of this proposed rule.
    Then, we would apply the -$80.95 rebasing adjustment finalized in 
the CY 2014 HH PPS final rule (78 FR 72256) and discussed in section 
II.C. Lastly, we would update the payment rates by the CY 2015 HH 
payment update percentage of 2.2 percent (MFP-adjusted home health 
market basket update) as described in section III.D.1 of this proposed 
rule. The proposed CY 2015 national, standardized 60-day episode 
payment rate would be $2,922.76 as calculated in Table 16.

                                      Table 16--CY 2015 60-Day National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
    CY 2014 national,                                                                                                                Proposed CY 2015
   standardized 60-day        Wage index budget      Case-mix weights budget      CY 2015 Rebasing         CY 2015 HH payment     national, standardized
     episode payment          neutrality factor         neutrality factor            adjustment            update percentage      60-day episode payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
           $2,869.27                  x 1.0012                  x 1.0237                  - $80.95                   x 1.022              = $2,922.76
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed CY 2015 national, standardized 60-day episode payment 
rate for an HHA that does not submit the required quality data is 
updated by the CY 2015 HH payment update percentage (2.2 percent) minus 
2 percentage points and is shown in Table 17.

              Table 17--For HHAs That Do Not Submit the Quality Data--Proposed CY 2015 National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
    CY 2014 National,                                                                                      CY 2015 HH Payment        Proposed CY 2015
   standardized 60-day        Wage index budget      Case-mix weights budget      CY 2015 Rebasing      update percentage minus   national, standardized
     episode payment          neutrality factor         neutrality factor            adjustment           2 percentage points     60-day episode payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
           $2,869.27                  x 1.0012                  x 1.0237                  - $80.95                   x 1.002              = $2,865.57
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Proposed National Per-Visit Rates
    The national per-visit rates are used to pay LUPAs (episodes with 
four or fewer visits) and are also used to compute imputed costs in 
outlier calculations. The per-visit rates are paid by type of visit or 
HH discipline. The six HH disciplines are as follows:
     Home health aide (HH aide);
     Medical Social Services (MSS);
     Occupational therapy (OT);
     Physical therapy (PT);
     Skilled nursing (SN); and
     Speech-language pathology (SLP).
    To calculate the CY 2015 national per-visit rates, we start with 
the CY 2014 national per-visit rates. We then apply a wage index budget 
neutrality factor to ensure budget neutrality for LUPA per-visit 
payments and increase each of the six per-visit rates by the maximum 
rebasing adjustments described in section II.C. of this rule. We 
calculate the wage index budget neutrality factor by simulating total 
payments for LUPA episodes using the 2015 wage index and comparing it 
to simulated total payments for LUPA episodes using the 2014 wage 
index. By dividing the total payments for LUPA episodes using the 2015 
wage index by the total payments for LUPA episodes using the 2014 wage 
index, we obtain a wage index budget neutrality factor of 1.0000. We 
would apply the wage index budget neutrality factor of 1.0000 to the CY 
2015 national per-visit rates.
    The LUPA per-visit rates are not calculated using case-mix weights. 
Therefore, there is no case-mix weights budget neutrality factor is 
needed to ensure budget neutrality for LUPA payments. Finally, the per-
visit rates for each discipline are updated by the CY 2015 HH payment 
update percentage of 2.2 percent. The national per-visit rates are 
adjusted by the wage index based on the site of service of the 
beneficiary. The per-visit payments for LUPAs are separate from the 
LUPA add-on payment amount, which is paid for episodes that occur as 
the only episode or initial episode in a sequence of adjacent episodes. 
The proposed CY 2015 national per-visit rates are shown in Tables 18 
and 19.

                     Table 18--Proposed CY 2015 National Per-Visit Payment Amounts for HHAs That DO Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        CY 2015 HH
                    HH Discipline type                     CY 2014 Per-visit  Wage index budget   CY 2015 Rebasing    Payment update    Proposed CY 2015
                                                                payment       neutrality factor      adjustment         percentage     per-visit payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide.........................................             $54.84           x 1.0000            + $1.79            x 1.022             $57.88
Medical Social Services..................................            $194.12           x 1.0000            + $6.34            x 1.022            $204.87
Occupational Therapy.....................................            $133.30           x 1.0000            + $4.35            x 1.022            $140.68
Physical Therapy.........................................            $132.40           x 1.0000            + $4.32            x 1.022            $139.73
Skilled Nursing..........................................            $121.10           x 1.0000            + $3.96            x 1.022            $127.81
Speech-Language Pathology................................            $143.88           x 1.0000             + 4.70            x 1.022            $151.85
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed CY 2015 per-visit payment rates for an HHA that does 
not submit the required quality data are updated by the CY 2015 HH 
payment update percentage (2.2 percent) minus 2

[[Page 38398]]

percentage points and is shown in Table 19.

                   Table 19--Proposed CY 2015 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        CY 2015 HH
                                                                                                                      Payment update
                    HH Discipline Type                     CY 2014 Per-visit  Wage index budget   CY 2015 Rebasing   percentage minus   Proposed CY 2015
                                                                 rates        neutrality factor      adjustment        2 percentage     per-visit rates
                                                                                                                          points
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide.........................................             $54.84           x 1.0000            + $1.79            x 1.002             $56.74
Medical Social Services..................................            $194.12           x 1.0000            + $6.34            x 1.002            $200.86
Occupational Therapy.....................................            $133.30           x 1.0000            + $4.35            x 1.002            $137.93
Physical Therapy.........................................            $132.40           x 1.0000            + $4.32            x 1.002            $136.99
Skilled Nursing..........................................            $121.10           x 1.0000            + $3.96            x 1.002            $125.31
Speech-Language Pathology................................            $143.88           x 1.0000             + 4.70            x 1.002            $148.88
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
    LUPA episodes that occur as the only episode or as an initial 
episode in a sequence of adjacent episodes are adjusted by applying an 
additional amount to the LUPA payment before adjusting for area wage 
differences. In the CY 2014 HH PPS final rule, we changed the 
methodology for calculating the LUPA add-on amount by finalizing the 
use of three LUPA add-on factors: 1.8451 for SN; 1.6700 for PT; and 
1.6266 for SLP (78 FR 72306). We multiply the per-visit payment amount 
for the first SN, PT, or SLP visit in LUPA episodes that occur as the 
only episode or an initial episode in a sequence of adjacent episodes 
by the appropriate factor to determine the LUPA add-on payment amount. 
For example, for LUPA episodes that occur as the only episode or an 
initial episode in a sequence of adjacent episodes, if the first 
skilled visit is SN, the payment for that visit will be $235.82 (1.8451 
multiplied by $127.81).
e. Proposed Non-Routine Medical Supply (NRS) Conversion Factor Update
    Payments for NRS are computed by multiplying the relative weight 
for a particular severity level by the NRS conversion factor. To 
determine the CY 2015 NRS conversion factor, we start with the 2014 NRS 
conversion factor ($53.65) and apply the -2.82 percent rebasing 
adjustment calculated in section II.C. of this rule (1 - 0.0282 = 
0.9718). We then update the conversion factor by the CY 2015 HH payment 
update percentage (2.2 percent). We do not apply a standardization 
factor as the NRS payment amount calculated from the conversion factor 
is not wage or case-mix adjusted when the final claim payment amount is 
computed. The proposed NRS conversion factor for CY 2015 is shown in 
Table 20.

       Table 20--Proposed CY 2015 NRS Conversion Factor for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                   CY 2015         CY 2015 HH        2015 NRS
                CY 2014 NRS conversion factor                      Rebasing      Payment update     conversion
                                                                  adjustment       percentage         factor
----------------------------------------------------------------------------------------------------------------
$53.65.......................................................        x 0.9718          x 1.022         = $53.28
----------------------------------------------------------------------------------------------------------------

    Using the proposed CY 2015 NRS conversion factor, the proposed 
payment amounts for the six severity levels are shown in Table 21.

        Table 21--Proposed CY 2015 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                Proposed CY 2015
               Severity level                       Points (scoring)         Relative weight      NRS payment
                                                                                                    amounts
----------------------------------------------------------------------------------------------------------------
1..........................................  0............................             0.2698             $14.37
2..........................................  1 to 14......................             0.9742              51.91
3..........................................  15 to 27.....................             2.6712             142.32
4..........................................  28 to 48.....................             3.9686             211.45
5..........................................  49 to 98.....................             6.1198             326.06
6..........................................  99+..........................            10.5254             560.79
----------------------------------------------------------------------------------------------------------------

    For HHAs that do not submit the required quality data, we again 
begin with the CY 2014 NRS conversion factor ($53.65) and apply the -
2.82 percent rebasing adjustment discussed in section II.C of this 
proposed rule (1- 0.0282 = 0.9718). We then update the NRS conversion 
factor by the CY 2015 HH payment update percentage (2.2 percent) minus 
2 percentage points. The proposed CY 2015 NRS conversion factor for 
HHAs that do not submit quality data is shown in Table 22.

[[Page 38399]]

     Table 22--Proposed CY 2015 NRS Conversion Factor for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                          CY 2015 HH Payment
                                                       CY 2015 Rebasing    update percentage   Proposed CY 2015
            CY 2014 NRS conversion factor                 adjustment      minus 2 percentage    NRS conversion
                                                                                points              factor
----------------------------------------------------------------------------------------------------------------
$53.65..............................................           x 0.9718             x 1.002              $52.24
----------------------------------------------------------------------------------------------------------------

    The proposed 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 23.

      Table 23--Proposed CY 2015 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                Proposed CY 2015
               Severity level                       Points (scoring)         Relative weight      NRS payment
                                                                                                    amounts
----------------------------------------------------------------------------------------------------------------
1..........................................  0............................             0.2698             $14.09
2..........................................  1 to 14......................             0.9742              50.89
3..........................................  15 to 27.....................             2.6712             139.54
4..........................................  28 to 48.....................             3.9686             207.32
5..........................................  49 to 98.....................             6.1198             319.70
6..........................................  99+..........................            10.5254             549.85
----------------------------------------------------------------------------------------------------------------

f. Rural Add-On
    Section 421(a) of the MMA required, for HH services furnished in a 
rural areas (as defined in section 1886(d)(2)(D) of the Act), for 
episodes or visits ending on or after April 1, 2004, and before April 
1, 2005, that the Secretary increase the payment amount that otherwise 
will have been made under section 1895 of the Act for the services by 5 
percent.
    Section 5201 of the DRA amended section 421(a) of the MMA. The 
amended section 421(a) of the MMA required, for HH services furnished 
in a rural area (as defined in section 1886(d)(2)(D) of the Act), on or 
after January 1, 2006 and before January 1, 2007, that the Secretary 
increase the payment amount otherwise made under section 1895 of the 
Act for those services by 5 percent.
    Section 3131(c) of the Affordable Care Act amended section 421(a) 
of the MMA to provide an increase of 3 percent of the payment amount 
otherwise made under section 1895 of the Act for HH services furnished 
in a rural area (as defined in section 1886(d)(2)(D) of the Act), for 
episodes and visits ending on or after April 1, 2010, and before 
January 1, 2016.
    Section 421 of the MMA, as amended, waives budget neutrality 
related to this provision, as the statute specifically states that the 
Secretary shall not reduce the standard prospective payment amount (or 
amounts) under section 1895 of the Act applicable to HH services 
furnished during a period to offset the increase in payments resulting 
in the application of this section of the statute.
    Refer to Tables 24 through 27 for the proposed payment rates for 
home health services provided in rural areas.

                          Table 24--Proposed CY 2015 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               For HHAs that DO submit quality data                                       For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Proposed CY 2015                                      Proposed CY 2015
                                                                   Multiply by    rural national,    CY 2015 national,   Multiply by    rural national,
   CY 2015 national, standardized 60-day episode payment rate         the 3      standardized 60-    standardized 60-       the 3      standardized 60-
                                                                     percent        day episode         day episode        percent        day episode
                                                                  rural add-on     payment rate        payment rate     rural add-on     payment rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,922.76.......................................................       x 1.03           $3,010.44           $2,865.57        x 1.03           $2,951.54
--------------------------------------------------------------------------------------------------------------------------------------------------------

               Table 25--Proposed CY 2015 Per-Visit Amounts for Services Provided in a Rural Area
----------------------------------------------------------------------------------------------------------------
                                    For HHAs that DO submit quality data    For HHAs that DO NOT submit quality
--------------------------------------------------------------------------                  data
                                                                          --------------------------------------
                                                Multiply by   Proposed CY               Multiply by
                                   CY 2015 per-    the 3      2015 rural                   the 3     Proposed CY
        HH discipline type          visit rate    percent      per-visit   CY 2015 per-   percent     2015 rural
                                                 rural add-      rates      visit rate   rural add-   per-visit
                                                     on                                      on         rates
----------------------------------------------------------------------------------------------------------------
HH Aide                                 $57.88       x 1.03       $59.62        $56.74       x 1.03       $58.44
MSS                                     204.87       x 1.03       211.02        200.86       x 1.03       206.89
OT                                      140.68       x 1.03       144.90        137.93       x 1.03       142.07
PT                                      139.73       x 1.03       143.92        136.99       x 1.03       141.10
SN                                      127.81       x 1.03       131.64        125.31       x 1.03       129.07

[[Page 38400]]

 
SLP                                     151.85       x 1.03       156.41        148.88       x 1.03       153.35
----------------------------------------------------------------------------------------------------------------

                                  Table 26--Proposed CY 2015 NRS Conversion Factor for Services Provided in Rural Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 For HHAs that DO submit quality data                                       For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Proposed CY                                        Proposed CY
                                                                     Multiply by the   2015 rural NRS      CY 2015      Multiply by the   2015 rural NRS
                     CY 2015 conversion factor                       3 percent rural     conversion       conversion    3 percent rural     conversion
                                                                          add-on           factor           factor           add-on           factor
--------------------------------------------------------------------------------------------------------------------------------------------------------
$53.28.............................................................          x 1.03           $54.88           $52.24           x 1.03           $53.81
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                   Table 27--Proposed CY 2015 NRS Payment Amounts for Services Provided in Rural Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     For HHAs that DO submit quality data      For HHAs that DO NOT submit quality data
                                                                   (proposed CY 2015 NRS conversion factor =   (proposed CY 2015 NRS conversion factor =
                                                                                    $54.88)                                     $53.81)
            Severity level                  Points (scoring)     ---------------------------------------------------------------------------------------
                                                                                       Proposed CY 2015 NRS                        Proposed CY 2015 NRS
                                                                   Relative weight     payment amounts for     Relative weight     payment amounts for
                                                                                           rural areas                                 rural areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.....................................  0.......................             0.2698                   $14.81             0.2698                   $14.52
2.....................................  1 to 14.................             0.9742                    53.46             0.9742                    52.42
3.....................................  15 to 27................             2.6712                   146.60             2.6712                   143.74
4.....................................  28 to 48................             3.9686                   217.80             3.9686                   213.55
5.....................................  49 to 98................             6.1198                   335.85             6.1198                   329.31
6.....................................  99+.....................            10.5254                   577.63            10.5254                   566.37
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Payments for High-Cost Outliers Under the HH PPS

1. Background
    Section 1895(b)(5) of the Act allows for the provision of an 
addition or adjustment to the national, standardized 60-day case-mix 
and wage-adjusted episode payment amounts in the case of episodes that 
incur unusually high costs due to patient care needs. Prior to the 
enactment of the Affordable Care Act, section 1895(b)(5) of the Act 
stipulated that projected total outlier payments could not exceed 5 
percent of total projected or estimated HH payments in a given year. In 
the Medicare Program; Prospective Payment System for Home Health 
Agencies final rule (65 FR 41188 through 41190), we described the 
method for determining outlier payments. Under this system, outlier 
payments are made for episodes whose estimated costs exceed a threshold 
amount for each HH Resource Group (HHRG). The episode's estimated cost 
is the sum of the national wage-adjusted per-visit payment amounts for 
all visits delivered during the episode. The outlier threshold for each 
case-mix group or PEP adjustment is defined as the 60-day episode 
payment or PEP adjustment for that group plus a fixed-dollar loss (FDL) 
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost beyond the wage-adjusted threshold. The 
threshold amount is the sum of the wage and case-mix adjusted PPS 
episode amount and wage-adjusted FDL amount. The proportion of 
additional costs over the outlier threshold amount paid as outlier 
payments is referred to as the loss-sharing ratio.
    In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we 
discussed excessive growth in outlier payments, primarily the result of 
unusually high outlier payments in a few areas of the country. Despite 
program integrity efforts associated with excessive outlier payments in 
targeted areas of the country, we discovered that outlier expenditures 
still exceeded the 5 percent, target and, in the absence of corrective 
measures, would continue do to so. Consequently, we assessed the 
appropriateness of taking action to curb outlier abuse. To mitigate 
possible billing vulnerabilities associated with excessive outlier 
payments and adhere to our statutory limit on outlier payments, we 
adopted an outlier policy that included a 10 percent agency-level cap 
on outlier payments. This cap was implemented in concert with a reduced 
FDL ratio of 0.67. These policies resulted in a projected target 
outlier pool of approximately 2.5 percent. (The previous outlier pool 
was 5 percent of total HH expenditure). For CY 2010, we first returned 
5 percent of these dollars 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.
    As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 
70399), section 3131(b)(1) of the Affordable Care Act amended section 
1895(b)(3)(C) of the Act. As amended, ``Adjustment for outliers,'' 
states that ``The Secretary shall reduce the standard prospective 
payment amount (or amounts) under this paragraph applicable to HH 
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,

[[Page 38401]]

section 3131(b)(2) of the Affordable Care Act amended section 
1895(b)(5) of the Act by re-designating the existing language as 
section 1895(b)(5)(A) of the Act, and revising it to state that the 
Secretary, ``subject to [a 10 percent program-specific outlier cap], 
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 
for 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, beginning in CY 2011, our HH PPS outlier policy is that we 
reduce payment rates by 5 percent and target up to 2.5 percent of total 
estimated HH PPS payments to be paid as outliers. To do so, we first 
returned the 2.5 percent held for the target CY 2010 outlier pool to 
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. We then reduced the 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 we 
target up to 2.5 percent of estimated total payments to be paid as 
outlier payments, and apply a 10 percent agency-level outlier cap.
2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing Ratio
    For a given level of outlier payments, there is a trade-off between 
the values selected for the FDL ratio and the loss-sharing ratio. A 
high FDL ratio reduces the number of episodes that can receive outlier 
payments, but makes it possible to select a higher loss-sharing ratio, 
and therefore, increase outlier payments for outlier episodes. 
Alternatively, a lower FDL ratio means that more episodes can qualify 
for outlier payments, but outlier payments per episode must then be 
lower.
    The FDL ratio and the loss-sharing ratio must be selected so that 
the estimated total outlier payments do not exceed the 2.5 percent 
aggregate level (as required by section 1895(b)(5)(A) of the Act). 
Historically, we have used a value of 0.80 for the loss-sharing ratio 
which, we believe, 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 estimated costs 
above the outlier threshold amount. We are not proposing a change to 
the loss-sharing ratio in this proposed rule.
    In the CY 2011 HH PPS final rule (75 FR 70398), in targeting total 
outlier payments as 2.5 percent of total HH PPS payments, we 
implemented an FDL ratio of 0.67, and we maintained that ratio in CY 
2012. Simulations based on CY 2010 claims data completed for the CY 
2013 HH PPS final rule showed that outlier payments were estimated to 
comprise approximately 2.18 percent of total HH PPS payments in CY 
2013, and as such, we lowered the FDL ratio from 0.67 to 0.45. We 
stated that lowering the FDL ratio to 0.45, while maintaining a loss-
sharing ratio of 0.80, struck an effective balance of compensating for 
high-cost episodes while allowing more episodes to qualify as outlier 
payments (77 FR 67080). The national, standardized 60-day episode 
payment amount is multiplied by the FDL ratio. That amount is wage-
adjusted to derive the wage-adjusted FDL amount, which is added to the 
case-mix and wage-adjusted 60-day episode payment amount to determine 
the outlier threshold amount that costs have to exceed before Medicare 
will pay 80 percent of the additional estimated costs.
    Based on simulations using preliminary CY 2013 claims data, the 
proposed CY 2015 payments rates in section III.D.4 of this proposed 
rule, and the FDL ratio of 0.45; we estimate that outlier payments 
would comprise approximately 2.26 percent of total HH PPS payments in 
CY 2015. Simulating payments using preliminary CY 2013 claims data and 
the CY 2014 payment rates (78 FR 72304 through 72308), we estimate that 
outlier payments would comprise 2.01 percent of total payments. Given 
the proposed increases to the CY 2015 national per-visit payment rates, 
our analysis estimates an additional 0.25 percentage point increase in 
estimated outlier payments as a percent of total HH PPS payments each 
year that we phase-in the rebasing adjustments described in section 
II.C. We estimate that for CY 2016, estimated outlier payments as a 
percent of total HH PPS payments will increase to 2.51 percent. We note 
that these estimates do not take in to account any changes in 
utilization that may have occurred in CY 2014, and would continue to 
occur in CY 2015. Therefore, we are not proposing a change to the FDL 
ratio for CY 2015. In the final rule, we will update our estimate of 
outlier payments as a percent of total HH PPS payments using the most 
current and complete year of HH PPS data. We will continue to monitor 
the percent of total HH PPS payments paid as outlier payments to 
determine if future adjustments to either the FDL ratio or loss-sharing 
ratio are warranted.

F. Medicare Coverage of Insulin Injections Under the HH PPS

    Home health policy regarding coverage of home health visits for the 
sole purpose of insulin injections is limited to patients that are 
physically or mentally unable to self-inject and there is no other 
person who is able and willing to inject the patient.\16\ However, the 
Office of Inspector General concluded in August 2013 that some 
previously covered home health visits for the sole purpose of insulin 
injections were unnecessary because the patient was physically and 
mentally able to self-inject.\17\ In addition, results from analysis in 
response to public comments on the CY 2014 HH PPS final rule found that 
episodes that qualify for outlier payments in excess of $10,000 had, on 
average, 160 skilled nursing visits in a 60-day episode of care with 95 
percent of the episodes listing a primary diagnosis of diabetes or 
long-term use of insulin (78 FR 72310). Therefore, we conducted a 
literature review regarding generally accepted clinical management 
practices for diabetic patients and conducted further analysis of home 
health claims data to investigate the extent to which episodes with 
visits likely for the sole purpose of insulin injections are in fact 
limited to patients that are physically or mentally unable to self-
inject.
---------------------------------------------------------------------------

    \16\ Medicare Coverage Benefit Policy Manual (Pub. 100-02), 
Section 40.1.2.4.B.2 ``Insulin Injections''.
    \17\ Levinson, Daniel R. Management Implication Report 12-0011, 
Unnecessary Home Health Care for Diabetic Patients.
---------------------------------------------------------------------------

    As generally accepted by the medical community, older patients (age 
65 and older) are more likely to have impairments in dexterity, 
cognition, vision, and hearing.\18\ While studies have shown that most 
elderly patients starting or continuing on insulin can inject 
themselves, these conditions may affect the elderly individual's 
ability to self-inject insulin. It is clinically essential that there 
is careful assessment prior to the initiation of home care, and 
throughout the course of treatment, regarding the patient's capacity 
for self-injection. There are multiple reliable, and validated 
assessment tools that may be used to assess the elderly individual's 
ability to self-inject. These tools assess the individual's ability to 
perform activities of daily living (ADLs), as well as, cognitive, 
functional, and

[[Page 38402]]

behavioral status.\19\ These assessment tools have also proved valid 
for judging patients' ability to inject insulin independently and to 
recognize and deal with hypoglycemia.\20\
---------------------------------------------------------------------------

    \18\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \19\ Hendra, T.J. Starting insulin therapy in elderly patients. 
(2012). Journal of the Royal Society of Medicine. 95(9), 453-455.
    \20\ Sinclair AJ, Turnbull CJ, Croxson SCM. Document of care for 
older people with diabetes. Postgrad Med J 1996;72: 334-8.
---------------------------------------------------------------------------

    Another important consideration with regards to insulin 
administration in the elderly population is the possibility of dosing 
errors.\21\ Correct administration and accurate dosing is important in 
order to prevent serious complications, such as hypoglycemia and 
hyperglycemia. The traditional vial and syringe method of insulin 
administration involves several steps, including injecting air into the 
vial, drawing an amount out of the vial into a syringe with small 
measuring increments, and verifying the correct dose visually.\22\ In 
some cases, an insulin pen can be used as an alternative to the 
traditional vial and syringe method.
---------------------------------------------------------------------------

    \21\ Coscelli C, Lostia S, Lunetta M, Nosari I, Coronel GA. 
Safety, efficacy, acceptability of a pre-filled insulin pen in 
diabetic patients over 60 years old. Diabetes Research and Clinical 
Practice. 1995;38:173-7. [PubMed]
    \22\ Flemming DR. Mightier than the syringe. Am J Nurs. 
2000;100:44-8. [PubMed]
---------------------------------------------------------------------------

    Insulin pens are designed to facilitate easy self-administration, 
the possession of which would suggest the ability to self-inject. 
Additionally, insulin pens often come pre-filled with insulin or must 
be used with a pre-filled cartridge thus potentially negating the need 
for skilled nursing for the purpose of calculating and filling 
appropriate doses. It is recognized that visual impairment, joint 
immobility and/or pain, peripheral neuropathy, and cognitive issues may 
affect the ability of elderly patients to determine correct insulin 
dosing and injection. Our literature review indicates that insulin pen 
devices may be beneficial in terms of safety for elderly patients due 
to these visual or physical disabilities.\23\ To determine whether to 
use a traditional vial and syringe method of insulin administration 
versus an insulin pen, the physician must consider and understand the 
advantages these devices offer over traditional vials and syringes. 
These advantages include:
---------------------------------------------------------------------------

    \23\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534.
---------------------------------------------------------------------------

     Convenience, as the insulin pen eliminates the need to 
draw up a dose;
     Greater dose accuracy and reliability, especially for low 
doses which are often needed in the elderly;
     Sensory and auditory feedback associated with the dial 
mechanism on many pens may also benefit those with visual impairments;
     Pen devices are also more compact, portable and easier to 
grip, which may benefit those with impairments in manual dexterity; and
     Less painful injections and overall ease of use.\24\
---------------------------------------------------------------------------

    \24\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534.
---------------------------------------------------------------------------

    Although pen devices are often perceived to be more costly than 
vialed insulin, study results indicate that elderly diabetic patients 
are more likely to accept pen devices and adhere to therapy, which 
leads to better glycemic control that decreases long-term complications 
and associated healthcare costs.\25\ The significantly improved safety 
profiles of pen devices also avert costly episodes of hypoglycemia.\26\ 
It also should be noted that most insurance plans, including Medicare 
Part D plans, charge the patient the same amount for a month supply of 
insulin in the pen device as insulin in the vial.\27\ Furthermore, 
pharmacoeconomic data reveal cost benefits for using pens versus 
syringes due to improved treatment adherence and reduced health care 
utilization.\28\ Additionally, in some cases the individual with 
coverage for insulin pens may have one co-pay, resulting in getting 
more insulin than if purchasing a vial. And, there is less waste with 
pens because insulin vials should be discarded after 28 days after 
opening. However, there may be clinical reasons for the use of the 
traditional vial and insulin syringe as opposed to the insulin pen, 
including the fact that not all insulin preparations are available via 
insulin pen. In such circumstances, there are multiple assistive aids 
and devices to facilitate self-injection of insulin for those with 
cognitive or functional limitations. These include: nonvisual insulin 
measurement devices; syringe magnifiers; needle guides; prefilled 
insulin syringes; and vial stabilizers to help ensure accuracy and aid 
in insulin delivery.\29\ It is expected that providers will assess the 
needs, abilities, and preference of the patient requiring insulin to 
facilitate patient autonomy, efficiency, and safety in diabetes self-
management, including the administration of insulin.
---------------------------------------------------------------------------

    \25\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \26\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \27\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534
    \28\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \29\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
---------------------------------------------------------------------------

    Further research regarding self-injection of insulin, whether via a 
vial and syringe method or insulin pen, shows that education for 
starting insulin and monitoring should be provided by a diabetes nurse 
specialist, and typically entails 5 to 10 face-to-face contacts either 
in the patient's home or at the diabetes clinic; these are in addition 
to telephone contacts to further reinforce teaching and to answer 
patient questions.\30\ This type of assessment and education allows for 
patient autonomy and self-efficiency and is often a preferred mode for 
diabetes self-management.
---------------------------------------------------------------------------

    \30\ Hendra, T.J. Starting insulin therapy in elderly patients. 
(2012). Journal of the Royal Society of Medicine. 95(9), 453-455. 
http://www.ncbi.nlm.nih.gov.
---------------------------------------------------------------------------

    In the CY 2014 HH PPS final rule (78 FR 72256), we noted ``The 
Office of Inspector General (OIG) released a ``Management Implications 
Report in August of 2013'' that concluded there is a ``systemic 
weakness that results in Medicare coverage of unnecessary home health 
care for diabetic patients''. The OIG report noted that investigations 
show that the majority of beneficiaries involved in fraudulent schemes 
have a primary diagnosis of diabetes. The report noted that OIG Special 
Agents found falsified medical records documenting patients having hand 
tremors and poor vision preventing them from drawing insulin into a 
syringe, visually verifying the correct dosage, and injecting the 
insulin themselves, when the patients did not in fact suffer those 
symptoms.
    In light of the OIG report, we conducted analysis and performed 
simulations using CY 2012 claims data and described our findings in the 
CY 2014 Home Health PPS Final Rule (78 FR 72310). We found that nearly 
44 percent of the episodes that would qualify for outlier payments had 
a primary diagnosis of diabetes and 16 percent of episodes that would 
quality for outlier payments had a primary diagnosis of ``Diabetes 
mellitus without mention of complication, type II or unspecified type, 
not stated as uncontrolled.'' Qualifying for outlier

[[Page 38403]]

payments should indicate an increased resource and service need. 
However, uncomplicated and controlled diabetes typically would be 
viewed as stable without clinical complications and would not warrant 
increased resource and service needs nor would it appear to warrant 
outlier payments. Our simulations estimated that approximately 81 
percent of outlier payments would be paid to proprietary HHAs and that 
approximately two-thirds of outlier payments would be paid to HHAs 
located in Florida (27 percent), Texas (24 percent) and California (15 
percent). We also conducted additional analyses on episodes in our 
simulations that would have resulted in outlier payments of over 
$10,000. Of note, 95 percent of episodes that would have resulted in 
outlier payments of over $10,000 were for patients with a primary 
diagnosis of diabetes or long-term use of insulin, and most were 
concentrated in Florida, Texas, New York, California, and Oklahoma. On 
average, these outlier episodes had 160 skilled nursing visits in a 60-
day episode of care.\31\
---------------------------------------------------------------------------

    \31\ This analysis simulated payments using CY 2012 claims data 
and CY 2012 payment rates. The simulations did not take into account 
the 10-percent outlier cap. Some episodes may have qualified for 
outlier payments in the simulations, but were not paid accordingly 
if the HHA was at or over its 10 percent cap on outlier payments as 
a percent of total payments.
---------------------------------------------------------------------------

    Based upon the initial data analysis described above and the 
information found in the literature review, we conducted further data 
analysis with more recent home health claims and OASIS data (CY 2012 
and CY 2013) to expand our understanding of the diabetic patient in the 
home health setting. Specifically, we investigated the extent to which 
beneficiaries with a diabetes-related principal diagnosis received home 
health services likely for the primary purpose of insulin injection 
assistance and whether such services were warranted by other documented 
medical conditions. We also analyzed the magnitude of Medicare payments 
associated with home health services provided to this population of 
interest. The analysis was conducted by Acumen, LLC because of their 
capacity to provide real-time claims data analysis across all parts of 
the Medicare program (that is, Part A, Part B, and Part D).
    Our analysis began with identifying episodes for the home health 
diabetic population based on claims and OASIS assessments most likely 
to be associated with insulin injection assistance. We used the 
following criteria to identify the home health diabetic population of 
interest: (1) A diabetic condition listed as the principal/primary 
diagnosis on the home health claim; (2) Medicare Part A or Part B 
enrollment for at least three months prior to the episode and during 
the episode; and (3) episodes with at least 45 skilled visits. This 
threshold was determined based on the distribution in the average 
number and length of skilled nursing visits for episodes meeting 
criteria 1 and 2 above using CY 2013 home health claims data. The 
average number of skilled nursing visits for beneficiaries who receive 
at least one skilled nursing visit appeared to increase from 20 visits 
at the 90th percentile, to 50 visits at the 95th percentile. 
Additionally, the average length of a skilled nursing visit for 
episodes between the 90th and 95th percentiles was 37 minutes, less 
than half the length of visits for episode between the 75th and 90th 
percentiles.
    Approximately 49,100 episodes met the study population criteria 
described above, accounting for approximately $298 million in Medicare 
home health payments in CY 2013. Of the 49,100 episodes of interest, 71 
percent received outlier payments and, on average, there were 86 
skilled nursing visits per episode. In addition, 12 percent of the 
episodes in the study population were for patients prescribed an 
insulin pen to self-inject and more than half of the episodes billed 
(27,439) were for claims that listed ICD-9-CM 2500x, ``Diabetes 
Mellitus without mention of complication'', as the principal diagnosis 
code. ICD-9-CM describes the code 250.0x as diabetes mellitus without 
mention of complications (complications can include hypo- or 
hyperglycemia, or manifestations classified as renal, ophthalmic, 
neurological, peripheral circulatory damage or neuropathy). Clinically, 
this code generally means that the diabetes is being well-controlled 
and there are no apparent complications or symptoms resulting from the 
diabetes. Diabetes that is controlled and without complications does 
not warrant intensive intervention or daily skilled nursing visits; 
rather, it warrants knowledge of the condition and routine monitoring.
    As discussed above in this section, the traditional vial and 
syringe method of insulin administration is one of two methods of 
insulin administration (excluding the use of insulin pumps). The 
alternative to the traditional vial and syringe method is the use of 
insulin pens. We believe that insulin pens are usually prescribed for 
those beneficiaries that are able to self-administer the insulin via an 
insulin pen. Therefore, the possession of a prescribed insulin pen 
would suggest the ability to self-inject. Since insulin pens often come 
pre-filled with insulin or must be used with a pre-filled cartridge, we 
believe there would not be a need for skilled nursing for the purpose 
of insulin injection assistance. We expect providers to assess the 
needs, abilities, and preference of the patient requiring insulin to 
facilitate patient autonomy, efficiency, and safety in diabetes self-
management, including the administration of insulin. As noted above, 
approximately 12 percent of the episodes in the study population with 
visits likely for the purpose of insulin injection assistance were for 
patients prescribed an insulin pen to self-inject, which does not 
conform to our current policy that home health visits for the sole 
purpose of insulin injection assistance is limited to patients that are 
physically or mentally unable to self-inject and there is no other 
person who is able and willing to inject the patient.
    Furthermore, we recognize that our current sub-regulatory guidance 
may not adequately address the method of delivery. We are considering 
additional guidance that may be necessary surrounding insulin injection 
assistance provided via a pen based upon our analyses described above. 
We have found that literature supports that insulin pens may reduce 
expenses for the patient in the form of co-pays and may increase 
patient adherence to their treatment plan. Therefore, we encourage 
physicians to consider the potential benefits derived in prescribing 
insulin pens, when clinically appropriate, given the patient's 
condition.
    We also investigated whether secondary diagnosis codes listed on 
home health claims support that the patient, either for physical or 
mental reasons, cannot self-inject. Our contractor, Abt Associates, 
with review and clinical input from CMS clinical staff and experts, 
created a list of ICD-9-CM codes that indicate a patient has 
impairments in dexterity, cognition, vision, and/or hearing that may 
cause the patient to be unable to self-inject insulin. We found that 49 
percent of home health episodes in our study population did not have a 
secondary diagnosis from that ICD-9-CM code list on the home health 
claim that supported that the patient was physically or mentally unable 
to self-inject. When examining only the initial home health episodes of 
our study population, we found that 67 percent of initial home health 
episodes with skilled nursing visits likely for insulin injections did 
not have a secondary diagnosis on the home health claim that supported 
that the patient was physically or mentally unable to self-

[[Page 38404]]

inject. Using the same list of ICD-9-CM diagnosis codes, we examined 
both the secondary diagnoses on the home health claim and diagnoses on 
non-home health claims in the three months prior to starting home 
health care for initial home health episodes. We found that for initial 
home health episodes in our study population that the percentage of 
episodes that did not have a secondary diagnosis to support that the 
patient cannot self-inject would decrease from 67 percent to 47 percent 
if the home health claim included diagnoses found in other claim types 
during the three months prior to entering home care. We do recognize 
that, in spite of all of the education, assistive devices and support, 
there may still be those who are unable to self-inject insulin and will 
require ongoing skilled nursing visits for insulin administration 
assistance. However, there is an expectation that the physician and the 
HHA would clearly document detailed clinical findings and rationale as 
to why an individual is unable to self-inject, including the reporting 
of an appropriate secondary condition that supports the inability of 
the patient to self-inject.
    As described above, a group of CMS clinicians and contractor 
clinicians developed a list of conditions that would support the need 
for ongoing home health skilled nursing visits for insulin injection 
assistance for instances where the patient is physically or mentally 
unable to self-inject and there is no able or willing caregiver to 
provide assistance. We expect the conditions included in Table 28 to be 
listed on the claim and OASIS to support the need for skilled nursing 
visits for insulin injection assistance.

 Table 28--ICD-9-CM Diagnosis Codes That Indicate a Potential Inability
                         To Self-Inject Insulin
------------------------------------------------------------------------
            ICD-9-CM Code                         Description
------------------------------------------------------------------------
Amputation:
V49.61...............................  Thumb Amputation Status.
V49.63...............................  Hand Amputation Status.
V49.64...............................  Wrist Amputation Status.
V49.65...............................  Below elbow amputation status.
V49.66...............................  Above elbow amputation status.
V49.67...............................  Shoulder amputation status.
885.0................................  Traumatic amputation of thumb w/o
                                        mention of complication.
885.1................................  Traumatic amputation of thumb w/
                                        mention of complication.
886.0................................  Traumatic amputation of other
                                        fingers w/o mention of
                                        complication.
886.1................................  Traumatic amputation of other
                                        fingers w/mention of
                                        complication.
887.0................................  Traumatic amputation of arm and
                                        hand, unilateral, below elbow w/
                                        o mention of complication.
887.1................................  Traumatic amputation of arm and
                                        hand, unilateral, below elbow,
                                        complicated.
887.2................................  Traumatic amputation of arm and
                                        hand, unilateral, at or above
                                        elbow w/o mention of
                                        complication.
887.3................................  Traumatic amputation of arm and
                                        hand, unilateral, at or above
                                        elbow, complicated.
887.4................................  Traumatic amputation of arm and
                                        hand, unilateral, level not
                                        specified, w/o mention of
                                        complication.
887.5................................  Traumatic amputation of arm and
                                        hand, unilateral, level not
                                        specified, complicated.
887.6................................  Traumatic amputation of arm and
                                        hand, bilateral, any level, w/o
                                        mention of complication.
887.7................................  Traumatic amputation of arm and
                                        hand, bilateral, any level,
                                        complicated.
Vision:
362.01...............................  Background diabetic retinopathy.
362.50...............................  Macular degeneration (senile) of
                                        retina unspecified.
362.51...............................  Nonexudative senile macular
                                        degeneration of retina.
362.52...............................  Exudative senile macular
                                        degeneration of retina.
362.53...............................  Cystoid macular degeneration of
                                        retina.
362.54...............................  Macular cyst hole or pseudohole
                                        of retina.
362.55...............................  Toxic maculopathy of retina.
362.56...............................  Macular puckering of retina.
362.57...............................  Drusen (degenerative) of retina.
366.00...............................  Nonsenile cataract unspecified.
366.01...............................  Anterior subcapsular polar
                                        nonsenile cataract.
366.02...............................  Posterior subcapsular polar
                                        nonsenile cataract.
366.03...............................  Cortical lamellar or zonular
                                        nonsenile cataract.
366.04...............................  Nuclear nonsenile cataract.
366.09...............................  Other and combined forms of
                                        nonsenile cataract.
366.10...............................  Senile cataract unspecified.
366.11...............................  Pseudoexfoliation of lens
                                        capsule.
366.12...............................  Incipient senile cataract.
366.13...............................  Anterior subcapsular polar senile
                                        cataract.
366.14...............................  Posterior subcapsular polar
                                        senile cataract.
366.15...............................  Cortical senile cataract.
366.16...............................  Senile nuclear sclerosis.
366.17...............................  Total or mature cataract.
366.18...............................  Hypermature cataract.
366.19...............................  Other and combined forms of
                                        senile cataract.
366.20...............................  Traumatic cataract unspecified.
366.21...............................  Localized traumatic opacities.
366.22...............................  Total traumatic cataract.
366.23...............................  Partially resolved traumatic
                                        cataract.
366.8................................  Other cataract.
366.9................................  Unspecified cataract.
366.41...............................  Diabetic cataract.
366.42...............................  Tetanic cataract.
366.43...............................  Myotonic cataract.

[[Page 38405]]

 
366.44...............................  Cataract associated with other
                                        syndromes.
366.45...............................  Toxic cataract.
366.46...............................  Cataract associated with
                                        radiation and other physical
                                        influences.
366.50...............................  After-cataract unspecified.
369.00...............................  Impairment level not further
                                        specified.
369.01...............................  Better eye: total vision
                                        impairment; lesser eye: total
                                        vision impairment.
369.10...............................  Moderate or severe impairment,
                                        better eye, impairment level not
                                        further specified.
369.11...............................  Better eye: severe vision
                                        impairment; lesser eye: blind
                                        not further specified.
369.13...............................  Better eye: severe vision
                                        impairment; lesser eye: near-
                                        total vision impairment.
369.14...............................  Better eye: severe vision
                                        impairment; lesser eye: profound
                                        vision impairment.
369.15...............................  Better eye: moderate vision
                                        impairment; lesser eye: blind
                                        not further specified.
369.16...............................  Better eye: moderate vision
                                        impairment; lesser eye: total
                                        vision impairment.
369.17...............................  Better eye: moderate vision
                                        impairment; lesser eye: near-
                                        total vision impairment.
369.18...............................  Better eye: moderate vision
                                        impairment; lesser eye: profound
                                        vision impairment.
369.20...............................  Moderate to severe impairment;
                                        Low vision both eyes not
                                        otherwise specified.
369.21...............................  Better eye: severe vision
                                        impairment; lesser eye;
                                        impairment not further
                                        specified.
369.22...............................  Better eye: severe vision
                                        impairment; lesser eye: severe
                                        vision impairment.
369.23...............................  Better eye: moderate vision
                                        impairment; lesser eye:
                                        impairment not further
                                        specified.
369.24...............................  Better eye: moderate vision
                                        impairment; lesser eye: severe
                                        vision impairment.
369.25...............................  Better eye: moderate vision
                                        impairment; lesser eye: moderate
                                        vision impairment.
369.3................................  Unqualified visual loss both
                                        eyes.
369.4................................  Legal blindness as defined in
                                        U.S.A..
377.75...............................  Cortical blindness.
379.21...............................  Vitreous degeneration.
379.23...............................  Vitreous hemorrhage.
Cognitive/Behavioral:
290.0................................  Senile dementia uncomplicated.
290.3................................  Senile dementia with delirium.
290.40...............................  Vascular dementia, uncomplicated.
290.41...............................  Vascular dementia, with delirium.
290.42...............................  Vascular dementia, with
                                        delusions.
290.43...............................  Vascular dementia, with depressed
                                        mood.
294.11...............................  Dementia in conditions classified
                                        elsewhere with behavioral
                                        disturbance.
294.21...............................  Dementia, unspecified, with
                                        behavioral disturbance.
300.29...............................  Other isolated or specific
                                        phobias.
331.0................................  Alzheimer's disease.
331.11...............................  Pick's disease.
331.19...............................  Other frontotemporal dementia.
331.2................................  Senile degeneration of brain.
331.82...............................  Dementia with lewy bodies.
Arthritis:
715.11...............................  Osteoarthrosis localized primary
                                        involving shoulder region.
715.21...............................  Osteoarthrosis localized
                                        secondary involving shoulder
                                        region.
715.31...............................  Osteoarthrosis localized not
                                        specified whether primary or
                                        secondary involving shoulder
                                        region.
715.91...............................  Osteoarthrosis unspecified
                                        whether generalized or localized
                                        involving shoulder region.
715.12...............................  Osteoarthrosis localized primary
                                        involving upper arm.
715.22...............................  Osteoarthrosis localized
                                        secondary involving upper arm.
715.32...............................  Osteoarthrosis localized not
                                        specified whether primary or
                                        secondary involving upper arm.
715.92...............................  Osteoarthrosis unspecified
                                        whether generalized or localized
                                        involving upper arm.
715.13...............................  Osteoarthrosis localized primary
                                        involving forearm.
715.23...............................  Osteoarthrosis localized
                                        secondary involving forearm.
715.33...............................  Osteoarthrosis localized not
                                        specified whether primary or
                                        secondary involving forearm.
715.93...............................  Osteoarthrosis unspecified
                                        whether generalized or localized
                                        involving forearm.
715.04...............................  Osteoarthrosis generalized
                                        involving hand.
715.14...............................  Osteoarthrosis localized primary
                                        involving hand.
715.24...............................  Osteoarthrosis localized
                                        secondary involving hand.
715.34...............................  Osteoarthrosis localized not
                                        specified whether primary or
                                        secondary involving hand.
715.94...............................  Osteoarthrosis unspecified
                                        whether generalized or localized
                                        involving hand.
716.51...............................  Unspecified polyarthropathy or
                                        polyarthritis involving shoulder
                                        region.
716.52...............................  Unspecified polyarthropathy or
                                        polyarthritis involving upper
                                        arm.
716.53...............................  Unspecified polyarthropathy or
                                        polyarthritis involving forearm.
716.54...............................  Unspecified polyarthropathy or
                                        polyarthritis involving hand.
716.61...............................  Unspecified monoarthritis
                                        involving shoulder region.
716.62...............................  Unspecified monoarthritis
                                        involving upper arm.
716.63...............................  Unspecified monoarthritis
                                        involving forearm.
716.64...............................  Unspecified monoarthritis
                                        involving hand.
716.81...............................  Other specified arthropathy
                                        involving shoulder region.
716.82...............................  Other specified arthropathy
                                        involving upper arm.
716.83...............................  Other specified arthropathy
                                        involving forearm.
716.84...............................  Other specified arthropathy
                                        involving hand.
716.91...............................  Unspecified arthropathy involving
                                        shoulder region.
716.92...............................  Unspecified arthropathy involving
                                        upper arm.

[[Page 38406]]

 
716.93...............................  Unspecified arthropathy involving
                                        forearm.
716.94...............................  Unspecified arthropathy involving
                                        hand.
716.01...............................  Kaschin-Beck disease shoulder
                                        region.
716.02...............................  Kaschin-Beck disease upper arm.
716.04...............................  Kaschin-Beck disease forearm.
716.04...............................  Kaschin-beck disease involving
                                        hand.
719.81...............................  Other specified disorders of
                                        joint of shoulder region.
719.82...............................  Other specified disorders of
                                        upper arm joint.
719.83...............................  Other specified disorders of
                                        joint, forearm.
719.84...............................  Other specified disorders of
                                        joint, hand.
718.41...............................  Contracture of joint of shoulder
                                        region.
718.42...............................  Contracture of joint, upper arm.
718.43...............................  Contracture of joint, forearm.
718.44...............................  Contracture of hand joint.
714.0................................  Rheumatoid arthritis.
Movement Disorders:
332.0................................  Paralysis agitans (Parkinson's).
332.1................................  Secondary parkinsonism.
333.1................................  Essential and other specified
                                        forms of tremor.
736.05...............................  Wrist drop (acquired).
After Effects from Stroke/Other
 Disorders of the Central Nervous
 System/Intellectual Disabilities:
438.21...............................  Hemiplegia affecting dominant
                                        side.
438.22...............................  Hemiplegia affecting nondominant
                                        side.
342.01...............................  Flaccid hemiplegia and
                                        hemiparesis affecting dominant
                                        side.
342.02...............................  Flaccid hemiplegia and
                                        hemiparesis affecting
                                        nondominant side.
342.11...............................  Spastic hemiplegia and
                                        hemiparesis affecting dominant
                                        side.
342.12...............................  Spastic hemiplegia and
                                        hemiparesis affecting
                                        nondominant side.
438.31...............................  Monoplegia of upper limb
                                        affecting dominant side.
438.32...............................  Monoplegia of upper limb
                                        affecting nondominant side.
343.3................................  Congenital monoplegia.
344.41...............................  Monoplegia of upper limb
                                        affecting dominant side.
344.42...............................  Monoplegia of upper limb
                                        affecting nondominant side.
344.81...............................  Locked-in state.
344.00...............................  Quadriplegia unspecified.
344.01...............................  Quadriplegia c1-c4 complete.
344.02...............................  Quadriplegia c1-c4 incomplete.
344.03...............................  Quadriplegia c5-c7 complete.
344.04...............................  Quadriplegia c5-c7 incomplete.
343.0................................  Congenital diplegia.
343.2................................  Congenital quadriplegia.
344.2................................  Diplegia of upper limbs.
318.0................................  Moderate intellectual
                                        disabilities.
318.1................................  Severe intellectual disabilities.
318.2................................  Profound intellectual
                                        disabilities.
------------------------------------------------------------------------

    Although we are not proposing any policy changes at this time, we 
are soliciting public comments on whether the conditions in Table 28 
represent a comprehensive list of codes that appropriately indicate 
that a patient may not be able to self-inject and the use of insulin 
pens in home health. We plan to continue monitoring claims that are 
likely for the purpose of insulin injection assistance. Historical 
evidence in the medical record must support the clinical legitimacy of 
the secondary condition(s) and resulting disability that limit the 
beneficiary's ability to self-inject.

G. Implementation of the International Classification of Diseases, 10th 
Revision, Clinical Modification (ICD-10-CM)

    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) was enacted. Section 212 of the PAMA, titled 
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides that 
``[t]he Secretary of Health and Human Services may not, prior to 
October 1, 2015, adopt ICD-10 code sets as the standard for code sets 
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c)) 
and Sec.  162.1002 of title 45, Code of Federal Regulations.''
    On May 1, 2014, the Secretary announced that HHS expects to issue 
an interim final rule that will require use of ICD-10 beginning October 
1, 2015 and continue to require use of ICD-9-CM through September 30, 
2015. This announcement, which is available on the CMS Web site at 
http://cms.gov/Medicare/Coding/ICD10/index.html, means that ICD-9-CM 
diagnosis codes will continue to be used for home health claims 
reporting until October 1, 2015, when ICD-10-CM is required. Diagnosis 
reporting on home health claims must adhere to ICD-9-CM coding 
conventions and guidelines regarding the selection of principal 
diagnosis and the reporting of additional diagnoses until that time. 
The current ICD-9-CM Coding Guidelines refer to the use of the 
International Classification of Diseases,

[[Page 38407]]

9th Revision, Clinical Modification (ICD-9-CM) and are available 
through the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html or on the CDC's Web site at 
http://www.cdc.gov/nchs/icd/icd9cm.htm. We plan to disseminate this 
information through the HHA Center Web site, the Home Health, Hospice 
and DME Open Door Forum, and in the CY 2015 HH PPS final rule.

H. Proposed Change to the Therapy Reassessment Timeframes

    As discussed in our CY 2011 HH PPS final rule (75 FR 70372), 
effective January 1, 2011, therapy reassessments must be performed on 
or ``close to'' the 13th and 19th therapy visits and at least once 
every 30 days. A qualified therapist, of the corresponding discipline 
for the type of therapy being provided, must functionally reassess the 
patient using a method which would include objective measurement. The 
measurement results and corresponding effectiveness of the therapy, or 
lack thereof, must be documented in the clinical record. We anticipated 
that policy regarding therapy coverage and therapy reassessments would 
address payment vulnerabilities that have led to high use and sometimes 
overuse of therapy services. We also discussed our expectation that 
this policy change would ensure more qualified therapist involvement 
for beneficiaries receiving high amounts of therapy. In our CY 2013 HH 
PPS final rule (77 FR 67068), effective January 1, 2013, we provided 
further clarifications regarding therapy coverage and therapy 
reassessments. Specifically, similar to the existing requirements for 
therapy reassessments when the patient resides in a rural area, we 
finalized changes to Sec.  409.44(c)(2)(i)(C)(2) and (D)(2) specifying 
that when multiple types of therapy are provided, each therapist must 
assess the patient after the 10th therapy visit but no later than the 
13th therapy visit and after the 16th therapy visit but no later than 
the 19th therapy visit for the plan of care. In Sec.  
409.44(c)(2)(i)(E)(1), we specified that when a therapy reassessment is 
missed, any visits for that discipline prior to the next reassessment 
are non-covered.
    Our analysis of data from CYs 2010 through 2013 shows that the 
frequency of episodes with therapy visits reaching 14 and 20 therapy 
visits did not change substantially as a result of the therapy 
reassessment policy implemented in CY 2011 (see Table 29). The 
percentage of episodes with at least 14 covered therapy visits was 17.2 
percent in CY 2010 and decreased to 16.0 percent in CY 2011. In CY 2013 
the percentage of episodes with at least 14 covered therapy visits 
increased to 16.3 percent. Likewise, the percentage of episodes with at 
least 20 covered therapy visits was 6.0 percent in CY 2010 and 
decreased to 5.4 percent in CY 2011. In CY 2013, the percentage of 
episodes with at least 20 covered therapy visits was 5.3 percent. We 
analyzed data for specific types of providers (for example, non-profit, 
for profit, freestanding, facility-based), and we found the similar 
trends in the number of episodes with at least 14 and 20 covered 
therapy visits. For example, for non-profit HHAs, the percentage of 
episodes with at least 14 covered therapy visits decreased from 11.8 
percent in CY 2010 to 11.1 in CY 2011 and episodes with at least 20 
covered therapy visits decreased from 4.2 percent in CY 2010 to 3.9 
percent in CY 2011. For proprietary HHAs, the percentage of episodes 
with at least 14 covered therapy visits decreased from 19.7 percent in 
CY 2010 to 18.2 percent in CY 2011 and episodes with at least 20 
covered therapy visits decreased from 6.8 percent in CY 2010 to 6.1 
percent in CY 2011.
    As we stated in section III.A of this proposed rule, in addition to 
the implementation of the therapy reassessment requirements in CY 2011, 
HHAs were also subject to the Affordable Care Act face-to-face 
encounter requirement, payments were reduced to account for increases 
nominal case-mix, and the Affordable Care Act mandated that the HH PPS 
payment rates be reduced by 5 percent to pay up to, but no more than 
2.5 percent of total HH PPS payments as outlier payments. The estimated 
net impact to HHAs for CY 2011 was a decrease in total HH PPS payments 
of 4.78 percent. The independent effects of any one policy may be 
difficult to discern in years where multiple policy changes occur in 
any given year. We note that in our CY 2012 HH PPS final rule (76 FR 
68526), we recalibrated and reduced the HH PPS case-mix weights for 
episodes reaching 14 and 20 therapy visits, thereby greatly diminishing 
the payment incentive for episodes at those therapy thresholds.

              Table 29--Percentage of Episodes With 14 and 20 Therapy Visits, CY 2010 Through 2013
----------------------------------------------------------------------------------------------------------------
                                                          Episodes with at   Episodes with at   Episodes with at
                     Calendar year                        least 1 covered    least 14 covered   least 20 covered
                                                           therapy visit      therapy visits     therapy visits
----------------------------------------------------------------------------------------------------------------
2010...................................................              54.1%              17.2%               6.0%
2011...................................................              54.2%              16.0%               5.4%
2012...................................................              55.2%              15.6%               5.2%
2013...................................................              56.3%              16.3%               5.3%
----------------------------------------------------------------------------------------------------------------
Source: CY 2010 claims from the Datalink file and CY 2011 through CY 2013 claims from the standard analytic file
  (SAF).
Note(s): For CY 2010, we included all episodes that began on or after January 1, 2010 and ended on or before
  December 31, 2010 and we included a 20% sample of episodes that began in CY 2009 but ended in CY 2010. For CY
  2011 and CY 2013, we included all episodes that ended on or before December 31 of that CY (including 100% of
  episodes that began in the previous CY, but ended in the current CY).

    Since the therapy reassessment requirements were implemented in CY 
2011, providers have expressed frustration regarding the timing of 
reassessments for multi-discipline therapy episodes. In multiple 
therapy episodes, therapists must communicate when a planned visit and/
or reassessment is missed to accurately track and count visits. 
Otherwise, therapy reassessments may be in jeopardy of not being 
performed during the required timeframe increasing the risk of 
subsequent visits being non-covered. As stated above, our recent 
analysis of claims data from CY 2010 through CY 2013 shows no 
significant change in the percentage of cases reaching the 14 therapy 
visit and 20 therapy visit thresholds between CY 2010 and CY 2011. 
Moreover, payment increases at the 14 therapy visit and 20 therapy 
visit thresholds have been mitigated since the recalibration of the 
case-mix weights in CY 2012. Therefore, we propose to simplify Sec.  
409.44(c)(2) to require a qualified therapist (instead of an assistant) 
from each discipline to provide the needed therapy service and 
functionally reassess the patient in

[[Page 38408]]

accordance with Sec.  409.44(c)(2)(i)(A) at least every 14 calendar 
days.
    The requirement to perform a therapy reassessment at least once 
every 14 calendar days would apply to all episodes regardless of the 
number of therapy visits provided. All other requirements related to 
therapy reassessments would remain unchanged, such as a qualified 
therapist (instead of an assistant), from each therapy discipline 
provided, would still be required to provide the ordered therapy 
service and functionally reassess the patient using a method which 
would include objective measurements. The measurement results and 
corresponding effectiveness of the therapy, or lack thereof, would be 
documented in the clinical record. We believe that revising this 
requirement would make it easier and less burdensome for HHAs to track 
and to schedule therapy reassessments every 14 calendar days as opposed 
to tracking and counting therapy visits, especially for multiple-
discipline therapy episodes. We also believe that this proposal would 
reduce the risk of non-covered visits so that therapists could focus 
more on providing quality care for their patients, while still 
promoting therapist involvement and quality treatment for all 
beneficiaries, regardless of the level of therapy provided.
    We invite comment on this proposal and the associated change in the 
regulation at Sec.  409.44 in section VI. of this proposed rule.

I. HHA Value-Based Purchasing Model

    As we discussed previously in the FY 2009 proposed rule for Skilled 
Nursing Facilities (73 FR 25918, 25932, May 7, 2008), value-based 
purchasing (VBP) programs, in general, are intended to tie a provider's 
payment to its performance in such a way as to reduce inappropriate or 
poorly furnished care and identify and reward those who furnish quality 
patient care. Section 3006(b)(1) of the Affordable Care Act directed 
the Secretary to develop a plan to implement a VBP program for home 
health agencies (HHAs) and to issue an associated Report to Congress 
(Report). The Secretary issued that Report, which is available online 
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/downloads/stage-2-NPRM.PDF.
    The Report included a roadmap for HHA VBP implementation. The 
Report outlined the need to develop a HHA VBP program that aligns with 
other Medicare programs and coordinates incentives to improve quality. 
The Report indicated that a HHA VBP program should build on and refine 
existing quality measurement tools and processes. In addition, the 
Report indicated that one of the ways that such a program could link 
payment to quality would be to tie payments to overall quality 
performance.
    Section 402 of Public Law 92-603 provided authority for the CMS to 
conduct the Home Health Pay-for-Performance (HHPFP) Demonstration that 
ran from 2008 to 2010. The results of that Demonstration found limited 
quality improvement in certain measures after comparing the quality of 
care furnished by Demonstration participants to the quality of care 
furnished by the control group. One important lesson learned from the 
HHPFP Demonstration was the need to link the home health agency's 
quality improvement efforts and the incentives. HHAs in three of the 
four regions generated enough savings to have incentive payments in the 
first year of the Demonstration, but the size of payments were unknown 
until after the conclusion of the Demonstration. This time lag on 
paying incentive payments did not provide a sufficient incentive to 
HHAs to make investments necessary to improve quality. The 
Demonstration suggested that future models could benefit from ensuring 
that incentives are reliable enough, of sufficient magnitude, and paid 
in a timely fashion to encourage HHAs to be fully engaged in the 
quality of care initiative. The evaluation report is available online 
at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/HHP4P_Demo_Eval_Final_Vol1.pdf.
    We have already successfully implemented the Hospital Value-Based 
Purchasing (HVBP) program where 1.25 percent of hospital payments in FY 
2014 are tied to the quality of care that the hospitals provide. This 
percentage amount will gradually increase to 2.0 percent in FY 2017 and 
subsequent years. The President's 2015 Budget proposes that value-based 
purchasing should be extended to additional providers including skilled 
nursing facilities, home health agencies, ambulatory surgical centers, 
and hospital outpatient departments. Therefore, we are now considering 
testing a HHA VBP model that builds on what we have learned from the 
HVBP program. The model also presents an opportunity to test whether 
larger incentives than what have been previously tested will lead to 
even greater improvement in the quality of care furnished to 
beneficiaries. The HHA VBP model that is being considered would offer 
both a greater potential reward for high performing HHAs as well as a 
greater potential downside risk for low performing HHAs. If 
implemented, the model would begin at the outset of CY 2016, and 
include an array of measures that can capture the multiple dimensions 
of care that HHAs furnish. Building upon the successes of other related 
programs, we are seeking to implement a model with greater upside 
benefit and downside risk to motivate HHAs to make the substantive 
investments necessary to improve the quality of care furnished by HHAs.
    As currently envisioned, the HHA VBP model would reduce or increase 
Medicare payments, in a 5-8 percent range, depending on the degree of 
quality performance in various measures to be selected. The model would 
apply to all HHAs in each of the projected five to eight states 
selected to participate in the model. The distribution of payments 
would be based on quality performance, as measured by both achievement 
and improvement across multiple quality measures. Some HHAs would 
receive higher payments than standard fee-for-service payments and some 
HHAs would receive lower payments, similar to the HVBP program. We 
believe the payment adjustment at risk would provide an incentive among 
all HHAs to provide significantly better quality through improved 
planning, coordination, and management of care. To be eligible for any 
incentive payments, HHAs would need to achieve a minimal threshold in 
quality performance with respect to the care that they furnish. The 
size of the award would be dependent on the level of quality furnished 
above the minimal threshold with the highest performance awards going 
to HHAs with the highest overall level of or improvement in quality.
    HHAs that meet or exceed the performance standards based on quality 
and efficiency metrics would be eligible to earn performance payments. 
The size of the performance payment would be dependent upon the 
provider's performance relative to other HHAs within its participating 
state. HHAs that exceed the performance standards and demonstrate the 
greatest level of overall quality or quality improvement on the 
selected measures would have the opportunity to receive performance 
payment adjustments greater than the amount of the payment reduction, 
and would therefore see a net payment increase as a result of this 
model. Those HHAs that fail to meet the performance standard would 
receive lower payments than what would have been reimbursed

[[Page 38409]]

under the traditional FFS Medicare payment system, and would therefore 
see a net payment decrease to Medicare payments as a result of this 
model. We are proposing to use the waiver authority under section 1115A 
of the Act to waive the applicable Medicare payment provisions for HHAs 
in the selected states and apply a reduction or increase to current 
Medicare payments to these HHAs, which would be dependent on their 
performance.
    We are considering an HHA VBP model in which participation by all 
HHAs in five to eight selected states is mandatory. We believe 
requiring all HHAs in selected states to participate in the model will 
ensure that: (1) There is no selection bias, (2) participating HHAs are 
representative of HHAs nationally, and (3) there is sufficient 
participation to generate meaningful results. In our experience, 
providers are generally reluctant to participate voluntarily in models 
in which their Medicare payments are subject to reduction. In this 
proposed rule, we invite comments on the HHA VBP model outlined above, 
including elements of the model, size of the payment incentives and 
percentage of payments that would need to be placed at risk in order to 
spur HHAs to make the necessary investments to improve the quality of 
care for Medicare beneficiaries, the timing of the incentive payments, 
and how performance payments should be distributed. We also invite 
comments on the best approach for selecting states for participation in 
this model. Approaches could include: (1) Selecting states randomly, 
(2) selecting states based on quality, utilization, health IT, or 
efficiency metrics or a combination, or (3) other considerations.
    We note that if we decide to move forward with the implementation 
of this HHA VBP model in CY 2016, we intend to invite additional 
comments on a more detailed model proposal to be included in future 
rulemaking.

J. Advancing Health Information Exchange

    HHS believes all patients, their families, and their healthcare 
providers should have consistent and timely access to their health 
information in a standardized format that can be securely exchanged 
between the patient, providers, and others involved in the patient's 
care. (HHS August 2013 Statement, ``Principles and Strategies for 
Accelerating Health Information Exchange.'') The Department is 
committed to accelerating health information exchange (HIE) through the 
use of electronic health records (EHRs) and other types of health 
information technology (HIT) across the broader care continuum through 
a number of initiatives including: (1) Alignment of incentives and 
payment adjustments to encourage provider adoption and optimization of 
HIT and HIE services through Medicare and Medicaid payment policies, 
(2) adoption of common standards and certification requirements for 
interoperable HIT, (3) support for privacy and security of patient 
information across all HIE-focused initiatives, and (4) governance of 
health information networks. These initiatives are designed to 
encourage HIE among all health care providers, including professionals 
and hospitals eligible for the Medicare and Medicaid EHR Incentive 
Programs and those who are not eligible for the EHR Incentive programs, 
and are designed to improve care delivery and coordination across the 
entire care continuum. To increase flexibility in the Office of the 
National Coordinator for Health Information Technology's (ONC) 
regulatory certification structure and expand HIT certification, ONC 
has proposed a voluntary 2015 Edition EHR Certification rule to more 
easily accommodate HIT certification for technology used by other types 
of health care settings where individual or institutional health care 
providers are not typically eligible for incentive payments under the 
EHR Incentive Programs, such as long-term and post-acute care and 
behavioral health settings (79 FR 10880).
    We believe that HIE and the use of certified EHRs by HHAs (and 
other providers ineligible for the Medicare and Medicaid EHR Incentive 
programs) can effectively and efficiently help providers improve 
internal care delivery practices, support management of patient care 
across the continuum, and enable the reporting of electronically 
specified clinical quality measures (eCQMs). More information on the 
identification of EHR certification criteria and development of 
standards applicable to HH can be found at:
    http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulationshttp://www.healthit.gov/facas/FACAS/health-it-policy-committee/hitpc-workgroups/certificationadoptionhttp://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWGhttp://wiki.siframework.org/Longitudinal+Coordination+of+Care

K. Proposed Revisions to the Speech-Language Pathologist Personnel 
Qualifications

    We propose to revise the personnel qualifications for speech-
language pathologists (SLP) to more closely align the regulatory 
requirements with those set forth in section 1861(ll) of the Act. We 
propose to require that a qualified SLP be an individual who has a 
master's or doctoral degree in speech-language pathology, and who is 
licensed as a speech-language pathologist by the State in which he or 
she furnishes such services. To the extent of our knowledge, all states 
license SLPs; therefore, all SLPs would be covered by this option. We 
believe that deferring to the states to establish specific SLP 
requirements would allow all appropriate SLPs to provide services to 
Medicare beneficiaries. Should a state choose to not offer licensure at 
some point in the future, we propose a second, more specific, option 
for qualification. In that circumstance, we would require that an SLP 
successfully complete 350 clock hours of supervised clinical practicum 
(or is in the process of accumulating such supervised clinical 
experience); perform not less than 9 months of supervised full-time 
speech-language pathology services after obtaining a master's or 
doctoral degree in speech-language pathology or a related field; and 
successfully complete a national examination in speech-language 
pathology approved by the Secretary. These specific requirements are 
set forth in the Act, and we believe that they are appropriate for 
inclusion in the regulations as well.
    We invite comments on this technical correction and associated 
change in the regulations at Sec.  484.4 in section VI.

L. Proposed Technical Regulations Text Changes

    We propose to make technical corrections in Sec.  424.22(b)(1) to 
better align the recertification requirements with the Medicare 
Conditions of Participation (CoPs) for home health services. 
Specifically, we propose that Sec.  424.22(b)(1) would specify that 
recertification is required at least every 60 days when there is a need 
for continuous home health care after an initial 60-day episode to 
coincide with the CoP requirements in Sec.  484.55(d)(1), which require 
the HHA to update the comprehensive assessment in the last 5 days of 
every 60-day episode of care. As stated in Sec.  484.55, the 
comprehensive assessment must identify the patient's continuing need 
for home care and meet the patient's medical, nursing, rehabilitative, 
social, and discharge planning needs. We also propose to specify in 
Sec.  424.22(b)(1) that recertification is required at least every 60 
days unless there is a beneficiary elected transfer or a discharge with 
goals met and return to the same HHA

[[Page 38410]]

during the 60-day episode. The word ``unless'' was inadvertently left 
out of the payment regulations text. Inserting ``unless'' into Sec.  
424.22(b) (1) realigns the recertification requirements with the CoPs 
at Sec.  484.55(d)(1).
    As outlined in the ``Medicare Program; Prospective Payment System 
for Home Health Agencies'' final rule published on July 3, 2000 (65 FR 
41188 through 41190), a partial episode payment (PEP) adjustment 
applies to two intervening events: (1) Where the beneficiary elects a 
transfer to another HHA during a 60-day episode or the patient; or (2) 
a discharge and return to the same HHA during the 60-day episode when a 
beneficiary reached the treatment goals in the plan of care. To 
discharge with goals met, the plan of care must be terminated with no 
anticipated need for additional home health services for the balance of 
the 60-day period. A PEP adjustment proportionally adjusts the 
national, standardized 60-day episode payment amount to reflect the 
length of time the beneficiary remained under the agency's care before 
the intervening event.
    We propose to revise Sec.  424.22(b)(1)(ii) to clarify that if a 
beneficiary is discharged with goals met and/or no expectation of a 
return to home health care and returns to the same HHA during the 60-
day episode a new start of care would be initiated (rather than an 
update to the comprehensive assessment) and thus the second episode 
would be considered a certification, not a recertification,\32\ and 
would be subject to Sec.  424.22(a)(1).
---------------------------------------------------------------------------

    \32\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/downloads/OASISConsiderationsforPPS.pdf.
---------------------------------------------------------------------------

    We also propose to make a technical correction in Sec.  
484.250(a)(1) to remove the ``-C'' after ``OASIS'' in Sec.  
484.250(a)(1), so that the regulation refers generically to the version 
of OASIS currently approved by the Secretary, and to align this section 
with the payment regulations at Sec.  484.210(e). Specifically, an HHA 
must submit to CMS the OASIS data described at Sec.  484.55(b)(1) and 
(d)(1) for CMS to administer the payment rate methodologies described 
in Sec.  484.215, Sec.  484.230, and Sec.  484.235 and to meet the 
quality reporting requirements of section 1895(b)(3)(B)(v) of the Act.
    We invite comments on these technical corrections and associated 
changes in the regulations at Sec.  424.22 and Sec.  484.250 in section 
VI.

M. Survey and Enforcement Requirements for Home Health Agencies

1. Statutory Background and Authority
    Section 4023 of the Omnibus Budget Reconciliation Act of 1987 (OBRA 
'87) (Pub. L 100-203, enacted on December 22, 1987) added subsections 
1891(e) and (f) to the Act, which expanded the Secretary's options to 
enforce federal requirements for home health agencies (HHAs or the 
agency). Sections 1861(e)(1) and (2) of the Act provide that if CMS 
determines that an HHA is not in compliance with the Medicare home 
health Conditions of Participation and the deficiencies involved either 
do or do not immediately jeopardize the health and safety of the 
individuals to whom the agency furnishes items and services, then we 
may terminate the provider agreement, impose an alternative 
sanction(s), or both. Section 1891(f)(1)(B) of the Act authorizes the 
Secretary to develop and implement appropriate procedures for appealing 
determinations relating to the imposition of alternative sanctions.
    In the November 8, 2012 Federal Register (77 FR 67068), we 
published in the ``Alternative Sanctions for Home Health Agencies With 
Deficiencies'' final rule (part 488, subpart J), as well as made 
corresponding revisions to sections Sec.  489.53 and Sec.  498.3. This 
subpart J added the rules for enforcement actions for HHAs including 
alternative sanctions. Section 488.810(g) provides that 42 CFR part 498 
applies when an HHA requests a hearing on a determination of 
noncompliance that leads to the imposition of a sanction, including 
termination. Section 488.845(b) describes the ranges of CMPs that may 
be imposed for all condition-level findings: upper range ($8,500 to 
$10,000); middle range ($1,500 to $8,500); lower range ($500 to 
$4,000), as well as CMPs imposed per instance of noncompliance ($1,000 
to $10,000).
    Section 488.845(c)(2) addresses the appeals procedures when CMPs 
are imposed, including the need for any appeal request to meet the 
requirements of Sec.  498.40 and the option for waiver of a hearing.
2. Reviewability Pursuant to Appeals
    We propose to amend Sec.  488.845 by adding a new paragraph (h) 
which would explain the reviewability of a CMP that is imposed on a HHA 
for noncompliance with federal participation requirements. The new 
language will provide that when administrative law judges, state 
hearing officers (or higher administrative review authorities) find 
that the basis for imposing a civil money penalty exists, as specified 
in Sec.  488.485, he or she may not set a penalty of zero or reduce a 
penalty to zero; review the exercise of discretion by CMS or the state 
to impose a civil money penalty; or, in reviewing the amount of the 
penalty, consider any factors other than those specified in Sec.  
488.485(b)(1)(i) through (b)(1)(iv). That is, when the administrative 
law judge or state hearing officer (or higher administrative authority) 
finds noncompliance supporting the imposition of the CMP, he or she 
must retain some amount of penalty consistent with the ranges of 
penalty amounts established in Sec.  488.845(b). The proposed language 
for HHA reviews is similar to the current Sec.  488.438(e) governing 
the scope of review for civil money penalties imposed against skilled 
nursing facilities, and is also consistent with section 1128A(d) of the 
Act which requires that specific factors be considered in determining 
the amount of any penalty.
3. Technical Adjustment
    We are also proposing to amend Sec.  498.3, Scope and 
Applicability, by revising paragraph (b)(13) to include specific cross 
reference to proposed Sec.  488.845(h) and to revise the reference to 
section Sec.  488.740 which was a typographical error and replace it 
with section Sec.  488.820 which is the actual section that lists the 
sanctions available to be imposed against an HHA. We are also amending 
Sec.  498.3(b)(14)(i) to include cross reference to proposed Sec.  
488.845(h) which establishes the scope of CMP review for HHAs. Finally, 
we are proposing to amend Sec.  498.60 to include specific references 
to HHAs and proposed Sec.  488.845(h).

IV. 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 requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. 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

[[Page 38411]]

affected public, including automated collection techniques.
    We are soliciting public comment the information collection 
requirement (ICR) related to the proposed changes to the home health 
face-to-face encounter requirements in section III.B and the proposed 
change to the therapy reassessment timeframes in section III.H. These 
proposed changes are associated with ICR approved under OMB control 
number as 0938-1083.

A. Proposed Changes to the Face-to-Face Encounter Requirements

    The following assumptions were used in estimating the burden for 
the proposed changes to the home health face-to-face requirements:

Table 30--Home Health Face-to-Face Encounter Burden Estimate Assumptions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Medicare-billing HHAs, from CY                          11,521
 2013 claims with matched OASIS
 assessments..............................
Hourly rate of an office employee                 $20.54 ($15.80 x 1.30)
 (Executive Secretaries and Executive
 Administrative Assistants, 43-6014)......
Hourly rate of an administrator (General          $64.65 ($49.73 x 1.30)
 and Operations Managers, 11-1021)........
Hourly rate of Family and General                $112.91 ($86.85 x 1.30)
 Practitioners (29-1062)..................
------------------------------------------------------------------------
Note: CY = Calendar Year

    All salary information is from the Bureau of Labor Statistics (BLS) 
Web site at http://www.bls.gov/oes/current/naics4_621600.htm and 
includes a fringe benefits package worth 30 percent of the base salary. 
The mean hourly wage rates are based on May 2013 BLS data for each 
discipline, for those providing ``home health care services.''
1. Proposed Changes to the Face-to-Face Encounter Narrative Requirement
    Sections 1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, as amended by 
section 6407 of the Affordable Care Act require that, as a condition 
for payment, prior to certifying a patient's eligibility for the 
Medicare home health benefit the physician must document that the 
physician himself or herself or an allowed nonphysician practitioner 
(NPP) had a face-to-face encounter with the patient. Section 
424.22(a)(1)(v) currently requires that the face-to-face encounter be 
related to the primary reason the patient requires home health services 
and occur no more than 90 days prior to the home health start of care 
date or within 30 days after the start of the home health care. In 
addition, as part of the certification of eligibility, the certifying 
physician must document the date of the encounter and include an 
explanation (narrative) of why the clinical findings of such encounter 
support that the patient is homebound, as defined in section 1835(a) of 
the Act, and in need of either intermittent skilled nursing services or 
therapy services, as defined in Sec.  409.42(c).
    To simplify the face-to-face encounter regulations, reduce burden 
for HHAs and physicians, and to mitigate instances where physicians and 
HHAs unintentionally fail to comply with certification requirements, we 
propose to eliminate the narrative requirement at Sec.  
424.22(a)(1)(v). The certifying physician will still be required to 
certify that a face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care and was performed by a 
physician or allowed non-physician practitioner as defined in Sec.  
424.22(a)(1)(v)(A), and to document the date of the encounter as part 
of the certification of eligibility.
    In eliminating the face-to-face encounter narrative requirement, we 
assume that there will be a one-time burden for the HHA to modify the 
certification form, which the HHA provides to the certifying physician. 
The revised certification form must allow the certifying physician to 
certify that a face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care and was performed by a 
physician or allowed NPP as defined in Sec.  424.22(a)(1)(v)(A). In 
addition, the certification form must allow the certifying physician to 
document the date that the face-to-face encounter occurred.
    We estimate that it would take a home health clerical staff person 
15 minutes (15/60 = 0.25 hours) to modify the certification form, and 
the HHA administrator 15 minutes (15/60 = 0.25 hours) to review the 
revised form. The clerical time plus administrator time equals a one-
time burden of 30 minutes or (30/60) = 0.50 hours per HHA. For all 
11,521 HHAs, the total time required would be (0.50 x 11,521) = 5,761 
hours. At $20.54 per hour for an office employee, the cost per HHA 
would be (0.25 x $20.54) = $5.14. At $64.65 per hour for the 
administrator's time, the cost per HHA would be (0.25 x $64.65) = 
$16.16. Therefore, the total one-time cost per HHA would be $21.30, and 
the total one-time cost for all HHAs would be ($21.30 x 11,521) = 
$245,397.
    In the CY 2011 HH PPS final rule (75 FR 70455), we estimated that 
the certifying physician's burden for composing the face-to-face 
encounter narrative, which includes how the clinical findings of the 
encounter support eligibility (writing, typing, or dictating the face-
to-face encounter narrative) signing, and dating the patient's face-to-
face encounter, was 5 minutes for each certification (5/60 = 0.0833 
hours). Because it has been our longstanding manual policy that 
physicians sign and date certifications and recertifications, there is 
no additional burden to physicians for signing and dating the face-to-
face encounter documentation. We estimate that there would be 3,096,680 
initial home health episodes in a year based on 2012 claims data from 
the home health Datalink file. As such, the estimated burden for the 
certifying physician to write the face-to-face encounter narrative 
would have been 0.0833 hours per certification (5/60 = 0.0833 hours) or 
257,953 hours total (0.0833 hours x 3,096,680 initial home health 
episodes). The estimated cost for the certifying physician to write the 
face-to-face encounter narrative would have been $9.41 per 
certification (0.0833 x $112.91) or $29,139,759 total ($9.41 x 
3,096,680) for CY 2015.
    Although we are proposing to eliminate the narrative, the 
certifying physician will still be required to document the date of the 
face-to-face encounter as part of the certification of eligibility. We 
estimate that it would take no more than 1 minute for the certifying 
physician to document the date that the face-to-face encounter occurred 
(1/60 = 0.0166 hours). The estimated burden for the certifying 
physician to continue to document the date of the face-to-face 
encounter would be 0.0166 hours per certification or 51,405 hours total 
(0.0166 hours x 3,096,680 initial home health episodes). The estimated 
cost for the certifying physician to continue to document the date of 
the face-to-face encounter would be $1.87 per certification (0.0166 x

[[Page 38412]]

$112.91) or $5,790,792 total ($1.87 x 3,096,680) for CY 2015. 
Therefore, in eliminating the face-to-face encounter narrative 
requirement, as proposed in section III.B. of this proposed rule, we 
estimate that burden and costs will be reduced for certifying 
physicians by 206,548 hours (257,953 - 51,405) and $23,348,967 
($29,139,759 - $5,790,792), respectively for CY 2015.
2. Proposed Clarification on When Documentation of a Face-to-Face 
Encounter is Required
    To determine when documentation of a patient's face-to-face 
encounter is required under sections 1814(a)(2)(C) and 1835 (a)(2)(A) 
of the Act, we are proposing to clarify that the face-to-face encounter 
requirement is applicable for certifications (not recertifications), 
rather than initial episodes. A certification (versus recertification) 
is generally considered to be any time that a new start of care OASIS 
is completed to initiate care. We estimate that of the 6,562,856 
episodes in the CY 2012 home health Datalink file, 3,096,680 start of 
care assessments were performed on initial home health episodes. If 
this proposal is implemented, an additional 830,287 episodes would 
require documentation of a face-to-face encounter for subsequent 
episodes that were initiated with a new start of care OASIS assessment. 
We estimate that it would take no more than 1 minute for the certifying 
physician to document the date that the face-to-face encounter occurred 
(1/60 = 0.0166 hours). The estimated burden for the certifying 
physician to document the date of the face-to-face encounter for each 
certification (any time a new start of care OASIS is completed to 
initiate care) would be 0.0166 hours or 13,783 total hours (0.0166 
hours x 830,287 additional home health episodes). The estimated cost 
for the certifying physician to document the date of the face-to-face 
encounter for each additional home health episode would be $1.87 per 
certification (0.0166 x $112.91) or $1,552,637 total ($1.87 x 830,287) 
for CY 2015.

                                               Table 31--Estimated One-Time Form Revision Burden for HHAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
               OMB No.                    Requirement         HHAs      Responses          Hr. burden                Total time          Total dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
0938-1083............................               Sec.       11,521            1  0.5 hour................  5,761 hours............           $245,397
                                         424.22(a)(1)(v)
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                             Table 32--Estimated Burden Reduction for Certifying Physicians
                                                 [No Longer Drafting a Face-to-Face Encounter Narrative]
--------------------------------------------------------------------------------------------------------------------------------------------------------
               OMB No.                   Requirement     Certifications   Responses          Hr. burden              Total time          Total dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
0938-1083...........................               Sec.      3,096,680             1  (0.0667) hour..........  (206,548) hours.......      ($23,348,967)
                                        424.22(a)(1)(v)
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                  Table 33--Estimated Burden for Certifying Physicians
                                   [Documenting the Date of the Face-to-Face Encounter for Additional Certifications]
--------------------------------------------------------------------------------------------------------------------------------------------------------
               OMB No.                   Requirement     Certifications   Responses          Hr. burden              Total time          Total dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
0938-1083...........................               Sec.        830,287             1  0.0166 hour............  13,783 hours..........         $1,552,637
                                        424.22(a)(1)(v)
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In summary, all of the proposed changes to the face-to-face 
encounter requirements in section III.B of this proposed rule, 
including changes to Sec.  424.22(a)(1)(v), will result in an estimated 
net reduction in burden for certifying physicians of 192,765 hours or 
$21,796,330 (see Tables 32 and 33). The proposed changes to the face-
to-face encounter requirements at Sec.  424.22(a)(1)(v) will result in 
a one-time burden for HHAs to revise the certification form of 5,761 
hours or $245,397 (Table 31).

B. Proposed Change to the Therapy Reassessment Timeframes

    Currently, section 409.44(c) requires that patient's function must 
be initially assessed and periodically reassessed by a qualified 
therapist, of the corresponding discipline for the type of therapy 
being provided, using a method which would include objective 
measurement. If more than one discipline of therapy is being provided, 
a qualified therapist from each of the disciplines must perform the 
assessment and periodic reassessments. The measurement results and 
corresponding effectiveness of the therapy, or lack thereof, must be 
documented in the clinical record. At least every 30 days a qualified 
therapist (instead of an assistant) must provide the needed therapy 
service and functionally reassess the patient. If a patient is expected 
to require 13 and/or 19 therapy visits, a qualified therapist (instead 
of an assistant) must provide all of the therapy services on the 13th 
visit and/or 19th therapy visit and functionally reassess the patient 
in accordance with Sec.  409.44(c)(2)(i)(A). When the patient resides 
in a rural area or if the patient is receiving multiple types of 
therapy, a therapist from each discipline (not an assistant) must 
assess the patient after the 10th therapy visit but no later than the 
13th therapy visit and after the 16th therapy visit but no later than 
the 19th therapy visit for the plan of care. In instances where the 
frequency of a particular discipline, as ordered by a physician, does 
not make it feasible for the reassessment to occur during the specified 
timeframes without providing an extra unnecessary visit or delaying a 
visit, then it is acceptable for the qualified therapist from that 
discipline to provide all of the therapy and functionally reassess the 
patient during the visit associated with that discipline that is 
scheduled to occur closest to the 14th and/or 20th Medicare-covered 
therapy visit, but no later than the 13th and/or 19th Medicare-covered 
therapy visit. When a therapy reassessment is missed, any visits for 
that discipline prior to the next reassessment are non-covered.

[[Page 38413]]

    To lessen the burden on HHAs of counting visits and to reduce the 
risk of noncovered visits so that therapists can focus more on 
providing quality care for their patients, we propose to simplify Sec.  
409.44(c) to require that therapy reassessments must be performed at 
least once every 14 calendar days. The requirement to perform a therapy 
reassessment at least once every 14 calendar days would apply to all 
episodes regardless of the number of therapy visits provided. All other 
requirements related to therapy reassessments would remain unchanged. A 
qualified therapist (instead of an assistant), from each therapy 
discipline provided, must provide the ordered therapy service and 
functionally reassess the patient using a method which would include 
objective measurement. The measurement results and corresponding 
effectiveness of the therapy, or lack thereof, must be documented in 
the clinical record.
    In the CY 2011 HH PPS final rule we stated that the therapy 
reassessment requirements in Sec.  409.44(c) are already part of the 
home health CoPs, as well as from accepted standards of clinical 
practice, and therefore, we believe that these requirements do not 
create any additional burden on HHAs (75 FR 70454). As stated in the CY 
2011 HH PPS final rule, longstanding CoP policy at Sec.  484.55 
requires HHAs to document progress toward goals and the 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. 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. The CY 2011 HH PPS final rule goes on to state that both 
the functional assessment and its accompanying documentation are 
already part of existing HHA practices and accepted standards of 
clinical practice. Therefore, we continue to believe that changing the 
required reassessment timeframes from every 30 days and prior to the 
14th and 20th visits to every 14 calendar days does not place any new 
documentation requirements on HHAs.
    We are revising the currently approved PRA package (OMB 
0938-1083) to describe these changes to the regulatory text.

C. Submission of PRA-Related Comments

    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this proposed rule.
    PRA-specific comments must be received on/by August 6, 2014.

V. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VI. Regulatory Impact Analysis

A. Introduction

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 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 Orders 12866 and 13563 direct 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). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This proposed rule has been designated as economically 
significant under section 3(f)(1) of Executive Order 12866, since the 
aggregate transfer impacts in calendar year 2015 will exceed the $100 
million threshold. The net transfer impacts are estimated to be -$58 
million. Furthermore, we estimate a net reduction of $21.55 million in 
calendar year 2015 burden costs related to the certification 
requirements for home health agencies and associated physicians. 
Lastly, this proposed rule is a major rule under the Congressional 
Review Act and as a result, we have prepared a regulatory impact 
analysis (RIA) that, to the best of our ability, presents the costs and 
benefits of the rulemaking. In accordance with the provisions of 
Executive Order 12866, this regulation was reviewed by the Office of 
Management and Budget.

B. Statement of Need

    Section 1895(b)(1) of the Act requires the Secretary to establish a 
HH PPS for all costs of HH services paid under Medicare. In addition, 
section 1895(b)(3)(A) of the Act requires (1) the computation of a 
standard prospective payment amount include all costs for HH 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 levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the 
annual update to the standard prospective payment amounts by the HH 
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 appropriate 
case-mix adjustment factors for significant variation in costs among 
different units of services. Lastly, 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 HH 
services furnished in a geographic area compared to the applicable 
national average level.
    Section 1895(b)(5) of the Act gives the Secretary the option to 
make changes 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 1895(b)(3)(B)(v) of the Act requires 
HHAs to submit data for purposes of measuring health care quality, and 
links the quality data submission to the annual applicable percentage 
increase. Also, section 1886(d)(2)(D) of the Act requires that HH 
services furnished in a rural area for episodes and visits ending on or 
after April 1, 2010, and before January 1, 2016, receive an increase of 
3 percent the payment amount

[[Page 38414]]

otherwise made under section 1895 of the Act.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017.

C. Overall Impact

    The update set forth in this rule applies to Medicare payments 
under HH PPS in CY 2015. Accordingly, the following analysis describes 
the impact in CY 2015 only. We estimate that the net impact of the 
proposals in this rule is approximately $58 million in decreased 
payments to HHAs in CY 2015. We applied a wage index budget neutrality 
factor and a case-mix weights budget neutrality factor to the rates as 
discussed in section III.D.4. of this proposed rule; therefore, the 
estimated impact of the 2015 wage index proposed in section III.D.3. of 
this proposed rule and the recalibration of the case-mix weights for 
2015 proposed in section III.C. of this proposed rule is zero. The -$58 
million impact reflects the distributional effects of the 2.2 percent 
HH payment update percentage ($427 million increase) and the effects of 
the second year of the four-year phase-in of the rebasing adjustments 
to the national, standardized 60-day episode payment amount, the 
national per-visit payment rates, and the NRS conversion factor for an 
impact of -2.5 percent ($485 million decrease). The $58 million in 
decreased payments is reflected in the last column of the first row in 
Table 34 as a 0.3 percent decrease in expenditures when comparing CY 
2014 payments to estimated CY 2015 payments.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, 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 $35.5 million in any one year. 
For the purposes of the RFA, we estimate that almost all HHAs are small 
entities as that term is used in the RFA. Individuals and states are 
not included in the definition of a small entity. The economic impact 
assessment is based on estimated Medicare payments (revenues) and HHS's 
practice in interpreting the RFA is to consider effects economically 
``significant'' only if greater than 5 percent of providers reach a 
threshold of 3 to 5 percent or more of total revenue or total costs. 
The majority of HHAs' visits are Medicare-paid visits and therefore the 
majority of HHAs' revenue consists of Medicare payments. Based on our 
analysis, we conclude that the policies proposed in this rule will not 
result in an estimated total impact of 3 to 5 percent or more on 
Medicare revenue for greater than 5 percent of HHAs. Therefore, the 
Secretary has determined that this proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
Further detail is presented in Table 34, by HHA type and location.
    Executive Order 13563 specifies, to the extent practicable, 
agencies should assess the costs of cumulative regulations. However, 
given potential utilization pattern changes, wage index changes, 
changes to the market basket forecasts, and unknowns regarding future 
policy changes, we believe it is neither practicable nor appropriate to 
forecast the cumulative impact of the rebasing adjustments on Medicare 
payments to HHAs for future years at this time. Changes to the Medicare 
program may continue to be made as a result of the Affordable Care Act, 
or new statutory provisions. 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 would make it difficult to predict accurately the full scope of 
the impact upon HHAs for future years beyond CY 2015. We note that the 
rebasing adjustments to the national, standardized 60-day episode 
payment rate and the national per-visit rates are capped at the 
statutory limit of 3.5 percent of the CY 2010 amounts (as described in 
the preamble in section II.C. of this proposed rule) for each year, 
2014 through 2017. The NRS rebasing adjustment will be -2.82 percent in 
each year, 2014 through 2017.
    In addition, section 1102(b) of the Act requires us to prepare a 
RIA 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 of RFA. 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 rule will 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 one year of 
$100 million in 1995 dollars, updated annually for inflation. In 2014, 
that threshold is approximately $141 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 $141 million or more in CY 
2015.

D. Detailed Economic Analysis

    This proposed rule sets forth updates for CY 2015 to the HH PPS 
rates contained in the CY 2014 HH PPS final rule (78 FR 72304 through 
72308). 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 variables as number of visits or 
case-mix.
    This analysis incorporates the latest estimates of growth in 
service use and payments under the Medicare HH benefit, primarily on 
preliminary Medicare claims from 2013. 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 Affordable Care Act, or new 
statutory provisions. 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.

[[Page 38415]]

    Table 34 represents how HHA revenues are likely to be affected by 
the policy changes proposed in this rule. For this analysis, we used an 
analytic file with linked CY 2013 HH claims data (as of December 31, 
2013) for dates of service that ended on or before December 31, 2013, 
and OASIS assessments. The first column of Table 34 classifies HHAs 
according to a number of characteristics including provider type, 
geographic region, and urban and rural locations. The third column 
shows the payment effects of proposed CY 2015 wage index. The fourth 
column shows the payment effects of the proposed CY 2015 case-mix 
weights. The fifth column shows the effects of the rebasing adjustments 
to the national, standardized 60-day episode payment rate, the national 
per-visit payment rates, and NRS conversion factor. The sixth column 
shows the effects of the CY 2015 home health payment update percentage 
(the home health market basket update adjusted for multifactor 
productivity as discussed in section III.D.1. of this proposed rule). 
The last column shows the payment effects of all the proposed policies.
    Overall, HHAs are anticipated to experience a 0.3 percent decrease 
in payment in CY 2015, with freestanding HHAs anticipated to experience 
a 0.3 percent decrease in payments while facility-based HHAs and non-
profit HHAs are anticipated to experience a 0.4 percent and a 0.6 
percent increase in payments, respectively. Government-owned HHAs are 
anticipated to experience a 0.3 percent decrease in payments and 
proprietary HHAs are anticipated to experience a 0.6 percent decrease 
in payments. Rural HHAs are anticipated to experience a decrease in 
payments of 0.5 percent with rural freestanding government-owned HHAs 
and rural facility-based proprietary HHAs both estimated to experience 
a -1.1 percent decrease in payments. In contrast, rural facility-based 
non-profit HHAs are estimated to experience a 0.5 percent increase in 
payments. Urban HHAs are anticipated to experience a decrease in 
payments of 0.2 percent. Urban freestanding proprietary HHAs estimated 
to experience a 0.5 percent decrease in payments, whereas urban 
freestanding and facility-based non-profit HHAs are estimated to 
experience a 0.6 percent increase in payments for CY 2015. The overall 
impact in the South is estimated to be a 0.9 percent decrease in 
payments whereas the overall impact in the North is estimated to be a 
1.1 percent increase in payments. The West South Central census region 
is estimated to receive a 2.4 percent decrease in payments for CY 2015; 
however, in contrast, the New England census region is estimated to 
receive a 1.5 percent increase in payments for CY 2015. Finally, HHAs 
with less than 100 first episodes are anticipated to experience a 0.6 
percent decrease in payments compared to a 0.00 percent decrease in 
payments in CY 2015 for HHAs with 1,000 or more first episodes. A 
substantial amount of the variation in the estimated impacts of the 
proposals in this proposed rule in different areas of the country can 
be attributed to variations in the CY 2015 wage index used to adjust 
payments under the HH PPS and to the effects of the recalibration of 
the case-mix weights. Instances where the impact, due to the rebasing 
adjustments, is less than others can be attributed to differences in 
the incidence of outlier payments and LUPA episodes, which are paid 
using the national per-visit payment rates that are subject to payment 
increases due to the rebasing adjustments. We note that some individual 
HHAs within the same group may experience different impacts on payments 
than others due to the distributional impact of the CY 2015 wage index, 
the extent to which HHAs had episodes in case-mix groups where the 
case-mix weight decreased for CY 2015 relative to CY 2014, and the 
degree of Medicare utilization.
    For CY 2015, the average impact for all HHAs due to the effects of 
rebasing is an estimated 2.5 percent decrease in payments. The overall 
impact for all HHAs as a result of this proposed rule is a decrease of 
approximately 0.3 percent in estimated total payments from CY 2014 to 
CY 2015.

        Table 34--Estimated Home Health Agency Impacts by Facility Type and Area of the Country, CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                         CY 2015 HH
                                                 Proposed CY    CY 2015                   payment     Impact of
                                     Number of    2015 wage     case-mix     Rebasing      update    all CY 2015
                                      agencies    index \1\   weights \2\      \3\       percentage    policies
                                                  (percent)    (percent)    (percent)       \4\       (percent)
                                                                                         (percent)
----------------------------------------------------------------------------------------------------------------
All Agencies......................       11,521          0.0          0.0         -2.5          2.2         -0.3
Facility Type and Control:
    Free-Standing/Other Vol/NP....        1,031          0.4          0.3         -2.3          2.2          0.6
    Free-Standing/Other                   8,957         -0.1         -0.1         -2.5          2.2         -0.6
     Proprietary..................
    Free-Standing/Other Government          398          0.1         -0.3         -2.4          2.2         -0.4
    Facility-Based Vol/NP.........          788          0.2          0.6         -2.4          2.2          0.6
    Facility-Based Proprietary....          113         -0.4          0.5         -2.5          2.2         -0.2
    Facility-Based Government.....          234         -0.1          0.2         -2.4          2.2         -0.2
                                   -----------------------------------------------------------------------------
        Subtotal: Freestanding....       10,386          0.0         -0.1         -2.5          2.2         -0.3
        Subtotal: Facility-based..        1,135          0.2          0.5         -2.4          2.2          0.4
        Subtotal: Vol/NP..........        1,819          0.3          0.4         -2.4          2.2          0.6
        Subtotal: Proprietary.....        9,070         -0.1         -0.1         -2.5          2.2         -0.6
        Subtotal: Government......          632          0.0         -0.1         -2.4          2.2         -0.3
Facility Type and Control: Rural:
    Free-Standing/Other Vol/NP....          193         -0.3          0.1         -2.4          2.2         -0.4
    Free-Standing/Other                     136          0.4         -0.1         -2.5          2.2          0.0
     Proprietary..................
    Free-Standing/Other Government          459          0.0         -0.9         -2.4          2.2         -1.1
    Facility-Based Vol/NP.........          255          0.4          0.4         -2.5          2.2          0.5
    Facility-Based Proprietary....           31          0.0         -0.8         -2.5          2.2         -1.1
    Facility-Based Government.....          138          0.1         -0.1         -2.4          2.2         -0.1
Facility Type and Control: Urban:
    Free-Standing/Other Vol/NP....          891          0.4          0.4         -2.3          2.2          0.6
    Free-Standing/Other                   8,644         -0.1         -0.1         -2.5          2.2         -0.5
     Proprietary..................
    Free-Standing/Other Government          158          0.3         -0.3         -2.5          2.2         -0.3
    Facility-Based Vol/NP.........          533          0.2          0.6         -2.4          2.2          0.6

[[Page 38416]]

 
    Facility-Based Proprietary....           82         -0.5          0.7         -2.4          2.2          0.0
    Facility-Based Government.....           96         -0.2          0.3         -2.5          2.2         -0.2
Facility Location: Urban or Rural:  ...........  ...........  ...........  ...........  ...........          0.0
    Rural.........................        1,117          0.1         -0.3         -2.4          2.2         -0.5
    Urban.........................       10,404         -0.0          0.0         -2.5          2.2         -0.2
Facility Location: Region of the
 Country:
    North.........................          857          0.7          0.4         -2.2          2.2          1.1
    Midwest.......................        3,095         -0.1          0.5         -2.5          2.2          0.1
    South.........................        5,613         -0.3         -0.4         -2.5          2.2         -0.9
    West..........................        1,916          0.3          0.2         -2.4          2.2          0.3
    Other.........................           40          0.2         -0.4         -2.5          2.2         -0.5
Facility Location: Region of the
 Country (Census Region):
    New England...................          336          1.1          0.5         -2.3          2.2          1.5
    Mid Atlantic..................          521          0.4          0.4         -2.2          2.2          0.8
    East North Central............        2,358         -0.1          0.4         -2.5          2.2         -0.1
    West North Central............          737          0.2          0.9         -2.5          2.2          0.8
    South Atlantic................        2,028         -0.3          1.1         -2.5          2.2          0.5
    East South Central............          438         -0.7         -0.3         -2.6          2.2         -1.4
    West South Central............        3,147         -0.2         -2.0         -2.5          2.2         -2.4
    Mountain......................          679         -0.1          0.9         -2.4          2.2          0.7
    Pacific.......................        1,237          0.5         -0.1         -2.4          2.2          0.1
Facility Size (Number of 1st
 Episodes):
    50 blend would best 
mitigate the negative payment impacts associated with the 
implementation of the proposed new OMB delineations. While we 
considered alternatives to the 50/50 blend, we believe this type of 
split balances the increases and decreases in wage index values 
associated with this proposal, as well as provides a readily 
understandable calculation for HHAs.
    Next, we considered whether or not the blended wage index should be 
used for all HHAs or for only a subset of HHAs, such as those HHAs that 
would experience a decrease in their respective wage index values due 
to implementation of the revised OMB delineations. As required in 
section 1895(b)(3) of the Act, the wage index adjustment must be 
implemented in a budget-neutral manner. As such, if we were to apply 
the transition policy only to those HHAs that would experience a 
decrease in their respective wage index values due to implementation of 
the revised OMB delineations, the wage index budget neutrality factor, 
discussed in section III.D.4, would result in reduced base rates for 
all HHAs as compared to the budget neutrality factor that results from 
applying the blended wage index to all HHAs.
    For the reasons discussed above, we believe that our proposal to 
use a one-year transition with a blended wage index in CY 2015 
appropriately balances the interests of all HHAs and would best achieve 
our objective of providing relief to negatively impacted HHAs.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017. Therefore, in the CY 2014 HH PPS final 
rule (78 FR 77256), we finalized rebasing adjustments to the national, 
standardized 60-day episode payment amount, the national per-visit 
rates and the NRS conversion factor. As we noted in the CY 2014 HH PPS 
final rule, because section 3131(a) of the Affordable Care Act requires 
a four year phase-in of rebasing, in equal increments, to start in CY 
2014 and be fully implemented in CY 2017, we do not have the discretion 
to delay, change, or eliminate the rebasing adjustments once we have 
determined that rebasing is necessary (78 FR 72283).
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2015 be increased by a factor equal 
to the applicable HH market basket update for those HHAs that submit 
quality data as required by the Secretary. For CY 2015, section 3401(e) 
of the Affordable Care Act, requires that, in CY 2015 (and in 
subsequent calendar years), the market basket update under the HHA 
prospective payment system, as described in section 1895(b)(3)(B) of 
the Act, be annually adjusted by changes in economy-wide productivity. 
Beginning in CY 2015, section 1895(b)(3)(B)(vi)(I) of the Act, as 
amended by section 3401(e) of the Affordable Care Act, requires the 
application of the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act to the HHA PPS for CY 2015 and each 
subsequent CY. The -0.4 percentage point productivity adjustment to the 
proposed CY 2015 home health market basket update (2.6 percent), is 
discussed in the preamble of this rule and is not discretionary as it 
is a requirement in section 1895(b)(3)(B)(vi)(I) of the Act (as amended 
by the Affordable Care Act).
    We invite comments on the alternatives discussed in this analysis.

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 35, we have 
prepared an accounting statement showing the classification of the 
transfers and costs associated with the provisions of this proposed 
rule. Table 35 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. Table 35 also reflects the estimated change in costs and 
burden for certifying physicians and HHAs as a result of the proposed 
changes to the face-to-face encounter requirements in section III.B. We 
estimate a net reduction in burden for certifying physicians of 192,765 
hours or $21,796,330 (see section IV of this proposed rule). In 
addition, Table 35 reflects our estimate of a one-time burden for HHAs 
to revise the certification form of 5,761 hours or $245,397 as 
described in section IV. of this proposed rule.

[[Page 38418]]

  Table 35--Accounting Statement: Classification of Estimated Transfers
                 and Costs, From the CYs 2014 to 2015 *
------------------------------------------------------------------------
            Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.  -$58 million.
From Whom to Whom?.............  Federal Government to HHAs.
------------------------------------------------------------------------
            Category                              Costs
------------------------------------------------------------------------
Annualized Monetized Net         -$21.55 million.
 Reduction in Burden for
 Physicians Certifying Patient
 Eligibility for Home Health
 Services & HHAs for
 Certification Form Revision.
------------------------------------------------------------------------
* The estimates reflect 2014 dollars.

G. Conclusion

    In conclusion, we estimate that the net impact of the proposals in 
this rule is a decrease in Medicare payments to HHAs of $58 million for 
CY 2015. The $58 million decrease in estimated payments for CY 2015 
reflects the distributional effects of the 2.2 percent CY 2015 HH 
payment update percentage ($427 million increase) and the second year 
of the 4-year phase-in of the rebasing adjustments required by section 
3131(a) of the Affordable Care Act ($485 million decrease). Also, 
starting in CY 2015, certifying physicians are estimated to incur a net 
reduction in burden costs of $21,796,330 and HHAs are expected to incur 
a one-time increase in burden costs to revise the certification form of 
$245,397 as a result of the proposal to eliminate the face-to-face 
encounter narrative requirement. This analysis, together with the 
remainder of this preamble, provides an initial Regulatory Flexibility 
Analysis.

VII. Federalism Analysis

    Executive Order 13132 on Federalism (August 4, 1999) establishes 
certain requirements that an agency must meet when it promulgates a 
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 will not have substantial direct effects on the rights, roles, and 
responsibilities of states, local or tribal governments.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

42 CFR Part 424

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

42 CFR Part 484

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

42 CFR Part 488

    Administrative practice and procedure, Health facilities, Medicare, 
and Reporting and recordkeeping requirements.

42 CFR Part 498

    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

0
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).

0
2. Section 409.44 is amended by--
0
A. Removing ``intermediary's'' from paragraph (a) and adding ``Medicare 
Administrative Contractor's'' in its place.
0
B. Removing ``30'' from paragraph (c)(2)(i)(B) adding ``14 calendar'' 
in its place each time it appears.
0
C. Removing paragraphs (c)(2)(i)(C) and (D).
0
D. Redesignating paragraphs (c)(2)(i)(E) through (H) as paragraphs 
(c)(2)(i)(C) through (F).
0
E. Removing ``(c)(2)(i)(A), (B), (C), and (D) of this section,'' from 
newly redesignated paragraph (c)(2)(i)(C) introductory text and adding 
``(c)(2)(i)(A) and (B) of this section,'' in its place.
0
F. Removing ``(c)(2)(i)(E)(2) and (c)(2)(i)(E)(3) of this section are 
met,'' from newly redesignated paragraph (c)(2)(i)(C)(1) and adding 
``(c)(2)(i)(C)(2) and (c)(2)(i)(C)(3) of this section are met,'' in its 
place.
0
G. Removing ``Sec.  409.44(c)(2)(i)(H) of this section.'' from newly 
redesignated paragraph (c)(2)(i)(C)(3) and adding ``Sec.  
409.44(c)(2)(i)(F) of this section.'' in its place.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
3. 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).

0
4. Section 424.22 is amended by--
0
A. Revising paragraphs (a) and (b) and adding new paragraph (c).
0
B. Removing ``(d)(i)'' from paragraph (d)(2) and adding ``(d)(1)'' in 
its place.
    The revisions read as follows:

Sec.  424.22  Requirements for home health services.

* * * * *
    (a) Certification--(1) Content of certification. As a condition for 
payment of home health services under Medicare Part A or Medicare Part 
B, a physician must certify the patient's eligibility for the home 
health benefit, as outlined in 1814(a)(2)(C) and 1835(a)(2)(A) of the 
Act, as follows in paragraphs (a)(1)(i) through (v) of this section. 
The patient's medical record, as specified in paragraph (c) of this 
section, must support the certification of eligibility as outlined in 
paragraph (a)(1)(i) through (v) of this section.
    (i) The individual needs or needed intermittent skilled nursing 
care, or physical therapy or speech-language pathology services as 
defined in Sec.  409.42(c) of this chapter. If a patient's underlying 
condition or complication requires a registered nurse to ensure that 
essential non-skilled care is achieving its purpose, and necessitates a 
registered nurse be involved in the development, management, and 
evaluation of a patient's care plan, the physician will include a brief 
narrative describing the clinical justification of this need. If the 
narrative is part of the certification form, then the narrative must be 
located immediately prior to the physician's signature. If the 
narrative exists as an addendum to the certification form, in

[[Page 38419]]

addition to the physician's signature on the certification form, the 
physician must sign immediately following the narrative in the 
addendum.
    (ii) Home health services are or were required because the 
individual is or was confined to the home, as defined in sections 
1835(a) and 1814(a) of the Act, except when receiving outpatient 
services.
    (iii) A plan for furnishing the services has been established and 
will be or was periodically reviewed by a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine, and who is not precluded 
from performing this function under paragraph (d) of this section. (A 
doctor of podiatric medicine may perform only plan of treatment 
functions that are consistent with the functions he or she is 
authorized to perform under State law.)
    (iv) The services will be or were furnished while the individual 
was under the care of a physician who is a doctor of medicine, 
osteopathy, or podiatric medicine.
    (v) A face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care and was performed by a 
physician or allowed non-physician practitioner as defined in paragraph 
(a)(1)(v)(A) of this section. The certifying physician must also 
document the date of the encounter as part of the certification.
    (A) The face-to-face encounter must be performed by one of the 
following:
    (1) The certifying physician himself or herself.
    (2) A physician, with privileges, who cared for the patient in an 
acute or post-acute care facility from which the patient was directly 
admitted to home health.
    (3) A nurse practitioner or a clinical nurse specialist (as those 
terms are defined in section 1861(aa)(5) of the Act) who is working in 
accordance with State law and in collaboration with the certifying 
physician or in collaboration with an acute or post-acute care 
physician with privileges who cared for the patient in the acute or 
post-acute care facility from which the patient was directly admitted 
to home health.
    (4) A certified nurse midwife (as defined in section 1861(gg) of 
the Act) as authorized by State law, under the supervision of the 
certifying physician or under the supervision of an acute or post-acute 
care physician with privileges who cared for the patient in the acute 
or post-acute care facility from which the patient was directly 
admitted to home health.
    (5) A physician assistant (as defined in section 1861(aa)(5) of the 
Act) under the supervision of the certifying physician or under the 
supervision of an acute or post-acute care physician with privileges 
who cared for the patient in the acute or post-acute care facility from 
which the patient was directly admitted to home health.
    (B) 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.
    (1) Timing and 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.
    (2) [Reserved]
    (b) Recertification--(1) Timing and signature of recertification. 
Recertification is required at least every 60 days when there is a need 
for continuous home health care after an initial 60-day episode. 
Recertification should occur at the time the plan of care is reviewed, 
and must be signed and dated by the physician who reviews the plan of 
care. Recertification is required at least every 60 days unless there 
is a--
    (i) Beneficiary elected transfer; or
    (ii) Discharge with goals met and/or no expectation of a return to 
home health care.
    (2) Content and basis of recertification. The recertification 
statement must indicate the continuing need for services and estimate 
how much longer the services will be required. Need for occupational 
therapy may be the basis for continuing services that were initiated 
because the individual needed skilled nursing care or physical therapy 
or speech therapy. If a patient's underlying condition or complication 
requires a registered nurse to ensure that essential non-skilled care 
is achieving its purpose, and necessitates a registered nurse be 
involved in the development, management, and evaluation of a patient's 
care plan, the physician will include a brief narrative describing the 
clinical justification of this need. If the narrative is part of the 
recertification form, then the narrative must be located immediately 
prior to the physician's signature. If the narrative exists as an 
addendum to the recertification form, in addition to the physician's 
signature on the recertification form, the physician must sign 
immediately following the narrative in the addendum.
    (c) Determining patient eligibility for Medicare home health 
services. In determining whether a patient is or was eligible to 
receive services under the Medicare home health benefit at the start of 
home health care, only the medical record for the patient from the 
certifying physician or the acute/post-acute care facility (if the 
patient in that setting was directly admitted to home health) used to 
support the physician's certification of patient eligibility, as 
described in paragraphs (a)(1) and (b) of this section, will be 
reviewed. If the patient's medical record used in certifying 
eligibility is not sufficient to demonstrate that the patient is or was 
eligible to receive services under the Medicare home health benefit, 
payment will not be rendered for home health services provided.
* * * * *

PART 484--HOME HEALTH SERVICES

0
5. 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)) unless otherwise indicated.

0
6. Section 484.4 is amended by revising the definition of ``speech-
language pathologist'' to read as follows:

Sec.  484.4  Personnel qualifications.

* * * * *
    Speech-language pathologist. A person who has a master's or 
doctoral degree in speech-language pathology, and who meets either of 
the following requirements:
    (a) Is licensed as a speech-language pathologist by the State in 
which the individual furnishes such services; or
    (b) In the case of an individual who furnishes services in a State 
which does not license speech-language pathologists:
    (1) Has successfully completed 350 clock hours of supervised 
clinical practicum (or is in the process of accumulating such 
supervised clinical experience);
    (2) Performed not less than 9 months of supervised full-time 
speech-language pathology services after obtaining a master's or 
doctoral degree in speech-language pathology or a related field; and
    (3) Successfully completed a national examination in speech-
language pathology approved by the Secretary.
0
7. Section 484.250 is amended by revising paragraph (a)(1) to read as 
follows:

Sec.  484.250  Patient assessment data.

    (a) * * *

[[Page 38420]]

    (1) The OASIS data described at Sec.  484.55(b)(1) and (d)(1) of 
this part for CMS to administer the payment rate methodologies 
described in Sec. Sec.  484.215, 484.230, and 484.235 of this subpart, 
and to meet the quality reporting requirements of section 
1895(b)(3)(B)(v) of the Act.
* * * * *

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
8. The authority citation for part 488 continues to read as follows:

    Authority: Secs. 1102, 1128I and 1871 of the Social Security 
Act, unless otherwise noted (42 U.S.C. 1302, 1320a-7j, and 1395hh); 
Pub. L. 110-149, 121 Stat. 1819.

0
9. Section 488.845 is amended by adding paragraph (h) to read as 
follows:

Sec.  488.845  Civil money penalties.

* * * * *
    (h) Review of the penalty. When an administrative law judge or 
state hearing officer (or higher administrative review authority) finds 
that the basis for imposing a civil monetary penalty exists, as 
specified in this part, the administrative law judge, State hearing 
officer (or higher administrative review authority) may not--
    (1) Set a penalty of zero or reduce a penalty to zero;
    (2) Review the exercise of discretion by CMS to impose a civil 
monetary penalty; and
    (3) Consider any factors in reviewing the amount of the penalty 
other than those specified in paragraph (b) of this section.

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTCIPATION OF ICFS/IID AND CERTAIN NFS IN THE MEDICAID 
PROGRAM

0
10. The authority citation for part 498 continues to read as follows:

    Authority: Secs. 1102, 1128I and 1871 of the Social Security Act 
(42 U.S.C. 1302, 1320a-7j, and 1395hh).

0
11. Section 498.3 is amended by revising paragraphs (b)(13) and 
(b)(14)(i) to read as follows:

Sec.  498.3  Scope and applicability.

* * * * *
    (b) * * *
    (13) Except as provided at paragraph (d)(12) of this section for 
SNFs, NFs and HHAs, the finding of noncompliance leading to the 
imposition of enforcement actions specified in Sec.  488.406 or Sec.  
488.820 of this chapter, but not the determination as to which sanction 
was imposed. The scope of review on the imposition if a civil money 
penalty is specified in Sec.  488.438(e) and Sec.  488.845(h) of this 
chapter.
    (14) * * *
    (i) The range of civil money penalty amounts that CMS could collect 
(for SNFs or NFs, the scope of review during a hearing on the 
imposition of a civil money penalty is set forth in Sec.  488.438(e) of 
this chapter and for HHAs, the scope of review during a hearing on the 
imposition of a civil money penalty is set forth in Sec.  488.845(h) of 
this chapter); or
* * * * *
0
12. Section 498.60 is amended by revising paragraphs (c)(1) and (c)(2) 
to read as follows:

Sec.  498.60  Conduct of hearing.

* * * * *
    (c) * * *
    (1) The scope of review is as specified in Sec.  488.438(e) and 
Sec.  488.845(h) of this chapter; and
    (2) CMS' determination as to the level of noncompliance of a SNF, 
NF or HHA must be upheld unless it is clearly erroneous.

    Dated: June 16, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 19, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-15736 Filed 7-1-14; 4:15 pm]
BILLING CODE 4120-01-P
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