40988 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 409, 424, and 484 

[CMS–1353–P] 

RIN 0938–AQ30 

Medicare Program; Home Health 

Prospective Payment System Rate 

Update for Calendar Year 2012 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the Home Health Prospective 

Payment System (HH PPS) rates, 

including: The national standardized 

60-day episode rates, the national pervisit rates, the low utilization payment 

amount (LUPA), and outlier payments 

under the Medicare prospective 

payment system for home health 

agencies effective January 1, 2012. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on September 6, 2011. 

ADDRESSES: In commenting, please refer 

to file code CMS–1353–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–1353–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–1353–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: 

Elizabeth Goldstein, (410) 786–6665, for 

CAHPS issues. 

Mary Pratt, (410) 786–6867, for quality 

issues. 

Randy Throndset, (410)786–0131 

(overall HH PPS). 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 

8:30 a.m. to 4 p.m. EST. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Background 

A. Statutory Background 

B. System for Payment of Home Health 

Services 

C. Updates to the HH PPS 

II. Provisions of the Proposed Rule 

A. Case-Mix Measurement 

1. Independent Review of the Models To 

Assess Nominal Case-Mix Growth 

2. Revised Version of Our Models To 

Assess Nominal Case-Mix Growth 

B. Case-Mix Revision to the Case-Mix 

Weights 

1. Hypertension Diagnosis Coding Under 

the HH PPS 

2. Proposal for Revision of Case-Mix 

Weights 

C. Outlier Policy 

1. Background 

2. Regulatory Update 

3. Statutory Update 

4. Loss-Sharing Ratio and Fixed Dollar 

Loss (FDL) Ratio 

5. Outlier Relationship to the HH Payment 

Study 

D. CY 2012 Rate Update 

1. Home Health Market Basket Update 

2. Home Health Care Quality Improvement 

a. Background and Quality Reporting 

Requirements 

b. OASIS Data 

c. Claims Data, Proposed Requirements and 

Outcome Measure Change 

d. Home Health Care CAHPS Survey 

(HHCAHPS) 

3. Home Health Wage Index 

4. Proposed CY 2012 Annual Payment 

Update 

a. National Standardized 60-Day Episode 

Rate 

b. Proposed Updated CY 2012 National 

Standardized 60-Day Episode Payment 

Rate 

c. National Per-Visit Rates Used To Pay 

LUPAs and Compute Imputed Costs 

Used in Outlier Calculations 

d. LUPA Add-on Payment Amount Update 

e. Nonroutine Medical Supply Conversion 

Factor Update 

5. Rural Add-On 

E. Therapy Corrections and Clarification 

F. Home Health Face-to-Face Encounter 

G. Payment Reform: Home Health Study 

and Report 

H. International Classification of Diseases 

10th Edition (ICD–10) Coding 

I. Clarification to Benefit Policy Manual 

Language on ‘‘Confined to the Home’’ 

Definition 

III. Collection of Information Requirements 

IV. Response to Comments 

V. Regulatory Impact Analysis 

VI. 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 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
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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, Public 

Law 105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Public Law 106–113 

CAD Coronary Artery Disease 

CAH Critical Access Hospital 

CBSA Core-Based Statistical Area 

CHF Congestive Heart Failure 

CMI Case-Mix Index 

CMS Centers for Medicare and Medicaid 

Services 

CoPs Conditions of Participation 

COPD Chronic Obstructive Pulmonary 

Disease 

CVD Cardiovascular Disease 

DM Diabetes Mellitus 

DRA Deficit Reduction Act of 2005, Public 

Law 109–171, enacted February 8, 2006 

FDL Fixed Dollar Loss 

FI Fiscal Intermediaries 

FR Federal Register 

FY Fiscal Year 

HCC Hierarchical Condition Categories 

HCIS Health Care Information System 

HHCAHPS Home Health Care Consumer 

Assessment of Healthcare Providers and 

Systems Survey 

HH PPS Home Health Prospective Payment 

System 

HHAs Home Health Agencies 

HHRG Home Health Resource Group 

HIPPS Health Insurance Prospective 

Payment System 

IH Inpatient Hospitalization 

IRF Inpatient Rehabilitation Facility 

LTCH Long-Term Care Hospital 

LUPA Low Utilization Payment Amount 

MEPS Medical Expenditures Panel Survey 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Public Law 108–173, enacted 

December 8, 2003 

MSA Metropolitan Statistical Areas 

MSS Medical Social Services 

NRS Non-Routine Supplies 

OBRA Omnibus Reconciliation Act of 1981, 

Public Law 97–35, enacted August 13, 

1981 

OCESAA Omnibus Consolidated and 

Emergency Supplemental Appropriations 

Act, Public Law 105–277, enacted October 

21, 1998 

OES Occupational Employment Statistics 

OIG Office of Inspector General 

OT Occupational Therapy 

OMB Office of Management and Budget 

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, Public Law 

96–354 

RHHIs Regional Home Health 

Intermediaries 

RIA Regulatory Impact Analysis 

SLP Speech Language Pathology Therapy 

SNF Skilled Nursing Facility 

UMRA Unfunded Mandates Reform Act of 

1995 

I. 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 home 

health (HH) services. Section 4603 of 

the BBA mandated the development of 

the home health prospective payment 

system (HH PPS). Until the 

implementation of a HH PPS on October 

1, 2000, home health agencies (HHAs) 

received payment under a retrospective 

reimbursement system. 

Section 4603(a) of the BBA mandated 

the development of a HH PPS for all 

Medicare-covered 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 

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 wageadjustment 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 

because of unusual variations in the 

type or amount of medically necessary 

care. Section 3131(b) 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 

fiscal year (FY) or year may not exceed 

2.5 percent of total payments projected 

or estimated. The provision also makes 

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 2 percentage points. 

In the November 9, 2006 Federal 

Register (71 FR 65884, 65935), we 

published a final rule to implement the 


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pay-for-reporting requirement of the 

DRA, which was codified at 

§ 484.225(h) and (i) in accordance with 

the statute. 

Section 421(a) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173, enacted December 8, 2003) 

provides an increase of 3 percent of the 

payment amount otherwise made under 

section 1886(d)(2)(D) of the Act for HH 

services furnished in a rural area with 

respect to episodes and visits ending on 

or after April 1, 2010, and before 

January 1, 2016. 

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 medical supplies (NRS), is 

no longer part of the national 

standardized 60-day episode rate and is 

computed by multiplying the relative 

weight for a particular NRS severity 

level by the NRS conversion factor (See 

section 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 casemix classification 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 based on a national pervisit rate, adjusted by 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 Medicare prospective 

payment system for HHAs for CY 2008. 

The CY 2008 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. The case-mix represented the 

variations in conditions of the patient 

population served by the HHAs. 

Subsequently, a more detailed analysis 

was performed on the 12.78 percent 

increase in case-mix to evaluate if any 

portion of the increase was associated 

with a change in the actual clinical 

condition of HH patients. We 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 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 casemix that were not related to an 

underlying change in patient health 

status, we implemented a reduction 

over 4 years in the national 

standardized 60-day episode payment 

rates and the NRS conversion factor. 

That reduction was to be 2.75 percent 

per year for 3 years beginning in CY 

2008 and 2.71 percent for the fourth 

year in CY 2011. 

For CY 2011, we published the 

November 17, 2010 final rule (75 FR 

70372) (hereinafter referred to as the CY 

2011 HH PPS final rule) that set forth 

the update to the 60-day national 

episode rates and the national per-visit 

rates under the Medicare prospective 

payment system for HH services. 

As discussed in the CY 2011 rule, our 

analysis indicated that there was a 19.40 

percent increase in overall case-mix 

from 2000 to 2008 and that only 10.07 

percent of that overall observed casemix percentage increase was due to real 

case-mix change. As a result of our 

analysis, we identified a 17.45 percent 

nominal increase in case-mix. To fully 

account for the 17.45 percent nominal 

case-mix growth which was identified 

from 2000 to 2008, we proposed 3.79 

percent payment reductions in both CY 

2011 and CY 2012. However, we 

deferred finalizing a payment reduction 

for CY 2012 until a further study of the 

case-mix data was completed. 

Independent review of the case-mix 

model has been conducted and the 

results are discussed in section II.A. of 

this proposed rule. 

II. Provisions of the Proposed Rule 

A. Case-Mix Measurement 

Every year, since the HH PPS CY 2008 

proposed rule, we have stated in HH 

PPS rulemaking that we would continue 

to monitor case-mix changes in the HH 

PPS and to update our analysis to 

measure change in case-mix, both real 

changes in case-mix and changes which 

are unrelated to changes in patient 

acuity (nominal). We have continued to 

monitor case-mix changes, and our 

latest analysis continues to support the 

need to make payment adjustments to 

account for nominal case-mix growth. 

Before measuring nominal case-mix 

growth, we examined the total case-mix 

growth every year from 2000 to 2009. 

Our latest analysis indicates that there 

was a large 1-year increase, 2.6 percent, 

in the average case-mix weight from 

2008 to 2009. Specifically, the 2008 

average case-mix was 1.3095 and the 

2009 average case-mix was 1.3435. It 

should be noted that the average casemix for 2008 is slightly different than 

the average case-mix for 2008 that was 

reported in the CY 2011 HH PPS final 

rule. The difference in case-mix is due 

to the increased availability of data and 

inclusion of more episodes in the 2008 

sample. As we did last year, we sought 

to describe how much of the 1-year 

change was due to a change in the 

distribution of episodes according to the 

number of therapy visits and how much 

was due to a change in the average casemix weight at each level of therapy 

visits. 

The method we used first holds the 

average case-mix weight constant (at the 

2008 values) at each level of therapy 

visits, and measures the effect of the 

shift to the new distribution of therapy 

visits. The method then holds the 

distribution of therapy visits constant 

(at the 2008 distribution) and measures 

the effect of the change in average casemix weight at each level of therapy 

visits. The results were that 0.0254 or 

about 75 percent (0.0254/0.0340 = 0.75) 

of the total change in average case-mix 

weights from 2008 to 2009 was due to 

the shift in the distribution of therapy 

visits per episode. The remaining 0.0086 

or about 25 percent (0.0086/0.0340 = 

0.25) in overall average case-mix weight 

from 2008 to 2009 was due to an 

increase in the average case-mix weight 

at each level of therapy visits per 

episode. 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
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The decomposition suggests that 

agencies in 2009 were still responding 

to the 2008 refinements in terms of both 

coding practices and the definition of 

therapy treatment plans for patients. 

This analysis by itself, however, does 

not isolate real case-mix change within 

total case-mix change. We discuss our 

latest analysis of real and nominal casemix change in the remainder of this 

section. 

Section 1895(b)(3)(B)(iv) of the Act 

gives CMS the authority to implement 

payment reductions for nominal casemix growth, changes in case-mix that 

are not related to actual changes in 

patient characteristics over time. 

Nominal case-mix growth was assessed 

and reported in CY 2008 and CY 2011 

rulemaking, and payment reductions to 

the base rate were implemented to 

account for the nominal case-mix 

growth observed. 

In CY 2008 rulemaking, to assess 

nominal case-mix growth, we first 

estimated real case-mix growth, changes 

in case-mix which are related to changes 

in patient characteristics, using a 

regression-based, predictive model of 

individual case-mix weights. The 

predictive model contained measures of 

patients’ demographic characteristics, 

clinical status, inpatient history, and 

Part A Medicare costs in the time period 

leading up to their home health 

episodes. The regression coefficients for 

the predictive model were developed 

using 2000 as a base year and were 

applied to episodes from 2005, allowing 

estimation of the change in real casemix. We then determined the nominal 

case-mix growth from 2000 to 2005 

using the regression model-predicted 

real case-mix change and the total casemix change for the time period of 

interest. 

In 2000, the average case-mix was 

1.0960 and in 2005, the average casemix was 1.2361. As such, the total 

measure of case-mix change from 2000 

to 2005 was 12.78 percent ((1.2361 ¥ 

1.0960)/1.0960 = 0.1278). Using the 

regression-based predictive model, we 

identified 8.03 percent of the total casemix change as real case-mix change 

from 2000 to 2005, and we adjusted the 

12.78 percent of total change in casemix, downward, by 8.03 percent to get 

a final nominal case-mix change 

measure of 11.75 percent (0.1278 * (1 ¥ 

0.0803) = 0.1175). To account for the 

11.75 percent increase in nominal casemix, we implemented a payment 

reduction of 2.75 percent each year for 

3 years, beginning in 2008, and we 

planned to implement a payment 

reduction of 2.71 in CY 2011. 

Since the HH PPS CY 2008 proposed 

rule, we have continued to monitor 

case-mix changes in the HH PPS, and in 

CY 2011 rulemaking we updated our 

analysis to measure change in real and 

nominal case-mix. In CY 2011 

rulemaking, we developed two 

regression-based models to assess 

nominal case-mix growth from 2000 to 

2008. One model was developed using 

2000 as a base year and the 80 grouper 

case-mix system. The regression 

coefficients in the model were applied 

to 2007 data to determine the change in 

real case-mix from 2000 to 2007. The 

second model was developed using 

2008 as a base year and the 153 grouper 

case-mix system. The regression 

coefficients in the model were applied 

to 2007 data to determine the change in 

real case-mix from 2007 to 2008. The 

data from both of the models were then 

used to calculate the overall real and 

nominal case-mix change from 2000 to 

2008. Our analysis indicated that there 

was a 19.40 percent increase in overall 

case-mix from 2000 to 2008 and 10.07 

percent of that overall observed casemix change was identified as real casemix change. Consequently, as a result of 

our analysis, we identified a 17.45 

percent nominal increase in case-mix 

(0.1940 * (1 ¥ 0.1007) = 0.1745) from 

2000 to 2008. In other words, there was 

a growth in case-mix of 17.45 percent 

that was unrelated to differences in 

patient characteristics and reflects 

changes in coding procedures and 

documentation rather than the treatment 

of more resource-intensive patients. 

This 17.45 percent increase was larger 

than expected. Previously, there was 

about 1 percent annual case-mix growth 

from 2000 to 2007. Between 2007 and 

2008, we observed a 4 percent overall 

case-mix growth. As a result of our 

analysis, in CY 2011, we proposed an 

increase to the planned 2.71 percent 

payment reduction in 2011 to a 3.79 

percent payment reduction and we 

proposed another 3.79 percent payment 

reduction in 2012 to fully account for 

the 17.45 percent nominal case-mix 

growth which was identified from 2000 

to 2008. 

We received many comments on our 

CY 2011 HH PPS proposed rule that 

criticized our methodology for assessing 

real case-mix change. The criticisms 

from commenters centered on the idea 

that we underestimated the percentage 

of case-mix growth that was real. 

Multiple commenters stated that our 

model for assessing real case-mix 

change relies too heavily on hospital 

discharge data. Commenters stated that 

we should include more variables 

which capture the severity of patients 

entering home health from the 

community since more than half of 

Medicare home health patients are 

admitted to home health from a setting 

other than a hospital. Also, commenters 

suggested that the acute care hospital 

APR–DRG and other prior use variables 

in our models may not be relevant for 

patients with more than one home 

health episode. Another criticism was 

that our model should consider that 

there are shorter hospital stays, and 

therefore, the patients who are 

discharged from the hospital into home 

health may have a higher level of 

severity of illness than the model 

recognizes. Moreover, commenters 

stated that all of the HHAs were being 

penalized for the actions of a few HHAs 

and that the nominal case-mix change 

reductions should be limited to certain 

types of agencies (such as by region or 

for-profit/non-profit status or by casemix index [CMI]). Furthermore, one 

commenter stated that a recent study by 

Dr. Partha Deb of Hunter College used 

data from a nationally representative 

survey (the Medical Expenditures Panel 

Survey—MEPS) and found that the 

health status of Medicare beneficiaries 

worsened, suggesting a possible increase 

in real case-mix in the Medicare 

population from 2000 through 2007 (the 

study by Partha Deb can be found at 

http://www.aha.org/aha/content/2010/ 

pdf/100715-CMItrends.pdf). 

Commenters inferred that the change in 

real case-mix was larger than the change 

we measured for the home health 

population, and therefore, commenters 

doubted whether our model accounted 

for the entire real case-mix change in 

the home health population. The study 

by Dr. Deb constructed a case-mix 

measure from medical expenditures and 

diagnosis-related data and compared 

results for 2000 and 2007. 

In the CY 2011 HH PPS final rule, we 

implemented the proposed payment 

reduction of 3.79 percent to the national 

standardized episode rate in CY 2011. 

However, due to the extensive 

comments we received, we deferred 

finalizing a payment reduction for CY 

2012 until further study of the case-mix 

data and methodology was completed. 

1. Independent Review of the Models To 

Assess Nominal Case-Mix Growth 

To assess the validity of the criticisms 

we received about our models to 

measure real and nominal case-mix 

change, we procured an independent 

review of our methodology by a team at 

Harvard University led by Dr. David 

Grabowski. The review included an 

examination of the predictive regression 

models and data used in CY 2011 

rulemaking, and further analysis 

consisting of extensions of the model to 

allow a closer look at nominal case-mix 


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growth by categorizing the growth 

according to provider types and 

subgroups of patients. The extensions 

showed a similar rate of nominal casemix growth from 2000 to 2008 (Table 

1A) for the various categories and 

subgroups. Below, we discuss these 

results in terms of the criticisms we 

received. 

TABLE 1A—MODELS FOR ASSESSING REAL CASE-MIX CHANGE

Model 

Nominal case-mix 

percent increase 

from 2000 to 2008 

(ALL) Total Nominal growth using Full Data Set (Replication) ................................................................................................. 17.45 

(ALL) Full Data Set using MEDIAN ACH LOS (Replication) .................................................................................................... 17.38 

(ALL) Full Data Set using Q3 ACH LOS (Replication) ............................................................................................................. 17.47 

(1a) Pre-HHA: With IH in prior 14 days .................................................................................................................................... 21.16 

(1b) Pre-HHA: With IH in prior 15–120 days ............................................................................................................................ 16.81 

(2a) Pre-HHA: Without IH in prior 14 days ............................................................................................................................... 15.85 

(2b) Pre-HHA: Without IH in prior 15–120 days ....................................................................................................................... 18.19 

(3a) Pre-HHA: With IRF/SNF/LTCH in prior 14 days ................................................................................................................ 13.90 

(3b) Pre-HHA: With IRF/SNF/LTCH in prior 15–120 days ........................................................................................................ 14.11 

(4a) Pre-HHA: Without IRF/SNF/LTCH in prior 14 days ........................................................................................................... 18.51 

(4b) Pre-HHA: Without IRF/SNF/LTCH in prior 15–120 days ................................................................................................... 18.33 

(5a) Pre-HHA: With IH/IRF/SNF/LTCH in prior 14 days ........................................................................................................... 18.97 

(5b) Pre-HHA: With IH/IRF/SNF/LTCH in prior 15–120 days ................................................................................................... 16.74 

(6a) Pre-HHA: Without IH/IRF/SNF/LTCH in prior 14 days ...................................................................................................... 16.95 

(6b) Pre-HHA: Without IH/IRF/SNF/LTCH in prior 15–120 days .............................................................................................. 18.29 

(7a) AGENCY-LEVEL: Owner: Non-Profit ................................................................................................................................. 14.49 

(7b) AGENCY-LEVEL: Owner: For-Profit .................................................................................................................................. 18.63 

(7c) AGENCY-LEVEL: Owner: Government ............................................................................................................................. 15.22 

(8a) AGENCY-LEVEL: Facility-Based HHA .............................................................................................................................. 14.17 

(8b) AGENCY-LEVEL: Free-Standing HHA .............................................................................................................................. 17.86 

(9a) AGENCY-LEVEL: West Region ......................................................................................................................................... 17.51 

(9b) AGENCY-LEVEL: Midwest Region .................................................................................................................................... 16.76 

(9c) AGENCY-LEVEL: South Region ........................................................................................................................................ 18.01 

(9d) AGENCY-LEVEL: Northeast Region ................................................................................................................................. 14.81 

(10a) AGENCY-LEVEL: Large Agency ..................................................................................................................................... 17.21 

(10b) AGENCY-LEVEL: Small Agency ..................................................................................................................................... 17.53 

(11a) AGENCY-LEVEL: Urban HHA ......................................................................................................................................... 17.75 

(11b) AGENCY-LEVEL: Rural HHA .......................................................................................................................................... 15.36 

(12a) AGENCY-LEVEL: Treats predominantly post-acute patients .......................................................................................... 16.67 

(12b) AGENCY-LEVEL: Treats predominantly community patients ......................................................................................... 18.87 

(13) First Episode Only .............................................................................................................................................................. 19.06 

HHA = home health agency; IH = Inpatient hospitalization; IRF = inpatient rehabilitation facility; SNF = skilled nursing facility; LTCH = long-term 

care hospital, ACH LOS = acute care hospital length of stay. 

To address the concern about our 

current models’ robustness when there 

is no prior inpatient or post-acute care 

setting (when patients are admitted from 

the community), the Harvard team reran our models for separate subgroups; 

in most cases, subgroups were defined 

by the prior hospital and post-acute care 

use measures present on the data file. 

Specifically, they defined prior 

inpatient/post-acute care use in six 

different ways (shown in lines 1a 

through 6b of Table 1A): Any hospital 

use over the past 14 days (yes/no); any 

post-acute use over the prior 14 days 

(yes/no); any hospital use over the past 

15–120 days (yes/no); any post-acute 

care use over the past 15–120 days (yes/ 

no); any hospital or post-acute care use 

in the preceding 14 days (yes/no); and 

any hospital or post-acute care use in 

the preceding 15–120 days (yes/no). As 

another test, the team separated 

agencies according to whether they 

treated predominantly post-acute 

patients or not. To calculate this 

measure, the Harvard team split 

agencies above/below the median based 

on their percentage of home health 

episodes in 2007 with an inpatient 

hospital stay in the preceding 14 days. 

Across all models, there was evidence 

of significant and similar nominal casemix growth, suggesting that high rates of 

nominal case-mix growth exist 

regardless of whether there was a 

preceding inpatient or post-acute stay. 

Agencies classified as serving 

predominantly community patients had 

a slightly higher nominal case-mix 

percentage increase compared to 

agencies classified as serving 

predominately post-acute patients (as 

shown in lines 12a and 12b in Table 

1A). (For a full description of the 

Harvard team’s analysis and results, 

please see the L&M final report located 

at http://www.cms.gov/center/hha.asp). 

Also, to evaluate the validity of the 

comment that the acute care hospital 

APR–DRG and other prior use variables 

in our model may not be relevant for 

patients with more than one home 

health episode, the Harvard team re-ran 

our current predictive models using 

only the first home health episode for 

each patient (shown in line 13 of Table 

1A). Once again, results based on this 

first episode were similar to the overall 

results of our current model, suggesting 

that the model is relatively stable across 

home health episodes. The results show 

that the inclusion of the later episodes 

does not dramatically alter the primary 

finding of significant nominal case-mix 

growth. 

To evaluate the comment that our 

models should take into account the fact 

that there are shorter hospital stays and 

therefore, the patients who are 

discharged from the hospital into home 

health may have a higher level of 

severity of illness than the model 

recognizes, our predictions were 

calculated assuming there was a 

different average length of stay than the 

actual average length of stay found for 

the LOS predictor variables in the 2007 

and 2008 follow-up years. Harvard 

developed predictions of real and 

nominal case-mix growth using the 


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median acute care hospitalization length 

of stay, instead of the mean length of 

stay which is used in our current model. 

The median is lower than the mean 

acute care hospitalization length of stay. 

Harvard also developed predictions of 

real and nominal case-mix growth using 

the third quartile acute care 

hospitalization length of stay, which is 

longer than the mean. The results were 

very similar to the overall nominal casemix percentage increase and therefore, 

the analysis suggests that our 

methodology is not particularly limited 

in capturing length of stay effects, 

because acute care hospitalization 

length of stay does not play a big role 

in determining average patient severity. 

To evaluate the suggestion that we 

should limit nominal case-mix change 

reductions to certain types of agencies 

(such as by region or for-profit/nonprofit status or by CMI), the Harvard 

team re-ran our model based on 

ownership type (non-profit, 

government, for-profit), agency type 

(facility-based, freestanding), region of 

the country (Northeast, South, Midwest, 

West), urban vs. rural status, and agency 

size (large vs. small; based on the 

number of initial episodes), shown in 

lines 7a through 11b in Table 1A. As 

noted earlier, the team also examined 

case-mix growth by whether the agency 

had a particular focus on post-acute vs. 

community patients. Across all these 

different categories (ownership, agency 

type, region, urban vs. rural status, 

agency size, agency focus), nominal 

case-mix growth was present. As 

expected, nominal case-mix growth was 

larger for some sub-groups. For 

example, nominal case-mix growth was 

higher for for-profit agencies (18.63 

percent) than non-profit (14.49 percent) 

and government agencies (15.22 

percent); however, these latter 

ownership types still exhibited high 

rates of nominal case-mix growth. As 

such, the Harvard team asserted that 

similar high rates of nominal case-mix 

growth exist for all types of HHAs. 

To address the comment that a study 

which used MEPS data showed a higher 

rate of real case-mix growth in the entire 

Medicare population than our model 

estimated for Medicare home health 

patients, a more detailed analysis of the 

MEPS data was performed. The trends 

in health status of four different 

populations from 2000 to 2008 were 

analyzed. The data for the analysis were 

obtained from the MEPS 2000 and 2008 

Full Year Consolidated Data files. The 

four populations that were analyzed 

were: (1) The full MEPS sample; (2) all 

Medicare beneficiaries, defined as all 

respondents ever having Medicare in a 

given year; (3) all home health patients, 

defined as having at least one home 

health provider day in a given year; and 

(4) all home health Medicare 

beneficiaries, defined as all respondents 

with any Medicare home health charges. 

Two measures of self-reported health 

status and one measure derived from 

patient information that screened for 

activities of daily living (ADL) 

limitations were used to determine the 

trends in health status. These types of 

measures have been shown to be highly 

correlated with actual health (Ware and 

Sherbourne, 1992; McHorney, Ware, 

and Raczek, 1993). The three measures 

which were analyzed for each of the 

populations were: (1) Whether the 

respondent indicated perceived health 

status of ‘‘poor’’ or ‘‘fair’’ as opposed to 

those indicating health status as ‘‘good’’, 

‘‘very good’’, or ‘‘excellent’’; (2) whether 

the respondent indicated if pain limited 

normal work (including work in the 

home) in the past 4 weeks ‘‘extremely’’ 

or ‘‘quite a bit’’ as opposed to those 

indicating pain limited work 

‘‘moderately’’, ‘‘a little bit’’, or ‘‘not at 

all’’; and (3) whether respondents had a 

positive screen for needing assistance 

with ADL. In all cases, responses such 

as ‘‘refused’’, ‘‘don’t know’’, or ‘‘not 

ascertained’’ were omitted from the 

analysis. The Medicare analysis samples 

consisted of 3,371 and 4,144 

beneficiaries in 2000 and 2008, 

respectively. The Medicare home health 

subsamples consisted of 174 and 289 

beneficiaries in 2000 and 2008, 

respectively. The survey responses were 

then weighted using pre-constructed 

MEPS survey weights to estimate 

nationally representative changes in the 

three health status variables. 

All three measures indicated a slight 

increase in the overall health status of 

the Medicare home health population. 

Two of these results were not 

statistically significant, but the percent 

of home health Medicare beneficiaries 

experiencing ‘‘extreme’’ or ‘‘quite a bit’’ 

of work-limiting pain decreased 

substantially, from 56.6 percent in 2000 

to 45.4 percent in 2008 (p = 0.039). 

Unlike Dr. Deb’s original study, the new 

MEPS analysis focuses specifically on 

Medicare home health users (as opposed 

to the entire Medicare population), and 

it is not reliant on expenditure data. A 

limitation of the Debs case-mix measure, 

which relies on expenditure data, is that 

it could reflect large increases in 

expenditures, such as drug 

expenditures, but any relationship to 

actual increases in impairments and 

other reasons for using home health 

resources is unclear. A possible 

limitation of the new MEPS analysis is 

that the sample of Medicare home 

health respondents is relatively small, 

notwithstanding that the result of one of 

the three measures was statistically 

significant. Also, the ADL screening 

item may not capture a change in the 

frequency of very severe ADL 

limitations since the measure may be 

insensitive to changes at high levels of 

disability. However, the Harvard team 

asserted that the methods of the new 

MEPS analysis are more appropriate for 

assessing whether there are increases in 

the severity of illness burden that would 

specifically indicate a need for more 

resources in the Medicare home health 

population. Based on the two kinds of 

evidence, and a recognition of the 

limitations of both, we conclude that the 

MEPS data provide no evidence of an 

increase in patient severity from 2000 to 

2008. 

Based on the findings from the 

extensions of the current model that 

were tested, including the finding that 

the two nominal case-mix percentage 

increases for the post-acute and 

community patients are similar (Table 

1A), and the results of the MEPS 

analysis which do not provide evidence 

to suggest that the Medicare home 

health population has experienced a 

decrease in their health status over time, 

the Harvard team concluded that the 

current model adequately measures real 

case-mix growth for home health 

patients, including patients admitted to 

home health from the community. 

When reviewing the model, the 

Harvard team found that overall, our 

models are robust. However, one area of 

potential refinement to our models that 

the Harvard team suggested was to 

incorporate variables derived from 

Hierarchical Condition Categories (HCC) 

data, which is used by CMS to riskadjust payments to managed care 

organizations in the Medicare program. 

Currently, the HCC model includes 70 

HCCs, each of which is defined based 

on the presence of particular ICD–9–CM 

codes identified from Medicare claims 

data (inpatient and outpatient hospital 

claims and Part B Physician Claims). 

Some of the HCCs reflect hierarchies 

among related conditions, but, for 

unrelated diseases, each HCC is 

separately defined. The HCC model also 

includes demographic items related to 

gender, age, Medicaid enrollment, and 

whether Medicare eligibility was 

originally based on disabled status. We 

have augmented our modeling data with 

HCC information, as described in the 

next section. 

2. Revised Version of Our Models To 

Assess Nominal Case-Mix Growth 

In the past, we have considered using 

HCC data to assess real and nominal 


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case-mix change; however, we have yet 

to implement a change to our models 

which would incorporate the HCC data. 

Based on Dr. Grabowski and his team’s 

recommendation and our previous 

consideration to incorporate HCC data 

in our models to assess real case-mix 

change, we explored the effects of 

adding the managed care data to our 

models. To incorporate HCC data into 

our models, we augmented our analytic 

files used to measure real case-mix 

change. We obtained HCC data on all 

home health users for 2004–2009. There 

were several different types of HCC 

variables that could be added to our 

models to assess real case-mix. Some of 

the variables we considered are the HCC 

risk score, binary variables for each of 

the HCCs, demographic variables, and 

disease indicators. 

In the HCC model used for managed 

care risk adjustment, each HCC has an 

associated regression coefficient. 

Regression coefficients for each 

beneficiary’s HCCs, along with the 

regression coefficients for their 

demographic and enrollment 

characteristics, are summed to calculate 

predicted expenditures. A risk score for 

each record can then be calculated 

based on expected expenditures for the 

patient divided by the mean 

expenditures for all patients. The HCC 

data include several risk score 

measures, including the HCC 

community risk score, the institutional 

risk score, and the risk score for new 

Medicare enrollees. Because home 

health patients live in the community, 

the community risk score seemed more 

appropriate than the institutional risk 

score. An alternative to using the HCC 

risk score was to include binary 

variables for each of the 70 HCCs, which 

may better capture a patient’s severity. 

Along with the HCC risk score and the 

individual HCCs, we considered other 

elements of the HCC data such as the 

demographic variables, whether 

disability was the original reason for 

Medicare entitlement, and an indicator 

for whether the individual is a Medicaid 

beneficiary. Furthermore, we examined 

interactions involving a number of 

disease conditions that are included 

with the HCC data, such as congestive 

heart failure (CHF), diabetes mellitus 

(DM), chronic obstructive pulmonary 

disease (COPD), cardiovascular disease 

(CVD), renal failure (RF), and coronary 

artery disease (CAD). 

To test the usefulness of these 

different HCC variables, we developed 

several models to examine real case-mix 

and which contained different types of 

HCC data. We examined models in 

which we added the HCC community 

score to our CY 2005 data so that the 

HCC score was included with the APR– 

DRG variables in an equation explaining 

2005 case-mix weights. We also 

examined models which incorporated 

individual HCCs, instead of the HCC 

risk score. Furthermore, we examined 

models in which either the HCC risk 

score or individual HCCs were added to 

our model along with demographic and 

disease indicator variables. Moreover, 

we examined models which did not 

include APR–DRGs, but rather the HCC 

risk score or individual HCCs replaced 

the APR–DRGs in the model. When we 

replaced the APR–DRGs in the models 

with the HCC risk score, there was a low 

R-squared value, lower than any of the 

other models we examined. When we 

replaced the APR–DRG variables in our 

models with the individual HCC 

indicators, we observed a negative 

change in real case-mix. This negative 

change in real case-mix would indicate 

that the health status of the Medicare 

home health population has improved 

over time and that all of the change in 

case-mix from 2000–2009 would be 

nominal case-mix change. As a result of 

the findings from the various models, 

we decided to augment our current 

model with the HCC variables rather 

than replace our APR–DRG variables 

with HCC variables. 

It should be noted that in addition to 

examining which HCC variables we 

should include in our models, we also 

examined which year of HCC data we 

should use in our models. There is a 1 

year look-back period with HCC data in 

that the HCC data are based on the 

previous calendar year’s claims history 

for an individual. Therefore, when 

developing our models, we assessed 

whether we should use HCC data from 

the previous year or HCC data in the 

same year as when the home health 

episode occurred (the home health 

episode is the unit of observation in our 

models). Our concern was that if we 

used HCC data in the same year as the 

episode, the HCC data may partially 

reflect diseases and conditions 

identified after a home health episode. 

However, we decided to use HCC data 

in the same year as the episode since we 

thought it best reflected the health 

status of the patients in that year. 

For this year’s analysis, we used a 

similar approach to our previous 

methods. The basic method is to 

estimate a prediction model and use 

coefficients from that model along with 

predictor variables from a different year 

to predict the average case-mix for that 

year. It should be noted that we chose 

to enhance our models with HCC data 

starting in 2005 due to the availability 

of HCC data in our analytic files. 

Therefore, we analyzed real case-mix 

change for three different periods, from 

2000 to 2005, from 2005 to 2007, and 

from 2007 to 2009. The real case-mix 

change in the period from 2005 to 2007 

and the period from 2007 to 2009 were 

assessed using enhanced models, which 

included HCC data. The real case-mix 

change from 2000 to 2005 was assessed 

using the same variables used in the 

model described in last year’s regulation 

(75 FR 43238), a variable list consisting 

of measures of patients’ demographic 

characteristics, clinical status, inpatient 

history, and Part A Medicare costs in 

the time period leading up to their home 

health episodes. The regression 

coefficients from the model without 

HCC variables were applied to episodes 

from 2005, allowing us to estimate how 

much of the change in observed casemix was attributable to changes in 

patient characteristics between the IPS 

period and 2005. 

We added HCC variables for the 2005 

to 2007 period, estimating the model 

using data from 2005. The enhanced 

model includes HCC community scores, 

HCC demographic variables, and disease 

indicator variables for 2005 and later. 

We chose this version of the HCCenhanced case-mix change model 

largely based on its ability to predict 

higher real case-mix change relative to 

the other HCC enhanced models. We 

applied the regression coefficients to 

means from 2007, allowing estimation 

of real case-mix change between 2005 

and 2007. 

For the 2007 to 2009 period, we used 

the 153 HHRG case-mix weights and 

data from 2009 to estimate the same set 

of models as we did for 2005. Using the 

backwards prediction method that we 

used in CY 2011 rulemaking, the 

coefficients from this model were 

developed using 2009 data and were 

applied to episodes from 2007. This 

procedure allows us to estimate how 

much of the 2007 through 2009 change 

(based on the HHRG153 case-mix for 

both periods) was associated with 

changes in patient characteristics 

between 2007 and 2009. 

From 2000 to 2009, we identified a 

total change in case-mix of 0.2476 

(1.3435¥1.0959 = 0.2476), which 

results in a case-mix growth of 22.59 

percent ((1.3435¥1.0959)/1.0959 = 

0.2259). We then estimated the real and 

nominal change in case-mix for each of 

the three periods. The change in real 

case-mix from 2000 to 2005 was 0.0207 

case-mix units. The change in real casemix from 2005 to 2007 was 0.0061 casemix units. The change in real case-mix 

from 2007 to 2009 was 0.0122 case-mix 

units. After adding together the 

estimated real case-mix change in casemix units for the three periods, the total 


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estimated change in real case-mix from 

2000 to 2009 was 0.0390 (0.0207 + 

0.0061 + 0.0122 = 0.0390). Therefore, 

we estimate that 15.76 percent of the 

total percentage change in the national 

average case-mix weight since the IPS 

baseline through 2009 is due to change 

in real case-mix (0.0390/0.2476 = 

~0.1576). It should be noted that due to 

rounding, there is a 0.01 percentage 

point difference between the calculated 

and actual value. When taking into 

account the total measure of case-mix 

change (22.59 percent) and the 15.76 

percent of total case-mix change 

estimated as real from 2000 to 2009, we 

obtained a final nominal case-mix 

change measure of 19.03 percent from 

2000 to 2009 (0.2259 * (1¥0.1576) = 

0.1903). Please see Table 1B for 

additional information about the 

calculations used to make the real and 

nominal case-mix change estimates from 

2000 to 2009. 

Our estimates of real and nominal 

case-mix change are consistent with 

past results. Most of the case-mix 

change has been due to improved 

coding, coding practice changes, and 

other behavioral responses to the 

prospective payment system, such as 

increased use of high therapy treatment 

plans. 

TABLE 1B—SUMMARY OF REAL AND

NOMINAL CASE-MIX CHANGE ESTIMATES: 2000–2009 

Measure Model 

Actual case-mix: 2000 .................. 1.0959 

Actual case-mix: 2009 .................. 1.3435 

Total change in case-mix ............. 0.2476 

Total percentage change .............. 22.59% 

Estimated real change in casemix ............................................. 0.0390 

Percent of total change estimated 

as real ....................................... 15.76% 

Percent of total change estimated 

as nominal (creep) .................... 84.24% 

Real case-mix percent increase ... 3.56% 

Nominal case-mix percent increase ....................................... 19.03% 

As we described earlier in this 

proposed rule, our CY 2008 HH PPS 

final rule finalized a reduction over 4 

years in the national standardized 60- 

day episode payment rates to account 

for a large increase in case-mix from 

2000 to 2005 which we determined was 

not related to treatment of more intense 

patients. We implemented a 2.75 

percent reduction each year for 2008, 

2009, and 2010 and planned to reduce 

payments by 2.71 percent in 2011. In CY 

2011 rulemaking, we updated our 

analysis of nominal case-mix growth 

through 2008 and determined that there 

was 17.45 percent nominal case-mix 

growth from 2000 to 2008. Therefore, 

we proposed and finalized an increase 

in the planned 2.71 percent reduction to 

3.79 percent for CY 2011. Also, in the 

CY 2011 proposed rule, we stated that 

if we were to identify further increases 

in nominal case-mix as more current 

data becomes available, it would be our 

intent to account fully for those 

increases when they are identified, 

rather than continuing to phase in the 

reductions over more than 1 year. For 

the CY 2012 proposed rule, after 

updating our models to incorporate HCC 

data, we have determined that there was 

a 19.03 percent nominal case-mix 

change from 2000 to 2009. To account 

for the remainder of the 19.03 percent 

residual increase in nominal case-mix 

beyond that which has been accounted 

for in previous payment reductions, we 

estimate that the percentage reduction 

to the national standardized 60-day 

episode rates for nominal case-mix 

change for CY 2012 will be 5.06 percent. 

Therefore, for CY 2012, we propose to 

implement a 5.06 percent payment 

reduction to the national standardized 

60-day episode rates to fully account for 

growth in nominal case-mix from the 

inception of HH PPS through 2009. 

B. Case-Mix Revision to the Case-Mix 

Weights 

1. Hypertension Diagnosis Coding 

Under the HH PPS 

In CY 2011 rulemaking, we proposed 

to remove ICD–9–CM code 401.1, 

Benign Essential Hypertension, and 

ICD–9–CM code 401.9, Unspecified 

Essential Hypertension, from the HH 

PPS case-mix model’s hypertension 

group. Beginning with the HH PPS 

refinements in 2008, hypertension was 

included in the HH PPS system because 

data suggested it was associated with 

elevated resource use. As a result, the 

diagnoses Unspecified Essential 

Hypertension and Benign Essential 

Hypertension were associated with 

additional points from the four-equation 

model and subsequently, potentially 

higher case-mix weights in the HH PPS 

case-mix system. When examining the 

trends in reporting of hypertension 

codes from 2000 to 2008, our analysis 

showed a large increase in the reporting 

of codes 401.1 and 401.9 in 2008. 

However, when looking at 2008 claims 

data, the average number of visits for 

claims with code 401.9 was slightly 

lower than the average for claims not 

reporting these hypertension codes. In 

last year’s proposed rule, we proposed 

to remove codes 401.1 and 401.9 from 

our case-mix model based on 

preliminary analysis of the trends in 

coding and resource use of patients with 

these codes. We suspected that the 2008 

refinements, which newly awarded 

points for the diagnosis codes 401.1 and 

401.9, led to an increase in reporting of 

these codes and that this reporting was 

a key driver of the high 2008 growth in 

nominal case-mix. In response to this 

proposed policy change, we received 

numerous comments, many of which 

stated that additional analysis was 

needed to substantiate the rationale for 

removing hypertension codes 401.1 and 

401.9. In the CY 2011 HH PPS final rule, 

we withdrew our proposal to eliminate 

401.1 and 401.9 from our model and 

described our plans to do a more 

comprehensive analysis of the resource 

use of patients with these two 

hypertension codes. We have since 

completed a more thorough analysis. 

Based on the results of our latest 

analyses, we propose to remove codes 

401.1 and 401.9 from the HH PPS casemix system. 

We performed several analyses of the 

resource use and prevalence of patients 

with Benign Essential Hypertension and 

Unspecified Essential Hypertension 

(codes 401.1 and 401.9) to assess the 

appropriateness of these codes in our 

case-mix model. We looked at the HH 

PPS episode data using two samples to 

more accurately assess the trends in 

hypertension prevalence over time. In 

one sample, we excluded episodes from 

providers in areas exhibiting suspect 

billing practices. For the other sample, 

we excluded outlier episodes. In all of 

the analyses that follow, we report the 

results from the sample that excludes 

outliers because results from the 

alternate analysis were highly similar. 

Also, the sample that excludes outliers 

is more appropriate than one that 

includes outliers because our case-mix 

research has been conducted on samples 

without outliers. 

One of our analyses looked at the 

prevalence of various hypertension 

codes over time. We compared the 

change in prevalence of 401.1 and 401.9 

diagnoses to the prevalence of other 

diagnoses in the hypertension group— 

401.0 (malignant essential 

hypertension), 402 (hypertensive heart 

disease), 403 (hypertensive chronic 

kidney disease), 404 (hypertensive heart 

and chronic kidney disease), and 405 

(secondary hypertension)—from 2005 to 

2009 (Table 2). Our analysis shows that 

the prevalence of episodes with a 401.9 

diagnosis continued to increase in 2009, 

from 50.58 percent of episodes in 2008 

to 55.52 percent in 2009, and more than 

doubled between 2005 and 2009. The 

prevalence of episodes with a 401.1 

diagnosis decreased from 2008 to 2009 

but the prevalence remained slightly 

higher than the prevalence in 2005. 


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TABLE 2—PREVALENCE OF HYPERTENSION—2005–2009 

[In percent] 

Diagnosis 2005 2006 2007 2008 2009 

Any hypertension ................................................................................................................... 33.32 40.22 46.26 60.37 65.65 

401.0 Malignant essential hypertension .............................................................................. 0.56 0.54 0.53 0.56 0.47 

401.1 Benign essential hypertension .................................................................................. 2.89 3.36 3.44 3.79 2.95 

401.9 Essential hypertension, unspecified .......................................................................... 27.23 33.22 38.74 50.58 55.52 

402 Hypertensive heart disease .......................................................................................... 2.19 2.38 2.49 2.99 2.76 

403 Hypertensive renal disease .......................................................................................... 0.31 0.56 0.92 2.24 3.66 

404 Hypertensive heart and renal disease ......................................................................... 0.14 0.17 0.20 0.31 0.39 

405 Secondary hypertension ............................................................................................... 0.04 0.04 0.03 0.03 0.04 

Outlier episodes are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2005–2009. 

We also examined the prevalence of 

hypertension coding by various agency 

characteristics, such as agency type, 

region, and provider size, in 2005 versus 

2009 (Tables 3 and 4). We compared the 

2005 data (Table 3) to more current data 

(Table 4) because the 2005 data were 

used to simulate the 2008 refinements 

for the CY 2008 HH PPS final rule 

implementing the 153-group case-mix 

system (72 FR 49762 through 49945). 

Based on our analysis, except for 

government-owned agencies and 

agencies in a few regions, agencies 

(regardless of type) had a similar 

prevalence of episodes with a 401.9 

diagnosis across the board in 2009 

(Table 4). Also, agencies had a relatively 

similar prevalence of episodes with a 

401.1 diagnosis across the board in 

2009, except for West South Central, 

which had a high prevalence of 6.68 

percent (Table 4)—about 9 times the 

region’s prevalence in 2005. In addition, 

small facilities with less than 19 home 

health episodes in a year in the 20 

percent sample of the Home Health 

Datalink file had a high prevalence of 

diagnosis 401.1; 8.30 percent of their 

episodes had a 401.1 diagnosis. All 

categories of agencies appear to have a 

significant increase in the reporting of a 

401.9 diagnosis when comparing 2005 

HH PPS claims and OASIS data to 2009 

HH PPS claims and OASIS data. The 

reporting of a 401.9 diagnosis in 2009 

was typically 1.8 to 2.1 times the 

reporting of a 401.9 diagnosis in 2005, 

with the exception of the East North and 

the West North Central regions which 

had an increase of around 1.7 and 1.5 

fold respectively. Also, it should be 

noted that the Mid-Atlantic region had 

around a 2.4 fold increase in the 

reporting of a 401.9 diagnosis between 

2005 and 2009 and the West South 

Central region had almost a threefold 

increase in the reporting of a 401.9 

diagnosis between 2005 and 2009. 

Furthermore, many categories had an 

increase in the reporting of a 401.1 

diagnosis when comparing 2005 data to 

2009. 

TABLE 3—PREVALENCE OF HYPERTENSION BY VARIOUS AGENCY CHARACTERISTICS—2005 

[In percent] 

Any 401.0 401.1 401.9 402 403 404 405 

All Agencies ..................................................................... 33.59 0.56 2.96 27.34 2.26 0.32 0.15 0.04 

Type of Facility 

Free-Standing/Other Vol/NP ............................................ 27.50 0.21 0.63 25.49 0.83 0.30 0.06 0.01 

Free-Standing/Other Prop ................................................ 39.35 0.86 4.86 29.63 3.48 0.30 0.19 0.06 

Free-Standing/Other Govt ................................................ 29.01 0.41 1.35 25.36 1.51 0.22 0.17 0.04 

Hospital-Based Vol/NP .................................................... 25.11 0.17 0.68 23.33 0.51 0.35 0.09 0.01 

Hospital-Based Prop ........................................................ 29.79 0.30 0.68 27.50 0.83 0.37 0.16 0.01 

Agency-Based Govt ......................................................... 30.94 0.80 3.04 24.46 1.92 0.53 0.23 0.02 

Facility Location 

New England .................................................................... 39.36 1.06 5.25 27.83 4.63 0.37 0.30 0.01 

Mid Atlantic ...................................................................... 26.09 0.22 0.81 23.79 0.65 0.24 0.09 0.01 

South Atlantic ................................................................... 36.87 0.81 5.93 27.41 2.21 0.30 0.14 0.09 

East South Central ........................................................... 31.97 0.42 0.90 29.15 1.26 0.24 0.07 0.01 

West South Central .......................................................... 21.15 0.25 0.74 19.57 0.32 0.19 0.09 0.01 

East North Central ........................................................... 36.54 0.20 0.62 34.59 0.47 0.62 0.06 0.02 

West North Central .......................................................... 37.81 0.56 1.46 32.10 3.17 0.35 0.21 0.01 

Mountain .......................................................................... 29.95 0.45 1.58 24.74 2.70 0.35 0.16 0.03 

Pacific ............................................................................... 25.33 0.32 1.81 22.17 0.76 0.21 0.07 0.02

Other ................................................................................ 36.33 0.46 2.46 28.89 4.30 0.16 0.12 0.01 

Facility Size 

< 19 episodes .................................................................. 36.71 0.79 3.86 28.75 2.53 0.52 0.19 0.10 

20 to 49 ............................................................................ 36.11 0.74 4.42 27.39 2.98 0.38 0.17 0.04 

50 to 99 ............................................................................ 35.98 0.80 4.06 27.97 2.73 0.31 0.11 0.02 

100 to 199 ........................................................................ 36.78 0.73 4.11 28.60 2.81 0.33 0.16 0.07 


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TABLE 3—PREVALENCE OF HYPERTENSION BY VARIOUS AGENCY CHARACTERISTICS—2005—Continued 

[In percent] 

Any 401.0 401.1 401.9 402 403 404 405 

200+ ................................................................................. 32.86 0.53 2.72 27.06 2.09 0.31 0.14 0.03 

Outlier episodes are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file. 

TABLE 4—PREVALENCE OF HYPERTENSION BY VARIOUS AGENCY CHARACTERISTICS—2009 

[In percent] 

Any 401.0 401.1 401.9 402 403 404 405 

All Agencies ..................................................................... 65.95 0.48 3.17 55.36 3.00 3.64 0.40 0.04 

Type of Facility 

Free-Standing/Other Vol/NP ............................................ 60.11 0.17 0.94 53.06 0.71 5.05 0.24 0.01 

Free-Standing/Other Prop ................................................ 69.42 0.62 3.86 57.81 3.74 3.07 0.44 0.05 

Free-Standing/Other Govt ................................................ 54.60 0.45 3.13 44.98 2.00 3.41 0.72 0.02 

Hospital-Based Vol/NP .................................................... 56.82 0.16 1.22 49.49 0.78 4.93 0.32 0.02 

Hospital-Based Prop ........................................................ 61.41 0.21 1.45 54.61 1.83 3.31 0.16 0.01 

Agency-Based Govt ......................................................... 54.89 0.48 2.29 46.53 1.68 3.57 0.48 0.03 

Facility Location 

New England .................................................................... 58.71 0.10 0.54 53.96 0.43 3.50 0.23 0.02 

Mid Atlantic ...................................................................... 62.45 0.12 0.65 56.04 0.58 4.98 0.16 0.01 

South Atlantic ................................................................... 64.09 0.28 1.74 56.80 1.49 3.46 0.31 0.08 

East South Central ........................................................... 69.52 0.22 2.13 59.69 3.27 3.73 0.61 0.01 

West South Central .......................................................... 73.22 0.92 6.68 57.28 4.47 3.53 0.50 0.05 

East North Central ........................................................... 67.01 0.52 2.16 57.42 3.04 3.68 0.34 0.02 

West North Central .......................................................... 55.97 0.46 1.84 48.00 1.12 4.15 0.46 0.06 

Mountain .......................................................................... 56.02 0.52 2.21 49.13 1.29 2.51 0.32 0.10 

Pacific ............................................................................... 57.42 0.52 3.00 45.06 5.50 3.02 0.51 0.03

Other ................................................................................ 63.20 0.33 1.58 55.53 1.52 4.00 0.35 0.00 

Facility Size 

< 19 episodes .................................................................. 71.19 1.77 8.30 51.27 7.35 2.01 0.71 0.08 

20 to 49 ............................................................................ 68.39 1.35 6.13 53.07 5.63 2.04 0.44 0.04 

50 to 99 ............................................................................ 67.67 0.66 4.27 54.27 5.26 2.82 0.52 0.07 

100 to 199 ........................................................................ 65.99 0.52 4.03 54.90 3.12 3.07 0.41 0.08 

200+ ................................................................................. 64.37 0.21 1.52 56.61 1.38 4.38 0.33 0.02 

Outlier episodes are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file. 

In last year’s final regulation, we 

received a comment stating that a 

multivariate analysis of the costliness of 

hypertension is advisable to strengthen 

the evidence for the proposal to 

eliminate the 401.1 and 401.9 diagnoses 

from the case-mix model. In response to 

this comment, we estimated a set of 

multivariate regression models to 

examine the resources associated with 

the 401.1 and 401.9 diagnoses while 

adjusting for other factors in the casemix system (Tables 5 and 6). The 

multivariate regression models used 

2008 HH PPS claims and OASIS data 

which excluded PEP, LUPA, and outlier 

episodes. Model 1 included variables for 

the number of therapy visits, the clinical 

score, the functional score, and 

indicators for whether a 401.1 or 401.9 

diagnosis was present. In this model, 

both the 401.1 and 401.9 diagnoses were 

associated with significantly lower costs 

(¥19 and ¥18 resource units, 

respectively). This model indicates that 

an episode with a 401.1 or 401.9 code 

has less resource costs than an episode 

without a 401.1 or 401.9 code, when the 

amount of therapy, clinical score, and 

functional score are held constant. 

Model 2 included variables for the 

payment weight and the 401.1 and 401.9 

indicators. In this model, both 401.1 and 

401.9 were associated with lower costs 

and these impacts were statistically 

significant. The diagnosis code 401.1 

was associated with significantly lower 

costs (¥22 resource units) while the 

401.9 indicator was associated with 

about ¥2 resource units. This model 

most accurately shows the impact of 

codes 401.1 and 401.9 on resource use 

within the payment system, because it 

directly controls for the payment 

weight, which represents in a summary 

variable all the other conditions paid for 

in the case-mix algorithm. Both models 

provide strong evidence for removing 

the 401.1 diagnosis from the case-mix 

model, since it is associated with 

significantly lower resource costs. The 

models also provide strong evidence for 

removing the 401.9 diagnosis, since they 

do not indicate that this condition is 

responsible for additional resource costs 

beyond what is already accounted for in 

the case-mix model. 

In addition, it should be noted that 

when we estimated the multivariate 

regression models when excluding 

episodes from providers in areas 

exhibiting suspect billing practices, 

ICD–9–CM diagnosis code 401.9 was 

associated with slightly lower costs and 

ICD–9–CM diagnosis code 401.1 was 

associated with a slight increase in 


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resource costs (about +3 resource units). 

However, we believe that relying on 

analyses that include outliers, as this 

sample does, is problematic. In 2008 

and 2009, outliers reached a historically 

high rate per 100 episodes in home 

health, and the abuse of the PPS outlier 

policy was subsequently recognized as a 

significant problem. In a 10 percent 

random beneficiary sample, there is a 

strong association between the reporting 

of code 401.1 and outliers, and this 

association could be contributing to the 

higher resource costs for episodes with 

the 401.1 code in the regression that 

excludes episodes from suspect areas. 

Although it is not certain whether the 

use of this code in outlier cases is 

related to abusive outlier utilization, we 

are cautious about relying on data that 

include outliers. In addition, even 

absent any concerns about suspect 

billing practices, the increase in 

resource costs associated with a 401.1 

diagnosis is not large enough to warrant 

awarding additional points in our casemix system for the diagnosis. 

TABLE 5—REGRESSION RESULTS: RESOURCES ASSOCIATED WITH A 401.1 OR 401.9 DIAGNOSIS: MODEL 1 (2008) 

Variable Parameter 

estimate Standard error T value Pr > |t| 

Intercept ........................................................................................................... 171 .1183 0 .74992 228 .18 < .0001 

Number of therapy visits .................................................................................. 34 .72435 0 .0371 936 .03 < .0001 

Clinical score ................................................................................................... 8 .7105 0 .03774 230 .8 < .0001 

Functional score .............................................................................................. 8 .63246 0 .08876 97 .26 < .0001 

ICD9 401.1 present ......................................................................................... ¥18 .72875 1 .38201 ¥13 .55 < .0001 

ICD9 401.9 present ......................................................................................... ¥18 .19412 0 .53904 ¥33 .75 < .0001 

PEP, LUPA and outlier episodes are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008. 

TABLE 6—REGRESSION RESULTS: RESOURCES ASSOCIATED WITH A 401.1 OR 401.9 DIAGNOSIS: MODEL 2 (2008) 

Variable Parameter 

estimate Standard error T value Pr > |t| 

Intercept ........................................................................................................... ¥35 .5089 0 .68637 ¥51 .73 < .0001 

Payment weight ............................................................................................... 530 .9656 0 .51853 1023 .98 < .0001 

ICD9 401.1 present ......................................................................................... ¥21 .96335 1 .43741 ¥15 .28 < .0001 

ICD9 401.9 present ......................................................................................... ¥1 .73284 0 .55998 ¥3 .09 0 .002 

PEP, LUPA and outlier episodes are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008. 

We also examined whether there were 

any subsets of patients with a 401.1 or 

401.9 diagnosis who had higher 

resource costs. Potentially such 

information could lead to adding 

interaction variables involving the two 

hypertension diagnoses to the case-mix 

model. The model currently includes 

several interactions (for example, 

gastrointestinal disorders and ostomy). 

There was speculation that patients who 

required respiratory treatments may 

have higher than expected resource 

costs in the presence of either of the two 

hypertension codes—for example, 

patients who are smokers. We therefore 

examined the resource costs for patients 

with a 401.1 or a 401.9 diagnosis and 

different types of respiratory treatments 

(Tables 7 and 8). The results showed 

that there was a decrease in resource 

costs for episodes with patients with a 

401.1 diagnosis and who received 

respiratory treatments (Table 7). In 

addition, it can be noted that there was 

a decrease in resource costs for episodes 

with patients with a 401.1 diagnosis and 

no respiratory treatment. Table 8 shows 

that there was a decrease in average cost 

for episodes with patients with a 401.9 

diagnosis and who were on oxygen or 

receiving continuous positive airway 

treatment. There was also an increase in 

resource costs for episodes with 401.9 

compared to those without 401.9 for 

patients on ventilators. However, this 

increase in resource costs associated 

with the presence of a 401.9 diagnosis 

is not statistically significant. Overall, 

the results from Tables 7 and 8 show 

that there is little support for keeping 

401.1 and 401.9 codes for patients 

receiving respiratory treatments. 

TABLE 7—RESOURCE COSTS FOR PATIENTS WITH A 401.1 DIAGNOSIS AND RESPIRATORY TREATMENT (2008) 

401.1 Present 

Difference % Difference 

No Yes 

Oxygen ............................................................................................................. $575.79 $567.52 ($8.27) ¥1.44 

Ventilator .......................................................................................................... 662.71 612.24 (50.47) ¥7.62 

Continuous positive airway pressure ............................................................... 587.05 530.93 (56.12) ¥9.56 

None ................................................................................................................ 567.88 554.61 (13.27) ¥2.34 

Outliers are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008. 


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TABLE 8—RESOURCE COSTS FOR PATIENTS WITH A 401.9 DIAGNOSIS AND RESPIRATORY TREATMENT (2008) 

401.9 Present 

Difference % Difference 

No Yes 

Oxygen ............................................................................................................. $581.66 $568.46 (13.20) ¥2.27 

Ventilator .......................................................................................................... 648.94 683.77 34.83 5.37 

Continuous positive airway pressure ............................................................... 599.69 572.08 (27.61) ¥4.60 

None ................................................................................................................ 568.42 566.75 (1.67) ¥0.29 

Outliers are excluded. 

Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008. 

We also looked at the average 

resource cost of episodes for patients 

categorized by primary diagnosis, with 

and without a 401.9 diagnosis code, to 

determine whether there are other subcategories of patients diagnosed with 

401.9 who are more resource intensive 

(Table 9). Many primary diagnoses had 

a lower average cost when code 401.9 

was present. Heart disease was among 

the primary diagnoses in which the 

average resource cost for episodes with 

a 401.9 diagnosis was less than the 

average cost without a 401.9 diagnosis. 

For six primary diagnoses, there was an 

increase in resource cost when a 401.9 

diagnosis was present. However, the 

increases in resource costs for four of 

the six diagnoses were not statistically 

significant. It should be noted that while 

there was a large increase in resource 

costs for patients with blindness/low 

vision when a 401.9 diagnosis was 

present, the results were not statistically 

significant. There are few patients with 

a primary diagnosis of blindness/low 

vision. The two diagnoses which 

resulted in a significant increase in 

resource cost when a 401.9 diagnosis 

was present were stroke and gait 

abnormality (Table 9). 

When further examining the data, we 

questioned the hypertension coding for 

the episodes with stroke as a primary 

diagnosis. For the 28,923 episodes with 

a primary diagnosis of stroke, only 

18,063 episodes had a 401.9 diagnosis 

present. Furthermore, of those 28,923 

episodes, only 71 percent of the 

episodes had a hypertension diagnosis. 

Because stroke is so strongly associated 

with hypertension, we would expect 

more episodes with a primary diagnosis 

of stroke to also have a hypertension 

diagnosis. Therefore, we believe that the 

data in the table corresponding to the 

episodes with stroke as a primary 

diagnosis is affected by incomplete 

coding. Also, if stroke almost always 

should be listed followed by 

hypertension, there would be no reason 

for an interaction term in the model 

involving stroke and hypertension. An 

interaction in the model—identifying a 

subset of patients with a condition who 

have another condition that changes the 

patient’s resource cost utilization— 

cannot apply in this case. 

TABLE 9—TOTAL RESOURCE COSTS BY PRIMARY DIAGNOSIS AND WHETHER 401.9 IS PRESENT (2008) 

Primary diagnosis N N with 401.9 

present 

401.9 not 

present 401.9 present Difference % Difference 

Blindness/low vision ................................. 392 213 $392.95 $415.11 $22.16 5.64 

Stroke ....................................................... 28,923 18,063 742.54 768.66 26.12 3.52 

Gait Abnormality ...................................... 22,946 11,567 641.28 656.97 15.69 2.45 

Hypertension ............................................ 13,446 202 406.91 414.20 7.29 1.79 

Neurological ............................................. 14,869 6,583 622.88 628.27 5.39 0.86 

Blood disorders ........................................ 14,985 7,264 367.44 369.81 2.37 0.65 

Orthopedic ................................................ 33,468 17,757 529.46 529.46 0.00 0.00 

Cystostomy Care ..................................... 2,469 915 436.92 433.80 (3.12) ¥0.71 

Cancer ...................................................... 20,885 9,298 459.59 452.73 (6.86) ¥1.49 

Diabetes ................................................... 96,018 54,461 462.55 450.32 (12.23) ¥2.64 

Gastrointestinal ........................................ 14,496 7,170 457.55 445.29 (12.26) ¥2.68 

Traumatic wounds .................................... 27,855 13,849 554.73 539.44 (15.29) ¥2.76 

Heart disease ........................................... 68,297 36,040 484.49 469.11 (15.37) ¥3.17 

MS ............................................................ 4,206 1,329 651.37 620.30 (31.07) ¥4.77 

Dysphagia ................................................ 1,430 595 651.95 598.26 (53.69) ¥8.24 

Tracheostomy .......................................... 414 176 598.77 508.91 (89.86) ¥15.01 

Outlier episodes are excluded. 

Source: Abt Associates analysis of 20% sample of Home Health Datalink file for 2008. 

To further investigate the increase in 

average resource cost when 401.9 was 

present in patients with gait 

abnormality, we looked at average 

resources and average visits for joint 

replacement patients, which are patient 

groups strongly associated with a 

diagnosis of gait abnormality. We chose 

to look at patients with joint, hip, and 

knee replacements since they would be 

the sorts of patients in home health that 

would have a skilled need as a result of 

gait abnormality and they would 

typically have high therapy and 

resource costs. We also examined the 

subgroups of these patients who were 

reported on the OASIS to have a 

diagnosis of gait abnormality (Table 10). 

For patients with joint, hip, and knee 

replacements that had a 401.9 diagnosis, 

resource costs and visits differed little 

compared to such patients who did not 

have the 401.9 diagnosis. None of the 

differences were statistically significant. 

In addition, we saw that for the episodes 

with gait abnormality as a primary 

diagnosis, there were no statistically 

significant differences between the 

resource costs or number of visits for 

joint, hip, and knee replacement 

patients when a 401.9 diagnosis was 

present. These results indicate that there 

is no significant difference in resource 


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cost for patients with joint replacements 

when a 401.9 diagnosis is present. 

It should also be noted that when 

examining the increase in average 

resources for episodes with patients 

with a primary diagnosis of stroke or 

gait abnormality when a 401.9 diagnosis 

is present, we could not determine 

whether the increase in resource cost 

was due to the 401.9 diagnosis or due 

to a third confounding variable. As 

described earlier, we estimated a set of 

multivariate regression models to 

determine the relationship between a 

401.9 diagnosis and resource cost, when 

controlling for other variables in the 

case-mix model. 

TABLE 10—TOTAL RESOURCE COSTS AND VISITS BY TYPE OF JOINT REPLACEMENT AND WHETHER 401.9 IS PRESENT

FOR ALL PATIENTS WITH JOINT REPLACEMENTS AND THE SUBSET OF PATIENTS WITH GAIT ABNORMALITY (2008) 

Diagnosis N 

Costs Visits 

401.9 not 

present 

401.9 

present Difference % Difference 

401.9 not 

present 

401.9 

present Difference % Difference 

Joint replacement .................... 45,689 $566.41 $559.88 ($6.53) ¥1.15% 15 .71 15.86 0.15 0.95 

Hip replacement ...................... 13,658 563.95 564.50 0.55 0.10 16 .37 16.43 0.06 0.37 

Knee replacement ................... 21,580 542.12 539.63 (2.49) ¥0.46 14 .9 15.04 0.14 0.94 

Episodes with gait abnormality as primary diagnosis 

Joint replacement .................... 632 553.68 562.41 8.73 1.58 15 .58 16.23 0.65 4.17 

Hip replacement ...................... 315 587.44 609.34 21.90 3.73 16 .83 17.99 1.16 6.89 

Knee replacement ................... 382 554.78 529.23 (25.55) ¥4.61 14 .98 14.57 (0.41) ¥2.74 

Outlier episodes are excluded. 

Source: Abt Associates’ analysis of 20 percent sample of Home Health Datalink file for 2008. 

Some of our analysis was performed 

to further investigate issues raised in 

comments we received on last year’s 

proposed rule. In response to last year’s 

rule, one commenter stated that we 

should keep the diagnosis code 401.9 in 

the case-mix system, stating that very 

often clinically complex patients, such 

as hypertensive heart disease patients, 

will be diagnosed with this code while 

waiting for proper documentation that is 

required by ICD–9–CM to report a more 

specific diagnosis code. To investigate 

the extent to which a 401.9 diagnosis 

might be coded on an initial assessment 

while waiting for necessary 

documentation for other hypertension 

codes, we looked at the hypertension 

prevalence for start-of-care episodes 

(defined as those with segment number 

equal to one) and recertification 

episodes (defined as those with segment 

number greater than one) for various 

subgroups of related episodes (Table 

11). Related episodes are episodes 

without a gap of more than 60 days in 

between them. In past rulemaking, we 

have referred to these as episodes as 

part of a sequence of adjacent episodes. 

In those rules, we defined episodes as 

adjacent if they were separated by no 

more than a 60-day period between 

episodes. Some of the subgroups we 

examined in our analysis were ones in 

which: (1) The initial episode had a 

401.9 code; (2) the 2nd episode in a 

sequence of adjacent episodes had a 

402, 403, 404, or 405 code; (3) codes 

402, 403, 404, and 405 were not present 

on the initial episode, but were present 

on the second episode in the sequence 

of adjacent episodes. Table 11 shows 

that, of the sequence of adjacent 

episodes where a 401.9 code is reported 

on the initial episode, very few 

subsequent episodes had a diagnosis of 

402, 403, 404, or 405, and most 

subsequent episodes continued to have 

a 401.9 diagnosis. Also, for those 

sequences of adjacent episodes where a 

402, 403, 404, or 405 code exists on the 

second episode, many (over 60 percent) 

had the same code reported for the 

initial episode. For patients that had a 

402, 403, 404, or 405 diagnosis on their 

second episode but not their initial 

episode, many had a 401.9 diagnosis on 

their initial episode. However, there 

were only a small number of episodes 

with this pattern and it is not clear if 

this pattern is related to the comment 

about coding 401.9 while waiting for 

documentation or if this occurs due to 

the random fluctuation in hypertension 

coding patterns. In summary, the results 

of this analysis do not provide support 

for keeping 401.9 as a diagnosis in the 

case-mix model based on the reason that 

it is used as a placeholder while waiting 

for documentation to support another 

ICD–9–CM hypertension code. 

TABLE 11—HYPERTENSION PREVALENCE BY SEGMENT AND TYPE OF HYPERTENSION REPORTED ON SEGMENT 1 OR

SEGMENT 2 (2009) 

Diagnosis N 401.9 

(%) 

401.1 

(%) 

402 

(%) 

403 

(%) 

404 

(%) 

405 

(%) 

401.1 Benign Essential hypertension, unspecified (segment 1) 

Segment 1 ............................................................................ 10,859 0.04 100.00 0.19 0.12 0.06 0.00 

Segment 2 ............................................................................ 3,463 12.21 75.69 1.70 0.78 0.20 0.03 

Segment 3 ............................................................................ 1,734 17.42 68.86 2.42 0.69 0.23 0.06 

Segment 4 ............................................................................ 997 19.76 64.79 3.21 0.80 0.30 0.10 

401.9 Essential hypertension, unspecified (segment 1) 

Segment 1 ............................................................................ 305,530 100.00 0.00 0.08 0.06 0.01 0.00 

Segment 2 ............................................................................ 70,493 87.63 0.44 0.74 1.41 0.11 0.00 

Segment 3 ............................................................................ 29,235 84.76 0.73 1.14 1.82 0.15 0.01 

Segment 4 ............................................................................ 14,255 82.94 0.98 1.35 2.13 0.18 0.01 


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TABLE 11—HYPERTENSION PREVALENCE BY SEGMENT AND TYPE OF HYPERTENSION REPORTED ON SEGMENT 1 OR

SEGMENT 2 (2009)—Continued 

Diagnosis N 401.9 

(%) 

401.1 

(%) 

402 

(%) 

403 

(%) 

404 

(%) 

405 

(%) 

402 Hypertensive heart disease (segment 1) 

Segment 1 ............................................................................ 8,777 2.83 0.24 100.00 0.24 0.09 0.01 

Segment 2 ............................................................................ 3,165 14.00 1.07 79.05 1.23 0.73 0.00 

Segment 3 ............................................................................ 1,563 20.47 1.66 70.12 1.15 1.02 0.06 

Segment 4 ............................................................................ 859 23.40 1.40 65.19 0.70 1.28 0.00 

403 Hypertensive renal disease (segment 1) 

Segment 1 ............................................................................ 18,740 1.02 0.07 0.11 100.00 0.03 0.01 

Segment 2 ............................................................................ 4,497 9.12 0.18 0.51 79.25 0.78 0.04 

Segment 3 ............................................................................ 1,806 11.46 0.39 0.44 73.75 1.33 0.06 

Segment 4 ............................................................................ 843 12.81 0.47 0.59 72.00 1.66 0.00 

404 Hypertensive heart and renal disease (segment 1) 

Segment 1 ............................................................................ 1,331 2.93 0.45 0.60 0.38 100.00 0.00 

Segment 2 ............................................................................ 404 8.66 1.98 2.23 6.44 73.51 0.00 

Segment 3 ............................................................................ 191 12.57 1.57 2.62 7.33 67.54 0.00 

Segment 4 ............................................................................ 101 12.87 1.98 0.99 10.89 67.33 0.00 

405 Secondary hypertension (segment 1) 

Segment 1 ............................................................................ 192 1.04 0.00 0.52 0.52 0.00 100.00 

Segment 2 ............................................................................ 56 8.93 0.00 0.00 1.79 1.79 75.00 

Segment 3 ............................................................................ 29 6.90 0.00 0.00 6.90 0.00 58.62 

Segment 4 ............................................................................ 13 23.08 0.00 0.00 0.00 0.00 61.54 

401.1 Secondary hypertension (segment 2) 

Segment 1 ............................................................................ 3,269 9.51 80.18 1.04 0.24 0.24 0.00 

Segment 2 ............................................................................ 3,269 0.06 100.00 0.28 0.12 0.15 0.00 

Segment 3 ............................................................................ 1,548 9.95 80.68 1.68 0.32 0.06 0.00 

Segment 4 ............................................................................ 987 15.40 72.10 3.00 0.20 0.20 0.00 

401.9 Essential hypertension, unspecified (segment 2) 

Segment 1 ............................................................................ 70,616 87.48 0.60 0.63 0.58 0.05 0.01 

Segment 2 ............................................................................ 70,616 100.00 0.00 0.12 0.08 0.02 0.00 

Segment 3 ............................................................................ 27,347 89.83 0.41 0.74 1.02 0.10 0.01 

Segment 4 ............................................................................ 13,622 86.46 0.70 0.99 1.50 0.10 0.01 

402 Hypertensive heart disease (segment 2) 

Segment 1 ............................................................................ 3,298 15.92 1.79 75.86 0.70 0.27 0.00 

Segment 2 ............................................................................ 3,298 2.67 0.27 100.00 0.27 0.06 0.00 

Segment 3 ............................................................................ 1,478 13.94 0.88 81.33 0.68 0.74 0.00 

Segment 4 ............................................................................ 788 17.51 1.02 74.62 0.51 1.27 0.00 

403 Hypertensive renal disease (segment 2) 

Segment 1 ............................................................................ 5,192 19.11 0.52 0.75 68.64 0.50 0.00 

Segment 2 ............................................................................ 5,192 1.02 0.08 0.17 100.00 0.00 0.00 

Segment 3 ............................................................................ 1,861 6.45 0.27 0.21 84.09 0.59 0.00 

Segment 4 ............................................................................ 837 7.89 0.36 0.36 81.84 0.96 0.00 

404 Hypertensive heart and renal disease (segment 2) 

Segment 1 ............................................................................ 478 15.69 1.46 4.81 7.32 62.13 0.21 

Segment 2 ............................................................................ 478 3.14 1.05 0.42 0.00 100.00 0.00 

Segment 3 ............................................................................ 201 7.46 1.99 1.49 5.47 78.61 0.00 

Segment 4 ............................................................................ 106 8.49 0.94 0.94 10.38 72.64 0.00 

405 Secondary hypertension (on segment 2) 

Segment 1 ............................................................................ 51 5.88 1.96 0.00 3.92 0.00 82.35 

Segment 2 ............................................................................ 51 0.00 0.00 0.00 0.00 0.00 100.00 

Segment 3 ............................................................................ 21 0.00 0.00 0.00 4.76 0.00 95.24 

Segment 4 ............................................................................ 11 18.18 0.00 0.00 0.00 0.00 81.82 


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TABLE 11—HYPERTENSION PREVALENCE BY SEGMENT AND TYPE OF HYPERTENSION REPORTED ON SEGMENT 1 OR

SEGMENT 2 (2009)—Continued 

Diagnosis N 401.9 

(%) 

401.1 

(%) 

402 

(%) 

403 

(%) 

404 

(%) 

405 

(%) 

402 Hypertensive heart disease (not present on segment 1 but present on segment 2) 

Segment 1 ............................................................................ 796 58.67 6.53 0.00 72.01 0.88 0.00 

Segment 2 ............................................................................ 796 3.27 0.25 100.00 64.58 0.00 0.00 

Segment 3 ............................................................................ 318 18.55 1.89 72.01 2.14 0.94 0.00 

Segment 4 ............................................................................ 144 22.22 1.39 64.58 0.38 2.08 0.00 

403 Hypertensive renal disease (not present on segment 1 but present on segment 2) 

Segment 1 ............................................................................ 1,628 59.28 1.41 1.97 0.00 1.54 0.06 

Segment 2 ............................................................................ 1,628 1.47 0.00 0.12 100.00 0.00 0.00 

Segment 3 ............................................................................ 552 9.42 0.18 0.36 76.27 0.72 0.00 

Segment 4 ............................................................................ 231 11.69 0.43 0.43 72.73 1.30 0.00 

404 Hypertensive heart disease (not present on segment 1 but present on segment 2) 

Segment 1 ............................................................................ 181 39.23 2.21 10.50 19.34 0.00 0.55 

Segment 2 ............................................................................ 181 4.97 0.55 0.55 0.00 100.00 0.00 

Segment 3 ............................................................................ 66 10.61 3.03 1.52 9.09 68.18 0.00 

Segment 4 ............................................................................ 36 13.89 0.00 0.00 8.33 63.89 0.00 

405 Secondary Hypertension (not present on segment 1 but present on segment 2) 

Segment 1 ............................................................................ 9 33.33 11.11 0.00 22.22 0.00 0.00 

Segment 2 ............................................................................ 9 0.00 0.00 0.00 0.00 0.00 100.00 

Segment 3 ............................................................................ 4 0.00 0.00 0.00 0.00 0.00 100.00 

Segment 4 ............................................................................ 2 0.00 0.00 0.00 0.00 0.00 100.00 

Outlier episodes are excluded. 

Source: Abt Associates’ analysis of 20 percent sample of Home Health Datalink file for 2009. 

To further investigate the issue 

whether 401.9 is used as a placeholder 

while waiting for documentation to 

support coding of other more complex 

hypertension codes, we looked at the 

average resource cost for the initial 

episode, categorized by hypertension 

diagnosis, for all of the episodes with a 

hypertension diagnosis of 402, 403, or 

404 in their second episode (Table 12). 

We compared the average cost of an 

initial episode when there was a 401.9 

diagnosis to the average cost of an initial 

episode when both the initial and 

second episode had the same diagnosis 

(both the initial and second episode had 

either a 402, 403, or 404 code). For 

example, for all 2nd episodes, in a 

sequence of adjacent episodes, with a 

402 diagnosis, we compared the average 

cost of an initial episode when there 

was a 401.9 diagnosis to the average cost 

of an initial episode when there was a 

402 diagnosis. Considering the comment 

that a 401.9 is coded while waiting for 

documentation for a more complex 

diagnosis like 402 (hypertensive heart 

disease), one would expect the average 

resource cost for an initial episode with 

a 401.9 code to be the same as an initial 

episode with a 402 code when looking 

at all of the sequences which have a 402 

diagnosis in the second episode. Based 

on our analysis, the average resource 

cost for initial episodes with a 401.9 

diagnosis is lower than the average 

resource cost for initial episodes with a 

402, 403, and 404 diagnosis, given that 

a 402, 403, or 404 diagnosis exists on 

the second episode respectively. It 

should be noted that the average 

resource cost for initial episodes with a 

401.9 diagnosis is only slightly lower 

than the average resource cost for initial 

episodes with a 404 diagnosis, given a 

404 diagnosis on the second episode. 

However, the samples for this 

comparison are small (N=69 and 

N=293). In general, the overall pattern of 

results of this analysis does not support 

keeping 401.9 as a diagnosis in the casemix model based on the reason that 

401.9 is coded while waiting for 

documentation for another ICD–9 code. 

TABLE 12—RESOURCE COSTS FOR SEGMENT 1 BY HYPERTENSION DIAGNOSES ON SEGMENT 1 GIVEN A HYPERTENSION

DIAGNOSIS REPORTED ON SEGMENT 2 (2009) 

Hypertension diagnosis 

(segment 1) 

Hypertension diagnosis (segment 2) 

402 403 404 

N 

Mean 

resource 

cost for 

initial 

episode 

N 

Mean 

resource 

cost for 

initial 

episode 

N 

Mean 

resource 

cost for 

initial 

episode 

None ............................................................................................. 254 $765.28 585 $725.84 54 $798.17 

401.9 ............................................................................................ 467 651.24 962 660.99 69 683.99 

402 ............................................................................................... 2502 692.79 39 565.74 23 624.20 

403 ............................................................................................... 17 769.40 3557 741.52 34 650.24 


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TABLE 12—RESOURCE COSTS FOR SEGMENT 1 BY HYPERTENSION DIAGNOSES ON SEGMENT 1 GIVEN A HYPERTENSION

DIAGNOSIS REPORTED ON SEGMENT 2 (2009)—Continued 

Hypertension diagnosis 

(segment 1) 

Hypertension diagnosis (segment 2) 

402 403 404 

N 

Mean 

resource 

cost for 

initial 

episode 

N 

Mean 

resource 

cost for 

initial 

episode 

N 

Mean 

resource 

cost for 

initial 

episode 

404 ............................................................................................... 7 756.36 25 619.69 293 689.01

Outlier episodes are excluded. 

Source: Abt Associates’ analysis of 20 percent sample of Home Health Datalink file for 2009. 

In summary, we propose to remove 

ICD–9–CM code 401.1, Benign Essential 

Hypertension, and ICD–9–CM code 

401.9, Unspecified Essential 

Hypertension, from the HH PPS casemix model’s hypertension group. Based 

on our analysis, there continues to be an 

increase in the prevalence of ICD–9–CM 

code 401.9 from 2008 to 2009. In 

addition, agencies (regardless of type) 

typically had a twofold or higher 

increase in the prevalence of a 401.9 

diagnosis from 2005 to 2009, with the 

exception of the East North and the 

West North Central regions which had 

an increase of about 1.7 and 1.5 fold 

respectively. Furthermore, many 

categories had an increase in the 

reporting of a 401.1 diagnosis when 

comparing 2005 data to 2009. Most 

compelling, current data indicates that 

these diagnoses are not predictors of 

higher home health patient resource 

costs. Rather, current data indicates a 

lower cost associated with home health 

patients when these codes are reported. 

The results from the two regression 

models provide strong support for 

removing the 401.1 and 401.9 diagnoses 

from the case-mix system, showing that 

the presence of these diagnoses is 

associated with lower costs, when 

controlling for other case-mix related 

factors. Therefore, we propose to 

remove codes 401.1 and 401.9 to more 

accurately align payment with resource 

use. 

In the CY 2011 HH PPS final rule, in 

response to comments, we described 

that if we were to finalize removing 

these codes from our case-mix system, 

we would do so in such a way that we 

would revise our case-mix weights to 

ensure that the removal of the codes 

would result in the same projected 

aggregate expenditures. Therefore, we 

also propose to revise the HH PPS casemix weights as we describe in detail in 

the following section. The revisions of 

the case-mix weights would redistribute 

HH PPS payments among the case-mix 

groups such that removal of these 

hypertension codes would not result in 

lower aggregate payments. Rather, the 

change would be effectuated in a budget 

neutral way. 

2. Proposal for Revision of Case-Mix 

Weights 

As we described in section II.B.1 of 

this preamble, we propose to revise our 

HH PPS case-mix weights to remove two 

hypertension codes from our case-mix 

system while maintaining budget 

neutrality. We also believe that 

additional revisions to the case-mix 

weights are needed. 

Our review of HH PPS utilization data 

shows a shift to an increased share of 

episodes with very high numbers of 

therapy visits. This shift was first 

observed in 2008 and it continued in 

2009. Table 13 shows the percentage 

distribution of episodes according to 

number of therapy visits for 2001 

through 2009. 

TABLE 13—DISTRIBUTION OF HOME HEALTH EPISODES ACCORDING TO NUMBER OF THERAPY VISITS (2001–2009) 

[In percent] 

Number of therapy visits 2001 2002 2003 2004 2005 2006 2007 2008 2009 

None ................................................................................................... 54 52 51 50 50 50 50 49 48 

1 to 5 .................................................................................................. 14 15 15 15 15 15 14 14 14 

6 ......................................................................................................... 3 3 3 3 3 3 3 3 3 

7 to 9 .................................................................................................. 6 6 6 6 6 6 6 9 9 

10 to 13 .............................................................................................. 10 11 13 14 14 15 15 10 10 

14+ ..................................................................................................... 12 12 12 12 12 12 12 15 16 

Note: Based on a 10 percent random beneficiary sample. 

The 2009 distribution of episodes by 

number of therapy visits resembles the 

2008 distribution with some important 

differences. In last year’s regulation, we 

described an increase of 25 percent in 

the share of episodes with 14 or more 

therapy visits. In the 2009 sample, the 

share with 14 or more therapy visits 

continued to increase while the share of 

episodes with no therapy visits 

continued to decrease. The frequencies 

also indicate that the share of episodes 

with 20 or more therapy visits was 6 

percent in 2009 (data not shown). This 

is a 50 percent increase from the share 

of episodes of 2007, when episodes with 

at least 20 therapy visits accounted for 

only 4 percent of episodes. 

In their 2010 and 2011 Reports to 

Congress, MedPAC suggests that the HH 

PPS contains incentives which likely 

result in agencies providing more 

therapy than is needed to maximize 

their Medicare payments. In their March 

2010 Report to the Congress, MedPAC 

stated that ‘‘therapy episodes appear to 

be overpaid relative to others and that 

the amount of therapy changed 

significantly in response to the 2008 

revisions to the payment system.’’ In 

support of this statement, MedPAC 

showed that there was a quick episode 

volume shift to the new therapy 

thresholds, which suggests 

inappropriate therapy utilization. In 

their March 2011 Report to the 


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Congress, MedPAC stated, ‘‘The volume 

data for 2009 indicate that the shifts that 

occurred in 2008 are continuing * * * 

Episodes with 14 or more therapy visits 

increased by more than 20 percent, and 

those with 20 or more therapy visits 

increased by 30 percent.’’ 

Also, in their March 2011 Report to 

Congress, MedPAC suggested that the 

current HH PPS may ‘‘overvalue therapy 

services and undervalue nontherapy 

services.’’ In this report, MedPAC 

describes that HHA margins average 

17.7 percent, with 20 percent of 

agencies achieving margins of 37 

percent. MedPAC further states that 

their analysis of high-margin and lowmargin agencies suggests that the HH 

PPS overpays for episodes with high 

case-mix values and underpays for 

episodes with low-case-mix values. 

Furthermore, MedPAC reports that 

home health agencies with high margins 

had high case-mix values which were 

attributable to the agencies providing 

more therapy episodes (MedPAC, March 

2011 Report to Congress). MedPAC went 

on to assert that ‘‘unless the case-mix 

system is revised, agencies will 

continue to have significant incentives 

to favor therapy patients, avoid highcost nontherapy patients, and base the 

number of therapy visits on payment 

incentives instead of patient 

characteristics.’’ 

We concur that the therapy utilization 

shifts and the correlation between high 

agency margins and high volumes of 

therapy episodes strongly suggest that 

the costs which the HH PPS assigns to 

therapy services when deriving the 

relative payment weights are higher 

than actual costs incurred by agencies 

for therapy services. We believe that one 

factor which contributes to this 

overpayment for therapy services is the 

growing use of therapy assistants, 

instead of qualified therapists, to 

provide home health therapy services. 

Current data suggest that the percentage 

of therapy assistants which is reflected 

in the therapy-wage weighted minutes 

used in the calculations of HH PPS 

relative resource costs is too low. For 

our 2008 refinements, to construct the 

relative resource costs for episodes, we 

used the labor mix percentages reported 

in the Occupational Employment 

Statistics (OES) data by the Bureau of 

Labor Statistics. In 2005, which is the 

year of data that was used to develop 

the HH PPS refinements, the OES data 

showed that 15 percent of physical 

therapy was provided by therapy 

assistants and that 11 percent of 

occupational therapy was provided by 

therapy assistants. This data was then 

used to develop the resource costs for 

episodes which were used to develop 

the current HH PPS payment weights. In 

2008, the OES data showed that 19 

percent of physical therapy was 

provided by therapy assistants and that 

13 percent of occupational therapy was 

provided by therapy assistants. In 

addition, by 2010, OES data has shown 

that the percentage of physical therapy 

provided by therapy assistants was 20 

percent and the percentage of 

occupational therapy provided by 

therapy assistants was 14 percent. We 

note that these statistics reflect the mix 

for all home health providers. Also, 

preliminary analysis of resource use 

data collected during Medicare’s PostAcute Care Demonstration (PAC-PRD) 

shows a somewhat higher prevalence of 

assistants providing therapy for patients 

receiving Medicare’s home health 

benefit than the OES data. We note that 

in CY 2011, we began collecting data on 

HH PPS claims which will enable us to 

quantify the percentage of therapy 

assistants who are providing therapy 

and to assess how the percentages vary 

relative to the quantity of therapy 

provided and the type of provider. 

We believe that MedPAC has 

provided strong evidence that our 

reimbursement for episodes with high 

therapy is too high. Also, based on 

MedPAC’s analysis and our own 

findings, we believe that the resource 

costs reflected in our current case-mix 

weights for therapy episodes, in 

particular for those episodes with high 

amounts of therapy, are higher than 

current actual resource costs and that an 

adjustment to the HH PPS therapy casemix weights is warranted. We note that 

fully addressing MedPAC’s concerns 

with the way the HH PPS factors 

therapy visits into the case-mix system 

will be a complex process which will 

require more comprehensive structural 

changes to the HH PPS. While we plan 

to address their concerns in a more 

comprehensive way in future years, for 

CY 2012 we propose to revise the 

current case-mix weights by lowering 

the relative weights for episodes with 

high therapy and increasing the weights 

for episodes with little or no therapy. It 

should be noted that we propose to 

revise the case-mix weights in a budget 

neutral way. In other words, this 

proposal would redistribute some HH 

PPS dollars from high therapy payment 

groups to other HH PPS case-mix 

groups, such as the groups with little or 

no therapy. We believe this proposed 

revision to the payment weights would 

result in more accurate HH PPS 

payments for targeted case-mix groups 

while addressing MedPAC concerns that 

our reimbursement for therapy episodes 

is too high and our reimbursement for 

non-therapy episodes is too low. Also, 

we believe our proposed revision of the 

payment weights will discourage the 

provision of unnecessary therapy 

services and will slow the growth of 

nominal case-mix. Our detailed 

approach, analysis, and case-mix 

revision methodology which support 

this proposal are described below. 

During the 2008 HH PPS refinements, 

in addition to implementing a change 

from an 80 group case-mix system to a 

153 group case-mix system, we 

developed new payment weights for the 

HH PPS case-mix system. To derive 

these payment weights, we developed a 

four-equation model which estimated an 

equation explaining an episode’s 

resource use, as measured in units 

corresponding to wage-weighted 

minutes (the dependent variable), in 

terms of therapy visits and clinical and 

functional variables (the independent, 

or explanatory, variables). Each 

equation was created from a different 

subset of episodes (for example, early 

episodes with 13 or fewer therapy 

visits). The results from the fourequation model were then used to 

develop the severity levels for the 

clinical and functional dimensions. 

Specifically, the coefficients of the fourequation model were divided by 10 and 

rounded to the nearest integer to create 

points which correspond to the impact 

of the variable on the total resource cost 

of the episode. These points are 

reported in Table 2a of the CY 2008 HH 

PPS final rule. For each episode in the 

sample, the sum of clinical variable 

points and the sum of functional 

variable points were calculated. Within 

each of the four equations, the clinical 

or functional severity levels were then 

defined in terms of intervals of the total 

clinical or functional points in such a 

way as to create a relatively even 

distribution of episodes amongst the 

severity levels. Also, the single 10- 

therapy visit threshold was changed to 

three therapy thresholds at 6, 14, and 20 

visits to promote appropriate therapy 

utilization. Graduated steps between 

each of the three thresholds were also 

defined to provide an equitable increase 

in payment that would not otherwise 

occur between the three threshold 

levels. After defining the severity levels 

and thresholds and graduated steps 

between thresholds, we estimated a 

payment regression. The payment 

regression quantifies the relationship 

between an episode’s resource use as 

measured in dollars corresponding to 

wage weighted minutes (the dependent 

variable) and the episode’s clinical 

severity indicator variables (low, 

medium, or high), functional severity 


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indicator variables (low, medium, or 

high), four-equation indicator variables 

(which indicate whether an episode is 

early/late and has low/high therapy), 

and therapy visit indicator variables. 

The therapy visit indicator variables 

were defined based on the graduated 

steps between the therapy thresholds. 

The raw payment weights for the 153 

case-mix groups were then derived from 

the payment regression model 

coefficients. Note that in the process of 

developing the weights for episodes 

with therapy, we decelerated the 

increase in payment within each 

grouping of additional therapy visits 

(that is, we decelerated the increase in 

payment for each graduated therapy 

step). Finally, the weights were altered 

to achieve budget neutrality to 2005. 

Initially, for this proposed rule, 

during the process of revising the casemix weights, we re-estimated the 

payment regression model on 2008 data 

using the same dependent and 

independent variables we defined for 

the payment regression model which we 

used for the HH PPS refinements. We 

then compared the results to the current 

payment regression, which was based 

on 2005 data. We saw that the 

coefficients for the clinical and 

functional severity indicators were 

typically smaller in 2008 compared to 

2005. This finding implies that if we 

were to use 2008 data to revise our 

payment weights, the clinical and 

functional severity levels would be 

associated with lower relative resource 

costs compared to our current payment 

regression model, and would result in 

lower raw payment weights for episodes 

with little or no therapy when compared 

to our current case-mix weights. These 

results would not achieve our intended 

goals as we describe in more detail 

below. 

As a result of our re-estimation of the 

payment regression using 2008 data, we 

decided not to use data from 2008 or 

later to develop the revised case-mix 

weights. Instead, we propose to use pre2008 data, which is before the 

implementation of the HH PPS 

refinements and the behavioral and 

coding changes we described in our 

discussion of the 2008 therapy 

utilization and case-mix data in last 

year’s proposed and final regulations 

(75 FR 43238 through 43244 and 75 FR 

70384). In last year’s proposed and final 

rules we presented several analyses that 

described indications of a large change 

in coding practices between 2007 and 

2008, the first year of the 153-group, 

refined system. Our initial analysis 

indicated that if we were to use the 2008 

data in our payment regression to 

develop the revised weights, the 

regression would assign a higher 

relative resource cost to high therapy 

episodes and would assign a lower 

relative resource cost to episodes with 

little or no therapy than was assigned 

when deriving the current weights. As 

we described earlier in this section, we 

believe the data strongly suggest that 

our current weights over-value high 

therapy episodes and under-value nontherapy episodes and has strongly 

influenced the utilization shifts to more 

episodes in the 14 and 20 therapy 

groups and fewer non-therapy episodes 

beginning in 2008. Therefore, we 

believe that using 2008 or later data in 

our payment regression to revise the 

case-mix weights would be inadvisable. 

The evidence strongly suggests that the 

utilization shifts are influenced by 

agencies’ attempts to maximize 

Medicare payments. As such, we 

propose to use pre-2008 data in the 

payment regression to revise our casemix weights. We believe this data is 

more reflective of costs associated with 

patients’ actual clinical needs than the 

2008 and later data. We note that using 

pre-2008 data to derive relative resource 

costs and to revise our case-mix weights 

does not hinder our ability to achieve 

budget neutrality. We will describe our 

approach to ensure budget neutrality 

later in this section. 

We explored numerous methods for 

revising our case-mix weights which 

were similar to the method we 

previously used for the 2008 

refinements. We note that when 

developing the case-mix weights for the 

2008 refinements, we were concerned 

that since there was an increase in 

payment weight as additional therapy 

visits were provided, there may be 

incentives to provide more therapy than 

clinically needed. To discourage this, 

when developing our current weights, 

we incrementally decreased the 

marginal payment for each grouping of 

therapy visits as the number of therapy 

visits grew. When exploring ways to 

revise our current case-mix weights, we 

initially applied a more aggressive 

deceleration to the weights for each of 

the incremental therapy visit steps 

similar to the approach we took for the 

current weights. We saw that when we 

applied more deceleration for each 

incremental therapy visit step, the 

payment weight for episodes with high 

numbers of therapy visits, when taking 

into account the clinical and functional 

score, was often the same as or larger 

than the current weight. Also, we saw 

inversions in the payment weights. For 

example, we saw that the payment 

weight for an episode with a clinical 

severity level of 1, functional severity 

level of 1, and 14 therapy visits had a 

smaller weight than for an episode with 

a clinical severity level of 1, a functional 

severity level of 1, and 13 therapy visits. 

Because of these observations, we 

decided against using the same type of 

approach we originally used when 

developing our current case-mix therapy 

weights. Instead, we developed a 

different approach to revise the casemix payment weights. 

Before we can describe this new 

approach, we must first explain the 

changes we made to the four-equation 

model to remove the hypertension 

diagnoses ICD–9–CM code 401.1, 

Benign Essential Hypertension, and 

ICD–9–CM code 401.9, Unspecified 

Essential Hypertension from our casemix system, as we have proposed to do. 

As we indicated in the CY 2011 HH PPS 

final rule, our intention would be to 

revise the system in a manner that 

redistributes all the resources in the 

system after removing the two 

hypertension codes from our case-mix 

system. Our method of redistributing 

the resources starts with changes to the 

four-equation model, which is the 

foundation for the subsequent revised 

payment regression and creation of 

revised case-mix weights. The changes 

to the four-equation model are described 

below. 

To examine the effects of removing 

the two hypertension codes 401.1 and 

401.9 from the case-mix system and 

determine whether the thresholds for 

the clinical severity indicators need to 

be changed if 401.1 and 401.9 are 

removed from the case-mix system, we 

estimated the four-equation model with 

and without codes 401.1 and 401.9 in 

the hypertension group. We used 2005 

data for this estimation. We note that 

the adjusted R-squared value for the 

four-equation model without codes 

401.1 and 401.9 derived from 2005 data 

was 0.4621. We also note that we used 

2005 data to develop an accurate 

comparison of the current four-equation 

model with the revised four-equation 

model without the two hypertension 

codes because our current four-equation 

model was built using 2005 data. In 

addition, we estimated the coefficients 

for the variables in the four-equation 

model using 2005 data to maintain the 

same variables we developed for our 

current four-equation model and 

minimize changes to our current model. 

We then used the coefficients from the 

four-equation model without codes 

401.1 and 401.9 to determine the points 

which would be associated with all the 

clinical and functional variables found 

in our current four-equation model, as 

described on Table 2a of the CY 2008 

HH PPS final rule (Table 14A). 


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When comparing the four-equation 

model with the two hypertension 

diagnoses (which is equivalent to our 

current model) to the four-equation 

model without the two hypertension 

diagnoses, there were some differences 

in the points assigned to variables. 

Specifically, there was a different 

number of points for 58 of the 224 

variables in the four-equation model. 

However, the difference between the 

two models was at most 1 point. Also, 

of the 58 variables which had a different 

number of points, 33 were clinical and 

functional variables. (The remaining 

variables were therapy-visit and early/ 

later episode indicator variables used in 

the four-equation model estimation 

procedure.) For 13 of the 33 clinical and 

functional variables, there was an extra 

point assigned when the two 

hypertension codes are excluded, and 

for 20 of the 33 clinical and functional 

variables, there was one less point 

assigned compared to the current model 

(Table 14B). 

TABLE 14A—POINTS ASSOCIATED WITH THE UPDATED 4-EQUATION MODEL WITHOUT HYPERTENSION

CODES 401.1 AND 401.9 

Case-Mix Adjustment Variables and Scores 

(Note: 4—Equation Model was Estimated on Episodes from 2005 where 401.1 and 401.9 were not counted in the Hypertension Diagnosis 

Group) 

Episode number within sequence of adjacent episodes 1 or 2 1 or 2 3+ 3+ 

Therapy visits 0–13 14+ 0–13 14+ 

EQUATION: 1 2 3 4 

CLINICAL DIMENSION 

1 Primary or Other Diagnosis = Blindness/Low Vision ....................................................................................... 3 3 3 3 

2 Primary or Other Diagnosis = Blood disorders ................................................................................................ 2 5 .......... ..........

3 Primary or Other Diagnosis = Cancer, selected benign neoplasms ............................................................... 3 8 3 10 

4 Primary Diagnosis = Diabetes ......................................................................................................................... 5 13 1 8 

5 Other Diagnosis = Diabetes ............................................................................................................................. 3 5 1 5 

6 Primary or Other Diagnosis = Dysphagia and Primary or Other Diagnosis = Neuro 3—Stroke .................... 2 6 .......... 6 

7 Primary or Other Diagnosis = Dysphagia and M0250 (Therapy at home) = 3 (Enteral) ................................ .......... 6 .......... ..........

8 Primary or Other Diagnosis = Gastrointestinal disorders ................................................................................ 2 6 1 5 

9 Primary or Other Diagnosis = Gastrointestinal disorders and M0550 (ostomy) = 1 or 2 ............................... 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 ............................................................................................................................. .......... .......... 2 ..........

11 Primary or Other Diagnosis = Heart Disease or Hypertension ....................................................................... 3 6 1 7 

12 Primary Diagnosis = Neuro 1—Brain disorders and paralysis ........................................................................ 3 8 5 8 

13 Primary or Other Diagnosis = Neuro 1—Brain disorders and paralysis and M0680 (Toileting) = 2 or more 3 10 3 10 

14 Primary or Other Diagnosis = Neuro 1—Brain disorders and paralysis or Neuro 2—Peripheral neurological 

disorders and M0650 or M0660 (Dressing upper or lower body) = 1, 2, or 3 ................................................ 1 4 1 2

15 Primary or Other Diagnosis = Neuro 3—Stroke .............................................................................................. .......... 2 .......... ..........

16 Primary or Other Diagnosis = Neuro 3—Stroke and M0650 or M0660 (Dressing upper or lower body) = 

1, 2, or 3 ........................................................................................................................................................... 1 3 2 8 

17 Primary or Other Diagnosis = Neuro 3—Stroke and M0700 (Ambulation) = 3 or more ................................. 1 5 .......... ..........

18 Primary or Other Diagnosis = Neuro 4—Multiple Sclerosis and at least one of the following: 

M0670 (bathing) = 2 or more or M0680 (Toileting) = 2 or more or M0690 (Transferring) = 2 or more or 

M0700 (Ambulation) = 3 or more ..................................................................................................................... 3 3 12 18 

19 Primary or Other Diagnosis = Ortho 1—Leg Disorders or Gait Disorders and M0460 (most problematic 

pressure ulcer stage) = 1, 2, 3 or 4 ................................................................................................................. 2 .......... .......... ..........

20 Primary or Other Diagnosis = Ortho 1—Leg or Ortho 2—Other orthopedic disorders and M0250 

(Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) ..................................................................................... 5 5 .......... ..........

21 Primary or Other Diagnosis = Psych 1—Affective and other psychoses, depression .................................... 4 6 2 6 

22 Primary or Other Diagnosis = Psych 2—Degenerative and other organic psychiatric disorders ................... 1 3 .......... 3 

23 Primary or Other Diagnosis = Pulmonary disorders ........................................................................................ 1 5 1 5 

24 Primary or Other Diagnosis = Pulmonary disorders and M0700 (Ambulation) = 1 or more ........................... 1 

25 Primary Diagnosis = Skin 1—Traumatic wounds, burns, and post-operative complications .......................... 10 20 8 20 

26 Other Diagnosis = Skin 1—Traumatic wounds, burns, post-operative complications .................................... 6 6 4 4 

27 Primary or Other Diagnosis = Skin 1—Traumatic wounds, burns, and post-operative complications or 

Skin 2—Ulcers and other skin conditions and M0250 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) 2 .......... 2 ..........

28 Primary or Other Diagnosis = Skin 2—Ulcers and other skin conditions ....................................................... 6 12 5 12 

29 Primary or Other Diagnosis = Tracheostomy .................................................................................................. 4 4 4 ..........

30 Primary or Other Diagnosis = Urostomy/Cystostomy ...................................................................................... 6 22 4 22 

31 M0250 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) ........................................................................ 8 15 5 11 

32 M0250 (Therapy at home) = 3 (Enteral) .......................................................................................................... 4 11 .......... 11 

33 M0390 (Vision) = 1 or more ............................................................................................................................. 1 .......... .......... 2 

34 M0420 (Pain) = 2 or 3 ...................................................................................................................................... 1 .......... .......... ..........

35 M0450 = Two or more pressure ulcers at stage 3 or 4 .................................................................................. 3 3 5 5 

36 M0460 (Most problematic pressure ulcer stage) = 1 or 2 ............................................................................... 5 11 5 11 

37 M0460 (Most problematic pressure ulcer stage) = 3 or 4 ............................................................................... 16 26 12 22 

38 M0476 (Stasis ulcer status) = 2 ....................................................................................................................... 7 7 7 7 

39 M0476 (Stasis ulcer status) = 3 ....................................................................................................................... 11 11 11 11 

40 M0488 (Surgical wound status) = 2 ................................................................................................................. .......... 2 3 ..........

41 M0488 (Surgical wound status) = 3 ................................................................................................................. 4 4 4 4 

42 M0490 (Dyspnea) = 2, 3, or 4 ......................................................................................................................... 2 2 .......... ..........


srobinson on DSK4SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 41007 

TABLE 14A—POINTS ASSOCIATED WITH THE UPDATED 4-EQUATION MODEL WITHOUT HYPERTENSION

CODES 401.1 AND 401.9—Continued 

Case-Mix Adjustment Variables and Scores 

(Note: 4—Equation Model was Estimated on Episodes from 2005 where 401.1 and 401.9 were not counted in the Hypertension Diagnosis 

Group) 

Episode number within sequence of adjacent episodes 1 or 2 1 or 2 3+ 3+ 

43 M0540 (Bowel Incontinence) = 2 to 5 .............................................................................................................. 1 2 1 ..........

44 M0550 (Ostomy) = 1 or 2 ................................................................................................................................ 5 9 3 9 

45 M0800 (Injectable Drug Use) = 0, 1, or 2 ........................................................................................................ 0 1 2 3 

FUNCTIONAL DIMENSION 

46 M0650 or M0660 (Dressing upper or lower body) = 1, 2, or 3 ....................................................................... 2 4 2 2 

47 M0670 (Bathing) = 2 or more .......................................................................................................................... 3 3 6 6 

48 M0680 (Toileting) = 2 or more ......................................................................................................................... 2 3 2 ..........

49 M0690 (Transferring) = 2 or more ................................................................................................................... .......... 1 .......... ..........

50 M0700 (Ambulation) = 1 or 2 ........................................................................................................................... 1 .......... 1 ..........

51 M0700 (Ambulation) = 3 or more ..................................................................................................................... 3 3 4 5 

Notes: The data for the regression equations come from a 20 percent random sample of episodes from CY 2005. The sample excludes LUPA 

episodes, outlier episodes, and episodes with SCIC or PEP adjustments. 

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. 

TABLE 14B—THE DIFFERENCE IN POINTS BETWEEN THE CURRENT AND PROPOSED CASE-MIX ADJUSTMENT SCORES

Episode number within sequence of adjacent episodes 1 or 2 1 or 2 3+ 3+ 

Therapy visits 0–13 14+ 0–13 14+ 

EQUATION: 1 2 3 4 

CLINICAL DIMENSION 

1 Primary or Other Diagnosis = Blindness/Low Vision ....................................................................................... 0 0 0 0 

2 Primary or Other Diagnosis = Blood disorders ................................................................................................ 0 0 .......... ..........

3 Primary or Other Diagnosis = Cancer, selected benign neoplasms ............................................................... ¥1 1 0 0 

4 Primary Diagnosis = Diabetes ......................................................................................................................... 0 1 0 0 

5 Other Diagnosis = Diabetes ............................................................................................................................. 1 1 0 1 

6 Primary or Other Diagnosis = Dysphagia and Primary or Other Diagnosis = Neuro 3—Stroke .................... 0 0 .......... 0 

7 Primary or Other Diagnosis = Dysphagia and M0250 (Therapy at home) = 3 (Enteral) ................................ .......... 0 .......... ..........

8 Primary or Other Diagnosis = Gastrointestinal disorders ................................................................................ 0 0 0 1 

9 Primary or Other Diagnosis = Gastrointestinal disorders and M0550 (ostomy) = 1 or 2 ............................... ¥1 .......... .......... ..........

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 ......................................................................................................................... .......... .......... 0 ..........

11 Primary or Other Diagnosis = Heart Disease or Hypertension ....................................................................... 0 ¥1 0 ¥1 

12 Primary Diagnosis = Neuro 1—Brain disorders and paralysis ........................................................................ 0 0 0 0 

13 Primary or Other Diagnosis = Neuro 1—Brain disorders and paralysis and M0680 (Toileting) = 2 or more 0 0 0 0 

14 Primary or Other Diagnosis = Neuro 1—Brain disorders and paralysis or Neuro 2—Peripheral 

neurological disorders and M0650 or M0660 (Dressing upper or lower body) = 1, 2, or 3 ............................ ¥1 0 ¥1 0 

15 Primary or Other Diagnosis = Neuro 3—Stroke .............................................................................................. .......... 1 .......... ..........

16 Primary or Other Diagnosis = Neuro 3—Stroke and M0650 or M0660 (Dressing upper or lower body) = 

1, 2, or 3 ........................................................................................................................................................... 0 0 0 0 

17 Primary or Other Diagnosis = Neuro 3—Stroke and M0700 (Ambulation) = 3 or more ................................. 0 0 .......... ..........

18 Primary or Other Diagnosis = Neuro 4—Multiple Sclerosis and at least one of the following: 

M0670 (bathing) = 2 or more or M0680 (Toileting) = 2 or more or M0690 (Transferring) = 2 or more or 

M0700 (Ambulation) = 3 or more ..................................................................................................................... 0 0 0 0 

19 Primary or Other Diagnosis = Ortho 1—Leg Disorders or Gait Disorders and M0460 (most problematic 

pressure ulcer stage) = 1, 2, 3 or 4 ................................................................................................................. 0 .......... .......... ..........

20 Primary or Other Diagnosis = Ortho 1—Leg or Ortho 2—Other orthopedic disorders and M0250 (Therapy 

at home) = 1 (IV/Infusion) or 2 (Parenteral) ..................................................................................................... 0 0 .......... ..........

21 Primary or Other Diagnosis = Psych 1—Affective and other psychoses, depression .................................... 1 1 0 1 

22 Primary or Other Diagnosis = Psych 2—Degenerative and other organic psychiatric disorders ................... 0 1 .......... 1 

23 Primary or Other Diagnosis = Pulmonary disorders ........................................................................................ 0 0 0 0 

24 Primary or Other Diagnosis = Pulmonary disorders and M0700 (Ambulation) = 1 or more ........................... 0 .......... .......... ..........

25 Primary Diagnosis = Skin 1—Traumatic wounds, burns, and post-operative complications .......................... 0 0 0 0 

26 Other Diagnosis = Skin 1—Traumatic wounds, burns, post-operative complications .................................... 0 0 0 0 

27 Primary or Other Diagnosis = Skin 1—Traumatic wounds, burns, and post-operative complications or 

Skin 2—Ulcers and other skin conditions and M0250 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) 0 .......... 0 ..........

28 Primary or Other Diagnosis = Skin 2—Ulcers and other skin conditions ....................................................... 0 0 0 0 

29 Primary or Other Diagnosis = Tracheostomy .................................................................................................. 0 0 0 ..........

30 Primary or Other Diagnosis = Urostomy/Cystostomy ...................................................................................... 0 ¥1 0 ¥1 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41008 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

TABLE 14B—THE DIFFERENCE IN POINTS BETWEEN THE CURRENT AND PROPOSED CASE-MIX ADJUSTMENT SCORES— 

Continued 

Episode number within sequence of adjacent episodes 1 or 2 1 or 2 3+ 3+ 

31 M0250 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) ........................................................................ 0 0 0 ¥1 

32 M0250 (Therapy at home) = 3 (Enteral) .......................................................................................................... 0 ¥1 .......... ¥1 

33 M0390 (Vision) = 1 or more ............................................................................................................................. 0 .......... .......... 1 

34 M0420 (Pain) = 2 or 3 ...................................................................................................................................... 0 .......... .......... ..........

35 M0450 = Two or more pressure ulcers at stage 3 or 4 .................................................................................. 0 0 0 0 

36 M0460 (Most problematic pressure ulcer stage) = 1 or 2 ............................................................................... 0 0 0 0 

37 M0460 (Most problematic pressure ulcer stage) = 3 or 4 ............................................................................... 0 0 0 ¥1 

38 M0476 (Stasis ulcer status) = 2 ....................................................................................................................... ¥1 ¥1 ¥1 ¥1 

39 M0476 (Stasis ulcer status) = 3 ....................................................................................................................... 0 0 0 0 

40 M0488 (Surgical wound status) = 2 ................................................................................................................. .......... 0 0 ..........

41 M0488 (Surgical wound status) = 3 ................................................................................................................. 0 0 0 0 

42 M0490 (Dyspnea) = 2, 3, or 4 ......................................................................................................................... 0 0 .......... ..........

43 M0540 (Bowel Incontinence) = 2 to 5 .............................................................................................................. 0 0 0 ..........

44 M0550 (Ostomy) = 1 or 2 ................................................................................................................................ 0 0 0 0 

45 M0800 (Injectable Drug Use) = 0, 1, or 2 ........................................................................................................ ¥1 0 0 ¥1 

FUNCTIONAL DIMENSION 

46 M0650 or M0660 (Dressing upper or lower body) = 1, 2, or 3 ....................................................................... 0 0 0 0 

47 M0670 (Bathing) = 2 or more .......................................................................................................................... 0 0 0 0 

48 M0680 (Toileting) = 2 or more ......................................................................................................................... 0 0 0 ..........

49 M0690 (Transferring) = 2 or more ................................................................................................................... .......... ¥1 .......... ..........

50 M0700 (Ambulation) = 1 or 2 ........................................................................................................................... 0 .......... 0 ..........

51 M0700 (Ambulation) = 3 or more ..................................................................................................................... 0 ¥1 0 0 

Notes: The data for the regression equations come from a 20 percent random sample of episodes from CY 2005. The sample excludes LUPA 

episodes, outlier episodes, and episodes with SCIC or PEP adjustments. 

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. 

We also examined how episodes in 

the sample changed clinical severity 

groups when going from a four-equation 

model that includes 401.1 and 401.9 to 

a four-equation model that does not 

include 401.1 and 401.9. It should be 

noted that a small number of episodes 

also changed functional groups. In our 

analysis, we looked at the distribution 

of episodes in each clinical severity 

level (low, medium, high) by the fourequation model indicators (early/late 

episodes and low/high therapy 

episodes). When comparing the 

distribution of episodes using the fourequation model without the 401.1 and 

401.9 hypertension codes to the 

distribution of episodes using the fourequation model with the hypertension 

codes (our current four-equation model), 

there was a similar distribution of 

episodes between the low, medium and 

high clinical levels, for each of the fourequation model indicators. We also 

looked at the distribution of episodes in 

each functional severity level by the 

four-equation model indicator. There 

was also a very similar distribution of 

episodes for the three functional 

severity levels using the four-equation 

model without the two hypertension 

codes compared to the distribution of 

episodes using the current four-equation 

model, for each of the four-equation 

model indicators. Since the fourequation model without the 

hypertension codes 401.1 and 401.9 had 

similar clinical and functional 

distributions of episodes as the current 

model, we decided that it was not 

necessary to change the thresholds for 

the clinical and functional severity 

levels. 

When developing the new payment 

regression model, we used scores from 

the four-equation model without 

hypertension codes 401.1 and 401.9 to 

identify the clinical and functional 

severity levels to be used as payment 

regression variables. In addition, as we 

described earlier, we decided to 

implement a revision of the weights 

using a new method of decelerating 

therapy resources with higher numbers 

of therapy visits. The new method 

involved the removal of the therapy 

visit step indicators from the payment 

regression model. This approach has the 

advantage of staging the introduction of 

clinical and functional severity levels 

into the model as a separate step, to 

avoid influence on the clinical and 

functional scores from numerous 

therapy step variables that would 

otherwise be simultaneously entered 

into the regression. In other words, we 

eliminated the therapy visit step 

indicators from the payment regression 

model to ensure that more of the 

resource use would be captured by 

clinical and functional variables, rather 

than therapy variables. Later, we 

implement a method to account for the 

resource use for the therapy step 

variables. The new payment regression 

model that was developed estimated the 

relationship between an episode’s total 

resource (as measured in dollars 

corresponding to wage weighted 

minutes) and the clinical score 

indicators, functional score indicators, 

and four-equation indicators (early/late 

episodes and low/high therapy 

services). 

It should be noted that for the 

payment regression model, we used data 

from 2007, which is the most recent 

data available before the 

implementation of the HH PPS 

refinements. The coefficients for the 

payment regression model using 2007 

data can be found at Table 15. The 

adjusted R-squared value for the 

payment regression model using 2007 

data is 0.3769. 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 41009 

TABLE 15—PROPOSED PAYMENT REGRESSION MODEL

Variable name Variable description 

New payment 

regression 

coefficients 

clin_grp2_1 ........................................................ Step 1, Clinical Score 5 to 8 .............................................................................. $6.55 

clin_grp3_1 ........................................................ Step 1, Clinical Score 9 or More ........................................................................ 37.72 

func_grp2_1 ...................................................... Step 1, Functional Score = 6 ............................................................................. 88.99 

func_grp3_1 ...................................................... Step 1, Functional Score 7 or More ................................................................... 129.81 

clin_grp2_21 ...................................................... Step 2.1, Clinical Score 7 to 14 ......................................................................... 87.49 

clin_grp3_21 ...................................................... Step 2.1, Clinical Score 15 or More ................................................................... 191.74 

func_grp2_21 .................................................... Step 2.1, Functional Score = 7 .......................................................................... 43.63 

func_grp3_21 .................................................... Step 2.1, Functional Score 8 or More ................................................................ 65.49 

clin_grp2_22 ...................................................... Step 2.2, Clinical Score 9 to 16 ......................................................................... 76.41 

clin_grp3_22 ...................................................... Step 2.2, Clinical Score 17+ .............................................................................. 177.93 

func_grp2_22 .................................................... Step 2.2, Functional Score = 8 .......................................................................... 36.55 

func_grp3_22 .................................................... Step 2.2, Functional Score 9 or More ................................................................ 109.94 

clin_grp2_3 ........................................................ Step 3, Clinical Score 3 to 5 .............................................................................. 28.53 

clin_grp3_3 ........................................................ Step 3, Clinical Score 6 or More ........................................................................ 112.15 

func_grp2_3 ...................................................... Step 3, Functional Score = 9 ............................................................................. 73.68 

func_grp3_3 ...................................................... Step 3, Functional Score 10 or More ................................................................. 113.33 

clin_grp2_4 ........................................................ Step 4, Clinical Score 8 to 14 ............................................................................ 84.62 

clin_grp3_4 ........................................................ Step 4, Clinical Score 15 or More ...................................................................... 213.78 

func_grp2_4 ...................................................... Step 4, Functional Score = 7 ............................................................................. 73.13 

func_grp3_4 ...................................................... Step 4, Functional Score 8 or More ................................................................... 133.71 

step2_1 ............................................................. Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits ................................. 386.71 

step2_2 ............................................................. Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits ............................................. 413.85 

step3 ................................................................. Step 3, 3rd+ Episodes, 0–13 Therapy Visits ..................................................... ¥63.66 

step4 ................................................................. Step 4, All Episodes, 20+ Therapy Visits .......................................................... 700.20 

_cons ................................................................. Intercept .............................................................................................................. 348.74 

Note: The data for the payment regression model come from a 20 percent random sample of episodes from CY 2007. 

The raw weights for each of the 153 

groups were then calculated based on 

the payment regression model. It should 

be noted that the raw weights do not 

change across the graduated therapy 

steps between the therapy thresholds. In 

the next step of weight revision, the 

weights associated with 0 to 5 therapy 

visits were increased by 7.5 percent. 

Also, the weights associated with 14–15 

therapy visits were decreased by 5 

percent and the weights associated with 

20+ therapy visits were decreased by 10 

percent. These adjustments were made 

to discourage inappropriate use of 

therapy while addressing concerns that 

non-therapy services are undervalued. 

The larger reduction factor for 20 or 

more therapy visits (10 percent) 

compared to the reduction factor for 14 

to 15 therapy visits (5 percent) 

implements a more aggressive 

deceleration than we used in the current 

weights. Currently, there is a high 

payment weight associated with the 20 

or more therapy visit threshold to 

capture the costs associated with 

providing 20 therapy visits, as well as 

numbers of therapy visits well beyond 

20 therapy visits. As a result, there is a 

large increase in the payment weight 

between the 18–19 therapy visit step 

and the 20 or more therapy visit 

threshold. This large increase in the 

payment weight may create incentives 

for agencies to provide unnecessary 

therapy visits up to and including 20 

visits, and may explain MedPAC’s 

observation that there was a larger 

increase in the number of episodes in 

the 20 or more therapy visit group than 

the 14 or more therapy visit group. By 

implementing a larger reduction at the 

20 or more therapy visits, we will 

provide a disincentive for agencies to 

pad episodes just to 20 visits or slightly 

more, to be able to realize a large margin 

from that threshold, which was 

designed to pay for not only episodes 

involving 20 or just above 20 therapy 

visits, but also episodes involving 

considerably more than 20 therapy 

visits. 

After the adjustments 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. The 

interpolated weights were then adjusted 

so that the average case-mix for the 

weights was equal to 1. 

When developing our model, we 

considered a number of different sets of 

adjustments. We further explored two 

sets of adjustments because the 

adjustments were in line with our goals 

to address therapy incentives. The two 

sets of adjustments are shown in Table 

16. We looked at the payment to cost 

ratios for various subgroups, where the 

payment was defined as the predicted 

resource use and the cost was defined 

as the wage weighted minutes in 

dollars. After looking at the payment to 

cost ratios, we decided to propose the 

less aggressive set of adjustments 

(option 2) to address therapy incentives 

while maintaining our target payment to 

cost ratios for groups. Specifically, 

when examining the payment to cost 

ratios by number of therapy visits, it 

appears that currently, episodes with 

three to five therapy visits are 

underpaid and episodes with 20 or just 

over 20 therapy visits are overpaid. 

When using our proposed payment 

weights, the episodes with three to five 

therapy visits have a higher payment to 

cost ratio and would receive higher 

payments. Also, episodes with around 

20 therapy visits have more reasonable 

payment to cost ratios when using the 

proposed weights compared to ratios 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41010 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

with the current weights. (Please see the 

Abt technical report located at http:// 

www.cms.gov/center/hha.asp for the 

payment to cost ratio tables and more 

information.) 

TABLE 16—ADJUSTMENTS TO THE RAW WEIGHTS

Therapy step group 

Option 1: 

Most 

aggressive 

direct 

adjustments 

Option 2: 

Less 

aggressive 

direct 

adjustments 

0 to 5 Therapy Visits ............................................................................................................................................... 1.15 1.075 

14 to 15 Therapy Visits ........................................................................................................................................... 0.9 0.95 

20+ Therapy Visits ................................................................................................................................................... 0.8 0.9 

After applying the adjustments in 

Table 16 to the raw weights, applying 

the interpolation between the therapy 

thresholds, and adjusting the weights so 

that the average case-mix for the weights 

was equal to 1, we applied a budget 

neutrality factor (1.2847) to the weights 

to ensure that the final proposed 

weights result in aggregate expenditures 

in 2009 approximately equal to 

expenditures using the current payment 

weights. It is important to note that our 

authority allows us to reduce home 

health payments only as described in 

section 1895(b)(3)(B)(iv) of the Act. As 

such, we must revise our payment 

weights in a budget neutral manner. 

Therefore, after deriving revised relative 

case-mix weights, we increased the 

weights to achieve budget neutrality to 

the most current, complete data 

available, which is 2009. We show the 

final set of new payment weights for the 

153 groups that we are proposing in 

Table 17. The R-squared value when we 

ran a regression of the episode’s total 

resources (dependent variable) using 

our proposed weights (independent 

variable) is 0.5384. It should be noted 

that we will continue to evaluate and 

potentially refine the payment weights 

as new data and analysis becomes 

available. 

It also should be noted that as we 

described in section A of this proposed 

rule, we also are proposing to reduce 

payments under our authority in section 

1895(b)(3)(B)(iv) of the Act to reduce the 

home health base episode payment to 

account for nominal case-mix growth 

through 2009. 

TABLE 17—FINAL PROPOSED PAYMENT WEIGHTS (2007) 

Payment group Step (episode and/or therapy visit ranges) 

Clinical and 

functional 

levels 

(1 = low; 

2 = medium; 

3 = high) 

Final weights 

(2007 

recalibration) 

10111 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C1F1 0.8468 

10112 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C1F1 0.9931 

10113 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C1F1 1.1394 

10114 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C1F1 1.2857 

10115 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C1F1 1.4320 

10121 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C1F2 1.0630 

10122 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C1F2 1.1847 

10123 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C1F2 1.3065 

10124 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C1F2 1.4283 

10125 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C1F2 1.5501 

10131 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C1F3 1.1621 

10132 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C1F3 1.2734 

10133 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C1F3 1.3847 

10134 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C1F3 1.4961 

10135 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C1F3 1.6074 

10211 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C2F1 0.8627 

10212 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C2F1 1.0434 

10213 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C2F1 1.2240 

10214 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C2F1 1.4047 

10215 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C2F1 1.5853 

10221 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C2F2 1.0788 

10222 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C2F2 1.2350 

10223 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C2F2 1.3912 

10224 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C2F2 1.5473 

10225 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C2F2 1.7035 

10231 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C2F3 1.1780 

10232 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C2F3 1.3237 

10233 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C2F3 1.4694 

10234 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C2F3 1.6151 

10235 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C2F3 1.7608 

10311 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C3F1 0.9384 

10312 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C3F1 1.1487 

10313 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C3F1 1.3589 

10314 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C3F1 1.5692 


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TABLE 17—FINAL PROPOSED PAYMENT WEIGHTS (2007)—Continued 

Payment group Step (episode and/or therapy visit ranges) 

Clinical and 

functional 

levels 

(1 = low; 

2 = medium; 

3 = high) 

Final weights 

(2007 

recalibration) 

10315 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C3F1 1.7794 

10321 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C3F2 1.1545 

10322 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C3F2 1.3403 

10323 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C3F2 1.5261 

10324 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C3F2 1.7118 

10325 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C3F2 1.8976 

10331 ............................................... 1st and 2nd Episodes, 0 to 5 Therapy Visits ............................................ C3F3 1.2537 

10332 ............................................... 1st and 2nd Episodes, 6 Therapy Visits ................................................... C3F3 1.4290 

10333 ............................................... 1st and 2nd Episodes, 7 to 9 Therapy Visits ............................................ C3F3 1.6043 

10334 ............................................... 1st and 2nd Episodes, 10 Therapy Visits ................................................. C3F3 1.7796 

10335 ............................................... 1st and 2nd Episodes, 11 to 13 Therapy Visits ........................................ C3F3 1.9549 

21111 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C1F1 1.5782 

21112 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C1F1 1.7630 

21113 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C1F1 1.9478 

21121 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C1F2 1.6719 

21122 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C1F2 1.8750 

21123 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C1F2 2.0781 

21131 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C1F3 1.7188 

21132 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C1F3 1.9473 

21133 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C1F3 2.1758 

21211 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C2F1 1.7660 

21212 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C2F1 1.9455 

21213 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C2F1 2.1250 

21221 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C2F2 1.8596 

21222 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C2F2 2.0575 

21223 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C2F2 2.2553 

21231 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C2F3 1.9065 

21232 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C2F3 2.1298 

21233 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C2F3 2.3531 

21311 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C3F1 1.9897 

21312 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C3F1 2.1822 

21313 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C3F1 2.3747 

21321 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C3F2 2.0833 

21322 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C3F2 2.2941 

21323 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C3F2 2.5050 

21331 ............................................... 1st and 2nd Episodes, 14 to 15 Therapy Visits ........................................ C3F3 2.1302 

21332 ............................................... 1st and 2nd Episodes, 16 to 17 Therapy Visits ........................................ C3F3 2.3665 

21333 ............................................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................ C3F3 2.6027 

22111 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C1F1 1.6365 

22112 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C1F1 1.8018 

22113 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C1F1 1.9672 

22121 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C1F2 1.7149 

22122 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C1F2 1.9037 

22123 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C1F2 2.0924 

22131 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C1F3 1.8724 

22132 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C1F3 2.0497 

22133 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C1F3 2.2270 

22211 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C2F1 1.8004 

22212 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C2F1 1.9685 

22213 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C2F1 2.1365 

22221 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C2F2 1.8789 

22222 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C2F2 2.0703 

22223 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C2F2 2.2618 

22231 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C2F3 2.0364 

22232 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C2F3 2.2164 

22233 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C2F3 2.3964 

22311 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C3F1 2.0183 

22312 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C3F1 2.2013 

22313 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C3F1 2.3842 

22321 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C3F2 2.0967 

22322 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C3F2 2.3031 

22323 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C3F2 2.5094 

22331 ............................................... 3rd+ Episodes, 14 to 15 Therapy Visits ................................................... C3F3 2.2542 

22332 ............................................... 3rd+ Episodes, 16 to 17 Therapy Visits ................................................... C3F3 2.4492 

22333 ............................................... 3rd+ Episodes, 18 to 19 Therapy Visits ................................................... C3F3 2.6441 

30111 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C1F1 0.6923 

30112 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C1F1 0.8811 

30113 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C1F1 1.0699 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41012 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

TABLE 17—FINAL PROPOSED PAYMENT WEIGHTS (2007)—Continued 

Payment group Step (episode and/or therapy visit ranges) 

Clinical and 

functional 

levels 

(1 = low; 

2 = medium; 

3 = high) 

Final weights 

(2007 

recalibration) 

30114 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C1F1 1.2588 

30115 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C1F1 1.4476 

30121 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C1F2 0.8712 

30122 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C1F2 1.0399 

30123 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C1F2 1.2087 

30124 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C1F2 1.3774 

30125 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C1F2 1.5462 

30131 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C1F3 0.9675 

30132 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C1F3 1.1485 

30133 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C1F3 1.3294 

30134 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C1F3 1.5104 

30135 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C1F3 1.6914 

30211 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C2F1 0.7615 

30212 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C2F1 0.9693 

30213 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C2F1 1.1771 

30214 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C2F1 1.3849 

30215 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C2F1 1.5927 

30221 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C2F2 0.9405 

30222 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C2F2 1.1281 

30223 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C2F2 1.3158 

30224 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C2F2 1.5035 

30225 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C2F2 1.6912 

30231 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C2F3 1.0367 

30232 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C2F3 1.2367 

30233 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C2F3 1.4366 

30234 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C2F3 1.6365 

30235 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C2F3 1.8364 

30311 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C3F1 0.9646 

30312 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C3F1 1.1753 

30313 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C3F1 1.3861 

30314 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C3F1 1.5968 

30315 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C3F1 1.8076 

30321 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C3F2 1.1435 

30322 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C3F2 1.3342 

30323 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C3F2 1.5248 

30324 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C3F2 1.7155 

30325 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C3F2 1.9061 

30331 ............................................... 3rd+ Episodes, 0 to 5 Therapy Visits ....................................................... C3F3 1.2398 

30332 ............................................... 3rd+ Episodes, 6 Therapy Visits ............................................................... C3F3 1.4427 

30333 ............................................... 3rd+ Episodes, 7 to 9 Therapy Visits ....................................................... C3F3 1.6456 

30334 ............................................... 3rd+ Episodes, 10 Therapy Visits ............................................................. C3F3 1.8485 

30335 ............................................... 3rd+ Episodes, 11 to 13 Therapy Visits ................................................... C3F3 2.0514 

40111 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C1F1 2.1325 

40121 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C1F2 2.2812 

40131 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C1F3 2.4043 

40211 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C2F1 2.3046 

40221 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C2F2 2.4532 

40231 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C2F3 2.5764 

40311 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C3F1 2.5671 

40321 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C3F2 2.7158 

40331 ............................................... All Episodes, 20+ Therapy Visits .............................................................. C3F3 2.8390 

C. Outlier Policy 

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 home health (HH) care 

needs. Prior to the enactment of the 

Affordable Care Act in March 2010, this 

section of the Act stipulated that total 

outlier payments could not exceed 5 

percent of total projected or estimated 

HH payments in a given year. In the July 

2000 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 

Home Health 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 

partial episode payment (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 wageadjusted threshold. The threshold 


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amount is the sum of the wage and casemix adjusted PPS episode amount and 

wage-adjusted fixed dollar loss amount. 

The proportion of additional costs paid 

as outlier payments is referred to as the 

loss-sharing ratio. 

2. Regulatory Update 

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 exceeded the 5 percent 

statutory limit. 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 done in concert 

with a reduced fixed dollar loss (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 expenditures.) 

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 

low utilization payment adjustment 

(LUPA) add-on payment amount, and 

the non-routine supplies (NRS) 

conversion factor. Then, we reduced the 

CY 2010 rates by 2.5 percent to account 

for the new outlier pool of 2.5 percent. 

This outlier policy was adopted for CY 

2010 only. 

3. Statutory Update 

As outlined in the CY 2011 HH PPS 

final rule (75 FR 70397 through 70399), 

sections 3131(b)(1) and 3131(b)(2) of the 

Affordable Care Act amended sections 

1895(b)(3)(C) and 1895(b)(5) of the Act. 

Specifically, section 3131(b)(2) of the 

Affordable Care Act amended section 

1895(b)(5) of the Act by redesignating 

the existing language as section 

1895(b)(5)(A) of the Act, and revising it 

to state that the Secretary, ‘‘may provide 

for an addition or adjustment to the 

payment amount otherwise made in the 

case of outliers because of unusual 

variations in the type or amount of 

medically necessary care. The total 

amount of the additional payments or 

payment adjustments made under this 

paragraph with respect to a fiscal year 

or year may not exceed 2.5 percent of 

the total payments projected or 

estimated to be made based on the 

prospective payment system under this 

subsection in that year.’’ 

The result of these revisions was that, 

beginning in CY 2011, we reduced 

payment rates by 5 percent, targeted up 

to 2.5 percent of estimated total 

payments to be paid as outlier 

payments, and applied a 10 percent 

agency-level outlier cap. 

4. Loss-Sharing Ratio and Fixed Dollar 

Loss (FDL) Ratio 

For a given level of outlier payments, 

there is a trade-off between the values 

selected for the FDL ratio and the losssharing 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). In the past, we have used a 

value of 0.80 for the loss-sharing ratio, 

which is relatively high, but preserves 

incentives for agencies to attempt to 

provide care efficiently for outlier cases. 

With a loss-sharing ratio of 0.80, 

Medicare pays 80 percent of the 

additional costs above the wageadjusted outlier threshold amount. 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. 

A preliminary look at partial CY 2010 

Health Care Information System (HCIS) 

data indicates that, because the total 

outlier payments comprise 

approximately 2 percent of total 

payments, we would maintain the 

current FDL ratio of 0.67. However, in 

the final rule, we will update our 

estimate of the FDL ratio using the most 

current and complete year of HH PPS 

data available. 

Table 18 shows outlier payment 

history as a percentage of total HH PPS 

payments between calendar years 2004 

and 2009. Preliminary data for CY 2010 

is also provided; however, this data 

represents only a portion of the data 

available and is current only through 

part of the third quarter. 

TABLE 18—OUTLIER PAYMENT HISTORY—CY 2004 THROUGH CY 2010 

Year Outlier payment Total HH PPS 

payment 

Outlier 

payment 

percentage 

2004 ............................................................................................................................. $309,198,604 $11,500,462,624 2.69 

2005 ............................................................................................................................. 527,096,653 12,885,434,951 4.09 

2006 ............................................................................................................................. 701,945,386 14,041,853,560 5.00 

2007 ............................................................................................................................. 996,316,407 15,677,329,001 6.36 

2008 ............................................................................................................................. 1,127,162,152 17,114,906,875 6.59 

2009 ............................................................................................................................. 1,204,246,569 18,895,476,901 6.37 

2010 ............................................................................................................................. 233,274,303 13,878,411,396 * 1.68 

* This CY 2010 outlier payment projection is based only on claims reported through part of the third quarter. 

5. Outlier Relationship to the HH 

Payment Study 

As we discuss later in this proposed 

rule, section 3131(d) of the Affordable 

Care Act requires CMS to conduct a 

study and report on developing HH 

payment revisions that will ensure 

access to care and payment for HH 

patients with high severity of illness. 

Our Report to Congress containing this 

study’s recommendations is due no later 

than March 1, 2014. Section 

3131(d)(1)(A)(iii) of the Affordable Care 

Act, in particular, states that this study 

may include analysis of potential 

revisions to outlier payments to better 

reflect costs of treating Medicare 

beneficiaries with high levels of severity 

of illness. 

D. CY 2012 Rate Update 

1. Home Health Market Basket Update 

Section 1895(b)(3)(B) of the Act 

requires that the standard prospective 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41014 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

payment amounts for CY 2012 be 

increased by a factor equal to the 

applicable home health market basket 

update for those HHAs that submit 

quality data as required by the 

Secretary. Section 3401(e) of the 

Affordable Care Act amended section 

1895(b)(3)(B) of the Act by adding a new 

clause (vi) which states, ‘‘After 

determining the home health market 

basket percentage increase * * * the 

Secretary shall reduce such percentage 

* * * for each of 2011, 2012, and 2013, 

by 1 percentage point. The application 

of this clause may result in the home 

health market basket percentage 

increase under clause (iii) being less 

than 0.0 for a year, and may result in 

payment rates under the system under 

this subsection for a year being less than 

such payment rates for the preceding 

year.’’ 

The proposed HH PPS market basket 

update for CY 2012 is 2.5 percent. This 

is based on Global Insight Inc.’s first 

quarter 2011 forecast, utilizing historical 

data through the fourth quarter of 2010. 

A detailed description of how we derive 

the HHA market basket is available in 

the CY 2008 HH PPS proposed rule (72 

FR 25356, 25435). Due to the 

requirement in section 1895(b)(3)(B)(vi) 

of the Act, the proposed CY 2012 market 

basket update of 2.5 percent must be 

reduced by 1 percentage point to 1.5 

percent. In effect, the proposed CY 2012 

market basket update becomes 1.5 

percent. 

2. Home Health Care Quality Reporting 

Program 

a. 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 

dictates that ‘‘for 2007 and each 

subsequent year, in the case of a HHA 

that does not submit data to the 

Secretary in accordance with subclause 

(II) with respect to such a year, the HH 

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 § 484.225(i). 

HHAs that meet the quality data 

reporting requirements would be 

eligible for the full home health market 

basket percentage increase. HHAs that 

do not meet the reporting requirements 

would be subject to a 2 percent 

reduction to the home health market 

basket increase. 

b. OASIS Data 

Accordingly, for CY 2012, we propose 

to continue to use a HHA’s submission 

of OASIS data as one form of quality 

data to meet the requirement that the 

HHA submit data appropriate for the 

measurement of health care quality. We 

are proposing for CY 2012 to consider 

OASIS assessments submitted by HHAs 

to CMS in compliance with HHA 

Conditions of Participation and 

Conditions for Payment for episodes 

beginning on or after July 1, 2010 and 

before July 1, 2011 as fulfilling one 

portion of the quality reporting 

requirement for CY 2012. This time 

period would allow 12 full months of 

data collection and would provide us 

the time necessary to analyze and make 

any necessary payment adjustments to 

the payment rates for CY 2012. We 

propose to reconcile the OASIS 

submissions with claims data to verify 

full compliance with the OASIS portion 

of the quality reporting requirements in 

CY 2012 and each year thereafter on an 

annual cycle July 1 through June 30 as 

described above. 

As set forth in the CY 2008 final rule, 

agencies do not need to submit OASIS 

data for those patients who are excluded 

from the OASIS submission 

requirements under the Home Health 

Conditions of Participation (CoPs) 

§ 484.1–§ 484.265, as well as those 

excluded, as described at 70 FR 76202: 

• Those patients receiving only 

nonskilled services; 

• Those patients for whom neither 

Medicare nor Medicaid is paying for 

home health care (patients receiving 

care under a Medicare or Medicaid 

Managed Care Plan are not excluded 

from the OASIS reporting requirement); 

• Those patients receiving pre- or 

post-partum services; or 

• Those patients under the age of 18 

years. 

As set forth in the CY 2008 HH PPS 

final rule (72 FR 49863), agencies that 

become Medicare-certified on or after 

May 31 of the preceding year (2011 for 

payments in 2012) are excluded from 

any payment penalty for quality 

reporting purposes for the following CY. 

Therefore, HHAs that are certified on or 

after May 1, 2011 are excluded from the 

quality reporting requirement for CY 

2012 payments. These exclusions only 

affect quality reporting requirements 

and do not affect the HHA’s reporting 

responsibilities under the Conditions of 

Participation and Conditions of 

Payment. 

(1) OASIS Data and Annual Payment 

Update 

HHAs that submit OASIS data as 

specified above are considered to have 

met one portion of the quality data 

reporting requirements. Additional 

portions of the quality data reporting 

requirements are discussed below under 

sections D.2.c and D.2.d of this 

preamble. 

(2) OASIS Data and Public Reporting 

Section 1895(b)(3)(B)(v)(III) of the Act 

further states that ‘‘[t]he Secretary shall 

establish procedures for making data 

submitted under sub clause (II) available 

to the public. Such procedures shall 

ensure that a home health agency has 

the opportunity to review the data that 

is to be made public with respect to the 

agency prior to such data being made 

public.’’ 

To meet the requirement for making 

such data public, we propose to 

continue using a subset of OASIS data 

that is utilized for quality measure 

development and reported on the Home 

Health Compare Web site. Currently, the 

Home Health Compare web site lists 23 

quality measures from the OASIS data 

set as described below. The Home 

Health Compare web site, which was 

redesigned in October 2010, is located at 

http://www.medicare.gov/HHCompare/ 

Home.asp. Each HHA currently has prepublication access, through the CMS 

contractor, to its own quality data that 

the contractor updates periodically. We 

propose to continue this process, to 

enable each agency to view its quality 

measures before public posting of data 

on Home Health Compare. 

The following 13 OASIS–C process 

measures have been publicly reported 

on Home Health Compare since October 

2010: 

• Timely initiation of care. 

• Influenza immunization received 

for current flu season. 

• Pneumococcal polysaccharide 

vaccine ever received. 

• Heart failure symptoms addressed 

during short-term episodes. 

• Diabetic foot care and patient 

education implemented during shortterm episodes of care. 

• Pain assessment conducted. 

• Pain interventions implemented 

during short-term episodes. 

• Depression assessment conducted. 

• Drug education on all medications 

provided to patient/caregiver during 

short-term episodes. 

• Falls risk assessment for patients 65 

and older. 

• Pressure ulcer prevention plans 

implemented. 

• Pressure ulcer risk assessment 

conducted. 


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• Pressure ulcer prevention included 

in the plan of care. 

We published information about these 

new process measures in the Federal 

Register in the CY 2010 HH PPS 

proposed and final rules (74 FR 40960 

and 74 FR 58096, respectively), and in 

the CY 2011 HH PPS proposed and final 

rules (75 FR 43250 and 75 FR 70401, 

respectively). We proposed and 

finalized the decision to update Home 

Health Compare in October 2010 to 

reflect the addition of the process 

measures. 

We propose to continue publicly 

reporting these 13 process measures and 

consider them as measures of home 

health quality. 

The following 10 OASIS–C outcome 

measures are currently listed on Home 

Health Compare: 

• Improvement in ambulation/ 

locomotion. 

• Improvement in bathing. 

• Improvement in bed transferring. 

• Improvement in management of 

oral medications. 

• Improvement in pain interfering 

with activity. 

• Acute care hospitalization. 

• Emergency Department Use 

Without Hospitalization. 

• Improvement in dyspnea. 

• Improvement in status of surgical 

wounds. 

• Increase in number of pressure 

ulcers. 

As proposed and finalized in the CY 

2011 HH PPS final rule (75 FR 70401), 

these OASIS–C outcome measure 

calculations will be publicly reported 

for the first time in July 2011. (3) 

Transition from OASIS–B1 to OASIS–C 

The implementation of OASIS–C on 

January 1, 2010 impacted the schedule 

of quality measure reporting for CY 

2010 and CY 2011. Although sufficient 

OASIS–C data were collected during CY 

2010 and early CY 2011 and risk models 

were in development, the outcome 

reports (found on Home Health 

Compare and the contractor outcome 

reports used for HHA’s performance 

improvement activities) remained static 

with OASIS–B1 data. The last available 

OASIS–B1 reports remained in the 

system and on the Home Health 

Compare site until they could be 

replaced with OASIS–C reports. 

Sufficient numbers of patient episodes 

were needed to report measures based 

on new OASIS–C data. This is 

important because measures based on 

patient sample sizes taken over short 

periods of time can be inaccurate and 

misleading due to issues like seasonal 

variation and under-representation of 

long-stay home health patients. Once 

sufficient OASIS–C data were collected 

and submitted to CMS’s national 

repository, we could begin producing 

new reports based on OASIS–C. 

December 2009 was the last month for 

which outcome data were calculated for 

OASIS–B1 data and OASIS–B1 CASPER 

outcome reports continued to be 

available after March 2010. OASIS–C 

process measures were made available 

to preview in September 2010 and were 

publicly reported in October 2010. 

OASIS–C outcome measures will be 

available to preview in June 2011 and 

will be publicly reported in July 2011. 

c. Claims Data, Proposed Requirements 

and Outcome Measure Change 

We propose to continue to use the 

aforementioned specified measures 

derived from the OASIS–C data for 

purposes of measuring home health care 

quality. We propose to also use 

measures derived from Medicare claims 

data to measure home health quality. 

This would also ensure that providers 

would not have an additional burden of 

reporting quality of care measures 

through a separate mechanism, and that 

the costs associated with the 

development and testing of a new 

reporting mechanism would be avoided. 

The change to OASIS–C brought 

about modifications to the OASIS–B1 

measure ‘‘Emergent Care,’’ and resulted 

in the following change to that measure: 

• Emergency Department Use without 

Hospitalization: This measure replaces 

the previously reported measure: 

Emergent care. It excludes emergency 

department visits that result in a 

hospital admission because those visits 

are already captured in the acute care 

hospitalization measure. 

Upon review of actual claims data for 

emergency department visits and 

responses to OASIS–C data item M2300, 

we determined that the claims data are 

a more robust source of data for this 

measure, therefore the OASIS-based 

measure ‘‘Emergency Department Use 

Without Hospitalization’’ will not be 

publicly reported in July 2011. The ED 

Use Without Hospitalization measure 

will be recalculated from claims data 

and we propose that public reporting of 

the claims-based measure would begin 

January 2012. We invite comment on 

the proposed use of claims data in the 

calculation of home health quality 

measures and as an additional 

measurement of home health quality. 

To summarize, we propose that the 

following 13 process and 9 outcome 

measures, which comprise measurement 

of home health care quality, would 

continue to be publicly reported in July 

2011 and quarterly thereafter: 

• Timely initiation of care. 

• Influenza immunization received 

for current flu season. 

• Pneumococcal polysaccharide 

vaccine ever received. 

• Heart failure symptoms addressed 

during short-term episodes. 

• Diabetic foot care and patient 

education implemented during shortterm episodes of care. 

• Pain assessment conducted. 

• Pain interventions implemented 

during short-term episodes. 

• Depression assessment conducted. 

• Drug education on all medications 

provided to patient/caregiver during 

short-term episodes. 

• Falls risk assessment for patients 65 

and older. 

• Pressure ulcer prevention plans 

implemented. 

• Pressure ulcer risk assessment 

conducted. 

• Pressure ulcer prevention included 

in the plan of care. 

• Improvement in ambulation/ 

locomotion. 

• Improvement in bathing. 

• Improvement in bed transferring. 

• Improvement in management of 

oral medications. 

• Improvement in pain interfering 

with activity. 

• Acute care hospitalization. 

• Improvement in dyspnea. 

• Improvement in status of surgical 

wounds. 

• Increase in number of pressure 

ulcers. 

We propose that the claims-based 

measure ‘‘Emergency Department Use 

without Hospitalization’’ would be 

publicly reported in January 2012. 

d. Home Health Care CAHPS Survey 

(HHCAHPS) 

In the HH PPS Rate Update for CY 

2011 final rule (75 FR 70404 et seq.), we 

stated that the expansion of the HH 

quality measures reporting requirements 

for Medicare-certified agencies will 

include the CAHPS® Home Health Care 

(HHCAHPS) Survey for the CY 2012 

annual payment update (APU). We are 

maintaining our existing policy as 

issued in the CY 2011 HH PPS Rate 

Update, and are moving forward with 

our plans for HHCAHPS linkage to the 

pay-for-reporting (P4R) requirements 

affecting the HH PPS rate update for CY 

2012. 

(1) Background and Description of 

HHCAHPS 

As part of the U.S. Department of 

Health and Human Services’ (DHHS) 

Transparency Initiative, we have 

implemented a process to measure and 

publicly report patient experiences with 

home health care using a survey 


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developed by the Agency for Healthcare 

Research and Quality’s (AHRQ’s) 

Consumer Assessment of Healthcare 

Providers and Systems (CAHPS®) 

program, and endorsed by the National 

Quality Forum (NQF). The HHCAHPS 

survey is part of a family of CAHPS®

surveys that asks patients to report on 

and rate their experiences with health 

care. The Home Health Care CAHPS 

(HHCAHPS) survey presents home 

health patients with a set of 

standardized questions about their 

home health care providers and about 

the quality of their home health care. 

Prior to this survey, there was no 

national standard for collecting 

information about patient experiences 

that would enable valid comparisons 

across all HHAs. The history of the 

HHCAHPS has been given in previous 

rules, but it is also available on our Web 

site at https://homehealthcahps.org and 

also, in the HHCAHPS Protocols and 

Guidelines Manual, which is 

downloadable from our Web site. 

For public reporting purposes, we 

will present five measures—three 

composite measures and two global 

ratings of care from the questions on the 

HHCAHPS survey. The publicly 

reported data will be adjusted for 

differences in patient mix across home 

health agencies. Each composite 

measure consists of four or more 

questions 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); 

• 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, and the patient’s willingness 

to recommend the HHA to family and 

friends. 

The HHCAHPS survey is currently 

available in six languages. At the time 

of the CY 2010 HH PPS final rule, 

HHCAHPS was only available in 

English and Spanish translations. In the 

proposed rule for CY 2010, we stated 

that we would provide additional 

translations of the survey over time in 

response to suggestions for any 

additional language translations. We 

now offer HHCAHPS in English, 

Spanish, Mandarin (Simplified) 

Chinese, Cantonese (Classical) Chinese, 

Russian, and Vietnamese languages. We 

will continue to consider additional 

translations of the HHCAHPS in 

response to the needs of the home 

health patient population. 

All of the requirements about 

eligibility for HHCAHPS and 

conversely, which home health patients 

are ineligible for HHCAHPS are 

delineated and detailed in the 

HHCAHPS Protocols and Guidelines 

Manual which is downloadable from 

the official Home Health Care CAHPS 

Web site https://homehealthcahps.org. 

To be eligible, home health patients 

must have received at least two skilled 

home health visits in the past 2 months, 

paid for by Medicare or Medicaid. 

HHCAHPS surveys will not be taken 

from patients who are: 

• Under the age of 18; 

• Deceased; 

• Receiving hospice care; 

• Receiving routine maternity care 

only; 

• Living in a State that restricts the 

release of patient information for a 

specific condition or illness that the 

patient has; or are 

• Requesting that their names not be 

released to anyone. 

We stated in previous rules that 

Medicare-certified agencies are required 

to contract with an approved HHCAHPS 

survey vendor. Beginning in summer 

2009, interested vendors applied to 

become approved HHCAHPS survey 

vendors. 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 now have 

approximately 40 approved HHCAHPS 

survey vendors. The list of approved 

vendors is available at https:// 

homehealthcahps.org. 

(2) HHCAHPS Requirements for CY 

2012 

In the CY 2010 HH PPS final rule (74 

FR 58078 et seq.), we stated that 

HHCAHPS would not be required for 

the APU for CY 2011. We did this so 

that HHAs would have more time to 

prepare for the implementation of 

HHCAHPS. Therefore, in the CY 2010 

HH PPS final rule, we stated that data 

collection should take place beginning 

in the third quarter of CY 2010 to meet 

the HHCAHPS reporting requirements 

for the CY 2012 APU. In the CY 2010 

HH PPS final rule, and in the CY 2011 

HH PPS final rule, we stated that 

Medicare-certified agencies would be 

required to participate in a dry run for 

at least 1 month in third quarter of 2010 

(July, August, and/or September), and to 

begin continuous monthly data 

collection in October 2010 through 

March 2011, for the CY 2012 APU. The 

dry run data were due to the Home 

Health CAHPS® Data Center by 11:59 

p.m., eastern standard time (e.s.t.) on 

January 21, 2011. The dry run data will 

not be publicly reported on the CMS 

Home Health Compare web site. The 

purpose of the dry run was to provide 

an opportunity for vendors and HHAs to 

acquire first-hand experience with data 

collection, including sampling and data 

submission to the Home Health Care 

CAHPS® Data Center. 

In the CY 2011 HH PPS final rule, it 

was stated that the mandatory period of 

data collection for the CY 2012 APU 

would include the dry run data in the 

third quarter 2010, data from each 

month in the fourth quarter of 2010 

(October, November and December 

2010), and data from each month in the 

first quarter 2011 (January, February and 

March 2011). We previously stated that 

all Medicare-certified HHAs should 

continuously collect HHCAHPS survey 

data for every month in every quarter 

beginning October 2010, and submit 

these data for the fourth quarter of 2010 

to the Home Health CAHPS® Data 

Center by 11:59 p.m., eastern daylight 

time (e.d.t.) on April 21, 2011. In the CY 

2011 HH PPS final rule, we stated that 

the data collected for the 3 months of 

the first quarter 2011 would have to be 

submitted to the Home Health CAHPS®

Data Center by 11:59 p.m., e.d.t. on July 

21, 2011. We also stated that these data 

submission deadlines would be firm 

(that is, no late submissions would be 

accepted). 

These periods (a dry run in third 

quarter 2010, and 6 months of data from 

October 2010 through March 2011) were 

deliberately chosen to comprise the 

HHCAHPS reporting requirements for 

the CY 2012 APU because they 

coincided with the OASIS–C reporting 

requirements that would already have 

been due on June 30, 2011 for the CY 

2012 APU. We would also exempt 

Medicare-certified agencies from the 

HHCAHPS reporting requirements if 

they had fewer than 60 HHCAHPSeligible unique patients from April 1, 

2009 through March 31, 2010. In the CY 

2011 HH PPS final rule, we stated that 

by January 21, 2011 HHAs would need 

to provide CMS with patient counts for 

the period of April 1, 2009 through 

March 31, 2010. We have posted a form 

on https://homehealthcahps.org that the 

HHAs would need to use to submit their 

patient counts. This patient counts 

reporting requirement would pertain 

only to Medicare-certified HHAs with 

fewer than 60 HHCAHPS eligible, 

unduplicated or unique patients for that 

time period. The aforementioned 

agencies would be exempt from 

conducting the HHCAHPS survey for 

the APU in CY 2012. 

We stated in the CY 2010 HH PPS 

final rule (74 FR 58078) and in the CY 


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2011 HH PPS final rule that we would 

exempt newly Medicare-certified HHAs. 

We realize that if an HHA became 

Medicare-certified April 1, 2010 and 

after, then they would be exempt from 

participating in HHCAHPS. 

For CY 2012, we propose to maintain 

our policy that all HHAs, unless covered 

by specific exclusions, must meet the 

quality reporting requirements or be 

subject to a two (2) percentage point 

reduction in the HH market basket 

percentage increase, in accordance with 

section 1895(b)(3)(B)(v)(I) of the Act. 

(3) HHCAHPS Reconsiderations and 

Appeals Process 

We stated in the CY 2011 HH PPS 

final rule that we would propose a 

reconsiderations and appeals process for 

HHAs not meeting the HHCAHPS 

reporting requirements for CY 2012. We 

are therefore now proposing a 

reconsiderations and appeals process for 

HHAs that fail to meet the HHCAHPS 

data collection requirements. We are 

proposing that HHAs that are not 

compliant with OASIS–C and/or 

HHCAHPS requirements for the CY 

2012 APU requirements will be notified 

after a process is followed to confirm 

that they were noncompliant with CY 

2012 quality reporting requirements. We 

are proposing to issue a Joint Signature 

Memorandum to RHHIs/MACs with a 

list of HHAs not compliant with OASIS 

and/or HHCAHPS. We are proposing 

that the September Memorandum 

include language regarding evidence 

required for the reconsideration process. 

We are proposing that the language in 

the transmittal include information to 

the HHAs about how to prepare a 

request for reconsideration of the CMS 

decision, and these HHAs will have 30 

days to file their requests for 

reconsiderations to CMS. We are 

proposing that we examine each request 

and make a determination about 

whether we plan to uphold our original 

decision. We are proposing that HHAs 

receive CMS’reconsideration decision 

by December 31, 2011. We are 

proposing that HHAs have a right to 

appeal under 42 CFR 405, subpart R, to 

the Provider Reimbursement Review 

Board (PRRB) if they were not satisfied 

with the CMS reconsideration 

determination. 

We are proposing that this 

Memorandum be a CMS transmittal that 

would be sent out the first week of 

September 2011 from the CMS Manual 

System, Medicare Claims Processing. 

We are proposing that this CMS 

transmittal be sent to Fiscal 

Intermediaries (FIs), Regional Home 

Health Intermediaries (RHHIs) and/or 

Carriers. We propose that the RHHIs/ 

MACs verify the claims submissions for 

the identified timeframe for the 2012 

APU period, to confirm that the claims 

match the HHAs we identified as 

noncompliant with OASIS and 

HHCAHPS. In late September/early 

October, the appropriate staff within 

CMS would review your submission. If 

necessary, the RHHIs/MACs would 

identify and notify the HHAs that they 

could lose 2 percent of their 2012 APU, 

and provide them with instructions on 

how to request reconsideration. In early 

November 2011, the RHHIs/MACS 

would forward the HHAs 

reconsiderations to CMS on a flow basis 

so that we could review and prepare 

recommendations for cross component 

review within CMS throughout the 

month of November. We propose to 

have CMS finish this process in 

December, and about mid-December to 

circulate the recommendations for 

clearance and final determinations by 

CMS senior leadership. We propose that 

the HHAs would be informed about 

CMS’ final decisions by December 31, 

2011. 

(4) HHCAHPS Oversight Activities 

We stated in the CY 2011 HH PPS 

final rule that vendors and HHAs would 

be required to participate in HHCAHPS 

oversight activities to ensure 

compliance with HHCAHPS protocols, 

guidelines, and survey requirements. 

The purpose of the oversight activities 

is to ensure that HHAs and approved 

survey vendors follow the HHCAHPS 

Protocols and Guidelines Manual. As 

stated, all approved survey vendors 

must develop a Quality Assurance Plan 

(QAP) for survey administration in 

accordance with the HHCAHPS 

Protocols and Guidelines Manual. The 

first QAP must be submitted within 6 

weeks of the data submission deadline 

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 should include the 

following: 

• Organizational Background and 

Staff Experience. 

• Work Plan. 

• Sampling Plan. 

• Survey Implementation Plan. 

• Data Security, Confidentiality and 

Privacy Plan. 

• Questionnaire Attachments. 

As part of the oversight activities, the 

HHCAHPS Survey Coordination Team 

conducts on-site visits to the HHCAHPS 

vendors. The purpose of the site visits 

is to allow the HHCAHPS Coordination 

Team to observe the entire Home Health 

Care CAHPS Survey implementation 

process, from the sampling stage 

through file preparation and 

submission, as well as to assess how the 

HHCAHPS data are stored. The 

HHCAHPS Survey Coordination Team 

reviews the survey vendor’s survey 

systems, and assesses administration 

protocols based on the HHCAHPS 

Protocols and Guidelines Manual posted 

at https://homehealthcahps.org. The 

HHCAHPS Survey Coordination Team 

includes the CMS staff assigned to work 

on HHCAHPS, and the Federal 

contractor for the HHCAHPS 

implementation. HHCAHPS survey 

vendors are not part of the HHCAHPS 

Survey Coordination Team. The systems 

and program review include, but are not 

limited, to the following: 

• Survey management and data 

systems; 

• Printing and mailing materials 

facilities; 

• Telephone call center facilities; 

• Data receipt, entry and storage 

facilities; and 

• Written documentation of survey 

processes. 

After the site visits, vendors are given 

a defined time period in which to 

correct any identified issues and 

provide follow-up documentation of 

corrections for review. In general, we 

propose that the defined time periods 

will be between 2 weeks to 1 month 

after these issues are stated in the 

HHCAHPS Coordination Team’s site 

visit report to the survey vendor. It is 

proposed that survey vendors will be 

subject to follow-up site visits as 

needed. 

(5) HHCAHPS Requirements for CY 

2013 

For the CY 2013 APU, we propose to 

require HHCAHPS data collection and 

reporting for four quarters. The data 

collection period will include second 

quarter 2011 through first quarter 2012. 

We propose that HHAs will be required 

to submit their HHCAHPS data files to 

the Home Health CAHPS Data Center 

the third Thursday of the month (in the 

months of October, January, April and 

July). HHAs will be required to submit 

their HHCAHPS data files to the Home 

Health CAHPS Data Center for CY 2013 

as follows: the data for the second 

quarter 2011 by 11:59 p.m., e.d.t. on 

October 20, 2011; the data for the third 

quarter 2011 by 11:59 p.m., e.s.t. on 

January 19, 2012; the data for the fourth 

quarter 2011 by 11:59 p.m., e.d.t. on 

April 19, 2012; and the data for the first 

quarter 2012 by 11:59 p.m., e.d.t. on July 

19, 2012. 


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We propose to require that all HHAs 

that have fewer than 60 HHCAHPSeligible unduplicated or unique patients 

in the period of April 1, 2010 through 

March 31, 2011 will be exempt from the 

HHCAHPS data collection and 

submission requirements for the CY 

2013 APU. For the CY 2013 APU, 

agencies with fewer than 60 HHCAHPSeligible, unduplicated or unique 

patients would be required to submit 

their counts on the Participation 

Exemption Request form posted at 

https://homehealthcahps.org by 11:59 

p.m., e.d.t. on April 19, 2012. This 

deadline is firm, as are all of the 

quarterly data submission deadlines. 

We propose to exempt HHAs 

receiving Medicare certification on or 

after April 1, 2011 from the full 

HHCAHPS reporting requirement for the 

CY 2013 APU, because these HHAs 

were not Medicare-certified in the 

period of April 1, 2010 and March 31, 

2011. 

(6) HHCAHPS Codified Criteria 

The following codified criteria stay 

the same as issued in the CY 2011 HH 

PPS final rule (75 FR 70465). We stated 

in § 484.250(b) that ‘‘An HHA that has 

less than 60 eligible unique HHCAHPS 

patients annually must submit to CMS 

their total HHCAHPS patient count to 

CMS to be exempt from the HHCAHPS 

reporting requirements.’’ In § 484.250(c), 

we stated that ‘‘An HHA must contract 

with an approved, independent 

HHCAHPS survey vendor to administer 

the HHCAHPS on its behalf.’’ 

In § 484.250(c)(1), we stated that 

‘‘CMS approves an HHCAHPS survey 

vendor if such applicant has been in 

business for a minimum of 3 years and 

has conducted surveys of individuals 

and samples for at least 2 years. For 

HHCAHPS, a ‘‘survey of individuals’’ is 

defined as the collection of data from at 

least 600 individuals selected by 

statistical sampling methods and the 

data collected are used for statistical 

purposes. All applicants that meet these 

requirements will be approved by 

CMS.’’ 

In § 484.250(c)(2) we stated that ‘‘No 

organization, firm, or business that 

owns, operates, or provides staffing for 

a HHA is permitted to administer its 

own Home Health Care CAHPS 

(HHCAHPS) Survey or administer the 

survey on behalf of any other HHA in 

the capacity as an HHCAHPS survey 

vendor. Such organizations will not be 

approved by CMS as HHCAHPS survey 

vendors.’’ 

The following criteria from the CY 

2011 HH PPS final rule are proposed to 

be revised so that the requirements for 

OASIS and Home Health CAHPS are 

clearly delineated in the regulations. In 

the CY 2011 HH PPS final rule (75 FR 

70465), we stated for § 484.250, Patient 

Assessment Data, that ‘‘An HHA must 

submit to CMS the OASIS–C data 

described at § 484.55(b)(1) and Home 

Health Care CAHPS data for CMS to 

administer the payment rate 

methodologies described in § 484.215, 

§ 484.230, and § 484.235 of this subpart, 

and meet the quality reporting 

requirements of section 1895(b)(3)(B)(v) 

of the Act.’’ 

We propose to revise this section to 

clarify that HHCAHPS is associated 

with the APU described at § 484.225(i) 

and the quality reporting requirements, 

and not with other payment 

requirements. 

(7) HHCAHPS Requirements for CY 

2014 

For the CY 2014 APU, we propose to 

require HHCAHPS data collection and 

reporting for four quarters. The data 

collection period would include second 

quarter 2012 through first quarter 2013. 

It is proposed that HHAs will be 

required to submit their HHCAHPS data 

files to the Home Health CAHPS Data 

Center the third Thursday of the month 

for the months of October, January, 

April and July. It is proposed that HHAs 

will be required to submit their 

HHCAHPS data files to the Home Health 

CAHPS Data Center for CY 2014 as 

follows: for the second quarter 2012 by 

11:59 p.m., e.d.t. on October 18, 2012; 

for the third quarter 2012 by 11:59 p.m., 

e.s.t. on January 17, 2013; for the fourth 

quarter 2012 by 11:59 p.m., e.d.t. on 

April 18, 2013; and for the first quarter 

2013 by 11:59 p.m., e.d.t. on July 18, 

2013. 

As noted, we exempt HHAs receiving 

Medicare certification on or after April 

1, 2012 from the full HHCAHPS 

reporting requirement for the CY 2014 

APU, as data submission and analysis 

will not be possible for an agency that 

late in the reporting period for the CY 

2014 APU requirements. 

As noted, we require that all HHAs 

that have fewer than 60 HHCAHPSeligible unduplicated or unique patients 

in the period of April 1, 2011 through 

March 31, 2012 will be exempt from the 

HHCAHPS data collection and 

submission requirements for the CY 

2014 APU. For the CY 2014 APU, 

agencies with fewer than 60 HHCAHPSeligible, unduplicated or unique 

patients would be required to submit 

their counts on the Participation 

Exemption Request form posted on 

https://homehealthcahps.org by 11:59 

p.m., e.d.t. on April 18, 2013. This 

deadline is firm, as are all of the 

quarterly data submission deadlines. 

(8) For Further Information on the 

HHCAHPS Survey 

We encourage HHAs interested in 

learning about the survey to view the 

HHCAHPS Survey Web site at the 

official Web site for the HHCAHPS at 

https://homehealthcahps.org. Home 

health agencies can also send an e-mail 

to the HHCAHPS Survey Coordination 

Team at HHCAHPS@rti.org, or 

telephone toll-free (1–866–354–0985) 

for more information about HHCAHPS. 

3. Home Health Wage Index 

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 to account for area 

wage differences, using adjustment 

factors that reflect the relative level of 

wages and wage-related costs applicable 

to the furnishing of home health 

services. We apply the appropriate wage 

index value to the labor portion of the 

HH PPS rates based on the site of 

service for the beneficiary (defined by 

section 1861(m) of the Act as the 

beneficiary’s place of residence). 

Previously, we determined each HHA’s 

labor market area based on definitions 

of Metropolitan Statistical Areas (MSAs) 

issued by the Office of Management and 

Budget (OMB). We have consistently 

used the pre-floor, pre-reclassified 

hospital wage index data to adjust the 

labor portion of the HH PPS rates. We 

believe the use of the pre-floor, prereclassified hospital wage index data 

results in an appropriate adjustment to 

the labor portion of the costs, as 

required by statute. 

In the CY 2006 HH PPS final rule for 

(70 FR 68132), we began adopting 

revised labor market area definitions as 

discussed in the Office of Management 

and Budget (OMB) Bulletin No. 03–04 

(June 6, 2003). This bulletin announced 

revised definitions for Metropolitan 

Statistical Areas (MSAs) and the 

creation of Micropolitan Statistical 

Areas and Core-Based Statistical Areas 

(CBSAs). The bulletin is available 

online at http://www.whitehouse.gov/ 

omb/bulletins/b03–04.html. In addition, 

OMB published subsequent bulletins 

regarding CBSA changes, including 

changes in CBSA numbers and titles. 

This rule incorporates the CBSA 

changes published in the most recent 

OMB bulletin. The OMB bulletins are 

available at http://www.whitehouse.gov/ 

omb/bulletins/index.html. 

Finally, we continue to use the 

methodology discussed in the CY 2007 

HH PPS final rule for (71 FR 65884) to 

address those geographic areas in which 

there are no IPPS hospitals and, thus, no 


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hospital wage data on which to base the 

calculation of the HH PPS wage index. 

For rural areas that do not have IPPS 

hospitals and, therefore, lack hospital 

wage data on which to base a wage 

index, we use the average wage index 

from all contiguous CBSAs as a 

reasonable proxy. Since CY 2007, this 

methodology was used to calculate the 

wage index for rural Massachusetts. 

However, we now have wage data from 

an IPPS hospital in rural Massachusetts. 

The hospital was formerly a critical 

access hospital (CAH), but converted to 

an IPPS hospital in 2008, the base year 

for the 2012 wage index. Therefore, it is 

no longer necessary to apply this 

methodology to rural Massachusetts for 

CY 2012. 

For rural Puerto Rico, we do not apply 

this methodology due to the distinct 

economic circumstances that exist there, 

but instead continue using the most 

recent wage index previously available 

for that area (from CY 2005). 

For urban areas without IPPS 

hospitals, we use the average wage 

index of all urban areas within the State 

as a reasonable proxy for the wage index 

for that CBSA. For CY 2012, there is an 

additional urban area (Yuba City, CA) 

without hospital wage data. Therefore, 

for CY 2012, the two urban areas 

without hospital wage data are 

Hinesville-Fort Stewart, Georgia (CBSA 

25980) and Yuba City, CA (CBSA 

49700). 

The wage index values for rural areas 

and the CBSAs and their associated 

wage index values are available via the 

Internet at: http://www.cms.gov/ 

HomeHealthPPS/HHPPSRN/list.asp. 

4. Proposed CY 2012 Payment Update 

a. National Standardized 60-Day 

Episode Rate 

The Medicare HH PPS has been in 

effect since October 1, 2000. As set forth 

in the 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 rate. As set 

forth in § 484.220, we adjust the 

national standardized 60-day episode 

rate by a case-mix relative weight and a 

wage index value based on the site of 

service for the beneficiary. 

In the CY 2008 HH PPS final rule with 

comment period, we refined the casemix methodology and also rebased and 

revised the home health market basket. 

To provide appropriate adjustments to 

the proportion of the payment amount 

under the HH PPS to account for area 

wage difference, 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 is 77.082 

percent and the non-labor-related share 

is 22.918 percent. The proposed CY 

2012 HH PPS rates use the same casemix methodology and application of the 

wage index adjustment to the labor 

portion of the HH PPS rates as set forth 

in the CY 2008 HH PPS final rule with 

comment period. 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 (77.082 percent) 

and a non-labor portion (22.918 

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 casemix 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. The HH PPS regulations at 

§ 484.225 set forth the specific annual 

percentage update methodology. In 

accordance with § 484.225(i), for a HHA 

that does not submit home health 

quality data, as specified by the 

Secretary, the unadjusted national 

prospective 60-day episode rate is equal 

to the rate for the previous calendar year 

increased by the applicable home health 

market basket index amount minus two 

percentage points. Any reduction of the 

percentage change will apply only to the 

calendar year involved and will not be 

considered in computing the 

prospective payment amount for a 

subsequent calendar year. 

For CY 2012, we are proposing to base 

the wage index adjustment to the labor 

portion of the HH PPS rates on the most 

recent pre-floor and pre-reclassified 

hospital wage index. As discussed in 

the July 3, 2000 HH PPS final rule, for 

episodes with four or fewer visits, 

Medicare pays the national per-visit 

amount by discipline, referred to as a 

LUPA. We propose to update the 

national per-visit rates by discipline 

annually by the applicable home health 

market basket percentage. We propose 

to adjust the national per-visit rate by 

the appropriate wage index based on the 

site of service for the beneficiary, as set 

forth in § 484.230. We propose to adjust 

the labor portion of the updated 

national per-visit rates used to calculate 

LUPAs by the most recent pre-floor and 

pre-reclassified hospital wage index. We 

are also proposing to update the LUPA 

add-on payment amount and the NRS 

conversion factor by the applicable 

home health market basket update of 1.5 

percent for CY 2012. 

Medicare pays the 60-day case-mix 

and wage-adjusted episode payment on 

a split percentage payment approach. 

The split percentage payment approach 

includes an initial percentage payment 

and a final percentage payment as set 

forth in § 484.205(b)(1) and 

§ 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 § 409.43. The 

claim for the episode that the HHA 

submits for the final percentage 

payment determines the total payment 

amount for the episode and whether we 

make an applicable adjustment to the 

60-day case-mix and wage-adjusted 

episode payment. The end date of the 

60-day episode as reported on the claim 

determines which calendar year rates 

Medicare would use to pay the claim. 

We may also adjust the 60-day casemix and wage-adjusted episode 

payment based on the information 

submitted on the claim to reflect the 

following: 

• A low utilization payment provided 

on a per-visit basis as set forth in 

§ 484.205(c) and § 484.230. 

• A partial episode payment 

adjustment as set forth in § 484.205(d) 

and § 484.235. 

• An outlier payment as set forth in 

§ 484.205(e) and § 484.240. 

b. Proposed Updated CY 2012 National 

Standardized 60-Day Episode Payment 

Rate 

In calculating the annual update for 

the CY 2012 national standardized 60- 

day episode payment rates, we first look 

at the CY 2011 rates as a starting point. 

The CY 2011 national standardized 60- 

day episode payment rate is $2,192.07. 

Next, we update the payment amount 

by the proposed CY 2012 home health 

market basket update of 1.5 percent. 

As previously discussed in section 

II.A. (‘‘Case-Mix Measurement’’) of this 

proposed rule, our updated analysis of 

the change in case-mix that is not due 

to an underlying change in patient 

health status reveals an additional 

increase in nominal change in case-mix. 

Therefore, we propose to reduce rates by 

5.06 percent in CY 2012, resulting in a 

proposed CY 2012 national 

standardized 60-day episode payment 

rate of $2,112.37. The proposed CY 2012 

national standardized 60-day episode 

payment rate for an HHA that submits 

the required quality data is shown in 

Table 19. The proposed CY 2012 

national standardized 60-day episode 


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payment rate for an HHA that does not 

submit the required quality data is 

updated by the proposed CY 2012 home 

health market basket update (1.5 

percent) minus 2 percentage points and 

is shown in Table 20. 

TABLE 19—PROPOSED CY 2012 NATIONAL 60-DAY EPISODE PAYMENT AMOUNT UPDATED BY THE PROPOSED HOME

HEALTH MARKET BASKET UPDATE, BEFORE CASE-MIX ADJUSTMENT AND WAGE ADJUSTMENT BASED ON THE SITE OF

SERVICE FOR THE BENEFICIARY

CY 2011 National standardized 60-day 

episode payment rate 

Multiply by the 

proposed CY 

2012 home 

health market 

basket update 

of 1.5 percent 

Reduce by 

5.06 percent 

for nominal 

change in 

case-mix 

Proposed CY 

2012 national 

standardized 

6-day episode 

payment rate 

$2,192.07 ..................................................................................................................................... × 1.015 × 0.9494 $2,112.37 

TABLE 20—FOR HHAS THAT DO NOT SUBMIT THE QUALITY DATA—PROPOSED CY 2012 NATIONAL 60-DAY EPISODE

PAYMENT AMOUNT UPDATED BY THE PROPOSED HOME HEALTH MARKET BASKET UPDATE BEFORE CASE-MIX ADJUSTMENT AND WAGE ADJUSTMENT BASED ON THE SITE OF SERVICE FOR THE BENEFICIARY

CY 2011 National standardized 60-day episode payment rate 

Multiply by the 

proposed CY 

2012 home 

health market 

basket update 

of 1.5 percent 

minus 2 percentage points 

(-0.5 percent) 

Reduce by 

5.06 percent 

for nominal 

change in 

case-mix 

Proposed CY 

2012 National 

standardized 

60-day episode payment 

rate 

$2,192.07 ..................................................................................................................................... × 0.995 × 0.9494 $2070.75 

c. National Per-Visit Rates Used To Pay 

LUPAs and Compute Imputed Costs 

Used in Outlier Calculations 

In calculating the CY 2012 national 

per-visit rates used to calculate 

payments for LUPA episodes and to 

compute the imputed costs in outlier 

calculations, the CY 2011 national pervisit rates for each discipline are 

updated by the proposed CY 2012 home 

health market basket update of 1.5 

percent. National per-visit rates are not 

subject to the 5.06 percent reduction 

related to the nominal increase in casemix. The CY 2012 national per-visit 

rates per discipline are shown in Table 

21. The six home health 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 

Therapy (SLP). 

TABLE 21—PROPOSED CY 2012 NATIONAL PER-VISIT AMOUNTS FOR LUPAS (NOT INCLUDING THE LUPA ADD-ON

AMOUNT FOR A BENEFICIARY’S ONLY EPISODE OR THE INITIAL EPISODE IN A SEQUENCE OF ADJACENT EPISODES) 

AND OUTLIER CALCULATIONS UPDATED BY THE PROPOSED HEALTH MARKET BASKET UPDATE, BEFORE WAGE INDEX

ADJUSTMENT

Home health discipline type 

CY 2011 pervisit amounts 

per 60-day 

episode 

For HHAs that DO submit the 

required quality data 

For HHAs that DO NOT submit 

the required quality data 

Multiply by the 

proposed CY 

2012 market 

basket update 

of 1.5 percent 

Proposed CY 

2012 per-visit 

payment 

Multiply by 

the proposed 

CY 2012 

market 

basket 

update of 

1.5 percent 

minus 2 

percentage 

points (¥0.5 

percent) 

Proposed 

CY 2012 

per-visit 

payment 

HH Aide ................................................................................ $50.42 × 1.015 $51.18 × 0.995 $50.17 

MSS ..................................................................................... 178.46 × 1.015 181.14 × 0.995 177.57 

OT ........................................................................................ 122.54 × 1.015 124.38 × 0.995 121.93 

PT ......................................................................................... 121.73 × 1.015 123.56 × 0.995 121.12 

SN ........................................................................................ 111.32 × 1.015 112.99 × 0.995 110.76 

SLP ...................................................................................... 132.27 × 1.015 134.25 × 0.995 131.61 


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d. LUPA Add-on Payment Amount 

Update 

Beginning in CY 2008, LUPA episodes 

that occur as the only episode or initial 

episode in a sequence of adjacent 

episodes are adjusted by adding an 

additional amount to the LUPA 

payment before adjusting for area wage 

differences. We update the LUPA 

payment amount by the proposed CY 

2012 home health market basket update 

percentage of 1.5 percent. The LUPA 

add-on payment amount is not subject 

to the 5.06 percent reduction related to 

the nominal increase in case-mix. For 

CY 2012, we propose that the add-on to 

the LUPA payment to HHAs that submit 

the required quality data be updated by 

the proposed CY 2012 home health 

market basket update of 1.5 percent. The 

proposed CY 2012 LUPA add-on 

payment amount is shown in Table 22. 

We propose that the add-on to the LUPA 

payment to HHAs that do not submit the 

required quality data would be updated 

by the proposed CY 2012 home health 

market basket update (1.5 percent) 

minus two percentage points. 

TABLE 22—PROPOSED CY 2012 LUPA ADD-ON AMOUNTS

CY 2011 LUPA add-on amount 

For HHAs that DO submit the 

required quality data 

For HHAs that DO NOT submit 

the required quality data 

Multiply by the 

proposed CY 

2012 market 

basket update 

of 1.5 percent 

Proposed CY 

2012 LUPA 

add-on 

amount 

Multiply by the 

proposed CY 

2012 market 

basket update 

of 1.5 percent 

minus 2 percentage points 

(¥0.5 percent) 

Proposed CY 

2012 LUPA 

add-on 

amount 

$93.31 .............................................................................................................. × 1.015 $94.71 × 0.995 $92.84 

e. Nonroutine Medical Supply 

Conversion Factor Update 

Payments for nonroutine medical 

supplies (NRS) are computed by 

multiplying the relative weight for a 

particular severity level by the NRS 

conversion factor. We first increase CY 

2010 NRS conversion factor ($52.54) by 

the proposed market basket of 1.5 

percent. Then we reduce that amount by 

5.06 percent to account for the increase 

in nominal case-mix. The final updated 

CY 2012 NRS conversion factor for 2012 

appears in Table 23. For CY 2012, the 

NRS conversion factor is $53.33. 

TABLE 23—PROPOSED CY 2012 NRS CONVERSION FACTOR FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

CY 2011 NRS conversion factor 

Multiply by the proposed CY 2012 

market basket update of 1.5 percent 

Proposed CY 2011 

NRS conversion 

factor 

$52.54 ...................................................................................................................................................... × 1.015 $53.33 

Using the NRS conversion factor 

($53.33) for CY 2012, the payment 

amounts for the various severity levels 

are shown in Table 24. 

TABLE 24—PROPOSED CY 2012 NRS PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

Severity level Points 

(scoring) 

Relative 

weight 

Proposed 

CY 2012 NRS 

payment 

amount 

1 ..................................................................................................................................................... 0 ................... 0.2698 $14.39 

2 ..................................................................................................................................................... 1 to 14 .......... 0.9742 51.95 

3 ..................................................................................................................................................... 15 to 27 ........ 2.6712 142.46 

4 ..................................................................................................................................................... 28 to 48 ........ 3.9686 211.65 

5 ..................................................................................................................................................... 49 to 98 ........ 6.1198 326.37 

6 ..................................................................................................................................................... 99+ ............... 10.5254 561.32 

For HHAs that do not submit the 

required quality data, we again begin 

with the CY 2011 NRS conversion 

factor. We first increase the CY 2011 

NRS conversion factor ($52.54) by the 

proposed CY 2012 home health market 

basket update percentage of 1.5 percent 

minus 2 percentage points. The CY 2011 

NRS conversion factor for HHAs that do 

not submit quality data is shown in 

Table 25. 


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TABLE 25—PROPOSED CY 2012 NRS CONVERSION FACTOR FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY

DATA

CY 2011 NRS conversion factor 

Multiply by the proposed CY 2012 

market basket update of 1.5 percent 

minus 2 percentage 

points (¥0.5 percent) 

Proposed CY 2012 

NRS conversion 

factor 

$52.54 ...................................................................................................................................................... × 0.995 $52.28 

The payment amounts for the various 

severity levels based on the updated 

conversion factor for HHAs that do not 

submit quality data are calculated in 

Table 26. 

TABLE 26—PROPOSED CY 2012 NRS PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY

DATA

Severity level Points 

(scoring) 

Relative 

weight 

Proposed NRS 

payment 

amount 

1 ..................................................................................................................................................... 0 ................... 0.2698 $14.11 

2 ..................................................................................................................................................... 1 to 14 .......... 0.9742 50.93 

3 ..................................................................................................................................................... 15 to 27 ........ 2.6712 139.65 

4 ..................................................................................................................................................... 28 to 48 ........ 3.9686 207.48 

5 ..................................................................................................................................................... 49 to 98 ........ 6.1198 319.94 

6 ..................................................................................................................................................... 99+ ............... 10.5254 550.27 

5. Rural Add-On 

Section 421(a) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act (MMA) of 2003 (Pub. 

L. 108–173, enacted on December 8, 

2003 and as amended by section 3131(c) 

of the Affordable Care Act) provides an 

increase of 3 percent of the payment 

amount otherwise made under section 

1895 of the Act for home health services 

furnished in a rural area (as defined in 

section 1886(d)(2)(D) of the Act), for 

episodes and visits ending on or after 

April 1, 2010 and before January 1, 

2016. The statute waives budget 

neutrality related to this provision, as 

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 home health services 

furnished during a period to offset the 

increase in payments resulting in the 

application of this section of the statute. 

The 3 percent rural add-on is applied 

to the national standardized 60-day 

episode rate, national per-visit rates, 

LUPA add-on payment, and NRS 

conversion factor when home health 

services are provided in rural (nonCBSA) areas. Refer to Tables 27 thru 31 

for these payment rates. 

TABLE 27—PROPOSED CY 2012 PAYMENT AMOUNTS FOR 60-DAY EPISODES FOR SERVICES PROVIDED IN A RURAL AREA

BEFORE CASE-MIX AND WAGE INDEX ADJUSTMENT

For HHAs that do submit quality data For HHAs that do not submit quality data 

Proposed CY 2012 national standardized 60-day episode 

payment rate 

Multiply by the 

3 percent rural 

add-on 

Proposed 

Rural CY 2012 

national standardized 60-day 

episode payment rate 

Proposed CY 

2012 national 

standardized 

60-day episode payment 

rate 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 national standardized 60-day 

episode payment rate 

$2,112.37 ............................................................................. × 1.03 $2,175.74 $2,070.75 × 1.03 $2,132.87 

TABLE 28—PROPOSED CY 2012 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA, BEFORE WAGE INDEX

ADJUSTMENT

Home health discipline type 

For HHAs that do submit quality data For HHAs that do not submit quality data 

Proposed CY 

2012 per-visit 

rate 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 pervisit rate 

Proposed CY 

2012 per-visit 

rate 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 pervisit rate 

HH Aide .................................................... $51.18 × 1.03 $52.72 $50.17 × 1.03 $51.68 

MSS ......................................................... 181.14 × 1.03 186.57 177.57 × 1.03 182.90 

OT ............................................................ 124.38 × 1.03 128.11 121.93 × 1.03 125.59 

PT ............................................................. 123.56 × 1.03 127.27 121.12 × 1.03 124.75 

SN ............................................................ 112.99 × 1.03 116.38 110.76 × 1.03 114.08 


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TABLE 28—PROPOSED CY 2012 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA, BEFORE WAGE INDEX

ADJUSTMENT—Continued 

Home health discipline type 

For HHAs that do submit quality data For HHAs that do not submit quality data 

Proposed CY 

2012 per-visit 

rate 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 pervisit rate 

Proposed CY 

2012 per-visit 

rate 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 pervisit rate 

SLP .......................................................... 134.25 × 1.03 138.28 131.61 × 1.03 135.56 

TABLE 29—PROPOSED CY 2012 LUPA ADD-ON AMOUNTS FOR SERVICES PROVIDED IN RURAL AREAS

For HHAs that do submit quality data For HHAs that do not submit quality data 

Proposed CY 2012 LUPA add-on amount 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 

LUPA add-on 

amount 

Proposed CY 

2012 LUPA 

add-on 

amount 

Multiply by the 

3 percent rural 

add-on 

Proposed 

Rural CY 2012 

LUPA add-on 

amount 

$94.71 .................................................................................. × 1.03 $97.55 $92.84 × 1.03 $95.63 

TABLE 30—PROPOSED CY 2012 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 2011 conversion factor 

Multiply by the 

3 percent rural 

add-on 

Proposed rural 

CY 2012 conversion factor 

Proposed CY 

2012 conversion factor 

Multiply by the 

3 percent rural 

add-on 

Proposed CY 

rural 2012 

conversion 

factor 

$53.33 .................................................................................. × 1.03 $54.93 $52.28 × 1.03 $53.85 

TABLE 31—PROPOSED CY 2012 NRS PAYMENT AMOUNTS FOR SERVICES PROVIDED IN RURAL AREAS

Severity level Points 

(scoring) 

For HHAs that do submit 

quality data 

(NRS conversion factor = 

$54.93) 

For HHAs that do not submit 

quality data 

(NRS conversion factor = 

$53.85) 

Relative 

weight 

Total NRS 

payment 

amount for 

rural areas 

Relative 

weight 

Total NRS 

payment 

amount for 

rural areas 

1 ........................................................ 0 ....................................................... 0.2698 $14.82 0.2698 $14.53 

2 ........................................................ 1 to 14 .............................................. 0.9742 53.51 0.9742 52.46 

3 ........................................................ 15 to 27 ............................................ 2.6712 146.73 2.6712 143.84 

4 ........................................................ 28 to 48 ............................................ 3.9686 218.00 3.9686 213.71 

5 ........................................................ 49 to 98 ............................................ 6.1198 336.16 6.1198 329.55 

6 ........................................................ 99+ ................................................... 10.5254 578.16 10.5254 566.79 

E. Therapy Corrections and 

Clarifications 

1. Therapy Technical Correction to 

Regulation Text 

As part of our ‘‘Home Health 

Prospective Payment System Rate 

Update for Calendar Year 2011,’’ (75 FR 

70389 through 70461), we clarified 

policies related to how therapy services 

are to be provided and documented. 

Specifically, the clarifications 

included that: (1) Measurable treatment 

goals be described in the plan of care 

and that the patient’s clinical record 

demonstrate that the method used to 

assess a patient’s function include 

objective measurement and successive 

comparison of measurements, thus 

enabling objective measurement of 

progress toward goals and/or therapy 

effectiveness; (2) a qualified therapist 

(instead of an assistant) perform the 

needed therapy service, assess the 

patient, measure progress, and 

document progress toward goals at least 

once every 30 days during a therapy 

patient’s course of treatment; and (3) for 

those patients needing 13 or 19 therapy 

visits, we require that a qualified 

therapist (instead of an assistant) 

perform the therapy service required at 

the 13th and 19th visits, assess the 

patient, and measure and document the 

effectiveness of the therapy. 

As a result of comments received on 

the CY 2011 proposed rule, we finalized 

flexibility for the 13th and 19th visit 

requirements in cases when: (1) The 

patient resides in a rural area; (2) 

documented exceptional circumstances 

prevent the therapist from making the 

required visit; and (3) patients receive 

more than one type of therapy. The CY 

2011 HH PPS final rule preamble 

discussions clearly described that even 

with the flexibility which we finalized, 

for those patients who require 13 and 19 

therapy visits, the qualified therapist’s 

visit, assessment, and documentation 

must occur no later than the 13th and 

19th visits. 

However, regulation text associated 

with these changes at 

§ 409.44(c)(2)(i)(D)(2) reads, ‘‘Where 

more than one discipline of therapy is 

being provided, the qualified therapist 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41024 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

from each discipline must provide the 

therapy service and functionally 

reassess the patient in accordance with 

§ 409.44(c)(2)(i)(A) during the visit 

which would occur close to but before 

the 19th visit per the plan of care.’’ 

Therefore, to better align our regulations 

with our described final policies, we 

propose to correct the regulation text at 

§ 409.44(c)(2)(i)(D)(2) to read ‘‘Where 

more than one discipline of therapy is 

being provided, the qualified therapist 

from each discipline must provide the 

therapy service and functionally 

reassess the patient in accordance with 

§ 409.44(c)(2)(i)(A) during the visit 

which would occur close to but no later 

than the 19th visit per the plan of care.’’ 

2. Occupational Therapy Policy 

Clarifications 

We are proposing to clarify when 

occupational therapy is considered a 

dependent service versus when it is 

considered a qualifying service under 

the Medicare home health benefit. 

Section 1861(m)(2) of the Act 

established occupational therapy as a 

home health service. Section 1814(2)(C) 

of the Act provided that to qualify for 

the benefit, a physician must certify that 

such services are or were required 

because the individual needs or needed 

skilled nursing care (other than solely 

venipuncture for the purpose of 

obtaining a blood sample) on an 

intermittent basis or physical or speech 

therapy or, in the case of an individual 

who has been furnished home health 

services based on such a need and who 

no longer has such a need for such care 

or therapy, continues or continued to 

need occupational therapy. We codified 

the requirement for skilled services in 

the Medicare home health benefit at 

§ 409.42(c). This section further 

delineates beneficiary qualifications for 

home health, including what is meant 

by, ‘‘in need of skilled services.’’ 

Following this detailed explanation, 

skilled services, in § 409.42(c)(2) 

through (c)(4) include physical therapy 

services and speech-language pathology 

services that meet the requirements of 

§ 409.44(c), and continuing 

occupational therapy services that meet 

the requirements of § 409.44(c) if the 

beneficiary’s eligibility for home health 

services has been established by virtue 

of a prior need for intermittent skilled 

nursing care, speech-language pathology 

services, or physical therapy in the 

current or prior certification period. 

In addition to the above-mentioned 

designation and treatment of 

occupational therapy as a qualifying 

home health service, occupational 

therapy is also described as a dependent 

service, as currently specified in 

§ 409.45(d) where we state occupational 

therapy services that are not qualifying 

services under § 409.44(c) are 

nevertheless covered as dependent 

services if the requirements of 

§ 409.44(c)(2)(i) through (iv), as to 

reasonableness and necessity, are met. 

To clarify the status of when 

occupational therapy becomes a 

qualifying service, we propose to change 

the above-mentioned regulation text at 

§ 409.42(c)(4) to establish exactly when 

occupational therapy becomes a 

qualifying service. That is, we propose 

to amend this regulatory text to 

demonstrate when a continuing need for 

occupational therapy allows for its 

continued eligibility even though it 

becomes the sole skilled service being 

provided. Specifically, we propose to 

amend § 409.42(c)(4) to state 

occupational therapy services that meet 

the requirements of § 409.44(c) initially 

qualify for home health coverage as a 

dependent service as defined in 

§ 409.45(d) if the beneficiary’s eligibility 

for home health services has been 

established by virtue of a prior need for 

intermittent skilled nursing care, 

speech-language pathology services, or 

physical therapy in the current or prior 

certification period. Subsequent to an 

initial covered occupational therapy 

service, continuing occupational 

therapy services which meet the 

requirements of § 409.44(c) are 

considered to be qualifying services. 

We also propose a change to 

§ 409.44(c)to include a technical 

correction to this regulation text. 

Specifically, the current regulation text 

states ‘‘(c) Physical therapy, speechlanguage pathology services, and 

occupational therapy. To be covered, 

physical therapy, speech-language 

pathology services, and occupational 

therapy must satisfy the criteria in 

paragraphs (c)(1) through (4) of this 

section.’’ We propose to correct ‘‘(c)(1) 

through (4)’’ to, ‘‘(c)(1) and (2),’’ which 

is the correct reference. 

F. Home Health Face-to-Face Encounter 

As described in the CY 2011 HH PPS 

final rule (70 FR 70427), section 6407(a) 

of the Patient Protection and Affordable 

Care Act, as amended by section 10605 

of the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152), amended the requirements for 

physician certification of home health 

services contained in sections 

1814(a)(2)(C) and 1835(a)(2)(A) of the 

Act by requiring that, as a condition for 

payment, prior to certifying a patient’s 

eligibility for the home health benefit, 

the physician must document that the 

physician himself or herself or a 

permitted nonphysician practitioner 

(NPP) has had a face-to-face encounter 

with the patient. 

The statute describes NPPs who may 

perform this face-to-face patient 

encounter as a nurse practitioner or 

clinical nurse specialist, as those terms 

are defined in section 1861(aa)(5) of the 

Act, who is working in collaboration 

with the physician in accordance with 

State law, or a certified nurse-midwife 

(as defined in section 1861(gg) of the 

Act, as authorized by State law), or a 

physician assistant (as defined in 

section 1861(aa)(5) of the Act), under 

the supervision of the physician. 

The statutory provision allows the 

permitted NPPs to perform the face-toface encounter and inform the certifying 

physician, who documents the 

encounter as part of the certification of 

eligibility. 

Stakeholder feedback received during 

the CY 2011 rulemaking comment 

period urged CMS to also allow, in 

addition to an NPP, the physician who 

attended to the patient during a recent 

hospital or post-acute stay to inform the 

certifying physician regarding their 

encounters with the patient, as an NPP 

is allowed to do presently to satisfy the 

face-to-face encounter requirement. 

Typically, it is the patient’s primary 

care physician who certifies a patient’s 

eligibility for the home health benefit 

and oversees the patient’s home health 

care plan. As finalized in the CY 2011 

HH PPS final rule, a hospital or postacute attending physician’s encounter 

with the home health patient satisfies 

the face-to-face encounter requirement 

only when the attending physician 

certifies the patient’s home health 

eligibility. 

Stakeholders stated to CMS that many 

hospital attending physicians may order 

home health services upon discharge, 

but do not want the burden associated 

with certifying home health eligibility 

and establishing a patient’s plan of care. 

Stakeholders further stated that because 

NPPs can perform the encounter and 

inform the certifying physician, it makes 

no sense to preclude the physician who 

attended to the patient in the hospital 

from informing the certifying physician 

about the patient for the purpose of 

satisfying the face-to-face encounter. 

Further, they argued that for patients 

admitted to home health following a 

hospital or post-acute discharge, such a 

policy would be consistent with the goal 

of the provision, which is increased 

physician involvement in a patient’s 

home health certification of eligibility. 

Fifty percent of home health patients 

are admitted to home health 

immediately following a hospital 

discharge. As such, the physician who 

attended to these patients in the 


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hospital has the sort of involvement 

with the patient and knowledge about 

the patient’s need for home care which 

was the intent of the provision. 

Similarly, for patients admitted to home 

health from a post-acute setting, the 

physician who attended to the patient 

during the post-acute stay would also 

have the involvement with and 

knowledge of the patient as was the 

intent of the provision. 

We believe that the statute does not 

preclude a patient’s acute or post-acute 

attending physician from informing the 

certifying physician regarding their 

experience with the patient for the 

purpose of the face-to-face encounter 

requirement, as an NPP can. Instead, we 

believe that for patients admitted to 

home health following discharge from 

an acute or post-acute stay, the statutory 

language contains an unintentional gap 

in that it does not explicitly include 

language which allows the acute or 

post-acute attending physician to inform 

the certifying physician regarding his or 

her face-to-face encounters with the 

patient. 

Therefore, for patients admitted to 

home health upon discharge from a 

hospital or post-acute setting, we 

propose to allow the physician who 

attended to the patient in the hospital or 

post-acute setting to inform the 

certifying physician regarding their 

encounters with the patient to satisfy 

the face-to-face encounter requirement, 

much like an NPP currently can. 

In addition to meeting the goals of the 

face-to-face encounter provision, we 

believe this proposed policy change will 

result in enhanced communication 

between the attending and certifying 

physicians. We believe this enhanced 

communication will result in an 

improved transition of care from the 

hospital or post-acute setting to the 

home health setting. Improving a 

patient’s transition from one healthcare 

setting to another is widely regarded to 

be directly related to improved patient 

care and improved patient outcomes. 

We believe that this policy change 

encourages the attending acute or postacute physician who is best informed of 

the patient’s most current clinical 

condition to collaboratively 

communicate the patient’s need for 

home health services to the certifying 

physician. Because a standard protocol 

of communication or documentation is 

not mandated between the acute or postacute physician and a patient’s 

community physician, we believe the 

additional flexibility with the face-toface encounter will encourage increased 

communication between the physicians 

and better care coordination for the 

patient. Increased physician 

communication regarding the patient’s 

clinical condition fits within the 

framework of Congress’ goals associated 

with the face-to-face encounter 

requirement. 

We propose to revise § 424.22(a)(1)(v) 

so that the certifying physician’s 

documentation of the face-to-face 

encounter clearly states that either the 

certifying physician himself or herself, 

the permitted NPP, or, for patients 

admitted to home health immediately 

after an acute or post-acute stay, the 

attending acute or post-acute physician, 

has had a face-to-face encounter with 

the patient. We propose that the 

attending acute or post-acute physician 

must communicate the clinical findings 

of the face-to-face encounters with the 

patient to the certifying physician, so 

that the certifying physician could 

document the face-to-face encounter 

accordingly, as part of the signed 

certification. Further, we are proposing 

to simplify the regulation text at 

§ 424.22(a)(1)(v)(A) as some found the 

current regulation text confusing as it 

relates to the need for NPPs to 

document their encounters with the 

patient. Some confused this 

documentation, which is required of all 

practitioners who see Medicare patients, 

with the face-to-face encounter 

documentation which is part of the 

certification. Therefore, we propose to 

revise in § 424.22(a)(1)(v)(A) that the 

nonphysician practitioner or the 

attending acute or post-acute physician 

performing the face-to-face encounter 

must communicate the clinical findings 

of that face-to-face patient encounter to 

the certifying physician. 

We propose implementing the above 

face-to-face encounter provision for 

starts of care beginning January 1, 2012 

and later. 

G. Payment Reform: Home Health Study 

and Report 

Section 3131(d) of the Affordable Care 

Act requires the Secretary to conduct a 

study on home health agency costs of 

providing access to care to low-income 

Medicare beneficiaries or beneficiaries 

in medically underserved areas, and in 

treating beneficiaries with varying levels 

of severity of illness (specifically, 

patients with ‘‘high levels of severity of 

illness’’). As part of the study, we may 

analyze methods to revise the current 

Home Health Prospective Payment 

System (HH PPS) to ensure access to 

care and better account for costs for 

these patients. 

The study may analyze the need for 

payment adjustments for services that 

involve either more or fewer resources 

than are reflected in the current HH 

PPS; changes to reflect resources 

involved with providing home health 

services to low-income Medicare 

beneficiaries or Medicare beneficiaries 

residing in medically underserved areas, 

and ways outlier payments could be 

revised to reflect costs of treating 

Medicare beneficiaries with high levels 

of severity of illness. Section 3131(d) of 

the Affordable Care Act also allows for 

the study to investigate other issues 

with the payment system as the 

Secretary determines appropriate. We 

plan for the study to evaluate the 

current HH PPS and develop payment 

reform options which might minimize 

vulnerabilities and more accurately 

align payment with patient resource 

costs. No later than March 1, 2014, we 

must deliver a Report to Congress 

regarding the study, which may include 

potential recommendations for revisions 

to the HH PPS, recommendations for 

legislation and administrative action 

and recommendations for whether 

additional research is needed. 

The Affordable Care Act study 

provision was enacted to address 

concerns that some beneficiaries are at 

risk of not having access to Medicare 

home health services and that the 

current HH PPS encourages providers to 

adopt selective admission patterns to 

achieve higher margins. 

Congress also provided CMS with the 

authority to conduct a separate 

demonstration project to test 

recommended payment system changes 

resulting from this study. 

To accomplish these goals, in the fall 

of 2010 we awarded a contract to set the 

foundation for the study and develop a 

study analytic approach. Progress to 

date includes: (1) Reviewing research 

relevant to the goals of the study; (2) 

establishing and convening a technical 

expert panel comprised of home health 

industry stakeholders, subject matter 

experts, and researchers to obtain input 

regarding the study analytic plan 

(specifically, we solicited input from the 

panel regarding approaches to define 

and study these vulnerable populations 

which may experience difficulties 

accessing home health care); (3) hosting 

Open Door Forums to solicit additional 

input on the study analytic design from 

HHAs, providers, and trade 

associations; and (4) currently 

performing investigatory data analysis 

and finishing the analytic design. 

Materials related to the contractor’s 

findings are available at http:// 

www.cms.gov/HomeHealthPPS/ 

Downloads/ 

HHPPS_LiteratureReview.pdf. 

This summer, we plan to award 

another contract that will build upon 

the foundation established. Specifically, 

this contract will refine the analytic 


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plan, perform the detailed analysis and 

ultimately recommend payment model 

options. We will provide updates 

regarding our progress in future 

rulemaking and open door forums. 

H. International Classification of 

Diseases 10th Edition (ICD–10) Coding 

Effective March 17, 2009, CMS 

finalized its policies for the HIPAA 

Administrative Simplification: 

Modifications to the Medical Data Code 

Set Standards to Adopt ICD–10–CM and 

ICD–10–PCS (74 FR 3328). The March 

17, 2009 final rule modifies the standard 

medical data code sets for coding 

diagnoses by adopting the International 

Classification of Disease, 10th Revision, 

Clinical Modification (ICD–10–CM) for 

diagnosis coding, including the Official 

ICD–10–CM Guidelines for Coding and 

Reporting. These new codes replace the 

International Classification of Diseases, 

9th Revision, Clinical Modification, 

Volumes 1 and 2, including the Official 

ICD–9–CM Guidelines for Coding and 

Reporting. Entities are required to have 

implemented the adopted policies by 

October 1, 2013. On October 1, 2013, the 

ICD–9 code sets used to report medical 

diagnoses will be replaced by the ICD– 

10 code sets. In preparation for the 

transition to the use of ICD–10–CM 

codes, CMS is currently undergoing 

extensive efforts to update the Medicare 

payment systems. 

One of the key activities identified 

under this transition to ICD–10–CM 

codes is the need for CMS to review and 

update the payment systems which 

currently use ICD–9–CM codes. Home 

Health Agencies report ICD–9–CM 

codes for their patients through OASIS– 

C. HHAs enter data (including the ICD– 

9–CM codes) collected from their 

patients’ OASIS assessments into a data 

collection software tool. For Medicare 

patients, the data collection software 

invokes HH PPS Grouper software to 

assign a Health Insurance Prospective 

Payment System (HIPPS) code on the 

Medicare HH PPS bill, ultimately 

enabling CMS’ claims processing system 

to reimburse the HHA for services 

provided to patients receiving 

Medicare’s home health benefit. The HH 

PPS Grouper currently utilizes ICD–9– 

CM codes to calculate the HIPPS code. 

Effective October 1, 2013, the HH PPS 

Grouper will utilize the ICD–10–CM 

codes to calculate the HIPPS code. 

We have been working with the 

HHRG maintenance contractor to revise 

the HHRG to accommodate ICD–10–CM 

codes, as well as identify the 

appropriate ICD–10–CM codes to be 

included in each diagnosis group within 

the HHRG. In addition, we have also 

contracted with Abt Associates to assist 

with resolving the transition of certain 

codes that may be mapped to more than 

one diagnosis code under ICD–10–CM. 

To assist home health agencies and 

their vendors in preparing for this 

transition, the Agency is committed to 

providing information for transitioning 

the HHRG to accommodate ICD–10–CM 

codes effective October 1, 2013. The 

Agency will update providers and 

vendors through the ICD–10–CM 

National Provider outreach calls on our 

conversion plans. Additional detail 

concerning teleconference registration is 

available at http://www.cms.gov/ICD10/ 

Tel10/list.asp?intNumPerPage= 

20&submit=Go. Further details 

pertaining to our plans will be 

announced through the National 

Provider outreach calls. 

We will provide a proposed list of 

ICD–10–CM codes for the HHRG 

through the ICD–10 section of the Web 

site. Specific dates will be announced 

through the National Provider outreach 

calls. The preliminary plans include 

publishing the proposed list of ICD–10– 

CM codes for the HHRG by October, 1, 

2011, for industry review, as well as 

describing our testing approach for the 

HHRG to accommodate and process 

ICD–10–CM codes through the ICD–10 

section of the CMS Web site. The 

objective of the ICD–10–CM HHRG 

testing is to verify that all properly 

formatted input data containing ICD– 

10–CM diagnosis codes will produce the 

expected output. The HHRG 

maintenance contractor will convert 

current OASIS–C records to their 

translated ICD–10–CM codes to 

determine that appropriate outputs are 

achieved. CMS and the HHRG 

maintenance contractor will review the 

results of the testing to determine if 

additional testing is required. 

In addition, in April 2013, we plan to 

share the ICD–10–CM HHRG software 

with those vendors and home health 

agencies that have agreed to serve as 

Beta Testers and get their feedback 

regarding the software’s functionality. 

Issues and concerns noted by the Beta 

Testers will be reviewed and addressed 

by the HHRG Maintenance Contractor in 

consultation with CMS. 

CMS plans to release the final version 

of the ICD–10–CM HHRG in July 2013 

to permit HHAs and their vendors 

sufficient time to install the software. 

I. Clarification To Benefit Policy Manual 

Language on ‘‘Confined to the Home’’ 

Definition 

To address the recommended changes 

of the Office of Inspector General (OIG) 

to the home health benefit policy 

manual, CMS is proposing to clarify its 

‘‘confined to the home’’ definition to 

more accurately reflect the definition as 

articulated in the Act. Further 

clarification of the ‘‘confined to the 

home’’ definition will not only ensure 

statutory compatibility, but will also 

strengthen the position of the 

Government in applicable court cases. 

We propose to realign the existing 

manual criteria with the statute to create 

a clearer and more accurate ‘‘confined to 

the home’’ definition. We believe that 

such changes will strengthen our 

manual’s definition of ‘‘confined to the 

home’’, providing more definitive 

guidance to home health agencies for 

compliance with this requirement. 

We propose to move the requirement 

that the patient need supportive 

devices, transportation, etc., to the 

beginning of section 30.1.1 of the 

Chapter 7 Home Health Benefit Policy 

Manual as a necessary requirement to be 

considered ‘‘confined to the home.’’ 

Further, we propose to remove vague 

terms from section 30.1.1, such as 

‘‘generally speaking,’’ to ensure clear 

and specific requirements for the 

definition. These changes more closely 

align our policy manual with the Act to 

prevent confusion or distortion of 

requirements and promote a clearer 

enforcement of the statute. As such, we 

propose that section 30.1.1 begin with 

the following, revised language: 

‘‘30.1.1—Patient Confined to the 

Home.’’ 

For a patient to be eligible to receive 

covered home health services under 

both Part A and Part B, the statute 

requires that a physician certify in all 

cases that the patient is confined to his/ 

her home. For purposes of the statute, 

an individual shall be considered 

‘‘confined to the home’’ (that is, 

homebound) if the following exist: 

(1) The individual has a condition 

due to an illness or injury that restricts 

his or her ability to leave their place of 

residence except with: the aid of 

supportive devices such as crutches, 

canes, wheelchairs, and walkers; the use 

of special transportation; or the 

assistance of another person; or if 

leaving home is medically 

contraindicated. 

(2) The individual does not have to be 

bedridden to be considered ‘‘confined to 

the home’’. However, the condition of 

the patient should be such that there 

exists a normal inability to leave home 

and, consequently, leaving home would 

require a considerable and taxing effort. 

If the patient does in fact leave the 

home, the patient may nevertheless be 

considered homebound if the absences 

from the home are infrequent or for 

periods of relatively short duration, or 

are attributable to the need to receive 

health care treatment. Absences 


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attributable to the need to receive health 

care treatment include, but are not 

limited to: 

• Attendance at adult day centers, 

licensed or certified by a State or 

accredited to furnish adult day-care 

services in the State, to receive 

therapeutic, psychological, or medical 

treatment; 

• Ongoing receipt of outpatient 

kidney dialysis; or 

• The receipt of outpatient 

chemotherapy or radiation therapy. 

Any absence of an individual from the 

home attributable to the need to receive 

health care treatment, including regular 

absences for the purpose of participating 

in therapeutic, psychosocial, or medical 

treatment in an adult day-care program 

that is licensed or certified by a State, 

or accredited to furnish adult day-care 

services in a State, shall not disqualify 

an individual from being considered to 

be confined to his home. Any other 

absence of an individual from the home 

shall not so disqualify an individual if 

the absence is of an infrequent or of 

relatively short duration. For purposes 

of the preceding sentence, any absence 

for the purpose of attending a religious 

service shall be deemed to be an 

absence of infrequent or short duration. 

It is expected that in most instances, 

absences from the home that occur will 

be for the purpose of receiving health 

care treatment. However, occasional 

absences from the home for nonmedical 

purposes, for example, an occasional 

trip to the barber, a walk around the 

block or a drive, attendance at a family 

reunion, funeral, graduation, or other 

infrequent or unique event would not 

necessitate a finding that the patient is 

not homebound if the absences are 

undertaken on an infrequent basis or are 

of relatively short duration and do not 

indicate that the patient has the capacity 

to obtain the health care provided 

outside rather than in the home. 

Some examples of homebound 

patients that illustrate the factors used 

to determine whether a homebound 

condition exists would be: * * *’’ 

III. Collection of Information 

Requirements 

This document does not impose any 

new information collection and 

recordkeeping requirements. The 

information collection requirements 

discussed in proposed § 424.22 are 

currently approved under OMB control 

number 0938–1083. The information 

collection requirements discussed in 

proposed § 484.250, the OASIS–C and 

Home Health Care CAHPS, are currently 

approved under OMB control numbers 

0938–0760 and 0938–1066, respectively. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35). 

IV. 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. 

V. Regulatory Impact Analysis 

A. Introduction 

We have examined the impact 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 (March 22, 1995; Pub. L. 

104–4), 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. A 

regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). This 

proposed rule has been designated an 

‘‘economically significant’’ rule under 

section 3(f)(1) of Executive Order 12866. 

Accordingly, the rule has been reviewed 

by the Office of Management and 

Budget. 

B. Statement of Need 

This proposed rule adheres to the 

following statutory requirements. 

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 Act, entitled 

‘‘Prospective Payment For Home Health 

Services’’. Section 1895(b)(1) of the Act 

requires the Secretary to establish a HH 

PPS for all costs of 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 casemix 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, as 

amended by section 3131 of the 

Affordable Care 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 3131 of the Affordable 

Care Act requires that 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, receive an increase of 

3 percent the payment amount 

otherwise made under section 1895 of 

the Act. 

C. Overall Impact 

The update set forth in this proposed 

rule applies to Medicare payments 

under HH PPS in CY 2012. Accordingly, 

the following analysis describes the 

impact in CY 2012 only. We estimate 

that the net impact of the proposals in 


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this rule is approximately $640 million 

in CY 2012 savings. The $640 million 

impact due to the proposed CY 2012 HH 

PPS rule reflects the distributional 

effects of an updated wage index ($20 

million increase) plus the 1.5 percent 

HH market basket update ($290 million 

increase), for a total increase of $310 

million. The 5.06 percent case-mix 

adjustment applicable to the national 

standardized 60-day episode rates ($950 

million decrease) plus the combined 

wage index and market basket ($310 

million increase) results in a total 

savings of $640 million in CY 2012. The 

$640 million in savings is reflected in 

the first row of column 3 of Table 32 as 

a 3.35 percent decrease in expenditures 

when comparing the current CY 2011 

HH PPS to the proposed CY 2012 HH 

PPS. 

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 $34.5 

million in any 1 year. For the purposes 

of the RFA, our updated data show that 

approximately 98 percent of HHAs are 

considered to be small businesses 

according to the Small Business 

Administration’s size standards with 

total revenues of $13.5 million or less in 

any 1 year. Individuals and States are 

not included in the definition of a small 

entity. The Secretary has determined 

that this proposed rule would have a 

significant economic impact on a 

substantial number of small entities. We 

define small HHAs as those with total 

revenues of $13.5 million or less in any 

1 year. Analysis of Medicare cost report 

data reveals a 3.63 percent decrease in 

estimated payments to small HHAs in 

CY 2012. 

A discussion on the alternatives 

considered is presented in section V.E. 

below. The following analysis, with the 

rest of the preamble, constitutes our 

initial RFA analysis. We solicit 

comment on the RFA analysis provided. 

In this proposed rule, we have stated 

that our analysis reveals that nominal 

case-mix continues to grow under the 

HH PPS. Specifically, nominal case-mix 

has grown from the 17.45 percent 

growth identified in our analysis for CY 

2011 rulemaking to 19.03 percent for 

this year’s rulemaking (see further 

discussion in sections II.A. and II.B.). 

Because we have not yet accounted for 

all of the increase in nominal case-mix, 

that is case-mix that is not real (real 

being related to treatment of more 

resource intense patients), case-mix 

reductions are necessary. As such, we 

believe it is appropriate to reduce the 

HH PPS rates now, so as to move 

towards more accurate payment for the 

delivery of home health services. Our 

analysis shows that smaller HHAs are 

impacted slightly more than are larger 

HHAs by the proposed provisions of 

this rule. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 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 

proposed rule would not have a 

significant economic impact on the 

operations of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2011, that 

threshold is approximately $136 

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 

$136 million or more. 

D. Detailed Economic Analysis 

This proposed rule sets forth updates 

to the HH PPS rates contained in the CY 

2011 HH PPS final rule. 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 casemix. 

This analysis incorporates the latest 

estimates of growth in service use and 

payments under the Medicare home 

health benefit, based on Medicare 

claims from 2009. We note that certain 

events may combine to limit the scope 

or accuracy of our impact analysis, 

because such an analysis is futureoriented 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. 

Table 32 represents how HHA 

revenues are likely to be affected by the 

policy changes proposed in this rule. 

For this analysis, we used linked home 

health claims and OASIS assessments; 

the claims represented a 20-percent 

sample of 60-day episodes occurring in 

CY 2009. The first column of Table 32 

classifies HHAs according to a number 

of characteristics including provider 

type, geographic region, and urban and 

rural locations. The second column 

shows the payment effects of the wage 

index only. The third column shows the 

payment effects of all the proposed 

policies outlined earlier in this rule. For 

CY 2012, the average impact for all 

HHAs due to the effects of the wage 

index is a 0.10 percent increase in 

payments. The overall impact for all 

HHAs, in estimated total payments from 

CY 2011 to CY 2012, is a decrease of 

approximately 3.35 percent. 

As shown in Table 32, the combined 

effects of all of the changes vary by 

specific types of providers and by 

location. Rural and voluntary non-profit 

agencies fare considerably better than 

urban and proprietary agencies as a 

result of the proposed provisions of this 

rule. We believe this is due mainly to 

the distributional effects of the 

recalibration of the case-mix weights as 

described in section II.A of the proposed 

rule. Essentially, these impacts suggest 

that under the current case-mix system, 

rural and voluntary non-profit agencies 

bill less for high therapy episodes than 

do urban and proprietary agencies. 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 41029 

TABLE 32—PROPOSED HOME HEALTH AGENCY POLICY IMPACTS FOR CY 2012, BY FACILITY TYPE AND AREA OF THE

COUNTRY

Group 

Comparisons 

Impact of all CY 

2012 policies 1

(percent) 

Percent change 

due to the effects 

of the updated 

wage index 

(percent) 

All Agencies ................................................................................................................................................. 0.10 ¥3.35 

Type of Facility 

Free-Standing/Other Vol/NP ................................................................................................................. 0.29 ¥0.49 

Free-Standing/Other Proprietary .......................................................................................................... 0.08 ¥4.68 

Free-Standing/Other Government ........................................................................................................ ¥0.13 ¥2.13 

Facility-Based Vol/NP ........................................................................................................................... ¥0.03 0.17 

Facility-Based Proprietary .................................................................................................................... 0.03 ¥3.02 

Facility-Based Government .................................................................................................................. ¥0.06 ¥0.59 

Subtotal: Freestanding .................................................................................................................. 0.12 ¥3.82 

Subtotal: Facility-based ................................................................................................................. ¥0.03 ¥0.21 

Subtotal: Vol/NP ............................................................................................................................ 0.17 ¥0.24 

Subtotal: Proprietary ...................................................................................................................... 0.08 ¥4.65 

Subtotal: Government ................................................................................................................... ¥0.10 ¥1.38 

Type of Facility (Rural * Only) 

Free-Standing/Other Vol/NP ................................................................................................................. 1.88 0.94 

Free-Standing/Other Proprietary .......................................................................................................... 0.25 ¥3.74 

Free-Standing/Other Government ........................................................................................................ ¥0.21 ¥1.39 

Facility-Based Vol/NP ........................................................................................................................... ¥0.20 0.20 

Facility-Based Proprietary .................................................................................................................... ¥0.30 ¥2.12 

Facility-Based Government .................................................................................................................. ¥0.05 ¥0.27 

Type of Facility (Urban * Only) 

Free-Standing/Other Vol/NP ................................................................................................................. 0.05 ¥0.70 

Free-Standing/Other Proprietary .......................................................................................................... 0.06 ¥4.83 

Free-Standing/Other Government ........................................................................................................ ¥0.02 ¥3.13 

Facility-Based Vol/NP ........................................................................................................................... 0.02 0.16 

Facility-Based Proprietary .................................................................................................................... 0.25 ¥3.65 

Facility-Based Government .................................................................................................................. ¥0.09 ¥0.99 

Type of Facility (Urban* or Rural*) 

Rural ..................................................................................................................................................... 0.35 ¥2.15 

Urban .................................................................................................................................................... 0.05 ¥3.57 

Facility Location: Region* 

North ..................................................................................................................................................... 0.68 0.71 

South .................................................................................................................................................... ¥0.08 ¥4.97 

Midwest ................................................................................................................................................. ¥0.09 ¥3.91 

West ...................................................................................................................................................... 0.36 ¥0.82 

Outlying ................................................................................................................................................. 0.43 ¥3.05 

Facility Location: Area of the Country 

New England ........................................................................................................................................ 1.35 0.69 

Mid Atlantic ........................................................................................................................................... 0.30 0.71 

South Atlantic ....................................................................................................................................... ¥0.49 ¥5.77 

East South Central ............................................................................................................................... ¥0.66 ¥6.28 

West South Central .............................................................................................................................. 0.51 ¥3.76 

East North Central ................................................................................................................................ ¥0.22 ¥4.41 

West North Central ............................................................................................................................... 0.49 ¥1.63 

Mountain ............................................................................................................................................... 0.32 ¥4.22 

Pacific ................................................................................................................................................... 0.37 0.68 

Outlying ................................................................................................................................................. 0.43 ¥3.05 

Facility Size: (Number of First Episodes) 

< 19 ...................................................................................................................................................... 0.32 ¥3.05 

20 to 49 ................................................................................................................................................ 0.32 ¥3.41 

50 to 99 ................................................................................................................................................ 0.33 ¥3.57 

100 to 199 ............................................................................................................................................ 0.16 ¥3.81 

200 or More .......................................................................................................................................... ¥0.02 ¥3.15 

Facility Size: (estimated total revenue) 

Small (estimated total revenue <= $13.5 million) ................................................................................ 0.13 ¥3.63 

Large (estimated total revenue > $13.5 million) .................................................................................. ¥0.02 ¥2.10 

Note: Based on a 20 percent sample of CY 2009 claims linked to OASIS assessments. 

* Urban/rural status, for the purposes of these simulations, is based on the wage index on which episode payment is based. The wage index is 

based on the site of service of the beneficiary. 

REGION KEY: 

New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic: Pennsylvania, New Jersey, New 

York; South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East 

North Central: Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central: Alabama, Kentucky, Mississippi, Tennessee; West North Central: 

Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central: Arkansas, Louisiana, Oklahoma, Texas; Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific: Alaska, California, Hawaii, Oregon, Washington; Outlying: Guam, Puerto Rico, Virgin Islands. 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
41030 Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 

1Percent change due to the effects of the updated wage index, the 1.5 percent proposed market basket update, the 5.06 percent case-mix adjustment, and the 3 percent rural add-on. 

E. Alternatives Considered 

As described in section V.C. above, if 

we implement the case-mix adjustment 

for CY 2012 along with the market 

basket update and the updated wage 

index, the aggregate impact would be a 

net decrease of $640 million in 

payments to HHAs, resulting from a 

$310 million increase due to the 

updated wage index and the market 

basket update and a $950 million 

reduction from the 5.06 percent casemix adjustment. If we were to not 

implement the case-mix adjustment for 

CY 2012, Medicare would pay an 

estimated $950 million more to HHAs in 

CY 2012, for a net increase in payments 

to HHAs in CY 2012 of $310 million 

(market basket update and updated 

wage index). We believe that not 

implementing a case-mix adjustment, 

and paying out an additional $950 

million to HHAs when those additional 

payments are not reflective of HHAs 

treating sicker patients, would not be in 

line with the intent of the HH PPS, 

which is to pay accurately and 

appropriately for the delivery of home 

health services to Medicare 

beneficiaries. 

Section 1895(b)(3)(B)(iv) of the Act 

gives CMS the authority to implement 

payment reductions for nominal casemix growth, changes in case-mix that 

are unrelated to actual changes in 

patient health status. We are committed 

to monitoring the accuracy of payments 

to HHAs, which includes the 

measurement of the increase in nominal 

case-mix, which is an increase in casemix that is not due to patient acuity. As 

discussed in section II.A. of this rule, 

we have determined that there is a 19.03 

percent nominal case-mix change from 

2000 to 2009. To account for the 

remainder of the 19.03 percent residual 

increase in nominal case-mix beyond 

that which was has been accounted for 

in previous payment reductions (2.75 

percent in CY 2008 through CY 2010 

and 3.79 percent in CY 2011), we have 

estimated that the percentage reduction 

to the national standardized 60-day 

episode rates for nominal case-mix 

change for CY 2012 would be 5.06 

percent. 

We believe that the alternative of not 

implementing a case-mix adjustment to 

the payment system in CY 2012 to 

account for the increase in case-mix that 

is not real would be detrimental to the 

integrity of the PPS. As discussed in 

section II.A. of this rule, because 

nominal case-mix continues to grow 

(about 1 percent each year in 2006 and 

2007, 4 percent in 2008, and 2 percent 

in 2009), and thus to date we have not 

accounted for all the increase in 

nominal case-mix growth, we believe it 

is appropriate to reduce HH PPS rates 

now, thereby paying more accurately for 

the delivery of home health services 

under the Medicare home health 

benefit. The other reduction to HH PPS 

payments, a 1.0 percentage point 

reduction to the proposed CY 2012 

home health market basket update, is 

discussed in this rule and is not 

discretionary as it is a requirement in 

section 1895(b)(3)(B)(vi) of the Act (as 

amended by the Affordable Care Act). 

We solicit comment on the 

alternatives considered 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 16 below, 

we have prepared an accounting 

statement showing the classification of 

the transfers associated with the 

provisions of this proposed rule. This 

table 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 33—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED

TRANSFERS, FROM THE CY 2011 

HH PPS TO THE CY 2012 HH PPS 

Category Transfers 

Annualized Monetized 

Transfers.

¥$640 million. 

From Whom to 

Whom? 

Federal Government 

to HH providers. 

G. Conclusion 

In conclusion, we estimate that the 

net impact of the proposals in this rule 

is approximately $640 million in CY 

2012 savings. The $640 million impact 

to the proposed CY 2012 HH PPS 

reflects the distributional effects of an 

updated wage index ($20 million 

increase), the 1.5 percent home health 

market basket update ($290 million 

increase), and the 5.06 percent case-mix 

adjustment applicable to the national 

standardized 60-day episode rates ($950 

million decrease). This analysis, 

together with the remainder of this 

preamble, provides a Regulatory Impact 

Analysis. 

VI. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

proposed rule under the threshold 

criteria of Executive Order 13132, 

Federalism, and have determined that it 

would not have substantial direct effects 

on the rights, roles, and responsibilities 

of States, local or tribal governments. 

List of Subjects 

42 CFR Part 409 

Health facilities, Medicare. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 484 

Health facilities, Health professions, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposed to amend 

42 CFR chapter IV as set forth below: 

PART 409—HOSPITAL INSURANCE 

BENEFITS 

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). 

Subpart C—Posthospital SNF Care 

2. Section 409.42 is amended by 

revising paragraph (c)(4) to read as 

follows: 

§ 409.42 Beneficiary qualifications for 

coverage of services. 

* * * * * 

(c) * * * 

(4) Occupational therapy services that 

meet the requirements of § 409.44(c) of 

this subpart initially qualify for home 

health coverage as a dependent service 

as defined in § 409.45(d) of this subpart 

if the beneficiary’s eligibility for home 

health services has been established by 

virtue of a prior need for intermittent 

skilled nursing care, speech-language 

pathology services, or physical therapy 

in the current or prior certification 


srobinson on DSK4SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 76, No. 133 / Tuesday, July 12, 2011 / Proposed Rules 41031 

period. Subsequent to an initial covered 

occupational therapy service, 

continuing occupational therapy 

services which meet the requirements of 

§ 409.44(c) of this subpart are 

considered to be qualifying services. 

* * * * * 

3. Section 409.44 is amended by— 

A. Revising the introductory text of 

paragraph (c). 

B. Revising paragraph (c)(2)(i)(D)(2). 

The revisions read as follows: 

§ 409.44 Skilled services requirements. 

* * * * * 

(c) Physical therapy, speech-language 

pathology services, and occupational 

therapy. To be covered, physical 

therapy, speech-language pathology 

services, and occupational therapy must 

satisfy the criteria in paragraphs (c)(1) 

and (2) of this section. 

* * * * * 

(2) * * * 

(i) * * * 

(D) * * * 

(2) Where more than one discipline of 

therapy is being provided, the qualified 

therapist from each discipline must 

provide the therapy service and 

functionally reassess the patient in 

accordance with § 409.44(c)(2)(i)(A) of 

this section during the visit which 

would occur close to but no later than 

the 19th visit per the plan of care. 

* * * * * 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

4. 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). 

Subpart B—Certification and Plan 

Requirements 

5. Section 424.22 is amended by— 

A. Revising the introductory text of 

paragraph (a)(1)(v). 

B. Revising paragraph (a)(1)(v)(A). 

The revisions read as follows: 

§ 424.22 Requirements for home health 

services. 

* * * * * 

(a) * * * 

(1) * * * 

(v) The physician responsible for 

performing the initial certification must 

document that the face-to-face patient 

encounter, which is related to the 

primary reason the patient requires 

home health services, has occurred no 

more than 90 days prior to the home 

health start of care date or within 30 

days of the start of the home health care 

by including the date of the encounter, 

and including an explanation of why 

the clinical findings of such encounter 

support that the patient is homebound 

and in need of either intermittent 

skilled nursing services or therapy 

services as defined in § 409.42(a) and (c) 

of this subpart, respectively. Under 

sections 1814(a)(2)(C) and 1835(a)(2)(A) 

of the Act, the face-to-face encounter 

must be performed by the certifying 

physician himself or herself, by the 

nurse practitioner, a clinical nurse 

specialist (as those terms are defined in 

section 1861(aa)(5) of the Act) who is 

working in collaboration with the 

physician in accordance with State law, 

a certified nurse midwife (as defined in 

section 1861(gg) of the Act) as 

authorized by State law, a physician 

assistant (as defined in section 

1861(aa)(5) of the Act) under the 

supervision of the physician, or, for 

patients admitted to home health 

immediately after an acute or post-acute 

stay, the attending acute or post-acute 

physician. The documentation of the 

face-to-face patient encounter must be a 

separate and distinct section of, or an 

addendum to, the certification, and 

must be clearly titled, dated and signed 

by the certifying physician. 

(A) The nonphysician practitioner or 

the attending acute or post-acute 

physician performing the face-to-face 

encounter must communicate the 

clinical findings of that face-to-face 

patient encounter to the certifying 

physician. 

* * * * * 

PART 484—HOME HEALTH SERVICES 

6. The authority citation for part 484 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395(hh)). 

Subpart E—Prospective Payment 

System for Home Health Agencies 

7. Section 484.250 is revised to read 

as follows: 

§ 484.250 Patient assessment data. 

(a) Data submission. The following 

data must be submitted to CMS: 

(1) An HHA must submit the OASIS– 

C data described at § 484.55(b)(1) of this 

part for CMS to administer the payment 

rate methodologies described in 

§ 484.215, § 484.230, and § 484.235 of 

this subpart, and meet the quality 

reporting requirements of section 

1895(b)(3)(B)(v) of the Act. 

(2) An HHA must submit the Home 

Health Care CAHPS survey data for 

CMS to administer the payment rate 

methodologies described in § 484.225(i) 

of this subpart, and meet the quality 

reporting requirements of section 

1895(b)(3)(B)(v) of the Act. 

(b) Patient count. An HHA that has 

less than 60 eligible unique HHCAHPS 

patients annually must annually submit 

to CMS their total HHCAHPS patient 

count to CMS to be exempt from the 

HHCAHPS reporting requirements for a 

calendar year period. 

(c) Survey requirements. An HHA 

must contract with an approved, 

independent HHCAHPS survey vendor 

to administer the HHCAHPS Survey on 

its behalf. 

(1) CMS approves an HHCAHPS 

survey vendor if such applicant has 

been in business for a minimum of 3 

years and has conducted surveys of 

individuals and samples for at least 2 

years. 

(i) For HHCAHPS, a ‘‘survey of 

individuals’’ is defined as the collection 

of data from at least 600 individuals 

selected by statistical sampling methods 

and the data collected are used for 

statistical purposes. 

(ii) All applicants that meet these 

requirements will be approved by CMS. 

(2) No organization, firm, or business 

that owns, operates, or provides staffing 

for a HHA is permitted to administer its 

own Home Health Care CAHPS 

(HHCAHPS) Survey or administer the 

survey on behalf of any other HHA in 

the capacity as an HHCAHPS survey 

vendor. Such organizations will not be 

approved by CMS as HHCAHPS survey 

vendors. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: June 10, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: June 24, 2011. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2011–16938 Filed 7–5–11; 4:15 pm] 

BILLING CODE 4120–01–P 


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