```

[Federal Register Volume 79, Number 215 (Thursday, November 6, 2014)]
[Rules and Regulations]
[Pages 66031-66118]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26057]

[[Page 66031]]

Vol. 79

Thursday,

No. 215

November 6, 2014

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 409, 424, et al.

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

Federal Register / Vol. 79 , No. 215 / Thursday, November 6, 2014 / 
Rules and Regulations

[[Page 66032]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

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

[CMS-1611-F]
RIN 0938-AS14

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

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

ACTION: Final rule.

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

DATES: Effective Date: These regulations are effective on January 1, 
2015.

FOR FURTHER INFORMATION CONTACT: 
    Hillary Loeffler, (410) 786-0456, for general information about the 
HH PPS.
    Joan Proctor, (410) 786-0949, for information about the HH PPS 
Grouper, ICD-9-CM coding, and ICD-10-CM Conversion.
    Kristine Leddy, (410) 786-8953, for information about rebasing and 
the HH PPS case-mix weights.
    Hudson Osgood, (410) 786-7897, for information about the HH market 
basket.
    Alan Levitt, MD, (410) 786-6892, for information about the HH 
quality reporting program.
    Lori Teichman, (410) 786-6684, for information about HHCAHPS.
    Peggye Wilkerson, (410) 786-4857, for information about survey and 
enforcement requirements for HHAs.
    Robert Flemming, (410) 786-4830, for information about the HH VBP 
model.
    Danielle Shearer, (410) 786-6617, for information about SLP 
personnel qualifications.

SUPPLEMENTARY INFORMATION: 

Table of Contents

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

Acronyms

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

ACH LOS Acute Care Hospital Length of Stay
ADL Activities of Daily Living
APU Annual Payment Update
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Pub. L. 106-113
CAD Coronary Artery Disease
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CASPER Certification and Survey Provider Enhanced Reports
CHF Congestive Heart Failure
CMI Case-Mix Index
CMN Certificate of Medical Necessity
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
CoPs Conditions of Participation
COPD Chronic Obstructive Pulmonary Disease
CPI Center for Program Integrity
CVD Cardiovascular Disease
CY Calendar Year

[[Page 66033]]

DM Diabetes Mellitus
DME Durable Medical Equipment
DMEPOS Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies
DIF DME Information Form
DRA Deficit Reduction Act of 2005, Pub. L. 109-171, enacted February 
8, 2006
FDL Fixed Dollar Loss
FI Fiscal Intermediaries
FR Federal Register
FY Fiscal Year
HAVEN Home Assessment Validation and Entry System
HCC Hierarchical Condition Categories
HCPCS Healthcare Common Procedure Coding System
HCIS Health Care Information System
HH Home Health
HHA Home Health Agency
HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers 
and Systems Survey
HH PPS Home Health Prospective Payment System
HHRG Home Health Resource Group
HIPPS Health Insurance Prospective Payment System
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
IH Inpatient Hospitalization
IRF Inpatient Rehabilitation Facility
IT Information Technology
LTCH Long-Term Care Hospital
LUPA Low-Utilization Payment Adjustment
MEPS Medical Expenditures Panel Survey
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173, enacted December 8, 2003
MSA Metropolitan Statistical Area
MSS Medical Social Services
NQF National Quality Forum
NRS Non-Routine Supplies
OASIS Outcome and Assessment Information Set
OBRA Omnibus Budget Reconciliation Act of 1987, Pub. L. 100-2-3, 
enacted December 22, 1987
OCESAA Omnibus Consolidated and Emergency Supplemental 
Appropriations Act, Pub. L. 105-277, enacted October 21, 1998
OES Occupational Employment Statistics
OIG Office of Inspector General
OT Occupational Therapy
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health IT
MFP Multifactor productivity
PAMA Protecting Access to Medicare Act of 2014
PAC-PRD Post-Acute Care Payment Reform Demonstration
PEP Partial Episode Payment Adjustment
PT Physical Therapy
QAO Quality Assessments Only
QAP Quality Assurance Plan
PRRB Provider Reimbursement Review Board
RAP Request for Anticipated Payment
RF Renal Failure
RFA Regulatory Flexibility Act, Pub. L. 96--354
RHHIs Regional Home Health Intermediaries
RIA Regulatory Impact Analysis
SAF Standard Analytic File
SLP Speech-Language Pathology
SN Skilled Nursing
SNF Skilled Nursing Facility
SOC Start of Care
UMRA Unfunded Mandates Reform Act of 1995.

I. Executive Summary

A. Purpose

    This rule updates the payment rates for HHAs for calendar year (CY) 
2015, as required under section 1895(b) of the Social Security Act (the 
Act). This will reflect the second year of the four-year phase-in of 
the rebasing adjustments to the national, standardized 60-day episode 
payment rate, the national per-visit rates, and the NRS conversion 
factor finalized in the CY 2014 HH PPS final rule (78 FR 72256), 
required under section 3131(a) of the Patient Protection and Affordable 
Care Act of 2010 (Pub. L. 111-148), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152) (collectively 
referred to as the ``Affordable Care Act''). Updates to payment rates 
under the HH PPS will also include a change in the home health wage 
index to incorporate the new Office of Management and Budget (OMB) 
core-based statistical area (CBSA) definitions and updates to the 
payment rates by the home health payment update percentage reflective 
of the productivity adjustment mandated by 3401(e) of the Affordable 
Care Act.
    This final rule also discusses: Our efforts to monitor the 
potential impacts of the Affordable Care Act mandated rebasing 
adjustments and the face-to-face encounter requirement (sections 
3131(a) and 6407, respectively, of the Affordable Care Act); coverage 
of insulin injections under the HH PPS; and the delay in the 
implementation of the International Classification of Diseases, 10th 
Edition, Clinical Modification (ICD-10-CM) as a result of recent 
Congressional action (section 212 of the Protecting Access to Medicare 
Act, Public Law 113-93 (``PAMA'')). This final rule also: Simplifies 
the regulations at Sec.  424.22(a)(1)(v) that govern the face-to-face 
encounter requirement mandated by section 6407 of the Affordable Care 
Act; recalibrates the HH PPS case-mix weights under section 
1895(b)(4)(A)(i) and (b)(4)(B) of the Act; makes changes to the home 
health quality reporting program requirements under section 
1895(b)(3)(B)(v)(II) of the Act; simplifies the therapy reassessment 
timeframes specified in regulation at Sec.  409.44(c)(2)(C) and (D); 
revises the personnel qualifications for Speech-Language Pathology 
(SLP) at Sec.  484.4; and makes minor technical changes to the 
regulations text at Sec.  424.22(b)(1) and Sec.  484.250(a)(1). This 
final rule will also place limitations on the reviewability of CMS's 
decision to impose a civil monetary penalty for noncompliance with 
Federal participation requirements. Finally, this rule discusses 
comments received on the HH Value-Based Purchasing (VBP) model.

B. Summary of the Major Provisions

    As required by section 3131(a) of the Affordable Care Act and 
finalized in the CY 2014 HH final rule, ``Medicare and Medicaid 
Programs; Home Health Prospective Payment System Rate Update for CY 
2014, Home Health Quality Reporting Requirements, and Cost Allocation 
of Home Health Survey Expenses'' (78 FR 77256, December 2, 2013), we 
are implementing the second year of the four-year phase-in of the 
rebasing adjustments to the national, standardized 60-day episode 
payment amount, the national per-visit rates and the NRS conversion 
factor in section III.D.4. The rebasing adjustments for CY 2015 will 
reduce the national, standardized 60-day episode payment amount by 
$80.95, increase the national per-visit payment amounts by 3.5 percent 
of the national per-visit payment amounts in CY 2010 with the increases 
ranging from $1.79 for home health aide services to $6.34 for medical 
social services as described in section II.C, and reduce the NRS 
conversion factor by 2.82 percent.
    This final rule also discusses our efforts to monitor the potential 
impacts of the rebasing adjustments and the Affordable Care Act 
mandated face-to-face encounter requirement in sections III.A. Section 
III B implements changes to the face-to-face encounter narrative 
requirement by eliminating the narrative as part of the certification 
of eligibility and by outlining procedures for obtaining documentation 
from the certifying physician and/or the acute/post-acute care facility 
that: (1) Establish that the patient was eligible for the home health 
benefit; and (2) demonstrate that the face-to-face encounter was 
related to the primary reason the patient requires home health 
services, occurred within the required timeframe, and was performed 
either by the certifying physician, an acute/post-acute care physician 
that cared for the patient in that setting, or allowed non-physician 
practitioner (NPP). In addition, associated physician claims for 
certification/re-certification of eligibility (patient not present) 
will not

[[Page 66034]]

be eligible to be paid when a patient does not meet home health 
eligibility criteria. We will also clarify that the face-to-face 
encounter requirement is applicable for all episodes initiated with the 
completion of a Start-of-Care OASIS assessment, which we consider 
certifications, not re-certifications. In section III.C of the final 
rule, we are recalibrating the HH PPS case-mix weights, using the most 
current cost and utilization data available, in a budget neutral 
manner. In section III.D.1 of this final rule, we are updating the 
payment rates under the HH PPS by the home health payment update 
percentage of 2.1 percent (using the 2010-based Home Health Agency 
(HHA) market basket update of 2.6 percent, minus 0.5 percentage point 
for productivity as required by section 1895(b)(3)(B)(vi)(I) of the 
Act. In section III.D.3 of this final rule, we are updating the home 
health wage index using a 50/50 blend of the existing core-based 
statistical area (CBSA) designations and the new CBSA designations set 
out in a February 28, 2013, Office of Management and Budget (OMB) 
bulletin.
    This final rule also implements changes to the home health quality 
reporting program in section III.D.2, including the establishment of a 
minimum threshold for submission of OASIS assessments for purposes of 
quality reporting compliance, the establishment of a policy for the 
adoption of changes to measures that occur in-between rulemaking cycles 
as a result of the NQF process, and submission dates for the HHCAHPS 
Survey moving forward through CY 2017. In section III.E of this final 
rule, we discuss our rationale for maintaining the existing fixed-
dollar loss (FDL) and loss-sharing ratios used in calculating high-cost 
outlier payments under the HH PPS. In section III.F, we discuss our 
recent analysis of home health claims identified with skilled nursing 
visits that appear to have been for the sole purpose of insulin 
injection assistance, without any secondary diagnoses indicating that 
the patient was physically or mentally unable to self-inject. We 
discuss, in section III.G of this final rule, the delay in the 
implementation of ICD-10-CM as a result of section 212 of PAMA. In 
section III.H of this final rule, we discuss our finalizing of a change 
in the therapy reassessment regulations by requiring that therapy 
reassessments are to occur at least every 30 calendar days. In section 
III.I of this final rule, we discuss a HH VBP model. In section III.J 
we discuss our revision to the personnel qualifications for SLP. In 
section III.K we discuss minor technical regulations text changes. In 
section III.L we discuss our revision to the civil monetary provisions, 
which place limitations on the reviewability of the civil monetary 
penalty imposed on a HHA for noncompliance with federal participation 
requirements.

C. Summary of Costs and Transfers

                 Table 1--Summary of Costs and Transfers
------------------------------------------------------------------------
    Provision Description             Costs               Transfers
------------------------------------------------------------------------
CY 2015 HH PPS Payment Rate   A net reduction in    The overall economic
 Update.                       burden of $21.55      impact of this
                               million associated    final rule is an
                               with certifying       estimated $60
                               patient eligibility   million in
                               for home health       decreased payments
                               services &            to HHAs.
                               certification form
                               revisions.
------------------------------------------------------------------------

II. Background

A. Statutory Background

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted 
August 5, 1997), significantly changed the way Medicare pays for 
Medicare HH services. Section 4603 of the BBA mandated the development 
of the HH PPS. Until the implementation of the HH PPS on October 1, 
2000, HHAs received payment under a retrospective reimbursement system.
    Section 4603(a) of the BBA mandated the development of a HH PPS for 
all Medicare-covered HH services provided under a plan of care (POC) 
that were paid on a reasonable cost basis by adding section 1895 of the 
Social Security Act (the Act), entitled ``Prospective Payment For Home 
Health Services.'' Section 1895(b)(1) of the Act requires the Secretary 
to establish a HH 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, respectively. 
Section 1895(b)(4)(B) of the Act requires the establishment of an 
appropriate case-mix change adjustment factor for significant variation 
in costs among different units of services.
    Similarly, section 1895(b)(4)(C) of the Act requires the 
establishment of wage adjustment factors that reflect the relative 
level of wages, and wage-related costs applicable to HH services 
furnished in a geographic area compared to the applicable national 
average level. Under section 1895(b)(4)(C) of the Act, the wage-
adjustment factors used by the Secretary may be the factors used under 
section 1886(d)(3)(E) of the Act.
    Section 1895(b)(5) of the Act gives the Secretary the option to 
make additions or adjustments to the payment amount otherwise paid in 
the case of outliers due to unusual variations in the type or amount of 
medically necessary care. Section 3131(b)(2) of the Patient Protection 
and Affordable Care Act of 2010 (the Affordable Care Act) (Pub. L. 111-
148, enacted March 23, 2010) revised section 1895(b)(5) of the Act so 
that total outlier payments in a given year would not exceed 2.5 
percent of total payments projected for the year. The provision also 
made permanent a 10 percent agency-level outlier payment cap.
    In accordance with the statute, as amended by the BBA, we published 
a final rule in the July 3, 2000 Federal Register (65 FR 41128) to 
implement the HH PPS legislation. The July 2000 final rule established 
requirements for the new HH PPS for HH services as required by section 
4603 of the BBA, as subsequently amended by section 5101 of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act (OCESAA) for 
Fiscal Year 1999, (Pub. L. 105-277, enacted October 21, 1998); and by 
sections 302, 305, and 306 of the Medicare, Medicaid, and SCHIP 
Balanced Budget Refinement

[[Page 66035]]

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 a HHA does not 
submit quality data, the HH market basket percentage increase is 
reduced by 2 percentage points. In the November 9, 2006 Federal 
Register (71 FR 65884, 65935), we published a final rule to implement 
the pay-for-reporting requirement of the DRA, which was codified at 
Sec.  484.225(h) and (i) in accordance with the statute. The pay-for-
reporting requirement was implemented on January 1, 2007.
    The Affordable Care Act made additional changes to the HH PPS; 
section 3131(c) of the Affordable Care Act amended section 421(a) of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (MMA) (Pub. L. 108-173, enacted on December 8, 2003) as amended by 
section 5201(b) of the DRA. The amended section 421(a) of the MMA now 
requires, for HH services furnished in a rural area (as defined in 
section 1886(d)(2)(D) of the Act) with respect to episodes and visits 
ending on or after April 1, 2010, and before January 1, 2016, that the 
Secretary increase, by 3 percent, the payment amount otherwise made 
under section 1895 of the Act.

B. System for Payment of Home Health Services

    Generally, Medicare makes payment under the HH PPS on the basis of 
a national standardized 60-day episode payment rate that is adjusted 
for the applicable case-mix and wage index. The national standardized 
60-day episode rate includes the six HH disciplines (skilled nursing, 
HH aide, physical therapy, speech-language pathology, occupational 
therapy, and medical social services). Payment for non-routine supplies 
(NRS) is no longer part of the national standardized 60-day episode 
rate and is computed by multiplying the relative weight for a 
particular NRS severity level by the NRS conversion factor (See section 
II.D.4.e). Payment for durable medical equipment covered under the HH 
benefit is made outside the HH PPS payment system. To adjust for case-
mix, the HH PPS uses a 153-category case-mix classification system to 
assign patients to a home health resource group (HHRG). The clinical 
severity level, functional severity level, and service utilization are 
computed from responses to selected data elements in the OASIS 
assessment instrument and are used to place the patient in a particular 
HHRG. Each HHRG has an associated case-mix weight which is used in 
calculating the payment for an episode.
    For episodes with four or fewer visits, Medicare pays national per-
visit rates based on the discipline(s) providing the services. An 
episode consisting of four or fewer visits within a 60-day period 
receives what is referred to as a low-utilization payment adjustment 
(LUPA). Medicare also adjusts the national standardized 60-day episode 
payment rate for certain intervening events that are subject to a 
partial episode payment adjustment (PEP adjustment). For certain cases 
that exceed a specific cost threshold, an outlier adjustment may also 
be available.

C. Updates to the HH PPS

    As required by section 1895(b)(3)(B) of the Act, we have 
historically updated the HH PPS rates annually in the Federal Register. 
The August 29, 2007 final rule with comment period set forth an update 
to the 60-day national episode rates and the national per-visit rates 
under the HH PPS for CY 2008. The CY 2008 HH PPS final rule included an 
analysis performed on CY 2005 HH claims data, which indicated a 12.78 
percent increase in the observed case-mix since 2000. Case-mix 
represents the variations in conditions of the patient population 
served by the HHAs. Subsequently, a more detailed analysis was 
performed on the 2005 case-mix data to evaluate if any portion of the 
12.78 percent increase was associated with a change in the actual 
clinical condition of HH patients. We examined data on demographics, 
family severity, and non-HH Part A Medicare expenditures to predict the 
average case-mix weight for 2005. We identified 8.03 percent of the 
total case-mix change as real, and therefore, decreased the 12.78 
percent of total case-mix change by 8.03 percent to get a final nominal 
case-mix increase measure of 11.75 percent (0.1278 * (1--0.0803) = 
0.1175).
    To account for the changes in case-mix that were not related to an 
underlying change in patient health status, we implemented a reduction, 
over 4 years, to the national, standardized 60-day episode payment 
rates. That reduction was to be 2.75 percent per year for 3 years 
beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011. 
In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses 
of case-mix change and finalized a reduction of 3.79 percent, instead 
of 2.71 percent, for CY 2011 and deferred finalizing a payment 
reduction for CY 2012 until further study of the case-mix change data 
and methodology was completed.
    In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-
day national episode rates and the national per-visit rates. In 
addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528), 
our analysis indicated that there was a 22.59 percent increase in 
overall case-mix from 2000 to 2009 and that only 15.76 percent of that 
overall observed case-mix percentage increase was due to real case-mix 
change. As a result of our analysis, we identified a 19.03 percent 
nominal increase in case-mix. At that time, to fully account for the 
19.03 percent nominal case-mix growth identified from 2000 to 2009, we 
finalized a 3.79 percent payment reduction in CY 2012 and a 1.32 
percent payment reduction for CY 2013.
    In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a 
1.32 percent reduction to the payment rates for CY 2013 to account for 
nominal case-mix growth from 2000 through 2010. When taking into 
account the total measure of case-mix change (23.90 percent) and the 
15.97 percent of total case-mix change estimated as real from 2000 to 
2010, we obtained a final nominal case-mix change measure of 20.08 
percent from 2000 to 2010 (0.2390 * (1--0.1597) = 0.2008). To fully 
account for the remainder of the 20.08 percent increase in nominal 
case-mix beyond that which was accounted for in previous payment 
reductions, we estimated that the percentage reduction to the national, 
standardized 60-day episode rates for nominal case-mix change will be 
2.18 percent. Although we considered proposing a 2.18 percent reduction 
to account for the remaining increase in measured nominal case-mix, we 
finalized the 1.32 percent payment reduction to the national, 
standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 
FR 68532).

[[Page 66036]]

    Section 3131(a) of the Affordable Care Act requires that, beginning 
in CY 2014, CMS apply an adjustment to the national, standardized 60-
day episode rate and other amounts that reflect factors such as changes 
in the number of visits in an episode, the mix of services in an 
episode, the level of intensity of services in an episode, the average 
cost of providing care per episode, and other relevant factors. 
Additionally, CMS must phase in any adjustment over a four-year period 
in equal increments, not to exceed 3.5 percent of the amount (or 
amounts) as of the date of enactment of the Affordable Care Act, and 
fully implement the rebasing adjustments by CY 2017. The statute 
specifies that the maximum rebasing adjustment is to be no more than 
3.5 percent per year of the CY 2010 rates. Therefore, in the CY 2014 HH 
PPS final rule (78 FR 72256) for each year, CY 2014 through CY 2017, we 
finalized a fixed-dollar reduction to the national, standardized 60-day 
episode payment rate of $80.95 per year, increases to the national per-
visit payment rates per year as reflected in Table 2, and a decrease to 
the NRS conversion factor of 2.82 percent per year. We also finalized 
three separate LUPA add-on factors for skilled nursing, physical 
therapy, and speech-language pathology and removed 170 diagnosis codes 
from assignment to diagnosis groups in the HH PPS Grouper.

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

III. Provisions of the Proposed Rule and Responses to Comments

    We received approximately 337 timely responses from the public, 
many of which contained multiple comments on the CY 2015 HH PPS 
proposed rule (79 FR 38366). Many of the comments were identical, but 
submitted by multiple commenters. We received comments from various 
trade associations, HHAs, individual registered nurses, physicians, 
clinicians, therapists, therapy assistants, health care industry 
organizations, and health care consulting firms. The following 
sections, arranged by subject area, include a summary of the public 
comments received, and our responses.

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

1. Affordable Care Act Rebasing Adjustments
    As we stated in the CY 2015 HH PPS proposed rule (79 FR 38370), we 
do not have a sufficient amount of CY 2014 home health claims data to 
analyze as part of our effort in monitoring the potential impacts of 
the rebasing adjustments finalized in the CY 2014 HH PPS final rule (78 
FR 72293). However, we analyzed 2012 home health agency cost report 
data to determine whether the average cost per episode was higher using 
2012 cost report data compared to the 2011 cost report data used in 
calculating the rebasing adjustments. Specifically, we re-estimated the 
cost of a 60-day episode using 2012 cost report and 2012 claims data, 
rather than using 2011 cost report and 2012 claims data. To determine 
the 2012 average cost per visit per discipline, we applied the same 
trimming methodology outlined in the CY 2014 HH PPS proposed rule (78 
FR 40284) and weighted the costs per visit from the 2012 cost reports 
by size, facility type, and urban/rural location so the costs per visit 
were nationally representative. The 2012 average number of visits was 
taken from 2012 claims data. We estimate the cost of a 60-day episode 
to be $2,413.82 using 2012 cost report data (Table 3).

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

    Using the current claims data for CY 2013 (as of June 30, 2014), we 
re-examined the 2012 visit distribution and re-calculated the 2013 
estimated cost per episode using the updated 2013 visit profile. We 
estimate the 2013 60-day episode cost to be $2,485.24 (Table 4).

[[Page 66037]]

                                    Table 4--2013 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
                                                   2012 Average    2013 Average                   2013 Estimated
                   Discipline                        costs per       number of    2013 HH Market     cost per
                                                       visit          visits          basket          episode
----------------------------------------------------------------------------------------------------------------
Skilled Nursing.................................         $130.49            9.28           1.023       $1,238.80
Home Health Aide................................           61.62            2.41           1.023          151.92
Physical Therapy................................          160.03            5.03           1.023          823.46
Occupational Therapy............................          157.78            1.22           1.023          196.92
Speech-Language Pathology.......................          172.08            0.25           1.023           44.01
Medical Social Services.........................          210.36            0.14           1.023           30.13
                                                 ---------------------------------------------------------------
    Total.......................................  ..............  ..............  ..............        2,485.24
----------------------------------------------------------------------------------------------------------------
Source: FY 2012 Medicare cost report data and 2013 Medicare claims data from the standard analytic file (as of
  June 30, 2014) for episodes (excluding low-utilization payment adjusted episodes and partial-episode-payment
  adjusted episodes) ending on or before December 31, 2013 for which we could link an OASIS assessment.

    In the CY 2014 HH PPS final rule (78 FR 72277), using 2011 cost 
report data, we estimated the 2012 60-day episode cost to be about 
$2,507.83 ($2,453.71 * 0.9981 * 1.024) and the 2013 60-day episode cost 
to be $2,565.51 ($2,453.71 * 0.9981 * 1.024 * 1.023). Using 2012 cost 
report data, the 2012 and 2013 estimated cost per episode ($2,413.82 
and $2,485.24, respectively) are lower than the episode costs we 
estimated using 2011 cost report data for the CY 2014 HH PPS final 
rule.\1\
---------------------------------------------------------------------------

    \1\ The 2012 estimated cost per episode cited is based on FY 
2012 cost report data and CY 2012 claims data (as of June 30, 2013) 
and the 2013 estimated cost per episode is based on FY 2012 cost 
report data and CY 2013 claims data (as of June 30, 2014).
---------------------------------------------------------------------------

    In the CY 2014 HH PPS final rule, we stated that our analysis of 
2011 cost report data and 2012 claims data indicated a need for a -3.45 
percent rebasing adjustment to the national, standardized 60-day 
episode payment rate each year for four years. However, as specified by 
statute, the rebasing adjustment is limited to 3.5 percent of the CY 
2010 national, standardized 60-day episode payment rate of $2,312.94 
(74 FR 58106), or $80.95. We stated that given that a -3.45 percent 
adjustment for CY 2014 through CY 2017 will result in larger dollar 
amount reductions than the maximum dollar amount allowed under section 
3131(a) of the Affordable Care Act of $80.95, we are limited to 
implementing a reduction of $80.95 (approximately 2.8 percent for CY 
2014) to the national, standardized 60-day episode payment amount each 
year for CY 2014 through CY 2017. Our latest analysis of 2012 cost 
report and 2013 claims data suggests that an even larger reduction (-
4.21 percent) than the reduction described in the CY 2014 final rule (-
3.45 percent) will be needed in order to align payments to costs. We 
stated in the CY 2015 HH PPS proposed rule that we would continue to 
monitor potential impacts of rebasing as more data become available (79 
FR 38371).
    Although we finalized the rebasing adjustments in the CY 2014 HH 
PPS final rule and did not propose any changes to those adjustments, we 
received a number of comments on the rebasing and on our analysis of 
2012 cost report data in the CY 2015 HH PPS proposed rule. Those 
comments and our responses are summarized below.
    Comment: Commenters urged CMS to postpone or stop the 
implementation of the rebasing reductions. Commenters expressed 
concerns with the rebasing methodology, impact analysis, and process 
outlined in the CY 2014 HH PPS proposed and final rules and stated that 
a more comprehensive study is needed to evaluate the rebasing 
reductions. Some commenters also stated that the findings on the study 
on access to care mandated by section 3131(d) of the Affordable Care 
Act were not fully considered prior to the implementation or rebasing 
and urged CMS to take into account these findings and reconsider the 
rebasing adjustments.
    Response: We thank the commenters for their comments. We did not 
propose changes to the rebasing adjustments for CY 2014 through CY 2017 
finalized in the CY 2014 HH PPS final rule. The comments received 
regarding the rebasing adjustments were nearly identical to the 
comments submitted during the comment period for the CY 2014 HH PPS 
proposed rule. Therefore, we encourage commenters to review our 
responses to the comments we received on the rebasing adjustments in 
the CY 2014 HH PPS final rule (78 FR 72282-72294).
    Comment: Several commenters were concerned with the impact of the 
rebasing adjustments and urged CMS to monitor the impact of the 
reductions and provided suggestions for the impact and monitoring 
analyses.
    Response: As we noted in the CY 2015 HH PPS proposed rule, 
sufficient claims data for CY 2014 is not available for analysis. We 
plan to provide an update on our monitoring efforts once sufficient CY 
2014 claims data become available. In their public comments on the CY 
2015 HH PPS proposed rule, MedPAC stated that given the 12 percent or 
higher margins for for-profit and non-profit agencies in 2012, they do 
not expect the reductions to materially affect the operations of most 
agencies and recommended to Congress that rebasing be implemented in a 
shorter period, that the annual payment update be eliminated, and that 
such changes to statute would help bring payments closer to costs than 
the current approach to rebasing. MedPAC is required to conduct a study 
and submit a report on the impact of the rebasing adjustments on access 
to care, quality outcomes, the number of home health agencies, and 
rural agencies, urban agencies, for-profit agencies and non-profit 
agencies to be submitted no later than January 1, 2015.
    Comment: A commenter stated that CMS did not indicate in the CY 
2015 HH PPS proposed rule how many 2012 cost reports were audited and 
how many were trimmed out (excluded) from the analysis. The commenter 
requested that CMS include this information in the final rule for the 
sake of transparency.
    Response: None of the 2012 cost reports were audited. Of the 10,485 
cost reports in the sample, which contained 10,310 unique provider 
numbers, 6,135 cost reports were used in the results presented in the 
CY 2015 HH PPS proposed rule (79 FR 38370-38371). We used same trimming 
and weighting methodology described in the CY 2014 HH PPS proposed rule 
(78 FR 40284-40286).
    Comment: Commenters expressed concern with the reduction to the NRS 
conversion factor. The commenter was concerned that reductions to 
payments for NRS may impact patients with wounds and requested that CMS 
re-

[[Page 66038]]

evaluate the utilization of and charges associated with surgical 
dressings compared to other supplies in the NRS group and suggested CMS 
consider a separate conversion factor for surgical dressings. Another 
commenter stated that it is difficult to determine whether actual 
hospital-based HHA NRS costs had been included into the total cost of 
services measured. The commenter stated that there is a flaw in the 
hospital-based cost report where the NRS cost data does not flow to the 
total cost. The commenter recommended that CMS review the hospital 
based cost reports for this problem and fix the NRS adjustment 
equitably if that flaw exists.
    Response: We researched whether hospital-based HHA costs for NRS 
were included in our rebasing calculations in the CY 2014 HH PPS 
proposed and final rules. We noted in the CY 2014 HH PPS final rule 
that NRS costs for hospital-based HHAs are to be reported on CMS form 
2552-10, worksheet H, line 12 (78 FR 72291). This data flows to 
worksheet H3, part 1, line 15. However, line 15, columns 6 through 11 
are shaded out and not currently populated. We are in the process of 
``un-shading'' those columns for future data collection. Of the over 
11,000 HHAs included in the Regulatory Impact Analysis in section V., 
less than 10 percent are facility-based HHAs. We believe that using NRS 
cost data solely from freestanding HHAs, given the unavailability of 
the hospital-based HHA NRS cost data for FY 2011, is appropriate. We 
examined cost report data for both freestanding and hospital-based HHAs 
(using instances where the hospital-based HHA submitted cost report 
data using the older version of the Medicare hospital cost report (CMS 
form 2552-96) that allows columns 6 through 11 on line 15 on worksheet 
H6 part 1to be populated). We found that the average NRS cost per visit 
varies substantially from year-to-year, with the five-year average NRS 
cost per visit at $2.27.
    Once the hospital-based cost report data becomes available, we will 
analyze those costs and take them into consideration as we work to 
address any findings from the home health study required by section 
3131(d) of the Affordable Care Act, monitor the potential impact of the 
rebasing adjustments and other recent payment changes, and develop 
payment options to ensure ongoing access to care for vulnerable 
populations. The work may include potential revisions to the NRS and 
case-mix weights methodology to better reflect costs of treating 
Medicare beneficiaries.
    Comment: Commenters urged CMS to use the authority granted under 
section 1871 of the Social Security Act to modify the rebasing 
adjustments finalized in the CY 2014 HH PPS final rule. The commenter 
stated that CMS has authority to modify final regulations if CMS finds 
that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest. Commenters urged CMS 
to modify payment rates in order to secure seniors' access to home 
health care, ensure high quality of care, and preserve jobs. Another 
commenter stated that section 1895 of the Social Security Act allows 
CMS to implement a less aggressive approach to rebasing.
    Response: Section 1871(b)(2)(C) of the Act cross-references section 
553(b)(3)(B) of the Administrative Procedure Act. Both the Social 
Security Act and the Administrative Procedure Act permit us to waive 
the requirements of notice and a period for comment if, among other 
things, the Secretary determines that notice and comment are 
impracticable, unnecessary, or contrary to the public interest. 
Normally, we only waive notice and comment when we believe there are 
unusual circumstances that would warrant expedited implementation of a 
rule, or when the rule changes are technical and/or involve no exercise 
of discretion on the part of the Secretary. In the context of this 
notice-and-comment rulemaking, it appears that the commenter is 
requesting that we adjust our rebasing rates without having previously 
announced our intention to do so. We do not believe that circumstances 
have changed in a way that would require an immediate change to our 
rebasing rate; and even if circumstances changed, we do not believe 
that changing the rate without a period for notice and comment would be 
in the public interest. We also note that calculation of the rates 
pursuant to the rebasing provision at section 1895(b)(3)(A)(iii) of the 
Act took place after a period of notice and comment in the CY 2014 HH 
PPS rule (see 78 FR 72278 through 72281). Section 1895 of the Act 
states that we must phase in any adjustment over a four-year period in 
equal increments, not to exceed 3.5 percent of the amount (or amounts) 
as of the date of enactment of the Affordable Care Act, and fully 
implement the rebasing adjustments by CY 2017. We do not have the 
authority to implement rebasing in another manner. Therefore, we will 
move forward with the rebasing reductions finalized in the CY 2014 HH 
PPS final rule.
2. Affordable Care Act Face-to-Face Encounter Requirement
    Effective January 1, 2011, section 6407 the Affordable Care Act 
requires that, as a condition for payment, prior to certifying a 
patient's eligibility for the Medicare home health benefit, the 
physician must document that the physician himself or herself, or an 
allowed non-physician practitioner (NPP), as described below, had a 
face-to-face encounter with the patient. The regulations at Sec.  
424.22(a)(1)(v) currently require that that the face-to-face encounter 
be related to the primary reason the patient requires home health 
services and occur no more than 90 days prior to the home health start 
of care date or within 30 days of the start of the home health care. In 
addition, as part of the certification of eligibility, the certifying 
physician must document the date of the encounter and include an 
explanation (narrative) of why the clinical findings of such encounter 
support that the patient is homebound, as defined in subsections 
1814(a) and 1835(a) of the Act, and in need of either intermittent 
skilled nursing services or therapy services, as defined in Sec.  
409.42(c). The face-to-face encounter requirement was enacted, in part, 
to discourage physicians certifying patient eligibility for the 
Medicare home health benefit from relying solely on information 
provided by the HHAs when making eligibility determinations and other 
decisions about patient care.
    In the CY 2011 HH PPS final rule, in which we implemented the face-
to-face encounter provision of the Affordable Care Act, some commenters 
expressed concern that this requirement would diminish access to home 
health services (75 FR 70427). We examined home health claims data from 
before implementation of the face-to-face encounter requirement (CY 
2010), the year of implementation (CY 2011), and the years following 
implementation (CY 2012 and CY 2013), to determine whether there were 
indications of access issues as a result of this requirement. 
Nationally, utilization (as measured by the number of episodes) held 
relatively constant over the first year of implementation (comparing CY 
2010 and CY 2011) (see Table 5 below). Between CY 2010 and CY 2013, 
there was a 1.8 percent decrease in number of episodes, however, there 
was a 1.5 percent increase in the number of home health users 
(beneficiaries with at least one home health episode). Also, the number 
of HHAs providing at least one home health episode increased steadily 
from CY 2010 through CY 2013 with an

[[Page 66039]]

aggregate increase of 8.9 percent (see Table 5 below).
    Home health users as a percentage of Part A and/or Part B fee-for-
service (FFS) beneficiaries decreased slightly from 9.3 percent in CY 
2010 to 9.0 percent in CY 2013. The number of episodes per Part A and/
or Part B FFS beneficiaries decreased slightly between CY 2010 and CY 
2013, with 0.19 (or 19 episodes per 100 Medicare Part A and/or Part B 
FFS beneficiaries) in CY 2010 and 0.17 (or 17 episodes per 100 Medicare 
Part A and/or Part B FFS beneficiaries) in CY 2013. We note these 
observed decreases between CY 2010 to CY 2013, for the most part, are 
likely the result of an increase in FFS enrollment between CY 2010 and 
CY 2013 of 4.6 percent. Newly eligible Medicare beneficiaries are 
typically not of the age where home health services are needed and 
therefore, without any changes in utilization, we will expect home 
health users and the number of episodes per Part A and/or B FFS 
beneficiaries to decrease with an increase in the number of newly 
enrolled FFS beneficiaries.

                            Table 5--Home Health Statistics, CY 2010 Through CY 2013
----------------------------------------------------------------------------------------------------------------
                                                       2010            2011            2012            2013
----------------------------------------------------------------------------------------------------------------
Number of episodes..............................       6,833,669       6,821,459       6,727,875       6,708,923
Beneficiaries receiving at least 1 episode (Home       3,431,696       3,449,231       3,446,122       3,484,579
 Health Users)..................................
Part A and/or B FFS beneficiaries...............      36,818,078      37,686,526      38,224,640      38,505,609
Episodes per Part A and/or B FFS beneficiaries..            0.19            0.18            0.18            0.17
Home health users as a percentage of Part A and/            9.3%            9.2%            9.0%            9.0%
 or B FFS beneficiaries.........................
HHAs providing at least 1 episode...............          10,916          11,446          11,746          11,889
----------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14,
  2014 and August 19, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary
  File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/
  or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from
  outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year
  specified are included. Episodes with a claim frequency code equal to ``0'' (``Non-payment/zero claims'') and
  ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states
  within a year the beneficiary is counted within each state's unique number of beneficiaries served.

    Although home health utilization at the national level decreased 
slightly from CY 2010 and CY 2013, the decrease in utilization did not 
occur in all states. For example, California, New Jersey and Virginia 
experienced an increase in the number of episodes from CY 2010 to CY 
2013. Also, the number of episodes per Part A and/or Part B FFS 
beneficiaries for these states increased or remained roughly the same 
between CY 2010 through CY 2013 (see Table 6).

              Table 6--Home Health Statistics for Select States With Increasing Numbers of Home Health Episodes Between CY 2010 and CY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Year             AL              CA              MA              NJ              VA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Episodes......................................            2010         149,242         428,491         183,271         142,328         142,660
                                                                    2011         151,131         451,749         186,849         143,127         149,154
                                                                    2012         151,812         477,732         183,625         142,129         154,677
                                                                    2013         148,972         508,838         186,871         143,674         160,105
Beneficiaries Receiving at Least 1 Episode (Home Health             2010          68,949         259,013         103,954          95,804          83,933
 Users).................................................
                                                                    2011          70,539         270,259         107,520          97,190          86,796
                                                                    2012          71,186         281,023         106,910          96,534          89,879
                                                                    2013          71,703         294,150         110,573          97,385          94,393
Part A and/or Part B FFS Beneficiaries..................            2010         689,302       3,199,845         890,472       1,205,049       1,014,248
                                                                    2011         717,413       3,294,574         934,312       1,228,239       1,055,516
                                                                    2012         732,952       3,397,936         959,015       1,232,950       1,086,474
                                                                    2013         739,868       3,444,078         976,814       1,245,275       1,119,886
Episodes per Part A and/or Part B FFS beneficiaries.....            2010            0.22            0.13            0.21            0.12            0.14
                                                                    2011            0.21            0.14            0.20            0.12            0.14
                                                                    2012            0.21            0.14            0.19            0.12            0.14
                                                                    2013            0.20            0.15            0.19            0.12            0.14
Home Health Users as a Percentage of Part A and/or B FFS            2010          10.00%           8.09%          11.67%           7.95%           8.28%
 beneficiaries..........................................
                                                                    2011           9.83%           8.20%          11.51%           7.91%           8.22%
                                                                    2012           9.71%           8.27%          11.15%           7.83%           8.27%
                                                                    2013           9.69%           8.54%          11.32%           7.82%           8.43%
Providers Providing at Least 1 Episode..................            2010             148             925             138              49             196
                                                                    2011             150           1,013             150              48             209
                                                                    2012             148           1,073             160              47             219
                                                                    2013             150           1,157             165              46             224
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014 and August 19, 2014. Medicare
  enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with
  at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage.

[[Page 66040]]

 
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
  District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
  (``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
  a year the beneficiary is counted within each state's unique number of beneficiaries served.

    The states with the highest utilization of Medicare home health (as 
measured by the number of episodes per Part A and/or Part B FFS 
beneficiaries) are Texas, Florida, Oklahoma, Mississippi, and Louisiana 
(Table 7 and Figure 1 below). In aggregate, for CY 2010 through CY 2013 
the number of episodes for these states decreased by 8.0 percent; 
however, even with this decrease from CY 2010 through CY 2013, the five 
states listed in Table 7 continue to be among the states with the 
highest utilization of Medicare home health nationally (see Figure 1). 
If we were to exclude the five states listed in Table 7 from the 
national figures in Table 5, home health users (beneficiaries with at 
least one home health episode) as a percentage of Part A and/or Part B 
fee-for-service (FFS) beneficiaries would decrease from to 9.0 percent 
to 8.1 percent for CY 2013 and the number of episodes per Part A and/or 
Part B FFS beneficiaries would decrease from 0.17 (or 17 episodes per 
100 Medicare Part A and/or Part B FFS beneficiaries) to 0.14 (or 14 
episodes per 100 Medicare Part A and/or Part B FFS beneficiaries) for 
CY 2013.
    Texas, accounting for roughly 17 percent of HHA episodes in 2010, 
experienced a 12 percent decrease in the number of episodes and a 9 
percent decrease in the number of home health users between CY 2010 and 
CY 2013 (see Table 7 below). We also note that Texas is one of the 
states that has areas with suspect billing practices. A temporary 
moratoria on enrollment of new HHAs, effective July 30, 2013, were put 
in place for Miami, FL and Chicago, IL. In January of 2014, CMS 
announced new temporary moratoria on enrollment of new HHAs in four 
additional areas --Fort Lauderdale, FL; Detroit, MI; Dallas, TX; and 
Houston, TX. If we were to exclude Texas from the national average (see 
Table 5 above), there would be a 0.13 percent increase in number of 
episodes between CY 2010 and CY 2013 rather than a 1.8 percent decrease 
as observed at the national level. The number of home health users 
would increase 2.8 percent compared to the national average with an 
increase of 1.5 percent.

   Table 7--Home Health Statistics for the States With the Highest Number of Home Health Episodes per Part A and/or Part B FFS Beneficiaries, CY 2010
                                                                     Through CY 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Year             TX              FL              OK              MS              LA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Episodes......................................            2010       1,127,852         689,183         208,555         153,169         256,014
                                                                    2011       1,107,605         701,426         203,112         153,983         249,479
                                                                    2012       1,054,244         691,255         196,887         148,516         230,115
                                                                    2013         995,555         689,269         196,713         143,428         215,590
Beneficiaries Receiving at Least 1 Episode (Home Health             2010         366,844         355,181          68,440          55,132          77,976
 Users).................................................
                                                                    2011         363,474         355,900          67,218          55,818          77,677
                                                                    2012         350,803         354,838          65,948          55,438          74,755
                                                                    2013         333,396         357,099          66,502          55,453          73,888
Part A and/or Part B FFS Beneficiaries..................            2010       2,500,237       2,422,141         533,792         465,129         544,555
                                                                    2011       2,597,406       2,454,124         549,687         476,497         561,531
                                                                    2012       2,604,458       2,451,790         558,500         480,218         568,483
                                                                    2013       2,535,611       2,454,216         568,815         483,439         574,654
Episodes per Part A and/or Part B FFS beneficiaries.....            2010            0.45            0.28            0.39            0.33            0.47
                                                                    2011            0.43            0.29            0.37            0.32            0.44
                                                                    2012            0.40            0.28            0.35            0.31            0.40
                                                                    2013            0.39            0.28            0.35            0.30            0.38
Home Health Users as a Percentage of Part A and/or Part             2010          14.67%          14.66%          12.82%          11.85%          14.32%
 B FFS Beneficiaries....................................
                                                                    2011          13.99%          14.50%          12.23%          11.71%          13.83%
                                                                    2012          13.47%          14.47%          11.81%          11.54%          13.15%
                                                                    2013          13.15%          14.55%          11.69%          11.47%          12.86%
Providers Providing at Least 1 Episode..................            2010           2,352           1,348             240              53             213
                                                                    2011           2,472           1,426             252              51             216
                                                                    2012           2,549           1,430             254              48             213
                                                                    2013           2,600           1,357             262              48             210
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014 and August 19, 2014. Medicare
  enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with
  at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
  District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
  (``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
  a year the beneficiary is counted within each state's unique number of beneficiaries served.

[[Page 66041]]

[GRAPHIC] [TIFF OMITTED] TR06NO14.000

    For CY 2011, in addition to the implementation of the Affordable 
Care Act face-to-face encounter requirement, HHAs were also subject to 
new therapy reassessment requirements, payments were reduced to account 
for increases in nominal case-mix, and the Affordable Care Act mandated 
that the HH PPS payment rates be reduced by 5 percent to pay up to, but 
no more than 2.5 percent of total HH PPS payments as outlier payments. 
The estimated net impact to HHAs for CY 2011 was a decrease in total HH 
PPS payments of 4.78 percent. Therefore, any changes in utilization 
between CY 2010 and CY 2011 cannot be solely attributable to the 
implementation of the face-to-face encounter requirement. For CY 2012 
we recalibrated the case-mix weights, including the removal of two 
hypertension codes from scoring points in the HH PPS Grouper and 
lowering the case-mix weights for high therapy cases estimated net 
impact to HHAs, and reduced HH PPS rates in CY 2012 by 3.79 percent to 
account for additional growth in aggregate case-mix that was unrelated 
to changes in patients' health status. The estimated net impact to HHAs 
for CY 2012 was a decrease in total HH PPS payments of 2.31 percent. 
Again, any changes in utilization between CY 2011 and CY 2012 cannot be 
solely attributable to the implementation of the face-to-face encounter 
requirement. Given that a decrease in the number of episodes from CY 
2010 to CY 2013 occurred in states that have the highest home health 
utilization (number of episodes per Part A and/or Part B FFS 
beneficiaries) and not all states experienced declines in episode 
volume during that time period, we believe that the implementation of 
the face-to-face encounter requirement could be considered a 
contributing factor. We will continue to monitor for potential impacts 
due to the implementation of the face-to-face encounter requirements 
and other policy changes in the future. Independent effects of any one 
policy may be difficult to discern in years where multiple policy 
changes occur in any given year.

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

1. Background on Statutory and Regulatory Requirements
    As a condition for payment, section 6407 of the Affordable Care Act 
requires that, prior to certifying a patient's eligibility for the 
Medicare home health benefit, the physician must document that the 
physician himself or herself or an allowed non-physician practitioner 
(NPP) had a face-to-face encounter with the patient. Specifically, 
sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, as amended by the 
Affordable Care Act, state that, in addition to the certifying 
physician, a nurse practitioner or clinical nurse specialist, as those 
terms are defined in section 1861(aa)(5) of the Act, working in 
collaboration with the physician in accordance with state law, or a 
certified nurse-midwife (as defined in section 1861(gg) of the Act) as 
authorized by state law, or a physician assistant (as defined in 
section 1861(aa)(5) of the Act) under the supervision of the

[[Page 66042]]

physician may perform the face-to-face encounter.
    The goal of the Affordable Care Act provision is to achieve greater 
physician accountability in certifying a patient's eligibility and in 
establishing a patient's plan of care. We believe this goal is better 
achieved if the face-to-face encounter occurs close to the start of 
home health care, increasing the likelihood that the clinical 
conditions exhibited by the patient during the encounter are related to 
the primary reason the patient needs home health care. The certifying 
physician is responsible for determining whether the patient meets the 
eligibility criteria (that is, homebound status and need for skilled 
services) and for understanding the current clinical needs of the 
patient such that the physician can establish an effective plan of 
care. As such, CMS regulations at Sec.  424.22(a)(1)(v) require that 
the face-to-face encounter be related to the primary reason the patient 
requires home health services and occur no more than 90 days prior to 
the home health start of care date or within 30 days of the start of 
the home health care. In addition, current regulations require that, as 
part of the certification of eligibility, the certifying physician must 
document the date of the encounter and include an explanation 
(narrative) of why the clinical findings of such encounter support that 
the patient is homebound, as defined in sections 1835(a) and 1814(a) of 
the Act, and in need of either intermittent skilled nursing services, 
physical therapy, or speech-language pathology services, as defined in 
Sec.  409.42(c).
    The ``Requirements for Home Health Services'' describes certifying 
a patient's eligibility for the Medicare home health benefit, and as 
stated in the ``Content of the Certification'' under Sec.  424.22 
(a)(1), a physician must certify that:
     The individual needs or needed intermittent skilled 
nursing care, physical therapy, and/or speech-language pathology 
services as defined in Sec.  409.42(c).
     Home health services are or were required because the 
individual was confined to the home (as defined in sections 1835(a) and 
1814(a) of the Act), except when receiving outpatient services.
     A plan for furnishing the services has been established 
and is or will be periodically reviewed by a physician who is a doctor 
of medicine, osteopathy, or podiatric medicine (a doctor of podiatric 
medicine may perform only plan of treatment functions that are 
consistent with the functions he or she is authorized to perform under 
state law).\2\
---------------------------------------------------------------------------

    \2\ The physician cannot have a financial relationship as 
defined in Sec.  411.354 of the chapter, with that HHA, unless the 
physician's relationship meets one of the exceptions in section 1877 
of the Act, which sets forth general exceptions to the referral 
prohibition related to both ownership/investment and compensation; 
exceptions to the referral prohibition related to ownership or 
investment interests; and exceptions to the referral prohibition 
related to compensation arrangements.
---------------------------------------------------------------------------

     Home health services will be or were furnished while the 
individual is or was under the care of a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine.
     A face-to-face patient encounter occurred no more than 90 
days prior to the home health start of care date or within 30 days of 
the start of the home health care and was related to the primary reason 
the patient requires home health services. This also includes 
documenting the date of the encounter and including an explanation of 
why the clinical findings of such encounter support that the patient is 
homebound (as defined in sections 1835(a) and 1814(a) of the Act) and 
in need of either intermittent skilled nursing services or therapy 
services as defined in Sec.  409.42(c). The documentation must be 
clearly titled and dated and the documentation must be signed by the 
certifying physician.
    CMS regulations at Sec.  424.22(a)(1)(i) also require that, for 
instances where the physician orders skilled nursing visits for 
management and evaluation of the patient's care plan,\3\ the physician 
must include a brief narrative that describes the clinical 
justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the certification form, in addition to the 
physician's signature on the certification form, the physician must 
sign immediately after the narrative in the addendum.
---------------------------------------------------------------------------

    \3\ Skilled nursing visits for management and evaluation of the 
patient's care plan are reasonable and necessary where underlying 
conditions or complications require that only a registered nurse can 
ensure that essential unskilled care is achieving its purpose. For 
skilled nursing care to be reasonable and necessary for management 
and evaluation of the patient's plan of care, the complexity of the 
necessary unskilled services that are a necessary part of the 
medical treatment must require the involvement of skilled nursing 
personnel to promote the patient's recovery and medical safety in 
view of the patient's overall condition (reference Sec.  409.33 and 
section 40.1.2.2 in Chapter 7 of the Medicare Benefits Policy Manual 
(Pub. 100-02)).
---------------------------------------------------------------------------

    When there is a continuous need for home health care after an 
initial 60-day episode of care, a physician is also required to 
recertify the patient's eligibility for the home health benefit. In 
accordance with Sec.  424.22(b), a recertification is required at least 
every 60 days, preferably at the time the plan is reviewed, and must be 
signed and dated by the physician who reviews the plan of care. In 
recertifying the patient's eligibility for the home health benefit, the 
recertification must indicate the continuing need for skilled services 
and estimate how much longer the skilled services will be required. The 
need for occupational therapy may be the basis for continuing services 
that were initiated because the individual needed skilled nursing care, 
physical therapy, or speech-language pathology services. Again, for 
instances where the physician ordering skilled nursing visits for 
management and evaluation of the patient's care plan, the physician 
must include a brief narrative that describes the clinical 
justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the recertification form, in addition to the 
physician's signature on the recertification form, the physician must 
sign immediately after the narrative in the addendum.
    In the CY 2012 HH PPS final rule (76 FR 68597), we stated that, in 
addition to the certifying physician and allowed NPPs (as defined by 
the Act and discussed above), the physician who cared for the patient 
in an acute or post-acute care facility from which the patient was 
directly admitted to home health care, and who had privileges in such 
facility, could also perform the face-to-face encounter. In the CY 2013 
HH PPS final rule (77 FR 67068) we revised our regulations so that an 
allowed NPP, collaborating with or under the supervision of the 
physician who cared for the patient in the acute/post-acute care 
facility, could communicate the clinical findings that supported the 
patient's needs for skilled care and homebound status to the acute/
post-acute care physician. In turn, the acute/post-acute care physician 
would communicate the clinical findings that supported the patient's 
needs for skilled care and homebound status from the encounter 
performed by the NPP to the certifying physician to document. Policy 
always permitted such NPPs in the acute/post-acute care setting from 
which the patient is directly admitted to home health care to perform 
the face-to-face encounter and communicate directly with the certifying 
physician the clinical findings from the encounter and how such 
findings support that the patient was homebound and needed skilled 
services (77 FR 67106).

[[Page 66043]]

2. Changes to the Face-to-Face Encounter Narrative Requirement and Non-
Coverage of Associated Physician Certification/Re-Certification Claims
    Each year, the CMS' Office of Financial Management (OFM), under the 
Comprehensive Error Rate Testing (CERT) program, calculates the 
Medicare Fee-for-Service (FFS) improper payment rate. For the FY 2013 
report period (reflecting claims processed between July 2011 and June 
2012), the national Medicare FFS improper payment rate was calculated 
to be 10.1 percent.\4\ For that same report period, the improper 
payment rate for home health services was 17.3 percent, representing a 
projected improper payment amount of approximately $3 billion.\5\ The 
improper payments identified by the CERT program represent instances in 
which a health care provider fails to comply with the Medicare coverage 
and billing requirements and are not necessarily a result of fraudulent 
activity.\6\
---------------------------------------------------------------------------

    \4\ U.S. Department of Health and Human Services, ``FY 2013 
Agency Financial Report'', accessed on April, 23, 2014 at: http://www.hhs.gov/afr/2013-hhs-agency-financial-report.pdf.
    \5\ U.S. Department of Health and Human Services, ``The 
Supplementary Appendices for the Medicare Fee-for-Service 2013 
Improper Payment Rate Report'', accessed on April, 23, 2014 at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/November2013ReportPeriodAppendixFinal12-13-2013_508Compliance_Approved12-27-13.pdf.
    \6\ The CERT improper payment rate is not a ``fraud rate,'' but 
is a measurement of payments made that did not meet Medicare 
requirements. The CERT program cannot label a claim fraudulent.
---------------------------------------------------------------------------

    The majority of home health improper payments were due to 
``insufficient documentation'' errors. ``Insufficient documentation'' 
errors occur when the medical documentation submitted is inadequate to 
support payment for the services billed or when a specific 
documentation element that is required (as described above) is missing. 
Most ``insufficient documentation'' errors for home health occurred 
when the narrative portion of the face-to-face encounter documentation 
did not sufficiently describe how the clinical findings from the 
encounter supported the beneficiary's homebound status and need for 
skilled services, as required by Sec.  424.22(a)(1)(v).
    The home health industry continues to voice concerns regarding the 
implementation of the Affordable Care Act face-to-face encounter 
documentation requirement. The home health industry cites challenges 
that HHAs face in meeting the face-to-face encounter documentation 
requirements regarding the required narrative, including a perceived 
lack of established standards for compliance that can be adequately 
understood and applied by the physicians and HHAs. In addition, the 
home health industry conveys frustration with having to rely on the 
physician to satisfy the face-to-face encounter documentation 
requirements without incentives to encourage physician compliance. 
Correspondence received to date has expressed concern over the 
``extensive and redundant'' narrative required by regulation for face-
to-face encounter documentation purposes when detailed evidence to 
support the physician certification of homebound status and medical 
necessity is available in clinical records. In addition, correspondence 
stated that the narrative requirement was not explicit in the 
Affordable Care Act provision requiring a face-to-face encounter as 
part of the certification of eligibility and that a narrative 
requirement goes beyond Congressional intent.
    While we do not agree that the narrative requirement goes beyond 
Congressional intent, we agree that there should be sufficient evidence 
in the patient's medical record to demonstrate that the patient meets 
the Medicare home health eligibility criteria. Therefore, in an effort 
to simplify the face-to-face encounter regulations, reduce burden for 
HHAs and physicians, and to mitigate instances where physicians and 
HHAs unintentionally fail to comply with certification requirements, we 
proposed that:
    (1) The narrative requirement in regulation at Sec.  
424.22(a)(1)(v) would be eliminated. The certifying physician would 
still be required to certify that a face-to-face patient encounter, 
which is related to the primary reason the patient requires home health 
services, occurred no more than 90 days prior to the home health start 
of care date or within 30 days of the start of the home health care and 
was performed by a physician or allowed non-physician practitioner as 
defined in Sec.  424.22(a)(1)(v)(A), and to document the date of the 
encounter as part of the certification of eligibility.
    For instances where the physician is ordering skilled nursing 
visits for management and evaluation of the patient's care plan, the 
physician would still be required to include a brief narrative that 
describes the clinical justification of this need as part of the 
certification/re-certification of eligibility as outlined in Sec.  
424.22(a)(1)(i) and Sec.  424.22(b)(2). This requirement was 
implemented in the CY 2010 HH PPS final rule (74 FR 58111) and is not 
changing. We note that this requirement predates the Affordable Care 
Act, and is a long-established policy of CMS.
    (2) In determining whether the patient is or was eligible to 
receive services under the Medicare home health benefit at the start of 
care, we proposed to review only the medical record for the patient 
from the certifying physician or the acute/post-acute care facility (if 
the patient in that setting was directly admitted to home health) used 
to support the physician's certification of patient eligibility, as 
described in paragraphs (a)(1) and (b) of the section. If the patient's 
medical record, used by the physician in certifying eligibility, was 
not sufficient to demonstrate that the patient was eligible to receive 
services under the Medicare home health benefit, payment would not be 
rendered for home health services provided.
    (3) Physician claims for certification/recertification of 
eligibility for home health services (G0180 and G0179, respectively) 
would not be covered if the HHA claim itself was non-covered because 
the certification/recertification of eligibility was not complete or 
because there was insufficient documentation to support that the 
patient was eligible for the Medicare home health benefit. However, 
rather than specify this in our regulations, this proposal would be 
implemented through future sub-regulatory guidance. We believed that 
these proposals were responsive to home health industry concerns 
regarding the face-to-face encounter requirements articulated above. We 
invited comment on these proposals and the associated change in the 
regulations text at Sec.  424.22 the CY 2015 HH PPS proposed rule (79 
FR 38376).
    The following is a summary of the comments we received regarding 
(1) the proposed elimination of the face-to-face encounter narrative 
requirement as part of the certification of eligibility; and (2) the 
proposal to review only the medical record for the patient from the 
certifying physician or the acute/post-acute care facility (if the 
patient in that setting was directly admitted to home health), used to 
support the physician's certification of patient eligibility, in 
determining whether the patient is or was eligible to receive services 
under the Medicare home health benefit at the start of care.
    Comment: A few commenters urged CMS to remove the face-to-face 
requirement entirely. Commenters went on to note that since the intent 
of the face-to-face encounter is to combat fraud, CMS should be able to 
determine which HHAs are providing care by fraudulent means and should 
investigate those HHAs.

[[Page 66044]]

    Response: As we note above, as a condition for payment, section 
6407 of the Affordable Care Act requires that, prior to certifying a 
patient's eligibility for the Medicare home health benefit, the 
physician must document that the physician himself or herself or an 
allowed NPP had a face-to-face encounter with the patient. As such, we 
do not have the legal authority to eliminate the face-to-face encounter 
requirement. We also note above that the goal of this provision was to 
achieve greater physician accountability in certifying a patient's 
eligibility, increasing communication between the physician and home 
health agency to improve patient care, and in establishing a patient's 
plan of care. CMS's Center for Program Integrity (CPI) is currently 
engaged in a variety of activities aimed at reducing fraud and abuse. 
Such activities include provider/contractor audits, policy reviews, and 
the identification and monitoring of program vulnerabilities. CPI is 
actively collaborating with the U.S. Department of Justice, the 
Department of Health & Human Services' Office of Inspector General, 
state law enforcement agencies, other federal entities, and other CMS 
component(s) for the purposes of detecting, deterring, monitoring and 
combating fraud and abuse, as well as taking action against those that 
commit or participate in fraudulent or other unlawful activities.
    Comment: Several commenters stated that CMS overstepped its 
statutory authority by requiring the face-to-face encounter narrative 
as part of the certification of patient eligibility for the home health 
benefit.
    Response: We disagree with the commenters. We believe that our 
policy is consistent with the text, structure, and purpose of the 
statute. As a condition for payment, section 6407 of the Affordable 
Care Act requires that, prior to certifying a patient's eligibility for 
the Medicare home health benefit, the physician must ``document'' that 
the physician himself or herself or an allowed NPP had a face-to-face 
encounter with the patient. The statutory text does not specify what 
the statutory term ``document'' means and we believe it is reasonable 
to interpret the requirement to ``document'' the face-to-face encounter 
as requiring the certifying physician to explain why the Medicare 
beneficiary is homebound and in need of skilled home health services. 
This interpretation is supported by the structure and purpose of the 
statute. Medicare payment for home health services is intended for 
individuals who are confined to the home and need skilled home health 
services. The face-to-face requirement and the documentation 
requirement help ensure that individuals do not receive home health 
services unnecessarily and that Medicare makes payment appropriately 
(that is, when the patient is homebound and needs skilled home health 
services). Nothing in the text of the statute indicates that the 
current required explanation is outside the scope of the Secretary's 
legal authority. In addition, this is similar to the long-standing 
Medicare policy for skilled nursing visits for management and 
evaluation of the patient's care plan (where underlying conditions or 
complications require that only a registered nurse can ensure that 
essential unskilled care is achieving its purpose), which was 
previously accepted by the home health community.
    Comment: Nearly all commenters were supportive of the proposal to 
eliminate the face-to-face encounter narrative as part of the 
certification of eligibility and urged CMS to finalize the proposal. 
Commenters cited challenges in getting certifying physicians, whom the 
HHA has no control over, to document the narrative sufficiently. Other 
commenters noted that policies surrounding the narrative requirement 
contained confusing nuances and reviews of narrative sufficiency were 
too subjective. Some commenters noted instances where medical necessity 
and patient eligibility for the Medicare home health benefit were 
clearly demonstrated in the medical record; however, the entire claim 
was denied because the certifying physician's narrative was deemed 
insufficient.
    In contrast, in its comments, MedPAC stated that the narrative 
should continue to be a requirement as part of the certification of 
eligibility for Medicare home health services. MedPAC stated that 
eliminating the narrative increases the risk of unnecessary or 
unauthorized home health care services. MedPAC suggested that CMS keep 
the current narrative requirement in effect for at least another year 
while it considers other potential improvements. Another commenter also 
disagreed with the proposed elimination of the face-to-face encounter 
narrative as part of the certification of eligibility stating that the 
elimination of the narrative may increase confusion about the Medicare 
home health eligibility requirements.
    Response: We thank the vast majority of the commenters for their 
support of this proposal. As explained in the proposed rule, we 
proposed to eliminate the narrative requirement in an effort to 
simplify the face-to-face encounter regulations, reduce burden for HHAs 
and physicians, and to mitigate instances where physicians and HHAs 
unintentionally fail to comply with certification requirements. We 
believe that the current narrative requirement can be useful for HHAs 
and medical review auditors, and is a permissible interpretation of 
section 6407 of the Affordable Care Act. However, as the proposed rule 
reflects, we acknowledge the concerns expressed by stakeholders 
regarding application of the narrative requirement. Balancing the 
considerations raised by stakeholders and commenters in light of our 
experience, we are finalizing our proposal to eliminate the narrative 
requirement. We will continue to evaluate whether further policy 
changes are warranted in the future.
    Comment: A few commenters asked that CMS affirm that a narrative 
for instances where the physician is ordering skilled nursing for 
management and evaluation of the patient's care plan (that is, 
instances where the patient's underlying conditions or complications 
require that only a registered nurse can ensure that essential 
unskilled care is achieving its purpose) should be a rare occurrence 
and asked how physicians and HHAs should identify cases that would 
require a narrative. Some commenters requested that CMS affirm in the 
final rule that while CMS proposed to eliminate the face-to-face 
encounter narrative, a narrative will still be required for instances 
where the physician is ordering skilled nursing visits for the 
management and evaluation of the patient's care plan. Several 
commenters recommended that CMS eliminate all narrative requirements 
for home health for consistency and to promote a better understanding 
of the certification/re-certification requirements by physicians.
    Response: Instances where a physician is ordering skilled nursing 
for the management and evaluation of the patient's care plan (when the 
patient's underlying conditions and/or complications require a 
registered nurse to ensure that non-skilled care is achieving its 
purpose), should be rare and therefore a narrative that explains the 
need for such services as part of the certification/re-certification of 
patient eligibility for the Medicare home health benefit should also be 
rare. Analysis of CY 2012 home health claims data showed that only 1.5 
percent of all home health visits were for management & evaluation of 
the patient's care plan (see Table 8 below).

[[Page 66045]]

    Table 8--Percentage of Home Health Visits by HCPCS Code, CY 2012
------------------------------------------------------------------------
                                                             Percent  of
                       Type of visit                            total
------------------------------------------------------------------------
G0154--Direct skilled services provided by a RN/LPN........         67.6
G0162--Skilled services by a RN for management and                   1.5
 evaluation of the plan of care (the patient's underlying
 conditions or complications requires an RN to ensure that
 essential non-skilled care achieves its purpose)..........
G0163--Skilled services of a RN/LPN for the observation and         10.5
 assessment of the patient's condition (the change in the
 patient's condition requires skilled nursing personnel to
 identify and evaluate the patient's need for possible
 modification of treatment)................................
G0164--Skilled services of a RN/LPN, in the training and/or         20.4
 education of a patient or family member...................
------------------------------------------------------------------------
Source: CY 2012 Medicare claims data for episodes ending on or before
  December 31, 2012 (as of June 30, 2013) for which we had a linked
  OASIS assessment.
Note(s): RN = Registered Nurse, LPN = Licensed Practical Nurse.

    We note that section 40.1.2.2 in Chapter 7 of the Medicare Benefits 
Policy Manual provides information on how to identify whether the 
patient is receiving skilled nursing services for management and 
evaluation of the patient's care plan. Skilled nursing services in such 
instances can be ``reasonable and necessary where underlying conditions 
or complications require that only a registered nurse can ensure that 
essential unskilled care is achieving its purpose. For skilled nursing 
care to be reasonable and necessary for management and evaluation of 
the patient's plan of care, the complexity of the necessary unskilled 
services that are a necessary part of the medical treatment must 
require the involvement of skilled nursing personnel to promote the 
patient's recovery and medical safety in view of the patient's overall 
condition.'' \7\ Section 40.1.2.2 also provides several examples in 
which skilled nursing services for management and evaluation of the 
patient's care plan could be considered reasonable and necessary.
---------------------------------------------------------------------------

    \7\ Medicare Benefit Policy Manual, (CMS Pub. 100-02), Ch. 7, 
sec. 40.1.2.2. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf.
---------------------------------------------------------------------------

    As indicated above in Table 8, instances where the physician is 
ordering skilled nursing visits for management and evaluation of the 
patient's care plan should be infrequent. Because the purpose of these 
visits require a skilled nurse to ensure that unskilled care is 
achieving its purpose, we believe that it is still appropriate for the 
physician to include a brief narrative that describes the clinical 
justification of this need as part of the certification/re-
certification of eligibility as outlined in Sec.  424.22(a)(1)(i) and 
Sec.  424.22(b)(2).
    Comment: Several commenters stated that CMS should halt current 
medical review activities with regard to the face-to-face encounter 
narrative and reopen any past denials that were made based on an 
insufficient face-to-face encounter narrative by making the 
implementation of the elimination of the face-to-face encounter 
narrative retroactive.
    Response: The changes finalized in CY 2015 HH PPS final rule will 
become effective for episodes that begin on or after January 1, 2015. 
Although we are eliminating the narrative requirement prospectively, 
the narrative requirement continues to apply to services furnished 
during episodes that begin before January 1, 2015.
    Comment: One commenter stated that for claims currently undergoing 
retrospective review, CMS should find HHAs ``without fault'' under 42 
U.S.C. 1395gg and section 1870 of the Act in receiving payments where 
the physician has provided the narrative, although perhaps not 
sufficient, in addition to meeting all other certification 
requirements. In finding the HHAs ``without fault'' CMS would simply be 
acknowledging that the nature of the earlier face-to-face guidance 
could lead to a provider acting in good faith in submitting a claim 
that might not meet the documentation standards. One commenter stated 
that CMS should issue clarifying guidance, to be applied to claims 
currently being reviewed, that explains what constitutes a compliant or 
sufficient narrative.
    Response: Providers are required to submit documentation adequate 
to justify payment under Medicare. Where we deny a claim due to 
insufficient documentation of the face-to-face encounter, we are also 
inherently determining that the provider is not without fault because 
the provider has not met its burden to submit documentation adequate to 
justify payment. The Medicare Financial Management Manual addresses the 
``without fault'' clause of section 1395gg of the Act and states that a 
provider is not without fault if it fails to provide the documentation 
necessary to determine that the billed-for services are covered.\8\ We 
believe that we have provided sufficient education and guidance to 
providers on the requirements for sufficiently documenting the face-to-
face encounter as part of the certification of eligibility.
---------------------------------------------------------------------------

    \8\ Medicare Financial Management Manual, (CMS Pub. 100-06), Ch. 
3, sec. 90.1(E). Available at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/fin106c03.pdf
---------------------------------------------------------------------------

    CMS has issued several educational articles and a set of Q&As to 
help aide physicians and HHAs in complying with the face-to-face 
encounter narrative requirement. The most recent article issued--MLN 
Matters[supreg] SE1405: Documentation Requirements for Home Health 
Prospective Payment System (HH PPS) Face-to-Face Encounter--explains 
what constitutes a sufficient face-to-face encounter narrative and 
includes several examples. Other articles and a set of Q&As on the 
face-to-face encounter requirement and physician certification of 
eligibility can be found on the Home Health Agency (HHA) center Web 
page at: http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html under ``spotlights''.
    Comment: Several commenters stated that CMS should educate its 
contractors to ensure that there are consistent and standardized audit 
practices. Other commenters stated that if CMS reviews the certifying 
physician's and/or facility's medical record for the patient, CMS 
should adequately prepare physicians to implement this new policy by 
educating physicians on the requirements for home health eligibility, 
how to sufficiently document patient eligibility, and the Medicare 
definition of confined to the home.
    Response: We use several methods to ensure consistency in medical 
reviews, including contractor oversight and the use of inter-rater 
reliability to ensure that all reviewers are interpreting the policy 
the same. We offer a range of educational resources through online 
manuals and Web site postings for HHAs and physicians who order these 
services. When appropriate, we also provide direct guidance and 
education to Medicare providers and suppliers. We encourage HHAs to 
work with their designated MAC to address any issues that arise in the 
claims payment process. We agree with commenters who suggested that we 
educate physicians regarding any policy changes finalized in this final 
rule and provide general education to physicians on certifying 
beneficiaries for Medicare home health services. We will do so via,

[[Page 66046]]

for example, open door forums, email listserv announcements, and 
MedLearn articles.
    Comment: A few commenters stated that the certifying physician 
would not have, nor should be required to have, sufficient 
documentation within his/her medical record for the patient to support 
his/her certification that the patient is eligible for the Medicare 
home health benefit. Several commenters stated that HHAs should not be 
liable for documentation errors made by physicians, whom they have 
little direct control over and some commenters stated that it is 
neither reasonable for the HHA to obtain all the documentation needed 
from the certifying physician and/or the acute/post-acute care facility 
that may have been used to certify patient eligibility and/or lead to 
the referral for home care. A few commenters stated that CMS' proposals 
to base reimbursement of one provider on documentation maintained by 
another, separate provider is unprecedented. Several commenters stated 
that if CMS begins reviewing the certifying physician's records for the 
patient, physician's will cease to refer patients to home health out of 
fear of patient record audits and frustration with administrative 
burden.
    Response: In accordance with the statutory language at sections 
1814(a)(2) and 1835(a)(2) of the Act, physicians are required to have, 
and thus be able to provide, material that appropriately supports their 
certification and recertification of Medicare home health 
beneficiaries, as provided by regulations. When we proposed to require 
a face-to-face encounter narrative, comments, which were summarized and 
addressed in the CY 2011 HH PPS final rule (75 FR 70431), communicated 
to CMS that ``the HHA has no control over the quality of the 
physician's documentation and no method to enforce proper physician 
documentation''. We stated in our response that:

    ``it is important to reiterate that to be eligible for 
Medicare's [home health] benefit, the patient must be under the care 
of a physician, and it is ultimately the responsibility of the HHA 
that this criterion is met. We have always held the HHA responsible 
for ensuring that there is a physician-signed plan of care, 
physician-signed orders, and a physician-signed certification. 
Therefore, we will also hold the agencies responsible for the 
certifying physician's encounter documentation. By statute, this 
documentation is a requirement for payment just as a physician-
signed certification of eligibility is a requirement for payment'' 
(75 FR 70430).

    We also stated in the CY 2011 HH PPS final rule that: ``we would 
expect that a physician who performs a medically necessary physician 
service, which also satisfies the face-to-face encounter requirement, 
would maintain medical record documentation concerning the encounter, 
and the clinical findings associated with that encounter would be 
consistent with the physician's certification documentation'' (75 FR 
70431). While we stated that the HHA was ``held harmless'' if the 
certification of eligibility, including the face-to-face encounter 
narrative, was sufficient, we noted that the certifying physician was 
still expected to fulfill his or her responsibility for ensuring 
appropriate medical record documentation associated with the 
certification and/or encounter and any associated Medicare billing (75 
FR 70431). Since we proposed to eliminate the face-to-face encounter 
narrative, with respect to which commenters were overwhelmingly 
supportive, the only other source that would substantiate the 
certification of eligibility is the certifying physician's and/or the 
acute/post-acute care facility's medical record for the patient.
    We do not agree that requiring documentation from the certifying 
physician's and/or acute/post-acute care facility's medical record for 
the patient to substantiate the certification of eligibility is 
unprecedented. For any Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (DMEPOS) item to be covered by Medicare:

    ``the patient's medical record must contain sufficient 
documentation of the patient's medical condition to substantiate the 
necessity for the type and quantity of items ordered and for the 
frequency of use or replacement (if applicable). . . . However, 
neither a physician's order nor a certificate of medical necessity 
(CMN) nor a DME information form (DIF) nor a supplier prepared 
statement nor a physician attestation by itself provides sufficient 
documentation of medical necessity, even though it is signed by the 
treating physician or supplier. There must be information in the 
patient's medical record that supports the medical necessity for the 
item and substantiates the answers on the CMN (if applicable) or DIF 
(if applicable) or information on a supplier prepared statement or 
physician attestation (if applicable).'' \9\
---------------------------------------------------------------------------

    \9\ Medicare Program Integrity Manual (CMS Pub. 100-08) Ch.5, 
sec. 5.7. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c05.pdf.

    The analysis in section III.A in this final rule shows that since 
the implementation of the face-to-face encounter requirement there has 
been little change in home health utilization. As such, we would not 
expect the elimination of the narrative and the review of documentation 
from the certifying physician's and/or post-acute/acute care facility's 
medical record for the patient to have a substantial impact on 
utilization for those beneficiaries who are truly eligible to receive 
services under the Medicare home health benefit. We will continue to 
monitor for potential impacts due to the face-to-face encounter 
requirements and other policy changes in the future.
    Comment: Commenters were generally opposed to using only the 
certifying physician's and/or acute/post-acute care facility's medical 
record for the patient to determine initial patient eligibility for the 
home health benefit. Commenters generally went on to state that all 
medical necessity and eligibility determinations should be based on 
whether the full patient record, regardless of who holds it, 
establishes that the patient is homebound and in need of skilled care. 
Other commenters suggested that CMS adopt a policy that allows the 
certifying physician documentation that supports the certification of 
eligibility for home health services to be maintained in the medical 
record of the HHA or allow information from the HHA to be incorporated 
into the certifying physician's medical record for the patient. One 
commenter noted that when MAC and RAC reviews are conducted, it can be 
years after the service was actually provided and it could be difficult 
to obtain information from the facility/certifying physician years 
later as the medical record for the patient may have been moved off-
site for storage.
    Response: In accordance with the statutory language at sections 
1814(a)(2) and 1835(a)(2) of the Act, a physician is required to 
certify and re-certify the patient's eligibility for the home health 
benefit. This is also a condition for Medicare payment per the 
regulations at Sec.  424.22. Without a valid certification/re-
certification of eligibility, there can be no payment made to the HHA. 
Section 1833(e) of the Act further states that: ``No payment shall be 
made to any provider of services or other person under this part unless 
there has been furnished such information as may be necessary in order 
to determine the amounts due such provider or other person under this 
part for the period with respect to which the amounts are being paid or 
for any prior period.'' Similarly, section 1815(a) of the Act states 
that: ``. . . no such payments shall be made to any provider unless it 
has furnished such information as the Secretary may request in order to 
determine the amounts due such provider under this part for the period

[[Page 66047]]

with respect to which the amounts are being paid or any prior period.'' 
Since the certification/re-certification of eligibility is a 
requirement for payment and a physician, independent from the HHA as 
outlined in Sec.  424.22(d), must complete the certification/ re-
certification of eligibility, only the certifying physician's and/or 
the acute/post-acute care facility's medical record for the patient 
that was used as the basis for the certification of eligibility can 
demonstrate whether the certification/re-certification of eligibility 
is valid.
    We agree with the suggestions made by the commenters that the 
certifying physician and/or acute/post-acute care facility should 
provide the documentation that substantiates the patient's eligibility 
to the HHA upon request. The HHA must provide the documentation from 
the certifying physician and/or acute/post-acute care facility that 
substantiates the patient's eligibility for the Medicare home health 
benefit to CMS and/or its contractors upon request. We also agree with 
commenters that it would be permissible for the HHA to communicate with 
and provide information to the certifying physician about the patient's 
homebound status and need for skilled care and for the certifying 
physician to incorporate this information into his or her medical 
record for the patient. However, the certifying physician must review 
and sign off on anything incorporated into his or her medical record 
for the patient that is used to support his/her certification/re-
certification of patient eligibility for the home health benefit. In 
addition, any information from the HHA (including the comprehensive 
assessment) that is incorporated into the certifying physician's and/or 
the acute/post-acute care facility's medical record for the patient (if 
the patient was directly admitted to home health) and used to support 
the certification of patient eligibility for the home health benefit, 
must corroborate the certifying physician's and/or the acute/post-acute 
care facility's own documentation/medical record entries, including the 
diagnoses and the patient's condition reported on the comprehensive 
assessment.
    Comment: Commenters questioned how the process of reviewing the 
certifying physician and/or acute/post-acute care facility medical 
record for the patient would be operationalized. Specifically, 
commenters asked if medical review auditors would contact the 
certifying physician and/or acute/post-acute care facility directly to 
obtain records for review and if HHAs would be penalized if certifying 
physician and/or acute/post-acute care facility patient records are not 
readily available for review. Some commenters questioned whether 
medical record reviews would happen upon request, such as a MAC or RAC 
additional documentation request, or if the HHA would be responsible 
for obtaining the supporting documentation from the certifying 
physician and/or acute/post-acute care facility and, if so, whether the 
documentation should be obtained upon referral. A few commenters stated 
that if HHAs are responsible for securing supporting documentation, it 
could lead to delays in accepting patients, which in turn could lead to 
issues in complying with other regulations, such as the timeframe 
required for completing the initial assessment.
    Response: After reviewing all of the public comments received, we 
believe that the best process is for the certifying physician and/or 
the acute/post-acute care facility (if the patient in that setting was 
directly admitted to home health) to provide the documentation used as 
the basis for the certification of home health eligibility, upon 
request, to the home health agency, review entities, and/or CMS. The 
HHA will obtain the documentation from the certifying physician and/or 
acute/post-acute care facility that substantiates the certification of 
patient eligibility for its own medical record for the patient and must 
be able to provide it to CMS and its review entities upon request. If 
the documentation used as the basis for the certification of 
eligibility is not sufficient to demonstrate that the patient is or was 
eligible to receive services under the Medicare home health benefit, 
payment will not be rendered for home health services provided. 
Obtaining documentation from the certifying physician and/or acute/
post-acute care facility should not lead to delays in accepting 
patients. We require certifications to be obtained at the time the plan 
of care is established or as soon thereafter as possible.\10\ This 
allows flexibility for HHAs to develop the plan of care in consultation 
with the physician, if needed.
---------------------------------------------------------------------------

    \10\ Medicare General Information, Entitlement, and Eligibility 
Manual (CMS Pub. 100-01) Ch. 4, sec. 30.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/ge101c04.pdf.
---------------------------------------------------------------------------

    The plan of care requirements in the Medicare Conditions of 
Participation (CoPs) at Sec.  484.18(a) states that the plan of care 
developed in consultation with the agency staff covers all pertinent 
diagnoses, including mental status, types of services and equipment 
required, frequency of visits, prognosis, rehabilitation potential, 
functional limitations, activities permitted, nutritional requirements, 
medications and treatments, any safety measures to protect against 
injury, instructions for timely discharge or referral, and any other 
appropriate items. If a physician refers a patient under a plan of care 
that cannot be completed until after an evaluation visit, the physician 
is consulted to approve additions or modifications to the original 
plan. Orders for therapy services include the specific procedures and 
modalities to be used and the amount, frequency, and duration. The 
therapist and other agency personnel participate in developing the plan 
of care.
    The Medicare CoPs, at Sec.  484.55(a), require the completion of an 
initial assessment within 48 hours of referral, or within 48 hours of 
the patient's return home, or on the physician-ordered start of care 
date. The initial assessment visit must be done to determine the 
immediate care and support needs of the patient and to determine 
eligibility for the Medicare home health benefit, including homebound 
status. The Medicare CoPs, at Sec.  484.55(b), require a comprehensive 
assessment to be completed in a timely manner, consistent with the 
patient's immediate needs, but no later than 5 calendar days after the 
start of care, and for eligibility for the Medicare home health benefit 
to be determined, including homebound status. We would expect that the 
findings from initial assessment and/or comprehensive assessment of the 
patient would be communicated to the certifying physician. The 
certifying physician can incorporate this information into his/her 
medical record for the patient and use it to develop the plan of care 
and to support his/her certification of patient eligibility. The 
certifying physician must review and sign off on anything incorporated 
it into his or her medical record for the patient that is used to 
substantiate the certification/ re-certification of patient eligibility 
for the home health benefit.
    Also, per the regulations at Sec.  424.22(a)(1)(v), the face-to-
face encounter itself, can occur up to 30 days after the start of care. 
As such, there may be instances where the certification of patient 
eligibility and associated supporting documentation may not be 
available until after the patient has been accepted by the HHA and 
services have commenced. As noted above, the certification must be 
obtained at the time the plan of care is established or as soon 
thereafter as possible. Therefore, it is not acceptable for HHAs to 
wait until the end of the 60-day episode of care to obtain a completed 
certification of

[[Page 66048]]

patient eligibility and supporting documentation from the certifying 
physician and/or the acute/post-acute care facility (if the patient was 
directly admitted to home health).
    Comment: Commenters stated that most of the issues with the face-
to-face encounter narrative stemmed from a misunderstanding by 
providers and physicians on what is considered a sufficient narrative. 
Therefore, if the certifying physician's and/or acute/post-acute care 
facility's medical record for the patient is reviewed to determine 
initial patient eligibility for the home health benefit, then CMS 
should define what it would consider sufficient documentation to 
substantiate the certification of eligibility. Some commenters stated 
that it is impossible for the HHA to ensure that the documentation in 
the certifying physician and/or acute/post-acute care facility medical 
record for the patient is sufficiently detailed to support the 
certification of patient eligibility. A few commenters stated that some 
physicians are reluctant or resistant to providing additional 
documentation or changing previous practices in order to comply with 
new requirements.
    Response: HHAs should obtain as much documentation from the 
certifying physician's medical records and/or the acute/post-acute care 
facility's medical records (if the patient was directly admitted to 
home health) as they deem necessary to assure themselves that the 
Medicare home health patient eligibility criteria have been met. As 
previously noted, we have issued several educational articles and a set 
of Q&As to help aide physicians and HHAs in complying with the face-to-
face encounter narrative requirement and similarly could be used as a 
guide on what would be considered adequate documentation in the 
certifying physician's and/or acute/post-acute care facility's medical 
record for the patient to substantiate eligibility for the Medicare 
home health benefit. The most recent article issued--MLN 
Matters[supreg] SE1405: Documentation Requirements for Home Health 
Prospective Payment System (HH PPS) Face-to-Face Encounter--explains 
what constitutes a sufficient face-to-face encounter narrative and 
includes several examples. Other articles, including SE1405, and a set 
of Q&As on the face-to-face encounter requirement and physician 
certification of eligibility can be found on the Home Health Agency 
(HHA) center Web page at: http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html under ``spotlights''.
    The Medicare Financial Management Manual requires providers to 
provide the documentation necessary to determine that the billed-for 
services are covered.\11\ Home health services cannot be covered 
without a valid patient certification/re-certification of eligibility, 
in accordance with our regulations at Sec.  424.22. The certifying 
physician and/or the acute/post-acute care facility medical record for 
the patient must contain information that justifies the referral for 
Medicare home health services, including the need for the skilled 
services initially ordered and the patient's homebound status. This 
information can be found most often in clinical and progress notes and 
discharge summaries. In addition, the certifying physician's and/or 
acute/post-acute care facility's medical record for the patient must 
contain the actual clinical note for the face-to-face encounter visit 
that demonstrates that the visit occurred within the required 
timeframe, was related to the primary reason the patient requires home 
health services, and was performed by either: (1) The certifying 
physician; (2) a physician, with privileges, who cared for the patient 
in an acute or post-acute care facility from which the patient was 
directly admitted to home health; or (3) an allowed NPP as set out in 
Sec.  424.22(a)(1)(v)(A).
---------------------------------------------------------------------------

    \11\ Medicare Financial Management Manual, (CMS Pub. 100-06), 
Ch. 3, sec. 90.1(E). Available at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/fin106c03.pdf
---------------------------------------------------------------------------

    It is permissible for the HHA to communicate with and provide 
information to the certifying physician about the patient's homebound 
status and need for skilled care and for the certifying physician to 
incorporate this information into his or her medical record for the 
patient. The certifying physician must review and sign off on anything 
incorporated it into his or her medical record for the patient that is 
used to support his/her certification/re-certification of patient 
eligibility for the home health benefit. In addition, any information 
from the HHA (including the comprehensive assessment) that is 
incorporated into the certifying physician's and/or the acute/post-
acute care facility's medical record for the patient (if the patient 
was directly admitted to home health) and used to support the 
certification of patient eligibility for the home health benefit, must 
corroborate the certifying physician's and/or the acute/post-acute care 
facility's own documentation/medical record entries, including the 
diagnoses and the patient's condition reported on the comprehensive 
assessment. With respect to DMEPOS, it has been our longstanding policy 
that records from suppliers or healthcare professionals with a 
financial interest in the claim outcome are not considered sufficient 
by themselves for the purpose of determining that a DMEPOS item is 
reasonable and necessary. We believe the same safeguards are necessary 
for home health patient eligibility determinations and consistent with 
the statutory intent in sections 1814(a), 1835(a) and 1877 of the Act, 
which require a physician, who does not have financial relationship 
with the HHA, to certify the patient's eligibility for home health 
services.
    We want to remind certifying physicians and acute/post-acute care 
facilities of their responsibility to provide the medical record 
documentation that supports the certification of patient eligibility 
for the Medicare home health benefit. Certifying physicians who show 
patterns of non-compliance with this requirement, including those 
physicians whose records are inadequate or incomplete for this purpose, 
may be subject to increased reviews, such as through provider-specific 
probe reviews.
    Comment: A few commenters questioned whether a certification 
statement will still be required, if the certification statement can be 
added to the plan of care, and what exactly constitutes a sufficient 
certification of eligibility. One commenter recommended that CMS 
consider a signed and dated order for home health services for an 
eligible patient by an eligible practitioner as satisfying the 
certification requirements.
    Response: As a reminder, the statute at sections 1814(a)(2)(C) and 
1835(a)(2)(A) outlines the certification and re-certification 
requirements for Medicare home health services. These requirements are 
also reflected in regulations at Sec.  424.22(a) and (b). A physician 
will still be required to certify patient eligibility for the Medicare 
home health benefit. Specifically for a certification of eligibility to 
be sufficient, a physician must certify that:
     The individual needs or needed intermittent skilled 
nursing care, physical therapy, and/or speech-language pathology 
services as defined in Sec.  409.42(c).
     Home health services are or were required because the 
individual was confined to the home (as defined in sections 1835(a) and 
1814(a) of the Act), except when receiving outpatient services.
     A plan for furnishing the services has been established 
and is or will be

[[Page 66049]]

periodically reviewed by a physician who is a doctor of medicine, 
osteopathy, or podiatric medicine (a doctor of podiatric medicine may 
perform only plan of treatment functions that are consistent with the 
functions he or she is authorized to perform under state law).\12\
---------------------------------------------------------------------------

    \12\ The physician cannot have a financial relationship as 
defined in Sec.  411.354 of the chapter, with that HHA, unless the 
physician's relationship meets one of the exceptions in section 1877 
of the Act, which sets forth general exceptions to the referral 
prohibition related to both ownership/investment and compensation.
---------------------------------------------------------------------------

     Home health services will be or were furnished while the 
individual is or was under the care of a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine.
     A face-to-face patient encounter occurred no more than 90 
days prior to the home health start of care date or within 30 days of 
the start of the home health care, was related to the primary reason 
the patient requires home health services, and was performed by the 
certifying physician, a physician, with privileges, who cared for the 
patient in an acute or post-acute care facility from which the patient 
was directly admitted to home health, or an allowed NPP defined in 
Sec.  424.22(a)(1)(v). The certifying physician must also document the 
date of the encounter as part of the certification.
    For instances where the physician orders skilled nursing visits for 
management and evaluation of the patient's care plan,\13\ the 
certifying physician must include a brief narrative that describes the 
clinical justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the certification form, in addition to the 
physician's signature on the certification form, the physician must 
sign immediately after the narrative in the addendum.
---------------------------------------------------------------------------

    \13\ Skilled nursing visits for management and evaluation of the 
patient's care plan are reasonable and necessary where underlying 
conditions or complications require that only a registered nurse can 
ensure that essential unskilled care is achieving its purpose. For 
skilled nursing care to be reasonable and necessary for management 
and evaluation of the patient's plan of care, the complexity of the 
necessary unskilled services that are a necessary part of the 
medical treatment must require the involvement of skilled nursing 
personnel to promote the patient's recovery and medical safety in 
view of the patient's overall condition (reference Sec.  409.33 and 
section 40.1.2.2 in Chapter 7 of the Medicare Benefits Policy Manual 
(Pub. 100-02)).
---------------------------------------------------------------------------

    When there is a continuous need for home health care after an 
initial 60-day episode of care, a physician is also required to 
recertify the patient's eligibility for the home health benefit. In 
accordance with Sec.  424.22(b), a recertification is required at least 
every 60 days, preferably at the time the plan is reviewed, and must be 
signed and dated by the physician who reviews the plan of care. In 
recertifying the patient's eligibility for the home health benefit, the 
recertification must indicate the continuing need for skilled services 
and estimate how much longer the skilled services will be required. The 
need for occupational therapy may be the basis for continuing services 
that were initiated because the individual needed skilled nursing care, 
physical therapy, or speech-language pathology services. Again, for 
instances where the physician ordering skilled nursing visits for 
management and evaluation of the patient's care plan, the physician 
must include a brief narrative that describes the clinical 
justification of this need and the narrative must be located 
immediately before the physician's signature. If the narrative exists 
as an addendum to the recertification form, in addition to the 
physician's signature on the recertification form, the physician must 
sign immediately after the narrative in the addendum.
    Comment: One commenter strongly believed that allowing a face-to-
face encounter to occur up to 90 days prior to the start of home health 
care was not appropriate, stating that if a physician saw the patient 
90 days ago and did not order home health care at that time, then it is 
unclear why is home health being ordered at a later date. Several 
commenters recommended that CMS eliminate the face-to-face encounter 
requirement altogether for instances where the patient was admitted 
directly from an acute/post-acute care facility since the patient would 
have seen a physician.
    Response: We did not propose to alter the timeframes during which a 
face-to-face encounter can occur nor did we propose to eliminate the 
face-to-face requirement for instances where the patient was admitted 
directly from an acute/post-acute care facility. We refer the 
commenters to the CY 2011 HH PPS final rule (75 FR 70428-70429), where 
we outlined our rationale on why the face-to-face encounter timeframe 
of up to 90 days prior and no more than 30 days after the start of home 
health care was finalized. We believe that sections 1814(a)(2)(C) and 
1835(a)(2)(A) of the Act do not provide the Secretary with the 
authority to eliminate the face-to-face encounter requirement 
altogether for instances where the patient was admitted directly from 
an acute/post-acute care facility. However, since we are finalizing the 
elimination of the face-to-face narrative requirement as part of the 
certification of eligibility for home health services, and, as 
commenters' noted, an encounter with a physician would have certainly 
occurred when a patient is admitted directly from an acute/post-acute 
care facility, documenting the date of the face-to-face encounter 
should not be burdensome. Although a home health patient would have 
seen a physician if they were admitted directly from an acute/post-
acute care facility, the certification of eligibility still requires 
that the encounter be related to the primary reason for home health 
care. Therefore, we believe that documentation of a face-to-face 
encounter as part of the certification of eligibility should still be 
required for patients admitted into home health care directly from an 
acute/post-acute care facility.
    Comment: Several commenters, including MedPAC, asked that CMS 
develop a standardized form for use in certifying patient eligibility 
for the home health benefit and/or making referrals to home health. 
MedPAC noted that CMS concurred with three recommendations in a recent 
audit by the Office of Inspector General (OIG), including the 
consideration of a standardized form for the face-to-face encounter 
narrative to simplify compliance. Other commenters asked that CMS 
consider requiring the use of CMS-485 form again.
    Response: We do not believe that a standard certification/
recertification of eligibility form is necessary given the elimination 
of the face-to-face narrative. The regulations at 42 CFR 424.22 clearly 
articulate what elements need to be contained in a certification/re-
certification form created by an HHA. We are pursuing development of an 
electronic clinical template that would allow electronic health records 
vendors, in all 50 states, to assist physicians in thoroughly 
documenting patient eligibility for the Medicare home health benefit. 
In order to facilitate adoption of suggested clinical elements by the 
provider community, we are currently collaborating with the Office of 
the National Coordinator for Health IT (ONC) and the electronic 
Determination of Coverage (eDoC) workgroup in developing the 
interoperability standards necessary for an electronic clinical 
template. We do not believe that we should require the use of the old 
CMS-485 form. The CMS-485 form was discontinued over a decade ago to 
provide HHAs with more plan of care flexibility. We encourage HHAs and 
physicians to work together in developing formats for the home health 
plan of care that best meets their needs.

[[Page 66050]]

    Comment: We received several comments advocating for us to allow 
other types of clinicians to certify eligibility and order home health 
services, such as physician assistants, nurse practitioners, and 
advanced-practice registered nurses.
    Response: These comments are outside the scope of this rule. We 
remind the commenters that the statute (sections 1814(a) and 1835(b) of 
the Act) require a physician to certify patient eligibility for the 
Medicare home health benefit. We do not have the authority to allow for 
someone other than a Doctor of Medicine, Osteopathy or Podiatry to 
certify patient eligibility for the Medicare home health benefit. A 
change to the statute would require an act of the Congress.
    Comment: Some commenters recommended statutory changes.
    Response: We remind commenters that only the Congress (not CMS) has 
the authority to make statutory changes.
    Final Decision: We are finalizing our proposal to eliminate the 
face-to-face encounter narrative as part of the certification of 
patient eligibility for the Medicare home health benefit, effective for 
episodes beginning on or after January 1, 2015. The certifying 
physician will still be required to certify that a face-to-face patient 
encounter, which is related to the primary reason the patient requires 
home health services, occurred no more than 90 days prior to the home 
health start of care date or within 30 days of the start of the home 
health care and was performed by a physician or allowed non-physician 
practitioner as defined in Sec.  424.22(a)(1)(v)(A), and to document 
the date of the encounter as part of the certification of eligibility. 
For instances where the physician is ordering skilled nursing visits 
for management and evaluation of the patient's care plan, the physician 
will still be required to include a brief narrative that describes the 
clinical justification of this need as part of the certification/re-
certification of eligibility as outlined in Sec.  424.22(a)(1)(i) and 
Sec.  424.22(b)(2).
    In determining whether the patient is or was eligible to receive 
services under the Medicare home health benefit at the start of care, 
we will require documentation in the certifying physician's medical 
records and/or the acute/post-acute care facility's medical records (if 
the patient was directly admitted to home health) to be used as the 
basis for certification of home health eligibility. We will require the 
documentation to be provided upon request to the home health agency, 
review entities, and/or CMS. Criteria for patient eligibility are 
described at Sec.  424.22(a)(1) and Sec.  424.22(b). HHAs should obtain 
as much documentation from the certifying physician's medical records 
and/or the acute/post-acute care facility's medical records (if the 
patient was directly admitted to home health) as they deem necessary to 
assure themselves that the Medicare home health patient eligibility 
criteria have been met and must be able to provide it to CMS and its 
review entities upon request. If the documentation used as the basis 
for the certification of eligibility is not sufficient to demonstrate 
that the patient is or was eligible to receive services under the 
Medicare home health benefit, payment will not be rendered for home 
health services provided.
    Again, we want to remind certifying physicians and acute/post-acute 
care facilities of their responsibility to provide the medical record 
documentation that supports the certification of patient eligibility 
for the Medicare home health benefit. Certifying physicians who show 
patterns of non-compliance with this requirement, including those 
physicians whose records are inadequate or incomplete for this purpose, 
may be subject to increased reviews, such as through provider-specific 
probe reviews.
    The following is a summary of the comments we received regarding 
the proposal to non-cover physician claims for certification/re-
certification of patient eligibility for Medicare home health services 
when the HHA claim itself was non-covered because the certification/
recertification of eligibility was not complete or because there was 
insufficient documentation to support that the patient was eligible for 
the Medicare home health benefit.
    Comments: A few commenters appreciated the proposal to non-cover 
physician claims for certification/re-certification of patient 
eligibility for Medicare-covered home health services when the HHA 
claim itself was non-covered because the certification/recertification 
of eligibility was not complete or because there was insufficient 
documentation to support that the patient was eligible for the Medicare 
home health benefit. Commenters who supported this proposal thanked CMS 
for linking physician billing to HHA billing as a first step in 
encouraging more physician accountability.
    Response: We thank the commenters for their support. We agree that 
this is an important first step in reminding physicians that 
coordination and collaboration between the physician and the HHA is 
essential in providing quality patient care. Coordination and 
collaboration should include sharing pertinent patient information with 
one another, especially with regard to the patient's skilled needs and 
homebound status. Both entities--the physician who is ultimately 
responsible for the patient while he/she is receiving home health 
services and the HHA providing such services--should be held 
accountable and compensated for their services when appropriate.
    Comment: Most commenters generally disagreed with the proposal to 
non-cover physician claims for certification/re-certification of 
patient eligibility for Medicare home health services when the HHA 
claim itself was non-covered because the certification/recertification 
of eligibility was not complete or because there was insufficient 
documentation to support that the patient was eligible for the Medicare 
home health benefit. One commenter questioned how CMS will identify 
``Part B claims for certification/re-certification'' and stated that 
the face-to-face encounter visit could occur during one of several 
Evaluation & Management (E&M) visits. Several commenters stated that 
while they support encouraging physicians to engage in the planning and 
oversight of home health services, they are concerned that some 
physicians, with limited understanding of the regulations, may be 
reluctant to refer to home health because of concerns about denials of 
reimbursement. Other commenters stated that physician claims for 
certification/recertification should not be denied because physicians 
are ``in good faith'' certifying the patient's eligibility for the home 
health benefit and billing for certification/recertification also 
includes activities performed to ensure the initial implementation of 
the plan of care. A few commenters suggested that, at a minimum, 
finalizing this proposal should be delayed until it can be proposed as 
part of the annual changes to the physician fee schedule.
    Response: Physician certification or re-certification claims are 
Part B physician claims paid for under the Physician Fee Schedule. 
These claims are claims billed using HCPCS code G0180 (certification) 
or G0179 (re-certification). These claims are not Evaluation and 
Management claims and are billed when the patient is not present. The 
descriptions of these two codes indicate that they are used to bill for 
certification or re-certification of patient eligibility ``for 
Medicare-covered home health services under a home health plan of care 
(patient not present), including contacts with home health

[[Page 66051]]

agency and review of reports of patient status required by physicians 
to affirm the initial implementation of the plan of care that meets 
patient's needs, per certification period.'' As underlined above, we 
note that these codes are for physician certification or re-
certification for Medicare-covered home health services. If there are 
no Medicare-covered home health services, these codes should not be 
billed or paid. As such, if the HHA claim is denied, the corresponding 
physician claim should not be covered because there is no longer a 
corresponding claim for Medicare-covered home health services. 
Physicians still have the option of billing Part B for E&M visits 
provided, transition care management, and other services as long as 
they follow the required billing instructions. We believe that 
including this proposal in the CY 2015 HH PPS proposal rule is 
sufficient and there is no need to re-propose this policy in next 
year's Physician Fee Schedule proposed rule. We received over 300 
comments on the CY 2015 HH PPS proposed rule, many of which were from 
physician associations, such as the American College of Physicians, 
American Academy of Home Care Medicine, American Medical Association, 
and the Society of Hospital Medicine, among others.
    Comment: Commenters stated that non-coverage of physician claims 
for certification/re-certification when the HHA claim itself was non-
covered would most likely not result in a change in physician 
practices/behaviors due to the small payment amounts for such claims. 
HHAs will still encounter issues with obtaining the necessary 
certification/re-recertification and supporting documentation form the 
certifying physician.
    Response: While the non-coverage of physician claims for 
certification/re-certification of patient eligibility for Medicare-
covered home health services following the denial of a HHA claim may 
not serve as a sufficient incentive for encouraging certifying 
physicians to work collaboratively with HHAs and to provide the 
necessary documentation to substantiate the certification of 
eligibility, certifying physicians who show patterns of non-compliance 
with providing sufficient documentation, including those physicians 
whose records are inadequate or incomplete for this purpose, may be 
subject to increased reviews, such as through provider-specific probe 
reviews. Claims subject to increased review may include services 
unrelated to the home health claim being reviewed or the beneficiary 
who was referred for home health services.
    Final Decision: We are finalizing this proposal as proposed. 
Physician claims for certification/recertification of eligibility for 
home health services (G0180 and G0179, respectively) will not be 
covered if the HHA claim itself was non-covered because the 
certification/recertification of eligibility was not complete or 
because there was insufficient documentation to support that the 
patient was eligible for the Medicare home health benefit. This 
proposal will be implemented through future sub-regulatory guidance.
3. Proposed Clarification on When Documentation of a Face-to-Face 
Encounter Is Required
    In the CY 2011 HH PPS final rule (75 FR 70372), in response to a 
commenter who asked whether the face-to-face encounter is required only 
for the first episode, we stated that the Congress enacted the face-to-
face encounter requirement to apply to the physician's certification, 
not recertifications. In sub-regulatory guidance (face-to-face 
encounter Q&As on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf), response to Q&A #11 states that the face-to-
face encounter requirement applies to ``initial episodes'' (the first 
in a series of episodes separated by no more than a 60-day gap). The 
distinction between what is considered a certification (versus a 
recertification) and what is considered an initial episode is important 
in determining whether the face-to-face encounter requirement is 
applicable.
    Recent inquiries question whether the face-to-face encounter 
requirement applies to situations where the beneficiary was discharged 
from home health with goals met/no expectation of return to home health 
care and readmitted to home health less than 60 days later. In this 
situation, the second episode will be considered a certification, not a 
recertification, because the HHA will be required to complete a new 
Start of Care (SOC) OASIS to initiate care. However, for payment 
purposes, the second episode is considered a subsequent episode, 
because there was no gap of 60 days or more between the first and 
second episodes of care. Therefore, in order to determine when 
documentation of a patient's face-to-face encounter is required under 
sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, we proposed to 
clarify that the face-to-face encounter requirement is applicable for 
certifications (not recertifications), rather than initial episodes. A 
certification (versus recertification) is considered to be any time 
that a new SOC OASIS is completed to initiate care. Because we proposed 
to clarify that a certification is considered to be any time that a new 
SOC OASIS is completed to initiate care, we will also revise Q&A #11 on 
the CMS Web site (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf) to 
reflect this proposed clarification. If a patient was transferred to 
the hospital and remained in the hospital after day 61 (or after the 
first day of the next certification period), once the patient returns 
home, a new SOC OASIS must be completed. Therefore, this new episode 
will not be considered continuous and a face-to-face encounter needs to 
be documented as part of the certification of patient eligibility.\14\
---------------------------------------------------------------------------

    \14\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/downloads/OASISConsiderationsforPPS.pdf
---------------------------------------------------------------------------

    Comment: One commenter stated that they were confused by the 
proposal and were seeking clarification as to whether CMS was proposing 
to require documentation of a face-to-face encounter for all 
certification episodes, initial and re-certifications.
    Response: We are not requiring documentation of a face-to-face 
encounter for all certification periods. Documentation of a face-to-
face encounter is only required for certifications and not re-
certifications. As previously noted, a certification (versus 
recertification) is considered to be any time that a new SOC OASIS is 
completed to initiate care. A recertification is any second or later 
episode of continuous home health care (where a recertification/follow-
up OASIS is completed).\15\
---------------------------------------------------------------------------

    \15\ We note that for instances where the patient was 
hospitalized and then returns to home health during the last 5 days 
of an episode of care, the requirement to complete a resumption of 
care OASIS could overlap with the time period requiring completion 
of a recertification/follow-up OASIS. In these instances, only the 
resumption of care OASIS is necessary and the subsequent episode of 
care would still be considered ``continuous'' and thus require a re-
certification of patient eligibility. If the patient receives a re-
certification assessment during days 56-60, is hospitalized, and 
returns home on day 61 following, if the HHRG remains the same then 
the second episode of care would be considered continuous and thus 
be considered a re-certification. However, if the HHRG is different, 
this would result in a new Start of Care (SOC) OASIS and thus be 
considered a new certification.
---------------------------------------------------------------------------

    Comment: A few commenters were supportive of the proposed 
clarification on when documentation of a face-to-face encounter is 
required. One commenter stated that their agency has been obtaining 
these since the inception of the face-to-face requirement and that the

[[Page 66052]]

proposed clarification would not present a change. The commenter goes 
on to state that the proposed clarification helps to ensure that the 
patient continues to have real oversight from the community physician 
that is overseeing the patient's care.
    Response: We thank the commenters for their support of the proposed 
clarification. We have heard, anecdotally, from several HHAs that they 
are already in compliance with this proposed clarification and, as 
such, this clarification will pose no additional burden for those HHAs. 
We agree that equating a certification with any time a SOC OASIS is 
completed to initiate care will further encourage physician 
accountability in certifying a patient's eligibility for the Medicare 
home health benefit and in establishing and overseeing the patient's 
plan of care.
    Comment: Several other commenters focused their comments solely on 
instances where a patient was discharged and then readmitted during the 
same 60-day episode of care. Commenters stated that CMS should not 
finalize its proposal as these episodes are currently subject to 
partial episode payment (PEP) adjustments and that the PEP adjustment 
is an appropriate safeguard to prevent inappropriate utilization. A few 
commenters asked CMS to clarify whether instances where the patient is 
returning to home health post-discharge with care initiated with a new 
SOC OASIS, but during (what would have been) the same 60-day episode of 
care, would require documentation of a new physician face-to-face 
encounter. A few commenters expressed concerns with the current PEP 
policy and stated that some HHAs are not discharging patients that have 
finished their course of treatment so that those episodes will not 
become PEPs if the patient is discharged and returns to home care 
within (what would have been) the 60-day episode of care.
    Response: A Partial Episode Payment (PEP) is applied to home health 
episodes that either end in discharge and are then followed by 
readmission to the same home health agency (HHA) within (what would 
have been) the original 60-day episode, or result in a transfer to a 
HHA that is different than the HHA that provided the initial home 
health episode. The purpose of this clarification is to ensure that 
HHAs understand when they must document that a face-to-face encounter 
occurred. For instances where a patient was discharged and then 
readmitted during (what would have been) the same 60-day episode of 
care, the second episode would be considered a certification as it 
would be initiated with a SOC OASIS and would require documentation of 
a face-to-face encounter. Depending on when the face-to-face encounter 
occurred, the face-to-face encounter from the PEP episode could be used 
for the new certification as long as it was performed within the 
required timeframe and is still related to the primary reason the 
patient requires home health services. The average number of days 
between a PEP episode and a subsequent episode of care was 17.5 days, 
with the 25th percentile at 5 days and the 75th percentile at 24 days 
in CY 2012 and approximately 60 percent of the time there was a 
hospitalization between a PEP episode and the subsequent episode of 
care. For those instances where the patient was hospitalized between 
the PEP episode and the subsequent episode of care, the patient would 
have seen a physician, so documenting the face-to-face encounter as 
part of the certification of eligibility for the subsequent episode of 
care should be easily accomplished.
    PEP episodes are paid a rate which is proportional to the days of 
service provided during the episode. In CY 2012 only 2.2 percent of 
episodes were PEP episodes. Table 9 below compares the number of days 
in between the last visit and the ``through'' date on the claim for 
PEPs and Non-PEP episodes. The distribution below for non-PEP episodes 
does not indicate that there is a wide-spread issue with HHAs refusing 
to discharge patients that have otherwise met all goals long before the 
end of the 60-day episode in hopes of avoiding PEPs. However, we will 
continue to monitor PEP episodes and will consider whether a refinement 
to the PEP policy is necessary in the future.

Table 9--Distribution of Days Between the Last Episode Visit and Episode
   Through Date for Non-PEP Episodes (n = 3,796,143) and PEP Episodes
               (8,105) at least 55 days in Length, CY 2012
------------------------------------------------------------------------
                                                  Non-PEP        PEP
              Distribution point                  episodes     Episodes
------------------------------------------------------------------------
10th Percentile...............................          1.0          1.0
25th Percentile...............................          1.0          1.0
50th Percentile (Median)......................          2.0          1.0
Mean Average..................................          4.7          6.9
75th Percentile...............................          4.0          7.0
90th Percentile...............................          7.0         24.0
99th Percentile...............................         52.0         51.0
------------------------------------------------------------------------
Source: Abt Associates analysis of 100% CY 2012 Medicare Home Health
  claims data.

    Comment: One commenter asked that CMS confirm that over 800,000 
episodes fit into a category of admissions shortly following discharges 
with goals met because that number seemed high.
    Response: In the CY 2015 HH PPS proposed rule we noted, in the 
Collection of Information section, that: ``we estimate that of the 
6,562,856 episodes in the CY 2012 home health Datalink file, 3,096,680 
SOC assessments were performed on initial home health episodes. If this 
proposal is implemented, an additional 830,287 episodes would require 
documentation of a face-to-face encounter for subsequent episodes that 
were initiated with a new SOC OASIS assessment'' (79 FR 38412). This 
includes instances where patients finished a 60-day episode of care, 
were discharged, and then were re-admitted before 60 days lapsed 
without having home health care. In addition, this estimate represents 
a ``worst-case'' scenario as it does not account for instances where 
HHAs already consider anytime a new SOC OASIS is completed as a 
certification and are thus already in compliance. Home Health Compare, 
via Medicare.gov, reports national and state-level data on how often 
home health patients had to be admitted to the hospital and how often 
patients receiving home health care needed urgent, unplanned care in 
the ER without being admitted. Nationally, for CY 2013, 12 percent of 
home health patients receiving home health care needed urgent, 
unplanned care in the emergency room and 16 percent of home health 
patients had to be admitted to the hospital. Subsequent episodes 
initiated with a SOC OASIS represent 12.7 percent of all home health 
episodes in the CY 2012 Datalink file. Most commenters focused on 
instances where the initial episode of care was a PEP (that is, the 
patient transferred to another HHA or was discharged before the end of 
a 60-day episode and then re-admitted during what would have been the 
same 60-day episode of care), which were only 2.2 percent of episodes 
in CY 2012.
    This clarification was intended to mostly respond to instances of 
patients being discharged after the end of a 60-day episode of care and 
then re-admitted without a 60-day gap in care before the start of the 
next episode. For claims processing purposes (to categorize episodes 
into ``early'' versus ``late'' for case-mix adjustment), these episodes 
are considered subsequent episodes rather than initial episodes of 
care. Sub-regulatory guidance (face-to-face encounter Q&As on the CMS 
Web site at: http://www.cms.gov/Medicare/

[[Page 66053]]

Medicare-Fee-for-Service-Payment/HomeHealthPPS/Downloads/Home-Health-
Questions-Answers.pdf) stated that face-to-face encounter requirement 
applies to ``initial episodes''. We received several questions from the 
MACs and providers asking whether the face-to-face encounter was 
required for instances where the patient was discharged at the end of a 
60-day episode of care and then re-admitted, sometimes up to 50 days 
later and for reasons completely unrelated to the previous episode of 
care. This prompted us to propose a clarification in the CY 2015 HH PPS 
proposed rule that would make it clear that documentation of a face-to-
face encounter is required for each certification and a certification 
is any time a SOC OASIS is completed to initiate care.
    Comment: One commenter stated that while it is understandable to 
categorize the completion of a SOC OASIS as a certification, thus 
requiring documentation of a face-to-face encounter, concerns exist 
that this will increase burden without any direct benefit. Several 
commenters stated that for subsequent episodes initiated with a SOC 
OASIS, a certification (which requires documentation of a face-to-face 
encounter) versus a recertification should be differentiated based on 
whether the reason for home care changed. Several commenters stated 
that a new face-to-face encounter should only be required when the 
second admission to home health services is for a wholly different 
reason than presented in the original admission. One commenter stated 
that a subsequent episode should only be considered a certification 
(which requires documentation of a face-to-face encounter) when a new 
physician is the certifying physician or if a new home health agency is 
providing the care.
    Response: If the patient is hospitalized during a 60-day episode of 
care and is expected to return to home health during the same 60-day 
episode of care, the HHA has the option to complete a transfer OASIS 
without discharging the patient. If the patient returns to home heath 
during that same 60-day home health episode, a resumption of care OASIS 
would be completed upon return, and depending on when the patient 
returned to home health, a re-certification/follow-up OASIS would be 
completed during the last 5 days of the episode. The subsequent episode 
would be considered continuous for re-certification purposes and 
documentation of a face-to-face encounter would not be required. More 
often than not, the primary reason for home care is changing between 
episodes of care when the subsequent episode of care is initiated with 
a SOC OASIS, regardless of whether the patient remains with the same 
HHA or is receiving care from another HHA. As such, we are clarifying 
that documentation that face-to-face encounter occurred is required for 
every certification and that a certification (versus recertification) 
is considered to be any time that a new SOC OASIS is completed to 
initiate care.
    When comparing the primary reason for home health care (the primary 
diagnosis (item M1020) on the OASIS) at the ICD-9-CM three-digit 
category level, subsequent episodes initiated with a SOC OASIS had a 
different primary diagnosis (primary reason for home care) than the 
previous episode of care approximately 73 percent of the time. The 
subsequent episode's primary diagnosis was different from the previous 
episodes' primary diagnosis approximately 70 percent of the time when 
the subsequent episode of care was with the same HHA, and 80 percent of 
the time when the subsequent episode of care with a different HHA. Just 
examining the subsequent episodes of care that follow a PEP, we found 
that subsequent episodes of care initiated with a SOC OASIS had a 
different primary diagnosis than the previous episode of care 
approximately 72 percent of the time. The subsequent episode's primary 
diagnosis was different from the previous PEP episodes' primary 
diagnosis approximately 66 percent of the time when the subsequent 
episode of care was with the same HHA, and 76 percent of the time when 
the subsequent episode of care with a different HHA.
    As we noted above, for CY 2012, approximately 60 percent of the 
time there was a hospitalization between a PEP episode and the 
subsequent episode of care. Therefore, we determined whether there was 
an intervening hospitalization between the PEP episode and the episode 
that follows (observed in the 60 days prior to the subsequent episode's 
start) and if so, whether there were differences in the clinical and 
functional levels between the PEP episode and the subsequent episode of 
care (Table 10 and Table 11 below). Overall, clinical levels only 
matched in 53 percent of instances. Functional levels matched in 63 
percent of instances. Clinical levels are higher in 24 percent of the 
episodes that follow PEP episodes and lower in 22 percent of episodes. 
Functional levels are higher in approximately 20 percent of episodes 
that follow PEP episodes and lower in 17 percent of episodes.

 Table 10--Cross-Tabulation of Clinical Level Between a Partial Episode Payment (PEP) Episode and Episodes That
                             Follow by Intervening Hospitalization Presence, CY 2012
----------------------------------------------------------------------------------------------------------------
                                    No intervening hospitalization [Total    Intervening hospitalization [Total
                                              episodes = 81,719]                     episodes = 30,416]
                                   -----------------------------------------------------------------------------
                                        Low         Medium        High         Low         Medium        High
----------------------------------------------------------------------------------------------------------------
Low...............................        12.3%         7.1%         5.4%         9.2%         6.9%         5.1%
Medium............................         7.8%        12.2%        11.4%         6.7%        12.8%        12.7%
High..............................         4.8%         9.8%        29.1%         4.1%        10.8%        31.7%
----------------------------------------------------------------------------------------------------------------
Source: Abt Associates analysis of 100% Medicare Home Health claims, CY 2012.
Note(s): Low = Clinical level 1; Medium = Clinical level 2; High = Clinical level 3 as described in section
  III.C of this rule.

Table 11--Cross-Tabulation of Functional Level Between a Partial Episode Payment (PEP) Episode and Episodes That
                             Follow by Intervening Hospitalization Presence, CY 2012
----------------------------------------------------------------------------------------------------------------
                                    No intervening hospitalization [Total    Intervening hospitalization [Total
                                              episodes = 81,719]                     episodes = 30,416]
                                   -----------------------------------------------------------------------------
                                        Low         Medium        High         Low         Medium        High
----------------------------------------------------------------------------------------------------------------
Low...............................         6.6%         7.8%         1.4%         6.4%         8.4%         1.4%

[[Page 66054]]

 
Medium............................         6.9%        38.6%        10.3%         8.3%        40.6%        10.4%
High..............................         1.1%         8.5%        18.8%         1.0%         8.1%        15.3%
----------------------------------------------------------------------------------------------------------------
Source: Abt Associates analysis of 100% Medicare Home Health claims, CY 2012.
Note(s): Low = Functional level 1; Medium = Functional level 2; High = Functional level 3 as described in
  section III.C of this rule.

    Final Decision: In order to determine when documentation of a 
patient's face-to-face encounter is required under sections 
1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, we are clarifying that the 
face-to-face encounter requirement is applicable for certifications 
(not re-certifications), rather than initial episodes. A certification 
(versus recertification) is considered to be any time that a new Start 
of Care OASIS is completed to initiate care.

C. Recalibration of the HH PPS Case-Mix Weights

    As stated in the CY 2015 proposed rule, for CY 2012, we removed two 
hypertension codes from our case-mix system and recalibrated the case-
mix weights in a budget neutral manner. When recalibrating the case-mix 
weights for the CY 2012 HH PPS final rule, we used CY 2005 data in the 
four-equation model used to determine the clinical and functional 
points for a home health episode and CY 2007 data in the payment 
regression model used to determine the case-mix weights. We estimated 
the coefficients for the variables in the four-equation model using CY 
2005 data to maintain the same variables we used for CY 2008 when we 
implemented the four-equation model, thus minimizing substantial 
changes. Due to a noticeable shift in the number of therapy visits 
provided as a result of the 2008 refinements, at the time, we decided 
to use CY 2007 data in the payment regression. As part of the CY 2012 
recalibration, we lowered the high therapy weights and raised the low 
or no therapy weights to address MedPAC's concerns that the HH PPS 
overvalues therapy episodes and undervalues non-therapy episodes (March 
2011 MedPAC Report to the Congress: Medicare Payment Policy, p. 176). 
These adjustments better aligned the case-mix weights with episode 
costs estimated from cost report data. The CY 2012 recalibration, 
itself, was implemented in a budget neutral manner. However, we noted 
that in the CY 2012 HH PPS final rule, we also finalized a 3.79 percent 
reduction to payments in CY 2012 and a 1.32 percent reduction for CY 
2013 to account for the nominal case-mix growth identified through CY 
2009.
    For CY 2014, as part of the rebasing effort mandated by the 
Affordable Care Act, we reset the case-mix weights, lowering the 
average case-mix weight to 1.0000. To lower the case-mix weights to 
1.0000, each case-mix weight was decreased by the same factor (1.3464), 
thereby maintaining the same relative values between the weights. This 
``resetting'' of the case-mix weights was done in a budget neutral 
manner, inflating the national, standardized 60-day episode rate as the 
starting point for rebasing by the same factor (1.3464) that was used 
to decrease the weights. In the CY 2014 HH PPS final rule, we also 
finalized reductions ($80.95) to the national, standardized 60-day 
episode payment amount each year from CY 2014 through CY 2017 to better 
align payments with costs (78 FR 72293), as required by the Affordable 
Care Act.
    For CY 2015, we proposed to recalibrate the case-mix weights, 
adjusting the weights relative to one another, using more current data 
and aligning payments with current utilization data in a budget neutral 
manner. We also proposed to recalibrate the case-mix weights annually 
in subsequent payment updates based on the methodology finalized in the 
2008 refinements (72 FR 25359-25392) and the CY 2012 HH PPS final rule 
(76 FR 68526), with minor changes as described below. To generate the 
CY 2015 case-mix weights, we used CY 2013 home health claims data (as 
of June 30, 2014) and used the same methodology finalized in the CY 
2012 HH PPS final rule, except where noted below. Similar to the CY 
2012 recalibration, some exclusion criteria were applied to the CY 2013 
home health claims data used to generate the CY 2015 case-mix weights. 
Specifically, we excluded Request for Anticipated Payment (RAP) claims, 
claims without a matched OASIS, claims where total minutes equal 0, 
claims where the payment amount equals 0, claims where paid days equal 
0, claims where covered visits equal 0, and claims without a HIPPS 
code. In addition, the episodes used in the recalibration were normal 
episodes. PEP, LUPA, outlier, and capped outlier (that is, episodes 
that are paid as normal episodes, but would have been outliers had the 
HHA not reached the outlier cap) episodes were dropped from the data 
file.\16\ We note that for the CY 2015 recalibration, a 100 percent 
sample of CY 2013 claims data as of June 30, 2014 with linked OASIS 
data was used.\17\
---------------------------------------------------------------------------

    \16\ At a later point, when normalizing the weights, PEP 
episodes are included in the analysis.
    \17\ Note, for the last recalibration (CY 2012 recalibration), 
only a 20 percent sample of data was used.
---------------------------------------------------------------------------

    Similar to the CY 2012 recalibration, the first step in the CY 2015 
recalibration was to re-estimate the four-equation model used to 
determine the clinical and functional points for an episode. The 
dependent variable for the CY 2015 recalibration is the same as the CY 
2012 recalibration, wage-weighted minutes of care. The wage-weighted 
minutes of care are determined using the CY 2012 Bureau of Labor 
Statistics national hourly wage plus fringe rates for the six home 
health disciplines and the minutes per visit from the claim.\18\
---------------------------------------------------------------------------

    \18\ Note, wage information for sub-disciplines is also used 
(e.g., RNs versus RNs and LPNs combined).
---------------------------------------------------------------------------

    The CY 2012 four-equation model contained the same variables and 
restrictions as the four-equation model used in the CY 2008 refinements 
(http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/Coleman_Final_April_2008.pdf). The 
CY 2012 model was estimated using CY 2005 data, same data used in the 
CY 2008 refinements, thereby minimizing changes in the points for the 
CY 2012 four-equation model. For the CY 2015 four-equation model, we 
re-examined all of the four-equation or ``leg'' variables for each of 
the 51 grouper variables in the CY 2008 model. Therefore, a grouper 
variable that may have dropped out of the model

[[Page 66055]]

in one of the four equations in CY 2008 may be in the CY 2015 four-
equation model and vice versa. Furthermore, the specific therapy 
indicator variables that were in the CY 2012 four-equation model were 
dropped in the CY 2015 four-equation model so that the number of 
therapy visits provided had less of an impact on the process used to 
create the case-mix weights.
    The steps used to estimate the four-equation model are similar to 
the steps used in the CY 2008 refinements. They are as follows: \19\
---------------------------------------------------------------------------

    \19\ All the regressions mentioned in steps 1-4 are estimated 
with robust standard errors clustered at the beneficiary ID level. 
This is to account for beneficiaries appearing in the data multiple 
times. When that occurs, the standard errors can be correlated 
causing the p-value to be biased downward. Clustered standard errors 
account for that bias.
---------------------------------------------------------------------------

    (1) We estimated a regression model where the dependent variable is 
wage-weighted minutes of care. Independent variables were indicators 
for which equation or ``leg'' the episode is in. The four legs of the 
model are leg 1: early episodes 0-13 therapy visits, leg 2: early 
episodes 14+ therapy visits, leg 3: Later episodes 0-13 therapy visits, 
and leg 4: later episodes 14+ therapy visits.\20\Also, independent 
variables for each of the 51 grouper variables for each leg of the 
model are included.
---------------------------------------------------------------------------

    \20\ Early episodes are defined as the 1st or 2nd episode in a 
sequence of adjacent covered episodes. Later episodes are defined as 
the 3rd episode and beyond in a sequence of adjacent covered 
episodes. Episodes are considered to be adjacent if they are 
separated by no more than a 60-day period between claims.
---------------------------------------------------------------------------

    (2) Once the four-equation model is estimated, we drop all grouper 
variables with a coefficient less than 5. We re-estimate the model and 
continue to drop variables and re-estimate until there are no grouper 
variables with a coefficient of 5 or less.
    (3) Taking the final iteration of the model in the previous step, 
we drop all grouper variables with a p-value greater than 0.10. We then 
re-estimate the model.
    (4) Taking the model in the previous step, we begin to apply 
restrictions to certain coefficients. Within a grouper variable we 
first look across the coefficients for leg1 and leg3. We performed an 
equality test on those coefficients. If the coefficients are not 
significantly different from one another (using a p-value of 0.05), we 
set a restriction for that grouper variable such that the coefficients 
are equal across leg1 and leg3. We run these tests for all grouper 
variables for leg1 and leg3. We also run these tests for all grouper 
variables for leg2 and leg4.\21\ After all restrictions are set, we re-
run the regression again taking those restrictions into account.
    (5) Taking the model from step 4, we drop variables that have a 
coefficient less than 5 and re-estimate the model a final time. Using 
complete 2013 claims data as of June 30, 2014, there were no grouper 
variables with a negative coefficient at this step.
---------------------------------------------------------------------------

    \21\ In the CY 2008 rule, there was a further step taken to 
determine if the coefficients of a grouper variable are equal across 
all 4 legs. This step was not taken at this time.
---------------------------------------------------------------------------

    The results from the final four-equation model are used to 
determine the clinical and functional points for an episode and place 
episodes in the different clinical and functional levels. We take the 
coefficients from the four equation model, divide them by 10, and round 
to the nearest integer to determine the points associated with each 
variable. The points for each of the grouper variables for each leg of 
the model, updated with complete CY 2013 data as of June 30, 2014, are 
shown in Table 12. The points for the clinical variables are added 
together to determine an episode's clinical score. The points for the 
functional variables are added together to determine an episode's 
functional score.

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    In updating the four-equation model with 2013 data (the last update 
to the four-equation model used 2005 data), there were a number of 
changes to the point values for the variables in the four-equation 
model. These changes reflect the change in the relationship between the 
grouper variables and resource use since 2005. The CY 2015 four-
equation model resulted in 124 point-giving variables being used in the 
model (as compared to the 164 variables for the 2012 recalibration). 
There were 21 variables that were added to the model and 63 variables 
that were dropped from the model due to the absence of additional 
resources associated with the variable. The points for 57 variables 
increased in the CY 2015 four-equation model and the points for 25 
variables in decreased in the CY 2015 four-equation model. There were 
17 variables with the same point values.
    Since there were a number of changes to the point values associated 
with the four-equation model, we are redefining the clinical and 
functional thresholds so that they would be reflective of the new 
points associated with the CY 2015 four-equation model. Specifically, 
after estimating the points for each of the variables and summing the 
clinical and functional points for each episode, we looked at the 
distribution of the clinical score and functional score, breaking the 
episodes into different steps. The categorizations for the steps are as 
follows:
     Step 1: First and second episodes, 0-13 therapy visits.
     Step 2.1: First and second episodes, 14-19 therapy visits.
     Step 2.2: Third episodes and beyond, 14-19 therapy visits.
     Step 3: Third episodes and beyond, 0-13 therapy visits.
     Step 4: Episodes with 20+ therapy visits
    Similar to the methodology used in the CY 2008 refinements, we then 
divide the distribution of the clinical score for episodes within a 
step such that a third of episodes are classified as low clinical 
score, a third of episodes are classified as medium clinical score, and 
a third of episodes are classified as high clinical score. The same 
approach is then done looking at the functional score. It was not 
always possible to evenly divide the episodes within each step into 
thirds due to many episodes being clustered around one particular 
score.\22\ Also, we looked at the average resource use associated with 
each clinical and functional score and used that to guide where we 
placed our thresholds. We tried to group scores with similar average 
resource use within the same level (even if it meant that more or less 
than a third of episodes were placed within a level). The new 
thresholds, based off of the CY 2015 four-equation model, points are 
shown in Table 13.
---------------------------------------------------------------------------

    \22\ For Step 1, 55% of episodes were in the medium functional 
level (All with score 15).
    For Step 2.1, 60.7% of episodes were in the low functional level 
(Most with score 3, some with score 0).
    For Step 2.2, 58.3% of episodes were in the low functional level 
(All with score 0).
    For Step 3, 52.1% of episodes were in the medium functional 
level (all with score 10).
    For Step 4, 41.7% of episodes were in the medium functional 
level (almost all with score 3).

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

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    Once the thresholds were determined and each episode was assigned a 
clinical and functional level, the payment regression was estimated 
with an episode's wage-weighted minutes of care as the dependent 
variable. Independent variables in the model were indicators for the 
step of the episode as well as the clinical and functional levels 
within each step of the episode. Like the four-equation model, the 
payment regression model is also estimated with robust standard errors 
that are clustered at the beneficiary level. Table 14 shows the 
regression coefficients for the variables in the payment regression 
model updated with complete CY 2013 data. The R-squared value for the 
payment regression model is 0.4680 (an increase from 0.3769 for the CY 
2012 recalibration).

                   Table 14--Payment Regression Model
------------------------------------------------------------------------
                                                            New payment
                  Variable description                      regression
                                                           coefficients
------------------------------------------------------------------------
Step 1, Clinical Score Medium...........................          $24.36
Step 1, Clinical Score High.............................           61.06
Step 1, Functional Score Medium.........................           81.65
Step 1, Functional Score High...........................          121.95
Step 2.1, Clinical Score Medium.........................           56.47
Step 2.1, Clinical Score High...........................          177.00
Step 2.1, Functional Score Medium.......................           26.09
Step 2.1, Functional Score High.........................           91.13
Step 2.2, Clinical Score Medium.........................           91.83
Step 2.2, Clinical Score High...........................          206.75
Step 2.2, Functional Score Medium.......................            6.22
Step 2.2, Functional Score High.........................           88.98
Step 3, Clinical Score Medium...........................           11.00
Step 3, Clinical Score High.............................           89.06
Step 3, Functional Score Medium.........................           50.88
Step 3, Functional Score High...........................           86.69
Step 4, Clinical Score Medium...........................           74.96
Step 4, Clinical Score High.............................          241.95
Step 4, Functional Score Medium.........................           35.12
Step 4, Functional Score High...........................           91.41
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits.          447.08
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits........          456.36
Step 3, 3rd+ Episodes, 0-13 Therapy Visits..............          -65.98
Step 4, All Episodes, 20+ Therapy Visits................          872.95
Intercept...............................................          378.43
------------------------------------------------------------------------
Source: CY 2013 Medicare claims data for episodes ending on or before
  December 31, 2013 (as of June 30, 2014) for which we had a linked
  OASIS assessment.

    The method used to derive the CY 2015 case-mix weights from the 
payment regression model coefficients is the same as the method used to 
derive the CY 2012 case-mix weights. This method is described below.
    (1) We used the coefficients from the payment regression model to 
predict each episode's wage-weighted minutes of care (resource use). We 
then divided these predicted values by the mean of the dependent 
variable (that is, the

[[Page 66061]]

average wage-weighted minutes of care across all episodes used in the 
payment regression). This division constructs the weight for each 
episode, which is simply the ratio of the episode's predicted wage-
weighted minutes of care divided by the average wage-weighted minutes 
of care in the sample. Each episode was then aggregated into one of the 
153 home health resource groups (HHRGs) and the ``raw'' weight for each 
HHRG was calculated as the average of the episode weights within the 
HHRG.
    (2) The weights associated with 0 to 5 therapy visits were then 
increased by 3.75 percent, the weights associated with 14-15 therapy 
visits were decreased by 2.5 percent, and the weights associated with 
20+ therapy visits were decreased by 5 percent. These adjustments to 
the case-mix weights are the same as the ones used in the CY 2012 
recalibration (76 FR 68557) and were done to address MedPAC's concerns 
that the HH PPS overvalues therapy episodes and undervalues non-therapy 
episodes (March 2011 MedPAC Report to the Congress: Medicare Payment 
Policy, p. 176). These adjustments better aligned the case-mix weights 
with episode costs estimated from cost report data.
    (3) After the adjustments in step (2) were applied to the raw 
weights, the weights were further adjusted to create an increase in the 
payment weights for the therapy visit steps between the therapy 
thresholds. Weights with the same clinical severity level, functional 
severity level, and early/later episode status were grouped together. 
Then within those groups, the weights for each therapy step between 
thresholds were gradually increased. We did this by interpolating 
between the main thresholds on the model (from 0-5 to 14-15 therapy 
visits, and from 14-15 to 20+ therapy visits). We used a linear model 
to implement the interpolation so the payment weight increase for each 
step between the thresholds (such as the increase between 0-5 therapy 
visits and 6 therapy visits and the increase between 6 therapy visits 
and 7-9 therapy visits) was constant. This interpolation is the 
identical to the process finalized in the CY 2012 final rule (76 FR 
68555).
    (4) The interpolated weights were then adjusted so that the average 
case-mix for the weights was equal to 1.\23\ This last step creates the 
final CY 2015 case-mix weights shown in Table 15.
---------------------------------------------------------------------------

    \23\ When computing the average, we compute a weighted average, 
assigning a value of one to each normal episode and a value equal to 
the episode length divided by 60 for PEPs.

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    To ensure the changes to the case-mix weights are implemented in a 
budget neutral manner, we proposed to apply a case-mix budget 
neutrality factor to the CY 2015 national, standardized 60-day episode 
payment rate (see section III.D.4. of this final rule). The case-mix 
budget neutrality factor is calculated as the ratio of total payments 
when CY 2015 case-mix weights are applied to CY 2013 utilization 
(claims) data to total payments when CY 2014 case-mix weights are 
applied to CY 2013 utilization data. This produces a final case-mix 
budget neutrality factor for CY 2015 of 1.0366, based on CY 2013 claims 
data as of June 30, 2014. The case-mix budget neutrality factor 
(1.0366) also takes into account the re-grouping of episodes according 
to the point values from the four-equation model and new clinical and 
functional thresholds described in section III.C, which contributes 
0.0090 to the case-mix budget neutrality factor.
    Section 1895(b)(3)(B)(iv) of the Act gives us the authority to 
implement payment reductions for nominal case-mix growth (that is, 
changes in case-mix that are not related to actual changes in patient 
characteristics over time). Previously, we accounted for nominal case-
mix growth from 2000 to 2009 through case-mix reductions implemented 
from 2008 through 2013 (76 FR 68528-68543). In the CY 2013 HH PPS 
proposed rule, we stated that we found that 15.97 percent of the total 
case-mix change was real from 2000 to 2010 (77 FR 41553). In the CY 
2014 HH PPS final rule, we used 2012 claims data to rebase payments (78 
FR 72277). Since we were resetting the payment amounts with 2012 data, 
we did not take into account any additional nominal case-mix growth. 
For the proposed rule, we examined case-mix growth from CY 2012 to CY 
2013 using CY 2012 and preliminary CY 2013 claims data. For this final 
rule, in updating our analysis with CY 2013 claims data as of June 30, 
2014, we estimate that case-mix increased by 2.76 percent between CY 
2012 and CY 2013. In applying the 15.97 percent estimate of real case-
mix growth to the total estimated case-mix growth from CY 2012 to CY 
2013 (2.76 percent), we estimate that 2.32 percent (2.76-(2.76 * 
0.1597)) of the case-mix growth is nominal (that is, case-mix growth 
that is unrelated to changes in patient acuity).
    We estimate that the case-mix budget neutrality factor of 1.0366 
would have to be reduced to 1.0134 to account for nominal case-mix 
growth ((1.0366-0.0276) + (0.0276*0.1597) = 1.0134). While we 
considered adjusting the case-mix budget neutrality factor to take into 
account the growth in nominal case-mix (2.32 percent), which would 
result in a case-mix budget neutrality adjustment of 1.0134 rather than 
1.0366, we will apply the full 1.0366 case-mix budget neutrality factor 
to the national, standardized 60-day episode payment rate. We will 
continue to monitor case-mix growth and may consider whether to propose 
nominal case-mix reductions in future rulemaking.
    The following is a summary of the comments and our responses to 
comments on the CY 2015 proposed case-mix weights and methodology:
    Comment: Commenters stated that CMS has not provided complete 
technical information on the nature and basis for the revisions to the 
case-mix weights and variables in the model and therefore, the 
recalibration of the weights cannot be sufficiently evaluated. 
Commenters stated that unlike previous recalibrations, CMS has not 
provided the technical report on the proposed recalibration of the 
weights and that CMS did not publish the data or the analysis used to 
support its conclusions. Commenters stated that a full technical report 
on the methodology and regression analysis would be valuable in 
understanding the reliability and validity of the recalibration and 
would allow stakeholders to conduct their own evaluations as well. A 
commenter recommended that CMS make all technical reports and analyses 
regarding the recalibration of the case-mix weights publicly available 
immediately in order to permit stakeholders to review the significant 
changes described in the proposed rule.
    Response: As stated in the CY 2015 proposed rule, the methodology 
used to recalibrate the weights is identical to the methodology used in 
the CY 2012 recalibration except for the minor exceptions noted in the 
proposed rule. We encourage commenters to refer to the CY 2012 proposed 
and final rule and the CY 2012 technical report on our home page at 
http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html for additional information about the recalibration 
methodology.
    Comment: Commenters stated that the recalibration of the high 
volume therapy episodes will lead to financial incentives to increase 
therapy visits even though CMS has indicated that therapy visit volume 
should have less impact on the weights. They stated that the changes to 
the proposed case-mix weights contradict what was said previously 
regarding undervalue of clinical elements and over-value of the therapy 
component. Commenters presented their analyses comparing the CY 2014 
weights to the CY 2015 weights and payments associated with each of the 
HHRGs. Commenters stated that under the CY 2015 proposed case-mix 
weights, a majority of the HHRGs with low therapy visits will have 
losses and a large number of the high therapy groups and all of the 20+ 
therapy episodes will receive substantial increases to their weights. 
Commenters stated that these results seem to contradict the adjustment 
discussion in the CY 2015 proposed rule.
    Response: We note that the CY 2015 recalibration is based on 2013 
claims data, which is six to eight years more current than the claims 
data used in the CY 2012 recalibration. The 2013 data also reflects the 
2008 refinements to the HH PPS, which included the change from one 
therapy threshold to multiple therapy thresholds and the change from 80 
HHRGs to 153 HHRGs. Given the time difference in the data used for the

[[Page 66067]]

two recalibrations, one would expect differences in the resulting case-
mix weights. However, comparing the CY 2015 proposed case-mix weights 
to the CY 2014 final weights; we observed that over 60% of normal 
episodes would have a case-mix weight change of 5 percent or less. 
Furthermore, few episodes have an increase in their case-mix weight 
that exceeds 5 percent (14.2 percent) and very few episodes have an 
increase in their case-mix weight that exceeds 10 percent (0.4 
percent).
    The changes in case-mix weights can be mostly attributed to shifts 
in utilization patterns between 2005/2007 and 2013. Over that six to 
eight year time period, we find a notable shift across all therapy 
groups away from the use of home health aides and a shift to either 
more nursing or more therapy care (see Tables 16 and 17 below). While 
some of the low therapy groups did add more skilled nursing visits, 
most of the therapy groups added more occupational therapy (OT) and 
speech-language pathology (SLP), which have substantially higher Bureau 
of Labor Statistics (BLS) average hourly wage values compared to 
skilled nursing ($39/hr for skilled nursing versus $55 for OT and $60 
for SLP).

                                                    Table 16--Summary Statistics--Episodes From 2013
                                                                 [Only normal episodes]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Number  of                                                                       All        All
                   Therapy group                       episodes    Nursing     Aides        PT         OT        SLP        MSS      therapy     visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-5................................................    2,951,379        8.9        2.1        0.6        0.1        0.0        0.1        0.7       11.8
6..................................................      224,325        6.0        1.3        5.2        0.6        0.1        0.1        6.0       13.3
7-9................................................      664,911        6.5        1.5        6.9        0.9        0.2        0.2        7.9       16.0
10.................................................      184,871        6.8        1.7        8.5        1.3        0.2        0.2       10.0       18.6
11-13..............................................      532,875        7.1        2.0       10.0        1.7        0.3        0.2       12.0       21.2
14-15..............................................      249,627        7.3        2.4       11.6        2.4        0.4        0.2       14.5       24.3
16-17..............................................      267,500        6.5        2.5       13.5        2.5        0.4        0.2       16.4       25.6
18-19..............................................      173,769        7.0        2.6       13.8        4.0        0.6        0.2       18.4       28.2
20+................................................      328,295        8.1        3.5       14.9        7.9        1.9        0.3       24.8       36.6
                                                    ----------------------------------------------------------------------------------------------------
    Total..........................................    5,577,552        7.9        2.1        5.1        1.2        0.2        0.1        6.5       16.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Data on episodes with a through date in 2013 using complete CY 2013 claims data as of June 30, 2014.

                                  Table 17--Summary Statistics--Episodes From 2007 (File Used in CY 2012 Recalibration)
                                                                 [Only normal episodes]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Number  of                                                                       All        All
                   Therapy group                       episodes    Nursing     Aides        PT         OT        SLP        MSS      therapy     visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average number of visits for Normal episodes with a
 through date in 2007
0-5................................................      520,639        9.3        3.6        0.6        0.1        0.0        0.1        0.7       13.7
6..................................................       28,349        5.5        1.7        5.3        0.6        0.1        0.2        6.0       13.4
7-9................................................       59,156        5.9        2.1        6.9        0.9        0.1        0.2        7.9       16.1
10.................................................       47,798        7.2        2.8        8.9        1.0        0.1        0.2       10.0       20.1
11-13..............................................      107,970        7.2        3.5       10.5        1.2        0.1        0.2       11.9       22.7
14-15..............................................       38,188        7.3        4.0       12.1        2.1        0.3        0.2       14.5       25.9
16-17..............................................       29,322        7.2        4.4       13.6        2.5        0.4        0.2       16.5       28.4
18-19..............................................       17,679        7.4        4.4       14.4        3.5        0.5        0.2       18.4       30.5
20+................................................       39,395        7.4        5.2       16.3        7.1        1.5        0.3       24.9       37.9
    Total..........................................      888,496        8.3        3.5        4.7        0.9        0.1        0.1        5.7       17.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Data on episodes ending in 2007 using a 20% sample of 2007 data from the home health Datalink file.

    In addition, while the average number of total visits per episode 
has decreased overall, it decreased disproportionately more for the no/
low therapy group (which constitute over 50 percent of all episodes) 
compared to the remaining groups (see Table 18 below). These 
utilization changes result in changes to the weights observed by the 
commenters, specifically, the decreases in the case-mix weights for the 
low or no therapy groups and increases in the case-mix weights for the 
high therapy groups.

   Table 18--Percent Change in the Average Number of Visits by Therapy
                          Group, 2007 and 2013
------------------------------------------------------------------------
                                                               Percent
                                                              change in
                       Therapy group                            visits
                                                              from 2007
                                                               to 2013
------------------------------------------------------------------------
0-5........................................................       -13.92
6..........................................................         0.18
7-9........................................................         0.32
10.........................................................        -7.38
11-13......................................................        -6.63
14-15......................................................        -6.14
16-17......................................................        -9.89
18-19......................................................        -7.73
20+........................................................        -3.46
------------------------------------------------------------------------

    We would like to clarify that the adjustments applied to the case-
mix weights are not in addition to the

[[Page 66068]]

adjustments applied in 2012, but rather are the same adjustments as the 
ones applied to the 2012 data. In other words, the 3.75 percent 
increases to the weights associated with 0 to 5 therapy visits, the 2.5 
percent decreases to the weights associated with 14-19 therapy visits, 
and 5 percent decreases to the weights associated with 20+ therapy 
visits are applied to the raw weights resulting from 2013 claims data. 
We did not take the CY 2012 case-mix weights and further adjust them. 
Therefore, one should not expect to see higher weights for low or no 
therapy episodes and lower weights for high therapy episodes when 
comparing the CY 2015 proposed case-mix weights to the CY 2014 weights, 
which have the same relative values as the 2012 case-mix weights.
    We note that by removing the therapy indicator variables from the 
four equation model and moving away from the use of therapy visits in 
the model that the case-mix weights for high therapy groups were lower 
than what they would have been if the therapy indicator variables were 
included in the model. We also note that the final case-mix weights for 
the highest therapy HHRGs (those groups of episodes with 20 or more 
therapy visits) slightly decreased when comparing the CY 2015 final 
case-mix weights, based on complete CY 2013 data as of June 30, 2014, 
to the CY 2015 proposed case-mix weights, based on preliminary CY 2013 
data as of December 31, 2013.
    Comment: One commenter was supportive of the recalibration proposal 
and agreed that the proposed recalibration strikes an appropriate 
balance between discouraging inappropriate use of therapy while 
addressing concerns that non-therapy services are undervalued.
    Response: We thank the commenter for their support.
    Comment: A commenter stated that the increase in therapy visits was 
due to therapists providing clinically necessary skilled care, not due 
to manipulating the therapy reimbursement process. Another commenter 
questioned whether CMS utilized multiple years of OASIS data to 
consider the change in functional status of those patients who receive 
low numbers of therapy visits versus those receiving 20 or more therapy 
visits and if the change noted at both ends of the spectrum of therapy 
utilization are appropriately reflected in the recalibration effort. 
Another commenter stated that CMS' proposed changes do not appear to be 
based on any reasoned consideration of why the visit time data is the 
way it is.
    Response: The case-mix weights are driven by the 2013 claims data 
with the same adjustments finalized in CY 2012 to better align payment 
for high and no/low therapy episodes with cost. The proposed 
recalibration of the case-mix weights used the methodology proposed and 
finalized in CY 2012, with a few noted differences outlined above and 
in the CY 2015 HH PPS proposed rule. We did not set the weights based 
on what levels of services we thought were appropriate. Any changes in 
the case-mix weights for CY 2015 are driven by utilization patterns 
observed in CY 2013 claims data.
    Comment: A commenter stated that the case-mix weights appear to 
decrease payments for third or later episodes of care. The commenter 
stated that many home health providers serve patients with multiple 
chronic conditions and that the patients often have significant medical 
issues. The commenter stated that reducing payments for such episodes 
of care will likely have an impact on how home health providers will 
treat patients with chronic conditions. The commenter asked for more 
clarifications regarding what practice or utilization changes we are 
trying to achieve and if we could explain if there are particular types 
of patients we believe should not be receiving third episodes of home 
health care and/or if there are certain patients who should receive a 
different approach to care that would be less costly than the care 
delivered at present.
    Response: We reiterate that CY 2015 the case-mix weights are 
reflective of the utilization patterns observed in the CY 2013 claims 
data. We have not manipulated the case-mix weights to encourage certain 
patterns of care for the third or later episodes. The case-mix weights 
are driven by the mix of services provided, the costs of services 
provided as determined by the BLS hourly rates, the length of the 
visits, and the number of visits provided. Any decreases in the case-
mix weights for third or later episodes of care reflect less average 
resources associated with those episodes using 2013 claims data than 
the average resources associated with third and later episodes using 
2007 data, which was the data used in the 2012 recalibration.
    We note that when comparing the visit distribution in 2013 versus 
2007 for third and later episodes, we observe large decreases in the 
total visit count in 2013 versus 2007 for these episodes (see Table 19 
and Table 20). As shown in Table 21, the number of total visits for the 
third and later episodes, on average, decreased significantly, ranging 
from -8.30 percent to -19.01 percent, for the various therapy groups. 
The decreases in the case-mix weights for third or later episode 
episodes for CY 2015 versus CY 2014 may be due to the decrease in total 
visits for these episodes between 2007 and 2013.

 Table 19--Average Number of Visits for Third and Later Episodes of Care (Not Including 20+ Therapy Visit Episodes Which May Be Early or Late), CY 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Number of                                                                        All        All
                   Therapy group                       episodes    Nursing     Aides        PT         OT        SLP        MSS      therapy     visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-5................................................    1,424,148        9.2        3.2        0.2        0.0        0.0        0.1        0.3       12.7
6..................................................       38,406        7.8        2.6        4.9        0.8        0.2        0.1        6.0       16.5
7-9................................................      125,743        8.2        2.9        6.7        1.0        0.3        0.1        7.9       19.1
10.................................................       37,482        8.4        2.9        8.5        1.2        0.3        0.1       10.0       21.4
11-13..............................................      120,115        8.4        3.2       10.2        1.5        0.3        0.1       12.0       23.7
14-15..............................................       68,540        8.3        3.5       12.1        1.9        0.5        0.1       14.5       26.3
16-17..............................................       77,730        7.2        3.6       13.9        2.0        0.4        0.1       16.4       27.3
18-19..............................................       41,557        7.6        3.6       14.2        3.5        0.6        0.1       18.3       29.7
                                                    -------------
    Total..........................................    1,933,721        8.9        3.2        2.8        0.5        0.1        0.1        3.3       15.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Data on normal episodes of care with a through date in 2013 using complete CY 2013 claims data as of June 30, 2014.

[[Page 66069]]

 Table 20--Average Number of Visits for Third and Later Episodes of Care (Not Including 20+ Therapy Visit Episodes Which May Be Early or Late), CY 2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Number of                                                                        All        All
                   Therapy group                       episodes    Nursing     Aides        PT         OT        SLP        MSS      therapy     visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-5................................................      227,934        9.6        5.9        0.2        0.0        0.0        0.1        0.2       15.7
6..................................................        3,068        7.7        4.1        5.0        0.8        0.2        0.1        6.0       18.0
7-9................................................        7,458        8.1        4.6        6.7        1.1        0.2        0.2        8.0       20.8
10.................................................        9,510        9.0        5.2        8.7        1.1        0.2        0.1       10.0       24.3
11-13..............................................       21,620        9.0        5.8       10.4        1.3        0.2        0.1       11.9       26.8
14-15..............................................        7,736        8.6        6.4       12.4        1.8        0.3        0.1       14.5       29.6
16-17..............................................        6,481        8.2        7.0       14.1        1.9        0.4        0.1       16.5       31.8
18-19..............................................        2,982        8.8        6.7       14.9        3.0        0.5        0.2       18.4       34.0
                                                    -------------
    Total..........................................      292,873        9.4        5.9        2.6        0.4        0.1        0.1        3.1       18.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Data on normal episodes of care ending in 2007 using a 20% sample of 2007 data from the home health Datalink file.

   Table 21--Percent Change in the Average Number of Visits by Therapy
        Group for Third and Later Episodes of Care, 2007 and 2013
------------------------------------------------------------------------
                                                               Percent
                                                              change  in
                       Therapy group                         visits from
                                                               2007 to
                                                                 2013
------------------------------------------------------------------------
0-5........................................................       -19.01
6..........................................................        -8.38
7-9........................................................        -8.30
10.........................................................       -11.75
11-13......................................................       -11.44
14-15......................................................       -11.28
16-17......................................................       -14.18
18-19......................................................       -12.72
------------------------------------------------------------------------

    Comment: A commenter stated that the points for the case-mix 
variables seem to be decreasing for the low therapy episodes and 
increasing for the high therapy episodes, motivating agencies to 
provide more therapy visits to boost reimbursement. The commenter 
stated that the data used to determine the case-mix points was swayed 
by the payment system which rewards high therapy utilization. Other 
commenters stated that many diagnosis codes are losing case-mix points 
and that there doesn't seem to be a reason behind the loss of points. 
Another commenter implied that there doesn't seem to be a balance in 
the shift in points and was concerned with the impact of the scoring 
variables being eliminated and others decreasing or increasing points. 
Another commenter stated that there is not sufficient detail to explain 
the Agency's rationale for the large scale changes to the case-mix 
point values in the proposed rule and questioned what message CMS is 
sending to agencies based on the changes to the case-mix variable 
table. The commenter stated that there is no longer an emphasis on 
diabetes, heart failure, COPD, or depression, but that there seems to 
be an emphasis on orthopedic and neurological diagnoses, particularly 
when 14 or more therapy visits are ordered. A commenter stated that the 
change in the case-mix points sends a message that there is little or 
no benefit to home health agencies in caring for chronically ill 
patients with common medical diagnoses unless those patients are 
receiving 14 or more therapy visits and urged CMS to reconsider 
adoption and implementation of the proposed case-mix point tables and 
new thresholds until CMS has sought more input from clinicians and 
agencies and has re-evaluated the messages the new case-mix table will 
send to the home health community.
    Response: We reiterate that the points for the case-mix variables 
are driven by the utilization patterns observed in the CY 2013 claims 
data. The changes to the weights are not surprising given the different 
data used for the CY 2012 recalibration versus the data used for the CY 
2015 recalibration. We used 2005 data to estimate the four equation 
model for the CY 2012 recalibration and we used 2013 data to estimate 
the four equation model for the CY 2015 recalibration. (The 2012 
payment regression was based on a 2007 sample that was assigned to 
severity levels based on the point values from a 4-equation model using 
2005 data that eliminated certain hypertension codes). The different 
point estimates across the two models indicate that the case-mix 
variables have a different relationship to resource use in 2013 
compared to 2005. A decrease in the number of points (for 2013 compared 
to 2005) for a variable means that the variable is associated with less 
resource use on average in 2013 compared to 2005. An increase in the 
number of points for a variable means that the variable is associated 
with more resource use on average in 2013 compared to 2005. Certain 
variables did drop out of the 4-equation model in in the CY 2015 
recalibration versus the CY 2012 recalibration. For many of those 
variables, the CY 2012 recalibration estimated only a small number of 
points associated with the variables and therefore those variables were 
already on the verge of being dropped from the model in CY 2012. While 
some variables did drop out of the model, the potential change in 
points associated with those variables was not very large, so that 
individually those variables had minimal impact on episodes' resource 
use. Some of the variables that dropped out of the model experienced 
increases in the number of episodes with the variable reported on OASIS 
between 2005 and 2013. The increase in episodes reporting a particular 
variable may have decreased the difference in resources for episodes 
that coded the variable versus those that did not and, therefore, may 
have caused the variable to become insignificant or to have minimal 
impact on resource costs, leading to its elimination from the model.
    When evaluating the points associated with each leg of the model, 
it is important to examine the thresholds for each leg. For example, 
the clinical thresholds described in the proposed rule have fewer 
points associated with them for the 0 to 13 therapy visit episodes. 
Therefore, while there may be fewer points associated with some of the 
variables within the 0 to 13 therapy visit legs, there is also a lower 
threshold for the clinical levels. In order to determine the 
thresholds, we put episodes into five groups (early episodes, 0 to 13 
therapy visits, early episodes, 14-19 therapy visits, late episodes, 0 
to 13 therapy visits, late episodes, 14-19 therapy visits, and 20+ 
therapy visit episodes) for both the clinical and the functional 
dimensions. We then attempt to divide the episodes within each group 
into thirds in order to set the thresholds. Therefore, regardless of 
the points, on average, the most resource-intensive episodes will be 
placed in the highest clinical or functional level. It is also

[[Page 66070]]

worth noting that, with the CY 2015 recalibration, additional variables 
received points in the estimation of the 4-equation model that did not 
receive points in the CY 2012 recalibration. Again, the outcomes of the 
models are guided by the data and reflect recent (2013) utilization 
patterns. This approach increases payments for the HHRGs where 
resources are being provided where they were not previously and 
decreases payment for the HHRGs where resources are not being provided 
where they were previously. The intent is to create payments that more 
accurately reflect the costs that agencies incur.
    Comment: A commenter also stated that this is the third year in a 
row that the HH PPS has had different case-mix weights and that this 
may be an indicator of uncertainty by CMS. Another commenter stated 
that the recalibration of the weights is being recommended after having 
just recently been changed the prior year and that there is no 
consistency in the change.
    Response: We would like to clarify that fundamentally we have not 
changed the weights since CY 2012. We previously recalibrated the case-
mix weights in 2012 and did not change the weights in CY 2013. For CY 
2014, while we lowered the case-mix weights to an average case-mix 
weight of 1.0000, we did not adjust the weights relative to one 
another. We instead decreased each case-mix weight by the same factor 
(1.3464). In the CY 2015 proposed rule, we proposed to recalibrate the 
case-mix weights with more current data, adjusting the weights relative 
to one another. To the greatest extent possible, we are attempting to 
use recent data to calibrate the payment models to ensure payments 
accurately reflect current resource use in home health episodes.
    Comment: A commenter found the data CMS is basing its proposals on 
to be puzzling and mentioned that the payment system does not allow for 
reporting of time devoted to patient care that is not visit time. The 
commenter stated that dementia and brain disorders involve significant 
time outside of the visit.
    Response: Section 1861(m) of the Act defines home health services 
as ``items and services furnished to an individual [. . .] provided on 
a visiting basis in a place of residence used as such individual's home 
. . .'' (emphasis added). Under certain circumstances, services may be 
provided via a telecommunications system, but these services do not 
substitute for in-person home health services and are not considered a 
home health visit for purposes of home health eligibility or payment 
(see section 1895(e)(1) of the Act). In addition, the commenter 
provided no supporting data explaining why home health services for 
patients suffering from dementia and brain disorders would require 
reimbursement exceeding the typical case management/care coordination 
functions that are inherent in managing patients in the home. We also 
note that while the case-mix recalibration does not include time 
outside of the visit, the base rate should capture other expenses 
related to patient care, such as travel costs, etc. An assumption since 
the original development of the HH PPS, supported by internal studies 
of cost report data, has been that visit time is approximately 
proportional to the total cost of caring for a patient during an 
episode.
    Comment: Commenters expressed concerns with the effects the 
recalibrated weights will have when coupled with the rebasing 
reductions. A commenter stated that the combination of the recalibrated 
case-mix weights and the change in base rate brings about the 
equivalent of about a three point reduction in payments. A commenter 
stated that it makes sense to update case-mix points when statistical 
analyses warrant it but that it seems that most adjustments in recent 
years were done to reduce payments to home health agencies. A commenter 
stated that the changes in the case-mix points and thresholds for 
scoring the episode constitute a further reduction in payment beyond 
the required reduction and recalibration of the case-mix weights for CY 
2015.
    Response: The CY 2015 case-mix recalibration is done in a budget 
neutral manner. While we recalibrated the CY 2015 case-mix weights to 
an average case-mix weight of 1.00, we also proposed an increase to the 
base rate of 2.37 percent in order to ensure that there are no changes 
in aggregate payments due to the recalibration. The weights are only 
changing relative to one another and do not result in an overall 
reduction in HH PPS payments due to the recalibration of the case-mix 
weights.
    Comment: A commenter stated that case-mix weights are continuing to 
be recalibrated to 1.000 but that many payments to home health do not 
result in the episodic payment including Partial Episode Payments, 
payments for low utilization payment adjustment episodes, outliers, and 
others.
    Response: We believe the commenter is implying that the case-mix 
recalibration is not budget neutral given that LUPA, outlier episodes, 
etc. are not included in the case-mix weight recalibration. We note the 
LUPA episodes are paid on a per-visit basis and are not paid using the 
case-mix weights. Therefore, they were not included when performing the 
recalibration. We note that all episodes, including partial episode 
payment episodes and outlier episodes, are included when calculating 
the budget neutrality factor in order to ensure that total payments 
would be the same when comparing the CY 2015 weights to the CY 2014 
weights. However, outliers are not included in the data when doing the 
case-mix recalibration because outlier episodes contain utilization 
patterns that are atypical. The outliers' utilization presumably 
reflects unusually high patient need for services that is not easily 
predictable in statistical data. In addition, due to the concentration 
of outlier episodes in suspect billing areas, we question some of the 
utilization data for outlier episodes. We would also like to note that 
outlier episodes receive additional payment when the imputed cost 
exceeds a certain threshold and therefore, receive additional payment 
outside of the case-mix system.
    Comment: A commenter stated that the R-squared value of the payment 
regression model has increased from the 2012 payment regression model 
even though variables were dropped from the four-equation model. The 
commenter stated that less variables in the four-equation model should 
weaken the R-squared value.
    Response: We do note that while the R-squared value for the payment 
regression increased for the CY 2015 payment regression model when 
compared to the CY 2012 payment regression model, the R-squared value 
for the CY 2015 four-equation model did decrease when compared to the 
R-squared value for the CY 2012 four-equation model, from 0.462 to 
0.427. However, we point out that for the CY 2015 four-equation model 
and payment regression model, we used 2013 data. For the CY 2012 four-
equation model, we used 2005 data and for the CY 2012 payment 
regression model, we used data from 2007. R-squared values will change 
depending on what data are used and cannot be directly compared.
    Comment: Commenters supported the idea of recalibrating the weights 
with newer data but expressed concerns with the resulting proposed 
weights. Commenters stated their concerns with the continued use of 
therapy thresholds in the case-mix system. Commenters recommended that 
the therapy thresholds be eliminated from the payment system and that 
home health services be paid solely based on patient characteristics. A 
commenter stated that

[[Page 66071]]

though CMS has made efforts to reduce payments for therapy episodes, 
the incentives of the therapy thresholds, with more visits receiving 
higher payments, still remain in effect. The commenter stated that the 
adjustments to the case-mix weights would not be necessary if the 
therapy thresholds were eliminated.
    Response: We recognize the issues around the use of the therapy 
thresholds and the use of therapy utilization in the payment system. We 
are currently looking into findings of the home health study authorized 
by section 3131(d) of the Affordable Care Act and payment reform 
options, including alternate ways to explain the amount of therapy 
resources without using therapy utilization variables. Further research 
is needed to find alternatives that will compensate for some of the 
loss of the explanatory power associated with the removal of the 
therapy utilization variables.
    Comment: Several commenters were concerned about the implications 
for agencies of adjusting to several successive recalibrations. 
Commenters said recalibrations cause instability for HHAs, with one 
saying recalibrations were inconsistent with one another. A commenter 
was concerned that multiple recalibrations make calculations with the 
case mix weights useless as a comparative tool over time. This 
commenter also cited problems with calculations from including therapy 
utilization and by the constant annual revision to the various OASIS 
items or diagnoses included/excluded.
    Response: We note that other post-acute payment systems, such as 
the inpatient rehabilitation facility PPS and acute inpatient PPS, 
recalibrate their case-mix weights annually. The differences in the 
recalibration results for the CY 2012 recalibration and the CY 2015 
recalibration largely result from the six to eight year difference in 
the data used. We expect future annual recalibrations to have less 
significant changes in the case-mix points and values. With regard to 
the use of therapy utilization in our methodology, as stated in our 
response above, we are looking into alternate ways to explain the 
amount of therapy resources. Since the 2008 refinements, there have 
been no changes to the payment items on the OASIS. In addition, besides 
last year's changes to the ICD-9-CM codes included into the case-mix 
system (effective January 1, 2014 and therefore not reflected in the CY 
2013 data used to recalibration the CY 2015 case-mix weights) and the 
removal of the hypertension codes in 2012, we did not make significant 
changes to the diagnoses included or excluded in the case-mix system. 
We also note in 2013, changes in the rules for using the payment 
diagnosis field were simulated and the simulations showed impacts in 
payment of less than one percent.
    Comment: A commenter stated that to the extent that CMS is pursuing 
the adjustments to the weights for 2015, the agency should analyze the 
payment-to-cost ratios for the proposed payment weights before and 
after the manual adjustment, similar to the analysis conducted during 
the CY 2012 recalibration. The commenter stated that this additional 
analysis would allow CMS to assess whether these adjustments equalize 
the financial incentives for therapy and non-therapy episodes. Another 
commenter urged CMS to adjust the CY 2015 case-mix weights to ensure 
appropriate use of therapy visits and move reimbursement for therapy-
based episodes towards actual costs incurred. Commenters recommended 
that CMS conduct a thorough validation review of the proposed case-mix 
weight recalibration and evaluate the potential impact on utilization, 
spending, access to care, and other relevant matters. Other commenters 
urged CMS to re-examine the case-mix recalibration and refine it to 
control for variables that might skew outcomes and ensure that the end 
result does not create rewards for high therapy resource use that may 
be inappropriate. A commenter suggested that CMS revisit the case-mix 
weight recalibration to accomplish its stated intention or 
alternatively provide a detailed explanation how the recalibrated case-
mix weights are consistent with its intent. The commenter also stated 
that there has been no testing to determine whether the adjustments 
will achieve the desired outcomes. The commenter recommended that CMS 
retain the current case-mix weights until an approach to recalibration 
that actually achieves the desired outcomes can be developed and 
tested. The commenter stated that the changes to the payment system 
don't seem to have achieved the desired impact.
    Response: We performed an analysis of the payment-to-cost ratio for 
episodes with varying levels of therapy visits. This analysis used cost 
report data to estimate episode cost and showed that the payment to 
cost ratios across the varying levels of therapy visits for the 
recalibrated weights were similar to the payment to cost ratios for the 
current weights. The analysis also justified the need for the continued 
adjustments (finalized in CY 2012) to be applied to the raw weights to 
lower the case-mix weights for high therapy episodes. The payment-to-
cost ratios across the individual therapy visits were all relatively 
similar to each other, with some exceptions in the tails of the 
distribution, and indicated that there may not be a strong incentive to 
provide unnecessary amounts of therapy visits. The goal of the 
recalibration is to better align payment with current costs and we 
believe the recalibration achieves this.
    Comment: Commenters expressed their support for CMS' decision to 
apply a full case-mix budget neutrality factor rather than a reduced 
case-mix budget neutrality factor which would take into account nominal 
case-mix growth. However, they expressed concern about the uncertainty 
for providers in planning for projected rates in CY 2015 and beyond 
given the possibility of case-mix reductions in the future. Commenters 
urged CMS to closely collaborate with the industry and stakeholders to 
ensure that the appropriate analysis is conducted in evaluating case-
mix growth before proposing case-mix reductions in the future. Another 
commenter suggested that CMS perform a comprehensive study of 
individual patient clinical records before asserting that case-mix 
growth has occurred by anything other than necessary clinical care 
being provided. Another commenter urged CMS to use their enforcement 
authority to conduct targeted claims reviews and deny payment for 
claims where the case-mix weight is not supported by the plan of care 
rather than cut the national standardized episode rate for all 
agencies. Yet another commenter stated that case-mix change should not 
be measured using 1999 data as a baseline and that HHAs are providing 
better care for a more needy clinical population. Other commenters 
questioned the methodology used to determine real and nominal case-mix.
    Response: While we appreciate the commenters' suggestion about the 
clinical record review, we note that our resources are not sufficient 
to conduct a review of patient records and/or claims on a scale that 
would be required to counteract the broad-based uptrend in case-mix 
weights; therefore, we cannot perform the review as suggested. However, 
we note that the MACs, in conjunction with supplemental review 
contractors, perform medical review of claims. When they perform 
medical review, they review the plan of care and OASIS and make 
adjustments to HHRGs if they deem that the documentation is not 
sufficient to support what was billed by the agency. Furthermore, we 
note that our statistical methods using available administrative data 
are

[[Page 66072]]

feasible and sufficiently reliable to utilize for the purpose of case-
mix reductions.
    With regard to the comments about patient severity, as stated in 
the CY 2012 proposed rule, a detailed analysis of Medicare Expenditure 
Panel Survey (MEPS) data (which is independent of our real case-mix 
model) was performed to examine the severity of the Medicare home 
health population. The trends in health status from 2000 to 2008 were 
analyzed. The analysis showed a slight increase in the overall health 
status of the Medicare home health population, and in particular, 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). While we 
recognize that there are some limitations to this analysis, we conclude 
that the results of this analysis provide no evidence of an increase in 
patient severity from 2000 to 2008.
    In addition, we would like to note that during the CY 2012 
rulemaking, we incorporated HCC data, which is used by CMS to risk-
adjust payments to managed care organization in the Medicare program, 
in our model to assess real case-mix growth. Our findings of real and 
nominal case-mix growth, even when incorporating HCC data, were 
consistent with past results. Most of the case-mix change was 
identified as nominal case-mix change. We will continue to solicit 
suggestions for other data that can be incorporated into our analysis 
of real and nominal growth and solicit suggestions on possible ways to 
improve our models. We plan to continue to monitor real and nominal 
case-mix growth and may propose additional case-mix reductions as 
necessary.
    Comment: One commenter stated that CMS has adjusted payments in 
2008 to 2013 based on an analysis of changes in coding not related to 
changes in patient severity, but that CMS has not proposed a coding 
adjustment for 2015. The commenter stated that given the history of 
coding increases not attributable to severity, CMS should analyze the 
nominal case-mix change in the reported average case-mix for more 
recent years and implement additional payment reductions as warranted.
    Response: We agree and we will continue to monitor nominal case-mix 
growth and propose case-mix adjustments, as necessary. We also note 
that annually recalibrating (and normalizing the weights to 1.00) may 
minimize nominal case-mix growth in future years.
    Comment: Another commenter stated that CMS should address and 
eliminate fraudulent activities in a targeted manner that does not 
burden the whole industry for the actions of a small number of bad 
actors. The commenter stated that CMS should target bad actors rather 
than continue to implement across the board reductions that could 
reduce the number and quality of home health providers.
    Response: For a variety of reasons, as we have noted in previous 
regulations, we have not proposed targeted reductions for nominal case-
mix change. Many agencies have small patient populations, which would 
make it practically impossible to reliably measure nominal case-mix 
change at the agency level. Further, we believe changes and 
improvements in coding practices have been widespread, making it 
difficult to clearly categorize agencies into high and low coding-
change groups. As discussed in the CY 2012 final rule, when performing 
an independent review of our case-mix measurement methodology, Dr. 
David Grabowski and his team at Harvard University agreed with our 
reasons for not proposing targeted reductions, stating their concerns 
about the small sample size of many agencies and their findings of 
significant nominal case-mix increases across different classes of 
agencies.
    We note that although we have stated in past regulations that a 
targeted system would be administratively burdensome, the reasons we 
have just presented go beyond administrative complexity. We do not 
agree that agency-specific case-mix levels can precisely differentiate 
agencies with inappropriate coding practices from other agencies that 
are coding appropriately. System wide, case-mix levels have risen over 
time while data on patient characteristics indicate little change in 
patient severity over time. That is, the main problem is not the level 
of case-mix reached over a period of time, but the amount of change in 
the billed case-mix not attributable to underlying changes in actual 
patient severity. We will continue to monitor nominal case-mix growth 
and determine whether case-mix reductions are needed.
    Comment: Commenters questioned why CMS has not expanded the 
recalibration analysis to include additional variables that impact the 
cost of home health services to Medicare beneficiaries, such as those 
examined in the home health study and associated with low-income 
beneficiaries, beneficiaries in medically underserved areas, and those 
with varying levels of severity of illness. Commenters urged CMS to 
incorporate findings from the access study into the case-mix system for 
CY 2015. A commenter expressed disappointment that CMS continued to 
rely on the current case-mix system rather than testing and 
implementing new models. The commenter stated that the current case-mix 
system and proposed adjustments have reached a level of complexity that 
make it challenging to determine the accuracy of the proposed technical 
refinements. The commenter stated that the inaccuracies in the current 
system, resulting from the limitations of the current OASIS variables 
and the use of average costs that do not represent the full costs of 
treating more complex patients, continue to result in underpayment for 
patients whose resource use and cost of care are not fully captured in 
the case-mix weights. Another commenter suggested that CMS work with 
the industry to develop the case-mix methodology.
    Response: We are currently doing follow-on work to the home health 
study to explore findings and recommendations from the home health 
study on access to care for vulnerable populations. Under this 
contract, we are also exploring payment reform options to better 
capture costs associated with the various types of home health 
patients. However, the project is in its preliminary stages and will 
take some time to complete. We plan to provide updates on the follow on 
study and payment reform work in future rulemaking and plan to consult 
with stakeholders once further progress has been made.
    Comment: While outside the scope of the rule, some commenters 
provided suggestions for our payment reform work.
    Response: We thank the commenter for their input. We will take 
their comments into consideration for our payment reform work.
    Final Decision: We are finalizing the points for the case-mix 
variables, the revised thresholds for the clinical and functional 
levels, and the case-mix weights for CY 2015 shown in the tables above. 
We are also finalizing our proposal to recalibrate the case-mix weights 
every year with more current data. We will continue to monitor case-mix 
growth and may consider whether to propose nominal case-mix reductions 
in future rulemaking.

[[Page 66073]]

D. CY 2015 Home Health Rate Update

1. CY 2015 Home Health Market Basket Update
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2015 be increased by a factor equal 
to the applicable HH market basket update for those HHAs that submit 
quality data as required by the Secretary. The home health market 
basket percentage increase for CY 2015 is based on IHS Global Insight 
Inc.'s (IGI) third quarter 2014 forecast with historical data through 
the second quarter of 2014. The home health market basket percentage 
increase for CY 2015 is 2.6 percent. The HH market basket was rebased 
and revised in CY 2013. A detailed description of how we derive the HH 
market basket is available in the CY 2013 HH PPS final rule (77 FR 
67080, 67090).
    For CY 2015, section 3401(e) of the Affordable Care Act, requires 
that, in CY 2015 (and in subsequent calendar years), the market basket 
percentage under the HH prospective payment system as described in 
section 1895(b)(3)(B) of the Act be annually adjusted by changes in 
economy-wide productivity. The statute defines the productivity 
adjustment, described in section 1886(d)(3)(B)(xi)(II) of the Act, to 
be equal to the 10-year moving average of change in annual economy-wide 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, calendar year, cost reporting period, or other annual 
period)(the ``MFP adjustment''). The Bureau of Labor Statistics (BLS) 
is the agency that publishes the official measure of private nonfarm 
business MFP. Please see http://www.bls.gov/mfp to obtain the BLS 
historical published MFP data. We note that the proposed methodology 
for calculating and applying the MFP adjustment to the HHA payment 
update is similar to the methodology used in other Medicare provider 
payment systems as required by section 3401 of the Affordable Care Act. 
Please refer to the CY 2015 HH PPS proposed rule (79 FR 38384 through 
38386) for more detailed information regarding the computation of the 
MFP adjustment.
    We did not receive any comments on our proposal related to the 
computation of the statutorily-required productivity adjustment. 
Therefore, we are finalizing our proposal to adjust the HH market 
basket percentage increase by the MFP adjustment as discussed in the 
proposed rule. The CY 2015 HH market basket percentage of 2.6 percent 
will be reduced by the MFP adjustment (the 10-year moving average of 
MFP for the period ending December 31, 2015) of 0.5 percent, which is 
based on IGI's third quarter 2014 forecast. The resulting MFP-adjusted 
HH market basket update is equal to 2.1 percent, or 2.6 percent less 
0.5 percentage point.
    Section 1895(b)(3)(B) of the Act requires that the home health 
market basket percentage increase be decreased by 2 percentage points 
for those HHAs that do not submit quality data as required by the 
Secretary. For HHAs that do not submit the required quality data for CY 
2015, the home health market basket update will be 0.1 percent (2.1 
percent minus 2.0 percentage points).
2. Home Health Care Quality Reporting Program (HH QRP)
a. General Considerations Used for Selection of Quality Measures for 
the HH QRP
    The successful development of the Home Health Quality Reporting 
Program (HH QRP) that promotes the delivery of high quality healthcare 
services is one of our paramount concerns in administering the home 
health program. We seek to adopt measures for the HH QRP that promote 
more efficient and safer care. Our measure selection activities for the 
HH QRP take into consideration input we receive from the Measure 
Applications Partnership (MAP), convened by the National Quality Forum 
(NQF) as part of a pre-rulemaking process that we have established and 
are required to follow under section 1890A of the Act. The MAP is a 
public-private partnership comprised of multi-stakeholder groups 
convened for the primary purpose of providing input to CMS on the 
selection of certain categories of quality and efficiency measures, as 
required by section 1890A(a)(3) of the Act. By February 1st of each 
year, the NQF must provide that input to CMS.
    More details about the pre-rulemaking process can be found at 
http://www.qualityforum.org/map.
    MAP reports to view and download are available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
    Our measure development and selection activities for the HH QRP 
take into account national priorities, such as those established by the 
National Priorities Partnership (http://www.qualityforum.org/Setting_Priorities/NPP/National_Priorities_Partnership.aspx), the 
Department of Health & Human Services (HHS) Strategic Plan (http://www.hhs.gov/secretary/about/priorities/priorities.html, the National 
Quality Strategy (NQS) (http://www.ahrq.gov/workingforquality/reports.htm), and the CMS Quality Strategy (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html). To the extent 
practicable, we have sought to adopt measures that have been endorsed 
by the national consensus organization under contract to endorse 
standardized healthcare quality measures under section 1890 of the Act, 
recommended by multi-stakeholder organizations, and developed with the 
input of patients, providers, purchasers/payers, and other 
stakeholders. At this time, the NQF is the national consensus 
organization that is under contract with HHS to provide review and 
endorsement of quality measures.
b. Background and Quality Reporting Requirements
    Section 1895(b)(3)(B)(v)(II) of the Act states that ``each home 
health agency shall submit to the Secretary such data that the 
Secretary determines are appropriate for the measurement of health care 
quality. Such data shall be submitted in a form and manner, and at a 
time, specified by the Secretary for purposes of this clause.''
    In addition, section 1895(b)(3)(B)(v)(I) of the Act states that 
``for 2007 and each subsequent year, in the case of a home health 
agency that does not submit data to the Secretary in accordance with 
subclause (II) with respect to such a year, the home health market 
basket percentage increase applicable under such clause for such year 
shall be reduced by 2 percentage points.'' This requirement has been 
codified in regulations at Sec.  484.225(i). HHAs that meet the quality 
data reporting requirements are eligible for the full home health (HH) 
market basket percentage increase. HHAs that do not meet the reporting 
requirements are subject to a 2 percentage point reduction to the HH 
market basket increase.
    Section 1895(b)(3)(B)(v)(III) of the Act further states that 
``[t]he Secretary shall establish procedures for making data submitted 
under subclause (II) available to the public. Such procedures shall 
ensure that a home health agency has the opportunity to review the data 
that is to be made public with respect to the agency prior to such data 
being made public.''
    Medicare home health regulations, as codified at Sec.  484.250(a), 
require HHAs to submit OASIS assessments and Home Health Care Consumer 
Assessment of

[[Page 66074]]

Healthcare Providers and Systems Survey[supreg] (HHCAHPS) data to meet 
the quality reporting requirements of section 1895(b)(3)(B)(v) of the 
Act. We provide quality measure data to HHAs via the Certification and 
Survey Provider Enhanced Reports (CASPER reports) which are available 
on the CMS Health Care Quality Improvement System (QIES). A subset of 
the HH quality measures has been publicly reported on the Home Health 
Compare (HH Compare) Web site since 2003. The CY 2012 HH PPS final rule 
(76 FR 68576), identifies the current HH QRP measures. The selected 
measures that are made available to the public can be viewed on the HH 
Compare Web site located at http://www.medicare.gov/HHCompare/Home.asp. 
As stated in the CY 2012 and CY 2013 HH PPS final rules (76 FR 68575 
and 77 FR 67093, respectively), we finalized that we will also use 
measures derived from Medicare claims data to measure HH quality.
    In the CY 2014 HH PPS final rule, we finalized a proposal to add 
two claims-based measures to the HH QRP, and also stated that we would 
begin reporting the data from these measures to HHAs beginning in CY 
2014. These claims based measures are: (1) Rehospitalization during the 
first 30 days of HH; and (2) Emergency Department Use without Hospital 
Readmission during the first 30 days of HH. Also in this rule, we 
finalized our proposal to reduce the number of process measures 
reported on the CASPER reports by eliminating the stratification by 
episode length for 9 process measures. While no timeframe was given for 
the removal of these measures, we have scheduled their removal from the 
CASPER folders in October 2014. In addition, five short stay measures 
which had previously been reported on HH Compare were recently removed 
from public reporting and replaced with non-stratified ``all episodes 
of care'' versions of these measures.
    Comment: One commenter urged CMS to only adopt quality measures 
that have been endorsed by the Measure Applications Partnership (MAP) 
and National Quality Forum (NQF).
    Response: To the extent practicable, we seek to adopt measures that 
have been endorsed by a consensus based entity, such as NQF. We also 
intend to continue seeking input from the MAP as part of the pre-
rulemaking process.
    Comment: One commenter asked CMS to comment on the timeframe for 
the public release of the two ``post-acute 30 day measures.''
    Response: We believe the commenter is requesting information about 
the status of public reporting for the two HH claims based measures 
titled ``Rehospitalization during the First 30 Days of HH'' and 
``Emergency Department Use without Readmission during the First 30 Days 
of HH'' that were finalized in the CY 2014 HH PPS final rule (78 FR 
72256). In the CY 2014 HH PPS final rule, we stated that ``these 
measures will be added to HH Compare for public reporting in CY 2015'' 
(78 FR 72298.).
c. OASIS Data Submission and OASIS Data for Annual Payment Update
(1) Regulatory Authority
    The HH conditions of participation (CoPs) at Sec.  484.55(d) 
require that the comprehensive assessment must be updated and revised 
(including the administration of the OASIS) no less frequently than: 
(1) The last 5 days of every 60 days beginning with the start of care 
date, unless there is a beneficiary-elected transfer, significant 
change in condition, or discharge and return to the same HHA during the 
60-day episode; (2) within 48 hours of the patient's return to the home 
from a hospital admission of 24-hours or more for any reason other than 
diagnostic tests; and (3) at discharge.
    It is important to note that to calculate quality measures from 
OASIS data, there must be a complete quality episode, which requires 
both a Start of Care (initial assessment) or Resumption of Care OASIS 
assessment and a Transfer or Discharge OASIS assessment. Failure to 
submit sufficient OASIS assessments to allow calculation of quality 
measures, including transfer and discharge assessments, is a failure to 
comply with the CoPs.
    HHAs do not need to submit OASIS data for those patients who are 
excluded from the OASIS submission requirements. As described in the 
December 23, 2005 Medicare and Medicaid Programs: Reporting Outcome and 
Assessment Information Set Data as Part of the Conditions of 
Participation for Home Health Agencies final rule (70 FR 76202), we 
define the exclusion as those patients:
     Receiving only non-skilled services;
     For whom neither Medicare nor Medicaid is paying for HH 
care (patients receiving care under a Medicare or Medicaid Managed Care 
Plan are not excluded from the OASIS reporting requirement);
     Receiving pre- or post-partum services; or
     Under the age of 18 years.
    As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs 
that become Medicare-certified on or after May 31 of the preceding year 
are not subject to the OASIS quality reporting requirement nor any 
payment penalty for quality reporting purposes for the following year. 
For example, HHAs certified on or after May 31, 2013 are not subject to 
the 2 percentage point reduction to their market basket update for CY 
2014. These exclusions only affect quality reporting requirements and 
do not affect the HHAs' reporting responsibilities as announced in the 
December 23, 2005 final rule, ``Medicare and Medicaid Programs; 
Reporting Outcome and Assessment Information Set Data as Part of the 
Conditions of Participation for Home Health Agencies'' (70 FR 76202).
(2) HH QRP Requirements for CY 2015 Payment and Subsequent Years
    In the CY 2014 HH PPS Final rule (78 FR 72297), we finalized a 
proposal to consider OASIS assessments submitted by HHAs to CMS in 
compliance with HH CoPs and Conditions for Payment for episodes 
beginning on or after July 1, 2012, and before July 1, 2013 as 
fulfilling one portion of the quality reporting requirement for CY 
2014. In addition, we finalized a proposal to continue this pattern for 
each subsequent year beyond CY 2014. OASIS assessments submitted for 
episodes beginning on July 1st of the calendar year 2 years prior to 
the calendar year of the Annual Payment Update (APU) effective date and 
ending June 30th of the calendar year 1 year prior to the calendar year 
of the APU effective date fulfill the OASIS portion of the HH QRP 
requirement.
(3) Establishing a ``Pay-for-Reporting'' Performance Requirement for 
Submission of OASIS Quality Data
    Section 1895(b)(3)(B)(v)(I) of the Act states that ``for 2007 and 
each subsequent year, in the case of a home health agency that does not 
submit data to the Secretary in accordance with subclause (II) with 
respect to such a year, the home health market basket percentage 
increase applicable under such clause for such year shall be reduced by 
2 percentage points.'' This ``pay-for-reporting'' requirement was 
implemented on January 1, 2007. However, to date, the quantity of OASIS 
assessments each HHA must submit to meet this requirement has never 
been proposed and finalized through rulemaking or through the sub-
regulatory process. We believe that this matter should be addressed for 
several reasons.
    We believe that defining a more explicit performance requirement 
for

[[Page 66075]]

the submission of OASIS data by HHAs would better meet section 
5201(c)(2) of the Deficit Reduction Act of 2005 (DRA), which requires 
that ``each home health agency shall submit to the Secretary such data 
that the Secretary determines are appropriate for the measurement of 
health care quality. Such data shall be submitted in a form and manner, 
and at a time, specified by the Secretary for purposes of this 
clause.''
    In February 2012, the Department of Health & Human Services Office 
of the Inspector General (OIG) performed a study to: (1) Determine the 
extent to which HHAs met federal reporting requirements for the OASIS 
data; (2) to determine the extent to which states met federal reporting 
requirements for OASIS data; and (3) to determine the extent to which 
the CMS was overseeing the accuracy and completeness of OASIS data 
submitted by HHAs. In a report entitled, ``Limited Oversight of Home 
Health Agency OASIS Data,''\24\ the OIG stated their finding that ``CMS 
did not ensure the accuracy or completeness of OASIS data.'' The OIG 
recommended that we ``identify all HHAs that failed to submit OASIS 
data and apply the 2 percent payment reduction to them''. We believe 
that establishing a performance requirement for submission of OASIS 
quality data would be responsive to the recommendations of the OIG.
---------------------------------------------------------------------------

    \24\ http://oig.hhs.gov/oei/reports/oei-01-10-00460.asp
---------------------------------------------------------------------------

    In response to these requirements and the OIG report, we designed a 
pay-for-reporting performance system model that could accurately 
measure the level of an HHA's submission of OASIS data. The performance 
system is based on the principle that each HHA is expected to submit a 
minimum set of two ``matching'' assessments for each patient admitted 
to their agency. These matching assessments together create what is 
considered a ``quality episode of care'', consisting ideally of a Start 
of Care (SOC) or Resumption of Care (ROC) assessment and a matching End 
of Care (EOC) assessment. However, it was determined that there are 
several scenarios that could meet this ``matching assessment 
requirement'' of the new pay-for-reporting performance requirement. 
These scenarios or ``quality assessments,'' are defined as assessments 
that create a quality episode of care during the reporting period or 
could create a quality episode if the reporting period were expanded to 
an earlier reporting period or into the next reporting period.
    Seven types of assessments submitted by an HHA fit this definition 
of a quality assessment. These are:
     A Start of Care (SOC) or Resumption of Care (ROC) 
assessment that has a matching End of Care (EOC) assessment. EOC 
assessments are assessments that are conducted at transfer to an 
inpatient facility (with or without discharge), death, or discharge 
from HH care. These two assessments (the SOC or ROC assessment and the 
EOC assessment) create a regular quality episode of care and both count 
as quality assessments.
     A SOC/ROC assessment that could begin an episode of care, 
but occurs in the last 60 days of the performance period. This is 
labeled as a ``Late SOC/ROC'' quality assessment.
     An EOC assessment that could end an episode of care that 
began in the previous reporting period, (that is, an EOC that occurs in 
the first 60 days of the performance period.) This is labeled as an 
``Early EOC'' quality assessment.
     A SOC/ROC assessment that is followed by one or more 
follow-up assessments, the last of which occurs in the last 60 days of 
the performance period. This is labeled as an ``SOC/ROC Pseudo 
Episode'' quality assessment.
     An EOC assessment is preceded by one or more follow-up 
assessments, the last of which occurs in the first 60 days of the 
performance period. This is labeled an ``EOC Pseudo Episode'' quality 
assessment.
     A SOC/ROC assessment that is part of a known one-visit 
episode. This is labeled as a ``One-Visit episode'' quality assessment.
     SOC, ROC, and EOC assessments that do not meet any of 
these definitions are labeled as ``Non-Quality'' assessments.
     Follow-up assessments (that is, where the M0100 Reason for 
Assessment = `04' or `05') are considered ``Neutral'' assessments and 
do not count toward or against the pay for reporting performance 
requirement.
    Compliance with this performance requirement can be measured 
through the use of an uncomplicated mathematical formula. This pay for 
reporting performance requirement metric has been titled as the 
``Quality Assessments Only'' (QAO) formula because only those OASIS 
assessments that contribute, or could contribute, to creating a quality 
episode of care are included in the computation. The formula based on 
this definition is as follows:
[GRAPHIC] [TIFF OMITTED] TR06NO14.011

    Our ultimate goal is to require all HHAs to achieve a pay-for-
reporting performance requirement compliance rate of 90 percent or 
more, as calculated using the QAO metric illustrated above. However, we 
proposed to implement this performance requirement in an incremental 
fashion over a 3 year period. We proposed to require each HHA to reach 
a compliance rate of 70 percent or better during the first reporting 
period \25\ that the new pay-for-reporting performance requirement is 
implemented. We further proposed to increase the pay-for-reporting 
performance requirement by 10 percent in the second reporting period, 
and then by an additional 10 percent in the third reporting period 
until a pay-for-reporting performance level of 90 percent is reached.
---------------------------------------------------------------------------

    \25\ The term ``reporting period'' is defined as the submission 
of OASIS assessments for episodes between July 1 (of the calendar 
year two years prior to the calendar year of the APU effective date) 
through the following June 30th (of the calendar year one year prior 
to the calendar year of the APU effective date) each year.
---------------------------------------------------------------------------

    To summarize, we proposed to implement the pay-for-reporting 
performance requirement beginning with all episodes of care that occur 
on or after July 1, 2015, in accordance with the following schedule:
     For episodes beginning on or after July 1st, 2015 and 
before June 30th, 2016, HHAs must score at least 70 percent on the QAO 
metric of pay-for-reporting performance or be subject to a 2 percentage 
point reduction to their market basket update for CY 2017.
     For episodes beginning on or after July 1st, 2016 and 
before June 30th, 2017, HHAs must score at least 80 percent on the QAO 
metric of pay-for-reporting performance or be subject to a 2 percentage 
point reduction to their market basket update for CY 2018.

[[Page 66076]]

     For episodes beginning on or after July 1st, 2017, and 
thereafter, and before June 30th, 2018 and thereafter, HHAs must score 
at least 90 percent on the QAO metric of pay-for-reporting performance 
or be subject to a 2 percentage point reduction to their market basket 
update for CY 2019, and each subsequent year thereafter.
    We solicited public comment on our proposal to implement the pay-
for-reporting performance requirement, as described previously, for the 
HH QRP. We received the following comments in response to our proposal:
    Comment: MedPAC submitted a comment in which they expressed full 
support for the proposal to establish a minimum requirement for 
submission of OASIS assessments. MedPAC stated that ``the requirement 
for submission of OASIS data to receive a full payment update has been 
in effect for many years, and agencies should have many years of 
experience with the transmission of this data'' and suggested that CMS 
consider phasing in the requirement at a faster rate, given the 
familiarity of HHAs with these processes. MedPAC recommended raising 
the threshold to 90 percent in the second year. Another commenter, who 
stated support for this proposal, suggested increasing the compliance 
thresholds to 75 percent, 85 percent and 95 percent (instead of the 70 
percent, 80 percent and 90 percent threshold that were proposed). 
Another commenter suggested that CMS should carefully monitor 
compliance rates over the next two years to determine if a 90 percent 
compliance rate is a realistic goal.
    Several commenters supported our proposal to establish a minimum 
requirement for submission of OASIS assessments for a variety of 
reasons. One commenter stated a belief that this proposal demonstrates 
CMS' efforts to obtain more complete patient data sets. Another 
commenter expressed an opinion that the proposed OASIS minimum 
reporting requirement is a program integrity reform and cost cutting 
measure that is preferable to the across the board payment cuts 
established by CMS in previous HH PPS rules.
    Response: We thank MedPAC and other commenters who support our 
proposal to establish a pay-for-reporting performance requirement for 
the HH QRP. We agree that the requirements for OASIS reporting have 
been in effect for many years. The HH CoPs which are codified at 42 CFR 
484.55 and mandate use of the OASIS data set when evaluating adult non-
maternity patients receiving skilled services were established in 1999 
(64 FR 3764 through 3784). OASIS reporting was first implemented on 
July 19, 1999 and in 2007, OASIS reporting became mandatory for quality 
reporting purposes under section 1895(b)(3)(B)(v)(I) of the Act. HHAs 
have been required to submit OASIS data as a condition of payment of 
their Medicare claims since 2010. As HHAs have been required to report 
OASIS data for the past 15 years as a CoP in the Medicare program and 
as a condition of payment of their Medicare claims for the past 4 
years, our establishment of a minimum threshold for OASIS reporting 
should not place any new or additional burden on HHAs.
    Our ultimate goal is to require all HHAs to achieve a pay-for-
reporting performance requirement compliance rate of 90 percent or 
more, as calculated using the QAO metric described and in this section. 
In the proposed rule, we proposed to require each HHA to reach a 
compliance rate of 70 percent or better during the first reporting 
period that the new pay-for-reporting performance requirement is 
implemented. We believe that use of the 70 percent standard is one that 
is attainable by any HHA, whether it is a large corporate entity or 
very small family run business. We had further proposed to increase the 
performance requirement by 10 percent in the second reporting period, 
and then by an additional 10 percent in the third reporting period 
until a pay-for-reporting performance requirement of 90 percent is 
reached, because we believed that this schedule would promote 
successful performance by all HHAs.
    However, after carefully considering the comments submitted, we 
have reconsidered our proposal for implementation of a ``pay-for-
performance'' performance requirement over a 3 year period. MedPAC 
suggested that CMS consider phasing in the OASIS reporting requirement 
at a faster rate, given the familiarity that HHAs have with the OASIS 
process. MedPAC recommended raising the threshold to 90 percent in the 
second year.
    We agree with MedPAC's contention that HHAs have been statutorily 
required to report OASIS for a number of years and therefore should 
have many years of experience with the collection of OASIS data and 
transmission of this data to CMS. Given the length of time that HHAs 
have been mandated to report OASIS data, we believe that HHAs will 
adapt quickly to the implementation of the ``pay-for-reporting'' 
performance requirement, if phased in over a 2 year period. On the 
other hand, the ``pay-for-reporting'' performance requirement is a new 
reporting requirement that can have a significant financial impact any 
HHA that is not able to meet the requirements.
    We believe that it is best to proceed with the establishment of the 
70 percent reporting requirement during the first reporting period 
(that is, July 1, 2015 through June 30, 2016) and will finalize this 
part of our proposal. However, we will not finalize our proposal to 
increase the reporting requirement in 10 percent increments over a 2 
year period until the maximum rate of 90 percent is reached. In 
consideration of the recommendations made, we plan to monitor provider 
performance under the ``pay-for-reporting'' performance requirement 
during the time period of July 1, 2014 through June 30, 2015. We will 
then use such information, as available, to make a determination about 
what the ``pay-for-reporting'' performance requirement will be set at 
in the 2nd and subsequent years. For example, we will review OASIS data 
from a recent reporting period simulating the ``pay-for reporting'' 
performance 70 percent submission requirement to determine the 
``hypothetical performance'' of each HHA ``as if'' the ``pay for 
reporting'' performance requirement were in effect during the reporting 
period preceding its implementation. We will provide a report to each 
HHA of their ``hypothetical performance'' under the ``pay for 
reporting'' performance requirement during the 2014-2015 ``pre-
implementation reporting period.'' We will also consider provider 
performance during the first part of the first year of the ``pay for 
reporting'' performance requirement as data are available in 
determining the OASIS reporting requirement for the 2nd and subsequent 
years.
    Comment: A commenter expressed agreement with our proposal to 
implement the OASIS minimum reporting requirements over a 3 year 
period, but strongly recommended that such requirements be limited to 
the OASIS data sets collected for Medicare PPS episodes only. This 
commenter stated a belief that it would be too burdensome if HHAs were 
required to complete OASIS assessments for patients on other payment 
programs.
    Response: Patients receiving care under a Medicare or Medicaid 
managed care plan are not excluded from the OASIS reporting 
requirements, and HHAs are required to submit OASIS assessments for 
these patients. OASIS reporting is mandated for all Medicare 
beneficiaries (under 42 CFR 484.250(a), 484.225(i), and 484.55). The HH 
CoPs require that the Home Health Registered

[[Page 66077]]

Nurse (HH RN) or qualified therapist perform an initial assessment 
within 48 hours of referral, within 48 hours of the patient's return 
home, or on the physician-ordered start of care date. The HH RN or 
qualified therapist must also complete a comprehensive assessment 
within 5 days from the start of care. During these assessments, the HH 
RN or qualified therapist must determine the patient's eligibility for 
the Medicare HH benefit, including homebound status (42 CFR 
484.55(a)(1) and 42 CFR 484.55 (b)). In addition, the requirement for 
OASIS reporting on Medicare and Medicaid Managed Care patients was 
established in a final rule titled ``Medicare and Medicaid Programs: 
Reporting Outcome and Assessment Information Set Data as Part of the 
Conditions of Participation for Home Health Agencies Final Rule'' dated 
December 23, 2005 (70 FR 76202), which stated the following:

    In the January 25, 1999, interim final rule with comment period 
(64 FR 3749), we generally mandated that all HHAs participating in 
Medicare and Medicaid (including managed care organizations 
providing home health services to Medicare and Medicaid 
beneficiaries) report their OASIS data to the database we 
established within each State via electronic transmission. (76 FR 
76200).

    We do not believe that there is more burden associated with the 
collection of OASIS assessment data for a Medicare Managed Care patient 
than there is for a HH patient that receives traditional Medicare PPS 
benefits. The requirements for the HH RN or qualified therapist to 
perform an initial and comprehensive assessment and complete all 
required OASIS assessments is the same for all Medicare patients 
regardless of the type of Medicare benefits they receive. The 
completion of these activities is a condition of payment of both 
Medicare PPS and managed care claims.
    Comment: A commenter, while in general agreement with the 
establishment of a minimum reporting requirement for OASIS reporting, 
expressed disagreement with implementation of this requirement on July 
1, 2015. This commenter voiced the opinion that HHAs should first be 
informed of their current OASIS submission compliance rate, so they 
have an opportunity to improve, if below the 70 percent threshold. 
Another commenter suggested that CMS provide each HHA with their 
current OASIS reporting compliance rates to allow them to assess and 
understand their compliance levels and create a benchmark against which 
they can seek to improve over time. Another commenter requested that 
CMS publish the current rate of HHA compliance with OASIS reporting and 
recommended that the new compliance standard be based on incremental 
increases from those rates.
    Response: HHAs have been required to report OASIS data on 100 
percent of their Medicare beneficiary patients for the past 15 years as 
a CoP and as a condition of payment of their Medicare claims. Also, 
since 2007, HHAs have been required to report OASIS quality data on 100 
percent of their Medicare beneficiary patients in order to receive 
their full yearly market basket update.
    We do not agree that revealing sub-par provider compliance rates 
will be helpful to providers as several commenters have requested. Our 
establishment of the pay-for reporting performance requirement is a 
means by which we can measure HHA compliance with the established and 
long standing OASIS reporting requirements, while allowing HHAs a 2 
year period to bring their performance up to the 90 percent compliance 
level. As the OASIS reporting requirements have been in existence for 
15 years, HHAs should already possess knowledge of these requirements 
and know what they need to do to bring their agency into compliance. 
Furthermore, as OASIS reporting on each Medicare beneficiary is a 
requirement for payment of Medicare billing claims and also a HH CoP, 
our establishment of a minimum threshold for OASIS reporting should not 
place any new or additional burden on HHAs.
    Comment: Several commenters, while in general agreement with this 
proposal, requested that CMS provide clarification of the term 
``submission'' and inquired whether this requires both submission and 
acceptance of OASIS data by the state agency. Another commenter sought 
assurance that HHAs will not be penalized for delayed acceptance of 
OASIS data by state agency due to CMS server/IT issues.
    Response: The pay-for reporting performance requirements will go 
into effect on July 1, 2015. However, on January 1, 2015, the data 
submission process for OASIS will convert from the current state-based 
OASIS submission system to a new national OASIS submission system known 
as the Assessment Submission and Processing (ASAP) System.\26\ 
Therefore, the commenter's question about whether successful submission 
requires both submission and acceptance of OASIS data by the state 
agency is moot because the state-based OASIS submission system will not 
be in existence.
---------------------------------------------------------------------------

    \26\ The state-based OASIS submission system is scheduled to 
shut down permanently at 6:00 p.m. on December 26, 2014. Beginning 
at 12:00 a.m. midnight on January 1, 2015, HHAs must begin to submit 
their OASIS assessment via the national ASAP system. With the 
implementation of the ASAP system, HHAs will no longer submit OASIS 
assessment data to CMS via their state databases.
---------------------------------------------------------------------------

    On July 1, 2015, when the pay-for reporting performance requirement 
of 70 percent goes into effect, providers will be required to submit 
their OASIS assessment data into the ASAP system. Successful submission 
of an OASIS assessment will consist of the submission of the data into 
the ASAP system with a receipt of no fatal error messages. Error 
messages received during submission can be an indication of a problem 
that occurred during the submission process and could also be an 
indication that the OASIS assessment was rejected. Successful 
submission can be verified by ascertaining that the submitted 
assessment data resides in the national database after the assessment 
has met all of the quality standards for completeness and accuracy 
during the submission process.
    Should one or more OASIS assessments submitted by a HHA be rejected 
due to an IT/servers issue cause by CMS, we may, at our discretion, 
excuse the non-submission of OASIS data. We anticipate that such a 
scenario would rarely, if ever, occur. In the event that a HHA believes 
they were unable to submit OASIS assessments due to an IT/server issue 
on the part of CMS, the HHA should be prepared to provide any 
documentation or proof available which demonstrates that no fault on 
their part contributed to the failure of the OASIS records to transmit 
to CMS.
    Comment: Several commenters suggested that CMS provide 
comprehensive education on the new OASIS minimum reporting requirements 
for at least 6 months before it is effective. One commenter stated a 
belief that provider education is especially necessary since the 
failure to meet the submission threshold would result in a 2 percent 
reduction in payment for an entire calendar year.
    Response: We agree that educating HH providers about the new OASIS 
data submission requirements is very important and necessary. The 
initial performance period for the pay-for-reporting performance 
requirement will consist of July 1, 2015 through June 30, 2016. Prior 
to and during this performance period, we will schedule multiple Open 
Door Forums and webinars to educate HHA personnel about the pay-for-
reporting performance requirement program and the pay-for-

[[Page 66078]]

reporting performance QAO metric. Additionally, OASIS Education 
Coordinators (OECs) will be trained to provide state-level instruction 
on this program and metric. We have already posted a report which 
provides a detailed explanation of the methodology for this pay-for-
reporting QAO methodology. To view this report, go to: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/Home-Health-Quality-Reporting-Requirements.html. Training announcements and additional educational 
information related to the pay-for-reporting Performance Requirement 
will be provided in the near future on the HH Quality Initiatives Web 
page (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/index.html).
    Comment: Another commenter expressed an opinion that the terms of 
our proposed ``pay-for reporting performance requirement'' reporting 
are not clear. This commenter states the opinion that the definitions 
of both the numerator and the denominator in the proposed ratio are not 
clear.
    Response: We have posted a technical report which provides a 
detailed explanation of the methodology used for the pay-for-reporting 
QAO methodology. This report provides a detailed definition of both the 
numerator and denominator of the QAO metric, and also addresses the 
definition of quality vs. non quality assessments. In addition, this 
report provides an extensive analysis of the pay-for reporting 
methodology using 2012-2013 OASIS assessment data. To view this report, 
go to: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/Downloads/Pay-for-Reporting-Quality-Assessments-Only-Methodology.pdf.
    Comment: A commenter believes that it is not necessary for CMS to 
establish a minimum threshold for the submission of OASIS quality data 
because state surveyors have access to the OASIS data and, therefore, 
have ways to ensure HHAs are in compliance with OASIS data submission 
requirements.
    Response: We respectfully disagree with this commenter. State 
surveyors would not be able to ensure compliance with the OASIS data 
submission requirements for several reasons. First, state surveyors 
have limited access to the OASIS data. Second, state surveyors do not 
have access to the claims/billing information that is necessary to 
determine if complete quality episodes have been submitted for each 
patient. Third, compliance with OASIS quality reporting requirements 
must be assessed on an annual basis in order to determine whether an 
HHA will receive their full market basket update or the 2 percentage 
point reduction for non-compliance. Therefore, use of state surveyors 
to perform this task is not possible.
    Comment: A commenter recommended that CMS provide HHAs with a 30-
day period in which to review CMS's assessment of their compliance and 
submit corrections if necessary.
    Response: Such a process has been in place for the HH QRP for some 
time. This process is referred to as the ``reconsideration process.''
    The OASIS data collection period runs from July 1st each year to 
June 30th of the following year. At the conclusion of each reporting 
period, we will assess the type and amount of OASIS data submitted by 
each HHA during the reporting period to determine whether each provider 
met the quality reporting requirements. HHAs that do not meet the 
requirements for that reporting period will be sent a ``notice of non-
compliance'' letter by their Medicare Administrative Contractor (MAC). 
A HHA will have 30 days from the date of the ``notice of non-
compliance'' letter to file a request for reconsideration to us. The 
HHA must tell us why they think the finding of non-compliance was 
incorrect and provide any documentation that proves they did meet the 
reporting requirements for that reporting period.
    The reconsideration process can also serve to provide notice to 
HHAs who fall below the pay-for-reporting performance requirement for a 
given reporting period of their OASIS compliance score for the 
reporting period. The HHA will then have 30 days to submit a request 
for reconsideration if they disagree with the compliance score provided 
by us. The HHA will also have the opportunity to submit evidence on 
their behalf of a higher compliance score.
    Comment: A commenter suggested that CMS should include an exemption 
from the OASIS minimum reporting requirements for small agencies 
similar to that given with the HH-CAHPS requirements.
    Response: Small HHAs are exempt from reporting HHCAHPS for several 
reasons. First, the data is not collected using OASIS, but is instead 
collected by the HHCAHPS, which is a non-payment related data 
collection instrument. Second, HHCAHPS data are collected for the 
purpose for quality monitoring. If data were collected from very small 
HHAs, there is a high probability that protected patient information or 
confidential information could be identified simply because of the 
small number of responses. Therefore, the granting of an exemption to 
small HHAs is done to protect the integrity of the data.
    However, the reporting of OASIS assessment data on each patient by 
HHAs is mandated by section 1895(b)(3)(B)(v)(II) of the Act. This 
statute required 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.'' Section 1895(b)(3)(B)(v)(I) of the Act 
states that ``for 2007 and each subsequent year, in the case of a home 
health agency that does not submit data to the Secretary in accordance 
with sub clause (II) with respect to such a year, the home health 
market basket percentage increase applicable under such clause for such 
year shall be reduced by 2 percentage points.''
    None of the statutes or Medicare regulations related to OASIS 
reporting exempt small HHAs from the OASIS reporting requirements. In 
fact, we would not be able to provide such an exemption, as submission 
of OASIS assessments is a condition of payment and condition of 
participation in the Medicare program. Any HHA (regardless of size) 
that wants to bill for HH care of a Medicare patient must submit the 
proper OASIS assessments in order to file valid claims. Also, any HHA 
(regardless of size) that wants to participate in the Medicare program, 
must submit the required type and amount of OASIS assessments for their 
Medicare patients.
    Comment: One commenter, though in agreement with the timeframes and 
the minimum scores proposed by CMS, expressed a belief that CMS should 
establish a disaster/exceptional circumstances policy to address 
situations beyond the control of the HHA that could result in the 
inability to submit OASIS data in a timely manner. This commenter noted 
that such a policy has been established in other post-acute care 
settings.
    Response: We thank this commenter for their support of our proposal 
to establish a pay-for-reporting performance requirement. However, the 
commenter's suggestion that CMS establish an exceptional circumstances/
disaster waiver policy for the HH QRP is outside the scope of the 
proposals that made in the proposed rule and

[[Page 66079]]

therefore, we are unable to comment on this suggestion. We will however 
take this suggestion under advisement.
    Comment: One commenter expressed concern that the proposal to 
establish a ``pay-for-reporting'' performance requirement for OASIS 
reporting is actually based on a ``pay for performance'' model.
    Response: The ``pay-for-reporting performance requirement'' 
discussed above is not a pay-for-performance model. This performance 
requirement simply sets a standard for the type and minimum number of 
OASIS assessments that each HHA must submit during a 12 month reporting 
period. If a HHA submits the required number of OASIS assessments 
during the 12 month reporting period, they will receive their full 
market basket update for the following calendar year.
    Final Decision: After consideration of the public comments 
received, we are adopting as final, our proposal to establish a pay-
for-reporting performance requirement, with the modifications stated 
below:
     For episodes beginning on or after July 1st, 2015 and 
before June 30th, 2016, HHAs must score at least 70 percent on the QAO 
metric of pay-for-reporting performance requirement or be subject to a 
2 percentage point reduction to their market basket update for CY 2017.
     We defer for now from setting a minimum OASIS reporting 
requirement for the 2nd and subsequent years of the OASIS ``pay-for-
reporting'' performance requirement program. However, we will consider 
increasing the requirement in subsequent years. We anticipate rates of 
at least 80 percent or higher, not exceed 90 percent, in years 2 and 3.
d. Updates to HH QRP Measures Which Are Made as a Result of Review by 
the NQF Process
    In the proposed rule, we noted that section 1895(b)(3)(B)(v)(II) of 
the Act generally requires the Secretary to adopt measures that have 
been endorsed by the entity with a contract under section 1890(a) of 
the Act. This contract is currently held by the NQF. The NQF is a 
voluntary consensus standard-setting organization with a diverse 
representation of consumer, purchaser, provider, academic, clinical, 
and other health care stakeholder organizations. The NQF was 
established to standardize health care quality measurement and 
reporting through its consensus development process.\27\
---------------------------------------------------------------------------

    \27\ For more information about the NQF Consensus Development 
Process, please visit the NQF Web site using the following link: 
http://www.qualityforum.org/Measuring_Performance/Consensus_Development_Process.aspx.
---------------------------------------------------------------------------

    The NQF undertakes to: (1) Review new quality measures and national 
consensus standards for measuring and publicly reporting on 
performance; (2) provide for annual measure maintenance updates to be 
submitted by the measure steward for endorsed quality measures; (3) 
provide for measure maintenance endorsement on a 3-year cycle; (4) 
conduct a required follow-up review of measures with time limited 
endorsement for consideration of full endorsement; and (5) conduct ad 
hoc reviews of endorsed quality measures, practices, consensus 
standards, or events when there is adequate justification for a review. 
In the normal course of measure maintenance, the NQF solicits 
information from measure stewards for annual reviews to review measures 
for continued endorsement in a specific 3-year cycle. In this measure 
maintenance process, the measure steward is responsible for updating 
and maintaining the currency and relevance of the measure and for 
confirming existing specifications to the NQF on an annual basis. As 
part of the ad hoc review process, the ad hoc review requester and the 
measure steward are responsible for submitting evidence for review by a 
NQF Technical Expert panel which, in turn, provides input to the 
Consensus Standards Approval Committee which then makes a decision on 
endorsement status and/or specification changes for the measure, 
practice, or event.
    Through the NQF's measure maintenance process, the NQF endorsed 
measures are sometimes updated to incorporate changes that we believe 
do not substantially change the nature of the measure. With respect to 
what constitutes a substantive versus a non-substantive change, we 
expect to make this determination on a measure-by-measure basis. 
Examples of such non-substantive changes might include updated 
diagnosis or procedure codes, medication updates for categories of 
medications, broadening of age ranges, and changes to exclusions for a 
measure. We believe that non-substantive changes may include updates to 
measures based upon changes to guidelines upon which the measures are 
based. These types of maintenance changes are distinct from more 
substantive changes to measures that result in what can be considered 
new or different measures, and that they do not trigger the same agency 
obligations under the Administrative Procedure Act.
    We proposed that, in the event that the NQF makes updates to an 
endorsed measure that we have adopted for the HH QRP in a manner that 
we consider to not substantially change the nature of the measure, we 
will use a sub-regulatory process to incorporate those updates to the 
measure specifications that apply to the program. Specifically, we 
stated that we would revise the information that is posted on the CMS 
Home Health Quality Initiatives Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html so that it clearly 
identifies the updates and provides links to where additional 
information on the updates can be found. We also stated that we would 
refer HHAs to the NQF Web site for the most up-to date information 
about the quality measures (http://www.qualityforum.org/). In addition, 
we stated that we would provide sufficient lead time for HHAs to 
implement the changes where changes to the data collection systems 
would be necessary.
    We further proposed to use the traditional ``notice and comment'' 
rulemaking process to adopt changes to measures that we consider to 
substantially change the nature of the measure. Examples of changes 
that we might consider to be substantive would be those in which the 
changes are so significant that the measure is no longer the same 
measure, or when a standard of performance assessed by a measure 
becomes more stringent, such as changes in acceptable timing of 
medication, procedure/process, test administration, or expansion of the 
measure to a new setting. We believed that our proposal adequately 
balances our need to incorporate NQF updates to NQF endorsed measures 
used in the HH QRP in the most expeditious manner possible, while 
preserving the public's ability to comment on updates to measures that 
so fundamentally change an endorsed measure that it is no longer the 
same measure that we originally adopted.
    We noted that a similar policy was adopted for the Hospital IQR 
Program, the PPS-Exempt Cancer Hospital (PCH) Quality Reporting 
Program, the Long-Term Care Hospital Quality Reporting (LTCHQR) 
Program, the Inpatient Rehabilitation Facility Quality Reporting 
Program (IRF QRP) and the Inpatient Psychiatric Facility (IPF) Quality 
Reporting Program.
    We invited public comment on our proposal to adopt a policy in 
which NQF changes to a measure that are non-substantive in nature will 
be adopted using a sub-regulatory process and NQF

[[Page 66080]]

changes that are substantive in nature will be adopted through the 
rulemaking process. We received the following public comments in 
response to this proposal:
    Comment: One commenter was opposed to our proposal to use sub-
regulatory guidance to incorporate NQF updates to previously endorsed 
measures unless NQF itself, in communication accompanying such updates, 
affirms that such updates do not substantially change the nature of the 
measure.
    Response: We believe it unlikely that NQF will undertake to make a 
determination as to whether a change to a measure is substantive or 
non-substantive. This is a policy determination that NQF is likely to 
leave to the discretion of the measure steward. In the event that a 
measure that has been previously adopted for use in the HH QRP is 
updated in a manner that we determine to be non-substantive in nature, 
we will ensure that stakeholders are fully informed about these changes 
and that they have been afforded adequate lead time to make any 
necessary changes. The NQF process requires an ad-hoc review of any 
measures that undergo substantive changes, and any party may request 
such an ad hoc review. If stakeholders believe a change to measures is 
substantive, they are encouraged to participate in the NQF process.
    Comment: Several commenters expressed a concern that the definition 
of what changes are considered to substantive and what changes are non-
substantive is not clear.
    Response: As noted above, with respect to what constitutes a 
substantive versus a non-substantive change, we expect to make this 
determination on a measure-by-measure basis. Examples of such non-
substantive changes might include updated diagnosis or procedure codes, 
medication updates for categories of medications, broadening of age 
ranges, and changes to exclusions for a measure. We believe that non-
substantive changes may include updates to measures based upon changes 
to guidelines upon which the measures are based. These types of 
maintenance changes are distinct from more substantive changes to 
measures that result in what can be considered new or different 
measures, and that they do not trigger the same agency obligations 
under the Administrative Procedure Act.
    Comment: One commenter expressed the opinion that CMS should 
develop a more comprehensive list of substantive and non-substantive 
change in a measure, and further suggested that stakeholders should be 
given the opportunity to submit comments on the list for CMS to 
consider.
    Response: We appreciate the commenters request for a more 
comprehensive list of substantive and non- substantive change in a 
measure, and the opportunity to submit comments on such lists. However, 
as noted above, we believe that our proposal adequately balances our 
need to incorporate NQF updates to NQF endorsed measures used in the HH 
QRP in the most expeditious manner possible, while preserving the 
public's ability to comment on updates to measures that so 
fundamentally change an endorsed measure that it is no longer the same 
measure that we originally adopted. We noted that a similar policy was 
adopted for the Hospital Inpatient Quality Reporting (IQR) Program, the 
PPS-Exempt Cancer Hospital (PCH) Quality Reporting Program, the Long-
Term Care Hospital Quality Reporting (LTCHQR) Program, the Inpatient 
Rehabilitation Facility Quality Reporting Program (IRF QRP) and the 
Inpatient Psychiatric Facility (IPF) Quality Reporting Program.
    Comment: A commenter expressed concern that most HH providers are 
not aware of the NQF Consensus Development process, and therefore may 
not have the opportunity to comment on changes to measures.
    Response: The NQF regularly maintains its endorsed measures through 
annual and triennial reviews, which may result in updates to the NQF-
endorsed measures. HHAs can go to the NQF Web page for information 
about the measure endorsement process. The NQF process is open to the 
public and transparent and incorporates an opportunity for public 
comment and engagement in the measure maintenance process.
    In the event that any measure that has been previously adopted for 
use in the HH QRP is updated through the NQF process, we will ensure 
that stakeholders are fully informed about these changes and that they 
have been afforded adequate lead time to make any necessary changes. 
Some of the methods that we will use to keep our stakeholders informed 
include: (1) Posting of information on the HH Quality Initiatives Web 
page; (2) holding special open door forums; (3) posting information in 
the CMS weekly E-News publication; and (4) responding to provider 
questions. While we expect to provide notice to stakeholders when we 
intend to seek NQF's review of measures, the NQF process also 
incorporates an opportunity for public comment and engagement in the 
measure maintenance process.
    Comment: Another commenter recommended that CMS notify HH providers 
when NQF, in their Consensus Development Process, is asking for input 
on NQF-endorsed measures used by HHAs, in order to give them an 
opportunity to comment on a change in the measure.
    Response: We anticipate that in most cases such changes will occur, 
not during the measure development process, but after a measure has 
already been endorsed by NQF and has been adopted for use in the HH 
QRP. Changes to adopted measures could take place during yearly measure 
maintenance or during the 3 year measure review process.
    We acknowledge that the NQF post-endorsement reviews may provide 
limited opportunity for provider engagement in the process. Therefore, 
we will make every effort to keep stakeholders informed about reviews 
to HH quality measures. Some of the methods that we will use to keep 
our stakeholders informed include: (1) Posting of information on the HH 
Quality Initiatives Web page; (2) holding special open door forums; (3) 
posting information in the CMS weekly E-News publication; and (4) 
responding to provider questions.
    Comment: One commenter expressed the concern about whether changes 
labeled as non-substantive changes are truly ``non-substantive''. This 
commenter proposed that CMS convene a panel of HH experts, drawn from 
individuals representing various regions of the country and types of 
agencies (urban, rural, profit, non-profit, governmental, etc.) with 
experience in the industry, to offer their opinion on whether changes 
to a measure are truly ``non-substantive'' in nature. The commenter 
further suggested that the panel be allowed to consider the changes for 
``two cycles of consideration'' and if the panel supports the changes, 
then the sub-regulatory could be used.
    Response: In the proposed rule, we proposed to establish a policy 
that ``in the event that the NQF makes updates to an endorsed measure 
that we have adopted for the HH QRP in a manner that we consider to not 
substantially change the nature of the measure, we will use a sub-
regulatory process to incorporate those updates to the measure 
specifications that apply to the program.'' It is our intent that this 
policy apply to existing NQF-endorsed quality measures that have 
already been adopted for use in the HH QRP. These measures have 
undergone the measure

[[Page 66081]]

development and endorsement process which typically includes multiple 
opportunities for input from stakeholders. Examples of stakeholder 
involvement include, but are not limited to: (1) Expert opinions 
obtained from a technical expert panel consisting of experts drawn from 
the HH community, (2) public comments solicited during the measure 
development process, and (3) multiple opportunities to provide input 
during the NQF endorsement process. HHAs will have multiple 
opportunities to become familiar with and provide their input related 
to the existing HH quality measures by the time they come up for the 
NQF one year measure maintenance review or the 3 year re-endorsement 
review.
    Because the NQF process is open and transparent and readily 
available to HHAs, they can learn of possible changes existing HH 
quality measure as a result of the NQF process and provide their input 
should they choose to do so. Furthermore, the NQF process provides for 
a comprehensive and in-depth review of all quality measures under 
review (including changes to these measures) by a highly qualified 
panel of experts in the field of home health care. For these reasons, 
we do not believe it is necessary to convene another panel of home 
health experts, as suggested by this commenter, to seek an opinion on 
whether changes to a measure are truly ``non-substantive'' in nature.
    This commenter further suggested that the expert panel be allowed 
to consider the changes for ``two cycles of consideration'' and if the 
panel supports the changes, then the sub-regulatory process should be 
used. It is not clear how this commenter defines ``two cycles of 
consideration'', however, it is not feasible for CMS to allow a 
decision regarding changes to an existing quality measure to go 
unresolved for a prolonged period of time. It is necessary for CMS to 
immediately assess any changes made to existing quality measures to 
determine if changes to the data collection process, data collection 
instrument, or technical specifications must be made. In addition CMS 
must determine if provider training or educational materials are 
required.
    Final Decision: After consideration of the public comments we 
received, we are adopting final a policy to: (1) Utilize a sub-
regulatory process to incorporate updates to the HH QRP quality 
measures that are not substantive in nature; and (2) continue use of 
the rulemaking process to adopt changes to measures that we consider to 
be substantive in nature.
e. Home Health Care CAHPS[supreg] Survey (HHCAHPS)
    In the CY 2014 HH PPS final rule (78 FR 72294), we stated that the 
HH quality measures reporting requirements for Medicare-certified 
agencies includes the Home Health Care CAHPS[supreg] (HHCAHPS) Survey 
for the CY 2014 APU. We are continuing to maintain the stated HHCAHPS 
data requirements for CY 2015 that have been set out in CY 2014 and in 
previous rules. We note that home health agencies and HHCAHPS survey 
vendors sometimes refer to the Home Health Care CAHPS[supreg] Survey as 
``HH-CAHPS'' rather than ``HHCAHPS''.
(1) Background and Description of HHCAHPS
    As part of the HHS Transparency Initiative, we implemented a 
process to measure and publicly report patient experiences with home 
health care, using a survey developed by the Agency for Healthcare 
Research and Quality's (AHRQ's) Consumer Assessment of Healthcare 
Providers and Systems (CAHPS[supreg]) program and endorsed by the NQF 
in March 2009 (NQF Number 0517). The HHCAHPS survey is part of a family 
of CAHPS[supreg] surveys that asks patients to report on and rate their 
experiences with health care. The Home Health Care CAHPS[supreg] 
(HHCAHPS) survey presents home health patients with a set of 
standardized questions about their home health care providers and about 
the quality of their home health care.
    Prior to this survey, there was no national standard for collecting 
information about patient experiences that will enable valid 
comparisons across all HHAs. The history and development process for 
HHCAHPS has been described in previous rules and is also available on 
the official HHCAHPS Web site at https://homehealthcahps.org and in the 
annually-updated HHCAHPS Protocols and Guidelines Manual, which is 
downloadable from https://homehealthcahps.org.
    For public reporting purposes, we report five measures from the 
HHCAHPS Survey--three composite measures and two global ratings of care 
that are derived from the questions on the HHCAHPS survey. The publicly 
reported data are adjusted for differences in patient mix across HHAs. 
We update the HHCAHPS data on Home Health Compare on www.medicare.gov 
quarterly. Each HHCAHPS composite measure consists of four or more 
individual survey items regarding one of the following related topics:
     Patient care (Q9, Q16, Q19, and Q24);
     Communications between providers and patients (Q2, Q15, 
Q17, Q18, Q22, and Q23); and
     Specific care issues on medications, home safety, and pain 
(Q3, Q4, Q5, Q10, Q12, Q13, and Q14).
    The two global ratings are the overall rating of care given by the 
HHA's care providers (Q20), and the patient's willingness to recommend 
the HHA to family and friends (Q25).
    The HHCAHPS survey is currently available in English, Spanish, 
Chinese, Russian, and Vietnamese. The OMB number on these surveys is 
the same (0938-1066). All of these surveys are on the Home Health Care 
CAHPS[supreg] Web site, https://homehealthcahps.org. We continue to 
consider additional language translations of the HHCAHPS in response to 
the needs of the home health patient population.
    All of the requirements about home health patient eligibility for 
the HHCAHPS survey and conversely, which home health patients are 
ineligible for the HHCAHPS survey are delineated and detailed in the 
HHCAHPS Protocols and Guidelines Manual, which is downloadable at 
https://homehealthcahps.org. Home health patients are eligible for 
HHCAHPS if they received at least two skilled home health visits in the 
past 2 months, which are paid for by Medicare or Medicaid.
    Home health patients are ineligible for inclusion in HHCAHPS 
surveys if one of these conditions pertains to them:
     Are under the age of 18;
     Are deceased prior to the date the sample is pulled;
     Receive hospice care;
     Receive routine maternity care only;
     Are not considered survey eligible because the state in 
which the patient lives restricts release of patient information for a 
specific condition or illness that the patient has; or
     No Publicity patients, defined as patients who on their 
own initiative at their first encounter with the HHAs make it very 
clear that no one outside of the agencies can be advised of their 
patient status, and no one outside of the HHAs can contact them for any 
reason.
    We stated in previous rules that Medicare-certified HHAs are 
required to contract with an approved HHCAHPS survey vendor. This 
requirement continues, and Medicare-certified agencies also must 
provide on a monthly basis a list of their patients served to their 
respective HHCAHPS survey vendors. Agencies are not allowed to 
influence at all how their patients respond to the HHCAHPS survey.

[[Page 66082]]

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

[[Page 66083]]

period of April 1, 2014, through March 31, 2015 request an exemption 
from the HHCAHPS data collection and submission requirements for the CY 
2017 APU by completing the CY 2017 HHCAHPS Participation Exemption 
Request form. Agencies with fewer than 60 HHCAHPS-eligible, 
unduplicated or unique patients in the period of April 1, 2014, through 
March 31, 2015, are required to submit their patient counts on the CY 
2017 HHCAHPS Participation Exemption Request form posted on https://homehealthcahps.org from April 1, 2015, to 11:59 p.m., e.s.t. on March 
31, 2016. This deadline for the exemption form is firm, as are all of 
the quarterly data submission deadlines.
(6) HHCAHPS Reconsiderations and Appeals Process
    HHAs should always monitor their respective HHCAHPS survey vendors 
to ensure that vendors submit their HHCAHPS data on time, by accessing 
their HHCAHPS Data Submission Reports on https://homehealthcahps.org. 
This helps HHAs ensure that their data are submitted in the proper 
format for data processing to the HHCAHPS Data Center.
    We continue HHCAHPS oversight activities as finalized in the 
previous rules. In the CY 2013 HH PPS final rule (77 FR 6704, 67164), 
we codified the current guideline that all approved HHCAHPS survey 
vendors must fully comply with all HHCAHPS oversight activities. We 
included this survey requirement at Sec.  484.250(c)(3).
    We continue the HHCAHPS reconsiderations and appeals process that 
we have finalized and that we have used for all prior periods cited in 
the previous rules, and utilized in the CY 2012 through CY2014 annual 
payment update recommendations and determinations. We have described 
the HHCAHPS reconsiderations and appeals process requirements in the 
Technical Direction Letter that we send to the affected HHAs annually 
in September. HHAs have 30 days from their receipt of the Technical 
Direction Letter informing them that they did not meet the HHCAHPS 
requirements to reply to CMS with documentation that supports their 
requests for reconsideration of the annual payment update to CMS. It is 
important that the affected HHAs send in comprehensive information in 
their reconsideration letter/package because we will not contact the 
affected HHAs to request additional information or to clarify 
incomplete or inconclusive information. If clear evidence to support a 
finding of compliance is not present, then the 2 percent reduction in 
the APU will be upheld. If clear evidence of compliance is present, 
then the 2 percent reduction for the APU will be reversed. We will 
notify affected HHAs by December 31st of the decisions that affect 
payments in the annual year beginning on January 1st. If we determine 
to uphold the 2 percent reduction for the annual payment update, the 
affected HHA may further appeal the 2 percent reduction via the 
Provider Reimbursement Review Board (PRRB) appeals process, which is 
described in the December letter.
    The following is a summary of the comments we received regarding 
HHCAHPS:
    Comment: A commenter stated that HHCAHPS is an unfunded 
administrative mandate that entails financial and resource burdens to 
HHAs.
    Response: This comment is outside the scope of the proposed rule. 
We finalized the collection of HHCAHPS in the CY2014 HH PPS Final Rule 
published in the Federal Register on December 2, 2013 (78 FR 72256). 
Please see the comments received and our responses on pages 72295 and 
72296.
    Comment: A commenter stated that a more timely way of collecting 
and publicly reporting the HHCAHPS survey data needs to be developed.
    Response: We understand this concern to collect the data in a 
timely manner. This is why the patients are sampled in the month 
following the two months of their care. We have a very strict timetable 
for how the 42-day survey data collection period is to be implemented, 
as described in the HHCAHPS Protocols and Guidelines Manual that is 
posted on https://homehealthcahps.org. We also allow time for the data 
received in from thousands of home health agencies to be processed and 
analyzed to ensure comparisons that are reliable and valid. We apply 
patient mix adjustment to the HHCAHPS data to allow for national 
comparisons. The best way to understand the reasons for our detailed 
survey implementation procedures is to examine the relevant sections in 
the HHCAHPS Protocols and Guidelines Manual which is posted on https://homehealthcahps.org.
    HHAs may always request their respective HHCAHPS survey vendors to 
provide continual feedback on particular questions of the survey so 
that they are kept apprised of any issues that their patients are 
reporting on the HHCAHPS surveys. When HHAs contract with their vendors 
about the terms of their HHCAHPS data collection and processing 
processes, they may arrange for ways to receive survey feedback 
information in real-time.
    Final Decision: We are not recommending any changes as a result of 
comments we received.
(7) For Further Information on the HHCAHPS Survey
    We strongly encourage HHAs to learn about the HHCAHPS Survey and to 
view the official Web site for HHCAHPS at https://homehealthcahps.org. 
For further information, HHAs may also send email correspondence to the 
HHCAHPS Survey Coordination Team at HHCAHPS@rti.org; or telephone toll-
free (1-866-354-0985) for more information about HHCAHPS.
3. CY 2015 Home Health Wage Index
a. Background
    Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the 
Secretary to provide appropriate adjustments to the proportion of the 
payment amount under the HH PPS that account for area wage differences, 
using adjustment factors that reflect the relative level of wages and 
wage-related costs applicable to the furnishing of HH services. Since 
the inception of the HH PPS, we have used inpatient hospital wage data 
in developing a wage index to be applied to HH payments. We proposed to 
continue this practice for CY 2015, as we continue to believe that, in 
the absence of HH-specific wage data, using inpatient hospital wage 
data is appropriate and reasonable for the HH PPS. Specifically, we 
proposed to continue to use the pre-floor, pre-reclassified hospital 
wage index as the wage adjustment to the labor portion of the HH PPS 
rates. For CY 2015, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2010 and before 
October 1, 2011 (FY 2011 cost report data).
    We will 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). In the CY 2006 HH PPS final 
rule (70 FR 68132), we adopted revised labor market area definitions as 
discussed in the OMB Bulletin No. 03-04 (June 6, 2003). This bulletin 
announced revised definitions for MSAs and the creation of micropolitan 
statistical areas and core-based statistical areas (CBSAs). The 
bulletin is available online at www.whitehouse.gov/omb/bulletins/b03-04.html. In adopting the CBSA

[[Page 66084]]

geographic designations, we provided a one-year transition in CY 2006 
with a blended wage index for all sites of service. For CY 2006, the 
wage index for each geographic area consisted of a blend of 50 percent 
of the CY 2006 MSA-based wage index and 50 percent of the CY 2006 CBSA-
based wage index. We referred to the blended wage index as the CY 2006 
HH PPS transition wage index. As discussed in the CY 2006 HH PPS final 
rule (70 FR 68132), since the expiration of this one-year transition on 
December 31, 2006, we have used the full CBSA-based wage index values.
    In the CY 2015 HH PPS proposed rule, we proposed to continue to use 
the same methodology discussed in the CY 2007 HH PPS final rule (71 FR 
65884) to address those geographic areas in which there are no 
inpatient hospitals, and thus, no hospital wage data on which to base 
the calculation of the CY 2015 HH PPS wage index. For rural areas that 
do not have inpatient hospitals, we would use the average wage index 
from all contiguous CBSAs as a reasonable proxy. For FY 2015, there are 
no rural geographic areas without hospitals for which we would apply 
this policy. For rural Puerto Rico, we would not apply this methodology 
due to the distinct economic circumstances that exist there (for 
example, due to the close proximity to one another of almost all of 
Puerto Rico's various urban and non-urban areas, this methodology would 
produce a wage index for rural Puerto Rico that is higher than that in 
half of its urban areas). Instead, we would continue to use the most 
recent wage index previously available for that area. For urban areas 
without inpatient hospitals, we would 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 2015, the only urban area without inpatient 
hospital wage data is Hinesville, Georgia (CBSA 25980).
    A summary of the comments we received regarding the wage index and 
our responses to those comments appears below. Comments on the specific 
proposal to use revised OMB delineations as part of the wage index are 
discussed further below.
    Comment: A commenter is concerned about the policy for imputing a 
rural wage index in instances where there is no hospital. The commenter 
is concerned about the impact for Texas and sizable rural areas, where 
some rural geographic areas that almost certainly do not have an 
inpatient hospital, but are significant metropolitan areas such as 
Dallas and Houston. The commenter asserts that wage rates vary 
considerably in Texas between these urban and rural areas and urges CMS 
to be extremely cautious in this pursuit and analyze the effects of 
such assumptions in the methodology.
    Response: As stated previously, there are currently no rural areas 
without hospitals. Therefore, the wage index proxy is not applicable 
for any rural area in CY 2015. We appreciate the comment and assure the 
commenter that if the need for a rural wage index proxy should arise, 
we would re-evaluate the policy in order to avoid possible unintended 
consequences. As such, we would propose any potential revision to this 
policy through rulemaking.
    Comment: Commenters stated that hospitals have a competitive 
advantage in being able to apply for geographic reclassification to 
other CBSAs and being able to apply for the rural floor and that this 
creates a competitive advantage for hospitals in recruiting and 
retaining nurses and therapists. Commenters stated that the wage index 
can be very volatile with large decreases and increases in an area 
index value from one year to the next. Commenters stated that all 
provider sectors should use the same index with the same rights of 
reclassification, exceptions, and appeals. Commenters urged us to work 
with home health providers to develop regulatory and legislative 
remedies to the continuing problem of wage index disparity. One 
commenter stated that the same MSAs continue to be rewarded with higher 
wage indexes, while MSAs like Asheville, NC and rural NC continue to be 
penalized with lower wage indexes. This commenter states that the 
current system rewards MSAs that have inefficient and inappropriate 
hospital costs, and is very volatile with large decreases and increases 
in an MSA from one year to the next. One commenter noted that CMS is 
reviewing the entire wage index system and considering a move to a 
Commuting-Based Wage Index that would set hospital-specific wage 
indices. The commenter urges CMS to expedite that review and implement 
a system that not only recognizes variations between localities, but 
also treats all provider types within a local market equitably. In the 
meantime, commenters urge CMS to implement an immediate policy to limit 
the wage index variations among provider types within CBSA's and 
adjacent markets. Another stated that unexpected increases and 
decreases in wage index values should be spread over two or more years 
to reduce the rapid escalation or decline in wage index values and thus 
create more payment stability in a budget neutral fashion. The 
commenter specifically requests CMS respond to this broader 
recommendation. One commenter urged CMS to adjust the 2015 home health 
agency wage index to reflect a policy to limit the wage index disparity 
between provider types within a given CBSA to no more than 10%.
    Response: Consistent with our previous responses to these recurring 
comments (most recently published in the CY 2014 HH PPS final rule (78 
FR 72302)), the regulations that govern the HH PPS do not provide a 
mechanism for allowing HHAs to seek geographic reclassification or to 
utilize the rural floor provisions that exist for IPPS hospitals. The 
rural floor provision in section 4410 of the Balanced Budget Act of 
1997 (BBA) (Pub. L. 105-33) is specific to hospitals. The 
reclassification provision found in section 1886(d)(10) of the Act is 
also specific to hospitals. CMS is exploring opportunities to reform 
the wage index. We refer readers to the CMS Web site at: www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html). We do not believe it would be appropriate to limit wage 
index differences or changes which are above or below a given level or 
to spread changes in wage index values over multiple years. The wage 
index values are updated annually and applying these types of changes 
would make the area wage index less reflective of the geographic area's 
wages.
    Comment: A commenter believes that linking home health wage index 
adjustments to the pre-floor, pre-reclassified hospital wage index may 
have been acceptable when this index only impacted the home health 
payment caps under cost reimbursement that most providers never 
reached. However, the commenter believes that this measure is imprecise 
to adjust every home health payment under HHPPS and creates clear and 
meaningful inaccuracies. Previously, CMS responded to this comment by 
citing a historical precedent of 20 years ago when a home health 
specific wage index was proposed by CMS as part of the payment capping 
mechanism and was opposed by many home health agencies. The commenter 
requests that CMS agree to collaborate with the home health community 
to develop a home health specific wage index based on current data on 
the wage categories used in home health care today and the related 
costs of this labor. An additional commenter also suggested that CMS 
pursue a home health specific wage index. Another commenter suggested 
that a new wage system could be

[[Page 66085]]

considered for non-hospital provider sectors.
    Response: Developing a wage index that utilizes data specific to 
HHAs would require us to engage resources in an audit process. In order 
to establish a home health specific wage index, we would need to 
collect data that is specific to home health services. This is not 
currently feasible due to the volatility of existing home health wage 
data and the significant amount of resources that would be required to 
improve the quality of that data. Furthermore, we believe the 
collection of home health specific wage data would place a significant 
amount of additional burden on HHAs. As discussed above, we continue to 
believe that in the absence of home health specific wage data, using 
the pre-floor, pre-reclassified hospital wage data is appropriate and 
reasonable for the HH PPS.
    Comment: A commenter expressed concern that when a hospital appeals 
or requests exceptions to what they believe are errors in the wage 
data, that corrections are not granted. The commenter asked us to 
reconsider this matter and believes that all providers should have the 
right to appeal or request exceptions when they suspect that there are 
errors in the data on which their rates will be based.
    Response: When a hospital submits an appeal of its wage data, CMS 
ensures that the appeal goes through the proper protocol and is given 
consideration. Not every appeal will warrant being granted. When 
appeals are valid, CMS take immediate action to correct the wage data 
and publish corrections to the wage indices for all provider types.
    Comment: A commenter is concerned that the home health wage index 
is based on inpatient hospital wage data, which in some cases contains 
errors that can result in significant fluctuations in the HHA wage 
index. Based on the Hospital Wage Index Development Timetable, there 
are specific deadlines for hospitals to report errors in the wage data 
to their MAC, CMS emphasizes that data that is incorrect in the 
preliminary hospital wage index data PUFs, but for which no correction 
request was received by the deadline, will not be changed for inclusion 
in the wage index. Another commenter stated that the inaction of a 
hospital or a mishandling of data by CMS or the MAC should not result 
in the lowering of an area's wage index value and, therefore, lowering 
Medicare payments for all HHAs in the area. Other commenters stated 
that inaccurate cost report data results in unpredictable year to year 
swings in the wage index values. Commenters are concerned that HHAs are 
subject to a wage index database that they have no control over. As 
such, HHAs are at the mercy of hospital data submission and have no 
means to correct erroneous data or avoid the impact of any unusual 
compensation changes in a hospital.
    Response: We believe that the mechanisms we employ ensure the 
accuracy of the hospital cost report data and resulting wage index. Our 
contractors perform desk reviews of all hospital cost report Worksheet 
S-3 wage data. In addition, we perform edits on the wage data to 
further ensure the accuracy and validity of the wage data. Any provider 
may submit comments on the hospital wage index during the annual IPPS 
rulemaking. We believe that our review processes result in an accurate 
collection of wage data.
    Comment: A commenter requested that CMS remove six specific 
counties in New Jersey from the New York City wage index.
    Response: We believe that the OMB standards for delineating 
Metropolitan and Micropolitan Statistical Areas are appropriate for 
determining wage area differences. We do not believe it would be 
appropriate to make exceptions and carve out specific areas from the 
OMB delineations. The 2010 Standards for Delineating Metropolitan and 
Micropolitan Statistical Areas were published in a Federal Register 
Notice on June 28, 2010 (75 FR 37246).
    Final Decision: After considering the comments received, for the 
reasons discussed above and in the CY 2015 HH PPS proposed rule (79 FR 
38366), we are finalizing our proposal to continue to use the pre-
floor, pre-reclassified hospital inpatient wage index data to develop 
the HH PPS wage index. For CY 2015, the updated wage data are for 
hospital cost reporting periods beginning on or after October 1, 2010 
and before October 1, 2011 (FY 2011 cost report data).
b. Update
    On February 28, 2013, OMB issued Bulletin No. 13-01, announcing 
revisions to the delineations of MSAs, Micropolitan Statistical Areas, 
and CBSAs, and guidance on uses of the delineation of these areas. This 
bulletin is available online at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin states that 
it ``provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010, in the Federal Register (75 FR 37246-37252) and Census Bureau 
data.''
    While the revisions OMB published on February 28, 2013 are not as 
sweeping as the changes made when we adopted the CBSA geographic 
designations for CY 2006, the February 28, 2013 bulletin does contain a 
number of significant changes. For example, there are new CBSAs, urban 
counties that have become rural, rural counties that have become urban, 
and existing CBSAs that have been split apart.
    As discussed in the CY 2014 HH PPS final rule (78 FR 72302), the 
changes made by the bulletin and their ramifications required extensive 
review by CMS before using them for the HH PPS wage index. We completed 
our assessment and in the FY 2015 IPPS final rule (79 FR 49854), and 
stated that we will use the most recent labor market area delineations 
issued by OMB for payments for inpatient stays at general acute care 
and long-term care hospitals (LTCHs). In addition, in the FY 2015 
Skilled Nursing Facility (SNF) PPS final rule (79 FR 45628), we made a 
final decision to use the new labor market delineations issued by OMB 
for payments for SNFs.
c. Implementation of New Labor Market Delineations
    We believe it is important for the HH PPS to use the latest OMB 
delineations available to maintain a more accurate and up-to-date 
payment system that reflects the reality of population shifts and labor 
market conditions. While CMS and other stakeholders have explored 
potential alternatives to the current CBSA-based labor market system 
(we refer readers to the CMS Web site at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no 
consensus has been achieved regarding how best to implement a 
replacement system. As discussed in the FY 2005 IPPS final rule (69 FR 
49027), ``While we recognize that MSAs are not designed specifically to 
define labor market areas, we believe they do represent a useful proxy 
for this purpose.'' We further believe that using the most current OMB 
delineations will increase the integrity of the HH PPS wage index by 
creating a more accurate representation of geographic variation in wage 
levels. We have reviewed our findings and impacts relating to the new 
OMB delineations, and have concluded that there is no compelling reason 
to further delay implementation.
    We proposed to incorporate the new CBSA delineations into the CY 
2015 HH PPS wage index in the same manner in

[[Page 66086]]

which the CBSAs were first incorporated into the HH PPS wage index in 
CY 2006 (70 FR 68138). We proposed to use a one-year blended wage index 
for CY 2015. We referred to this blended wage index as the CY 2015 HH 
PPS transition wage index. The proposed transition wage index would 
consist of a 50/50 blend of the wage index values using OMB's old area 
delineations and the wage index values using OMB's new area 
delineations. That is, for each county, a blended wage index would be 
calculated equal to fifty percent of the CY 2015 wage index using the 
old labor market area delineation and fifty percent of the CY 2015 wage 
index using the new labor market area delineation (both using FY 2011 
hospital wage data). This ultimately results in an average of the two 
values.
    The comments we received on the proposal to include the newest OMB 
area delineations into the HH PPS wage index and the proposed wage 
index transition methodology and our responses to these comments, 
appear below:
    Comment: Some commenters have reservations about CMS's proposal to 
adopt revisions to the CBSAs developed by the Census Bureau and OMB. 
Commenters strongly support a phased-in approach to provide a more 
uniform and equitable transition for providers impacted by the CBSA 
revisions. Commenters believe that a phased-in approach will mitigate 
short-term financial instability and better align OMB's labor market 
areas with the actual labor costs of provider organizations.
    Response: While CMS and other stakeholders have explored potential 
alternatives to the current CBSA-based labor market system (we refer 
readers to the CMS Web site at: www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no consensus 
has been achieved regarding how best to implement a replacement system. 
As stated in the FY 2005 IPPS final rule (69 FR 49027), while we 
recognize that MSAs are not designed specifically to define labor 
market areas, we believe they do represent a useful proxy for this 
purpose. We believe that using the most current OMB delineations would 
increase the integrity of the HH PPS wage index by creating a more 
accurate representation of geographic variation in wage levels. We 
believe that the most current OMB delineations accurately reflect the 
local economies and wage levels of the areas in which hospitals are 
currently located. In the CY 2015 HH PPS proposed rule, we proposed a 
transition period of one year, during which a 50/50 blended wage index 
would be used for all providers in CY 2015, in order to mitigate the 
resulting short-term instability and negative impacts on certain 
providers and to provide time for providers to adjust to their new 
labor market delineations. Under this proposal, providers would receive 
50 percent of their FY 2015 wage index based on the new OMB 
delineations and 50 percent of their FY 2015 wage index based on the 
labor market delineations for CY 2014 (both using FY 2011 hospital wage 
data).
    Comment: Most commenters support using a 50/50 blend of the current 
CBSA areas with the new CBSA areas as a way of easing the transition to 
the new geographic area designations. A commenter supports the budget 
neutrality adjustment to account for changes in the wage indices.
    Response: We thank the commenters for their support of these two 
policies.
    Comment: While a commenter commends CMS on the proposed wage index 
phase-in, which should afford home health providers time to adjust 
their budgets, expenses and operations, the commenter also recommends 
that home health providers that have been negatively impacted in such 
reclassified areas be permitted to seek a hardship exception or 
additional phase-in period. Such measures could be used in the event 
providers find that the characteristics of their operating areas remain 
representative of rural communities. This will help ensure that 
beneficiary access to home health services in such areas is not stifled 
or significantly negatively impacted.
    Response: We do not believe that the adoption of the OMB's new area 
delineations will impact HHAs that provide care to beneficiaries who 
are located in areas whose delineations have changed to such an extent 
that the HHAs will no longer be able to provide care in their current 
locale. As always, we continue to monitor home health utilization to 
determine if there are any problems related to beneficiary access to 
care.
    Comment: A commenter states that CMS' one-year transition policy of 
using a 50/50 blend of the previous and updated CBSA values is 
inconsistent with CMS' policy published in the Inpatient Prospective 
Payment System (IPPS) and Long- Term Acute Care Hospital-Prospective 
Payment System (LTCH-PPS) final rule. That rule applies a one-year 50/
50 blending of the previous and updated CBSA values, respectively, only 
to facilities whose payments will decrease based on the use of the 
updated CBSAs. This inconsistency unfairly penalizes home health 
agencies that would benefit from applying the new CBSA delineations 
exclusively. Consequently, the commenter recommends that CMS apply the 
one-year 50/50 blend to any agencies experiencing a decrease in their 
payments, but utilize the new CBSA delineations for those agencies that 
will experience an increase in their Medicare payments. In contrast, 
another commenter stated that while the current requirement to maintain 
budget neutrality means that some agencies will not immediately see the 
full increases in their wage index values to reduce the impact of those 
with decreases, the commenter believes this is a worthwhile trade-off 
to assure that those agencies who would otherwise suffer sudden and 
significant payment declines.
    Response: The implementation of the revised OMB delineations, which 
we are finalizing in this rule, sets home health payments at a level 
that more accurately reflects the costs of labor in a geographic area. 
Accordingly, under this policy, HHAs will experience a decrease from 
their current wage index only to the extent that their current wage 
index value actually exceeds what the latest area wage data warrants 
using the revised OMB delineations, and they will experience an 
increase from their current wage index value to the extent that their 
current wage index value is less than what the latest area wage data 
warrants using the revised OMB delineations. As discussed in the CY 
2015 HH PPS proposed rule (79 FR 38416), we considered whether or not 
the blended wage index should be used for all HHAs or for only a subset 
of HHAs, such as those HHAs that would experience a decrease in their 
respective wage index values due to implementation of the revised OMB 
delineations. If we were to apply the transition policy only to those 
HHAs that would experience a decrease in their respective wage index 
values due to implementation of the revised OMB delineations, the wage 
index budget neutrality factor, discussed in section III.D.4, would 
result in reduced base rates for all HHAs as compared to the budget 
neutrality factor that results from applying the blended wage index to 
all HHAs. We believe that our proposal to apply a one-year blended wage 
index in CY 2015 for all geographic areas appropriately balances the 
interests of all HHAs and would best achieve our objective of providing 
relief to negatively impacted HHAs.
    Final Decision: For the reasons previously discussed, we are 
finalizing our proposal to include changes to the

[[Page 66087]]

HH PPS wage index based on the newest OMB area delineations and to 
apply a one-year blended wage index in CY 2015 for all geographic areas 
to assist providers in adapting to these changes. This transition 
policy will be in effect for a one-year period, beginning January 1, 
2015, and continuing through December 31, 2015. Thus, beginning January 
1, 2016, the wage index for all HH PPS payments will be fully based on 
the new OMB delineations.
    The wage index Addendum provides a crosswalk between the CY 2015 
wage index using the current OMB delineations in effect in CY 2014 and 
the CY 2015 wage index using the revised OMB delineations. Addendum A 
shows each state and county and its corresponding transition wage index 
along with the previous CBSA number, the new CBSA number and the new 
CBSA name. Due to the calculation of the blended transition wage index, 
some CBSAs may have more than one transition wage index value 
associated with that CBSA. However, each county will have only one 
transition wage index. Therefore, for counties located in CBSAs that 
correspond to more than one transition wage index, a number other than 
the CBSA number will need to be input on the claim for CY 2015 only. 
These numbers are shown in the last column of Addendum A. The final CY 
2015 transition wage index as set forth in Addendum A is available on 
the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html
4. CY 2015 Annual Payment Update
a. Background
    The Medicare HH PPS has been in effect since October 1, 2000. As 
set forth in the July 3, 2000 final rule (65 FR 41128), the base unit 
of payment under the Medicare HH PPS is a national, standardized 60-day 
episode payment rate. As set forth in 42 CFR 484.220, we adjust the 
national, standardized 60-day episode payment rate by a case-mix 
relative weight and a wage index value based on the site of service for 
the beneficiary.
    To provide appropriate adjustments to the proportion of the payment 
amount under the HH PPS to account for area wage differences, we apply 
the appropriate wage index value to the labor portion of the HH PPS 
rates. The labor-related share of the case-mix adjusted 60-day episode 
rate will continue to be 78.535 percent and the non-labor-related share 
will continue to be 21.465 percent as set out in the CY 2013 HH PPS 
final rule (77 FR 67068). The CY 2015 HH PPS rates will use the same 
case-mix methodology as set forth in the CY 2008 HH PPS final rule with 
comment period (72 FR 49762) and adjusted as described in section 
III.C. of this rule. The following are the steps we take to compute the 
case-mix and wage-adjusted 60-day episode rate:
    (1) Multiply the national 60-day episode rate by the patient's 
applicable case-mix weight.
    (2) Divide the case-mix adjusted amount into a labor (78.535 
percent) and a non-labor portion (21.465 percent).
    (3) Multiply the labor portion by the applicable wage index based 
on the site of service of the beneficiary.
    (4) Add the wage-adjusted portion to the non-labor portion, 
yielding the case-mix and wage adjusted 60-day episode rate, subject to 
any additional applicable adjustments.
    In accordance with section 1895(b)(3)(B) of the Act, this document 
constitutes the annual update of the HH PPS rates. Section 484.225 sets 
forth the specific annual percentage update methodology. In accordance 
with Sec.  484.225(i), for a HHA that does not submit HH quality data, 
as specified by the Secretary, the unadjusted national prospective 60-
day episode rate is equal to the rate for the previous calendar year 
increased by the applicable HH market basket index amount minus two 
percentage points. Any reduction of the percentage change will apply 
only to the calendar year involved and will not be considered in 
computing the prospective payment amount for a subsequent calendar 
year.
    Medicare pays the national, standardized 60-day case-mix and wage-
adjusted episode payment on a split percentage payment approach. The 
split percentage payment approach includes an initial percentage 
payment and a final percentage payment as set forth in Sec.  
484.205(b)(1) and Sec.  484.205(b)(2). We may base the initial 
percentage payment on the submission of a request for anticipated 
payment (RAP) and the final percentage payment on the submission of the 
claim for the episode, as discussed in Sec.  409.43. The claim for the 
episode that the HHA submits for the final percentage payment 
determines the total payment amount for the episode and whether we make 
an applicable adjustment to the 60-day case-mix and wage-adjusted 
episode payment. The end date of the 60-day episode as reported on the 
claim determines which calendar year rates Medicare will use to pay the 
claim.
    We may also adjust the 60-day case-mix and wage-adjusted episode 
payment based on the information submitted on the claim to reflect the 
following:
     A low-utilization payment adjustment (LUPA) is provided on 
a per-visit basis as set forth in Sec.  484.205(c) and Sec.  484.230.
     A partial episode payment (PEP) adjustment as set forth in 
Sec.  484.205(d) and Sec.  484.235.
     An outlier payment as set forth in Sec.  484.205(e) and 
Sec.  484.240.
b. CY 2015 National, Standardized 60-Day Episode Payment Rate
    Section 1895(3)(A)(i) of the Act required that the 60-day episode 
base rate and other applicable amounts be standardized in a manner that 
eliminates the effects of variations in relative case mix and area wage 
adjustments among different home health agencies in a budget neutral 
manner. To determine the CY 2015 national, standardized 60-day episode 
payment rate, we will apply a wage index standardization factor, a 
case-mix budget neutrality factor described in section III.C, the 
rebasing adjustment described in section II.C, and the MFP-adjusted 
home health market basket update discussed in section III.D.1 of this 
final rule.
    To calculate the wage index standardization factor, henceforth 
referred to as the wage index budget neutrality factor, we simulated 
total payments for non-LUPA episodes using the 2015 wage index and 
compared it to our simulation of total payments for non-LUPA episodes 
using the 2014 wage index. By dividing the total payments for non-LUPA 
episodes using the 2015 wage index by the total payments for non-LUPA 
episodes using the 2014 wage index, we obtain a wage index budget 
neutrality factor of 1.0024. We will apply the wage index budget 
neutrality factor of 1.0024 to the CY 2015 national, standardized 60-
day episode rate.
    As discussed in section III.C of this final rule, to ensure the 
changes to the case-mix weights are implemented in a budget neutral 
manner, we will apply a case-mix weights budget neutrality factor to 
the CY 2015 national, standardized 60-day episode payment rate. The 
case-mix weights budget neutrality factor is calculated as the ratio of 
total payments when CY 2015 case-mix weights are applied to CY 2013 
utilization (claims) data to total payments when CY 2014 case-mix 
weights are applied to CY 2013 utilization data. The case-mix budget 
neutrality factor for CY 2015 will be 1.0366 as described in section 
III.C of this final rule.

[[Page 66088]]

    Then, we will apply the -$80.95 rebasing adjustment finalized in 
the CY 2014 HH PPS final rule (78 FR 72256) and discussed in section 
II.C. Lastly, we will update the payment rates by the CY 2015 HH 
payment update percentage of 2.1 percent (MFP-adjusted home health 
market basket update) as described in section III.D.1 of this final 
rule. The CY 2015 national, standardized 60-day episode payment rate 
will be $2,961.38 as calculated in Table 22.

                  Table 22--CY 2015 60-Day National, Standardized 60-Day Episode Payment Amount
----------------------------------------------------------------------------------------------------------------
CY 2014 National,      Wage index     Case-mix  weights                                        CY 2015 National,
standardized  60-        budget             budget       CY 2015  Rebasing      CY 2015 HH      standardized  60-
   day episode         neutrality         neutrality         adjustment      Payment  update      day episode
     payment             factor             factor                              percentage          payment
----------------------------------------------------------------------------------------------------------------
     $2,869.27          x; 1.0024          x; 1.0366            -$80.95           x; 1.021        = $2,961.38
----------------------------------------------------------------------------------------------------------------

    The CY 2015 national, standardized 60-day episode payment rate for 
an HHA that does not submit the required quality data is updated by the 
CY 2015 HH payment update (2.1 percent) minus 2 percentage points and 
is shown in Table 23.

  TABLE 23--For HHAs That Do Not Submit the Quality Data--CY 2015 National, Standardized 60-Day Episode Payment
                                                     Amount
----------------------------------------------------------------------------------------------------------------
                                                                                CY 2015 HH
CY 2014 National,      Wage index     Case-mix  weights                      Payment  update   CY 2015 National,
 standardized  60-       budget             budget       CY 2015  Rebasing  percentage  minus   standardized  60-
   day episode         neutrality         neutrality         adjustment       2  percentage       day episode
     payment             factor             factor                                points            payment
----------------------------------------------------------------------------------------------------------------
     $2,869.27          x; 1.0024          x; 1.0366            -$80.95           x; 1.001        = $2,903.37
----------------------------------------------------------------------------------------------------------------

c. National Per-Visit Rates
    The national per-visit rates are used to pay LUPAs (episodes with 
four or fewer visits) and are also used to compute imputed costs in 
outlier calculations. The per-visit rates are paid by type of visit or 
HH discipline. The six HH disciplines are as follows:
     Home health aide (HH aide);
     Medical Social Services (MSS);
     Occupational therapy (OT);
     Physical therapy (PT);
     Skilled nursing (SN); and
     Speech-language pathology (SLP).
    To calculate the CY 2015 national per-visit rates, we start with 
the CY 2014 national per-visit rates. We then apply a wage index budget 
neutrality factor to ensure budget neutrality for LUPA per-visit 
payments and increase each of the six per-visit rates by the maximum 
rebasing adjustments described in section II.C. of this rule. We 
calculate the wage index budget neutrality factor by simulating total 
payments for LUPA episodes using the 2015 wage index and comparing it 
to simulated total payments for LUPA episodes using the 2014 wage 
index. By dividing the total payments for LUPA episodes using the 2015 
wage index by the total payments for LUPA episodes using the 2014 wage 
index, we obtain a wage index budget neutrality factor of 1.0012. We 
will apply the wage index budget neutrality factor of 1.0012 to the CY 
2015 national per-visit rates.
    The LUPA per-visit rates are not calculated using case-mix weights. 
Therefore, there is no case-mix weights budget neutrality factor needed 
to ensure budget neutrality for LUPA payments. Finally, the per-visit 
rates for each discipline are updated by the CY 2015 HH payment update 
percentage of 2.1 percent. The national per-visit rates are adjusted by 
the wage index based on the site of service of the beneficiary. The 
per-visit payments for LUPAs are separate from the LUPA add-on payment 
amount, which is paid for episodes that occur as the only episode or 
initial episode in a sequence of adjacent episodes. The CY 2015 
national per-visit rates are shown in Tables 24 and 25.

     TABLE 24--CY 2015 National Per-Visit Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                           Wage index                  CY 2015 HH
                                            CY 2014  Per-    budget        CY 2015       Payment    CY 2015  Per-
            HH Discipline type                  visit      neutrality     Rebasing       update         visit
                                               payment       factor      adjustment    percentage      payment
----------------------------------------------------------------------------------------------------------------
Home Health Aide..........................        $54.84     x; 1.0012       + $1.79      x; 1.021        $57.89
Medical Social Services...................        194.12     x; 1.0012       + $6.34      x; 1.021        204.91
Occupational Therapy......................        133.30     x; 1.0012       + $4.35      x; 1.021        140.70
Physical Therapy..........................        132.40     x; 1.0012       + $4.32      x; 1.021        139.75
Skilled Nursing...........................        121.10     x; 1.0012       + $3.96      x; 1.021        127.83
Speech-Language Pathology.................        143.88     x; 1.0012        + 4.70      x; 1.021        151.88
----------------------------------------------------------------------------------------------------------------

[[Page 66089]]

    The CY 2015 per-visit payment rates for an HHA that does not submit 
the required quality data are updated by the CY 2015 HH payment update 
(2.1 percent) minus 2 percentage points and is shown in Table 25.

 
   Table 25--CY 2015 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                       CY 2015 HH
                                                                                         Payment
                                                           Wage  index     CY 2015       update
            HH Discipline type              CY 2014  Per-    budget       Rebasing     percentage   CY 2015  Per-
                                            visit  rates   neutrality    adjustment      minus 2    visit  rates
                                                             factor                    percentage
                                                                                         points
----------------------------------------------------------------------------------------------------------------
Home Health Aide..........................        $54.84     x; 1.0012       + $1.79      x; 1.001        $56.75
Medical Social Services...................        194.12     x; 1.0012       + $6.34      x; 1.001        200.89
Occupational Therapy......................        133.30     x; 1.0012       + $4.35      x; 1.001        137.95
Physical Therapy..........................        132.40     x; 1.0012       + $4.32      x; 1.001        137.02
Skilled Nursing...........................        121.10     x; 1.0012       + $3.96      x; 1.001        125.33
Speech-Language Pathology.................        143.88     x; 1.0012        + 4.70      x; 1.001        148.90
----------------------------------------------------------------------------------------------------------------

d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
    LUPA episodes that occur as the only episode or as an initial 
episode in a sequence of adjacent episodes are adjusted by applying an 
additional amount to the LUPA payment before adjusting for area wage 
differences. In the CY 2014 HH PPS final rule, we changed the 
methodology for calculating the LUPA add-on amount by finalizing the 
use of three LUPA add-on factors: 1.8451 for SN; 1.6700 for PT; and 
1.6266 for SLP (78 FR 72306). We multiply the per-visit payment amount 
for the first SN, PT, or SLP visit in LUPA episodes that occur as the 
only episode or an initial episode in a sequence of adjacent episodes 
by the appropriate factor to determine the LUPA add-on payment amount. 
For example, for LUPA episodes that occur as the only episode or an 
initial episode in a sequence of adjacent episodes, if the first 
skilled visit is SN, the payment for that visit will be $235.86 (1.8451 
multiplied by $127.83), subject to area wage adjustment.
e. Non-Routine Medical Supply (NRS) Conversion Factor Update
    Payments for NRS are computed by multiplying the relative weight 
for a particular severity level by the NRS conversion factor. To 
determine the CY 2015 NRS conversion factor, we start with the 2014 NRS 
conversion factor ($53.65) and apply the -2.82 percent rebasing 
adjustment described in section II.C. of this rule (1 - 0.0282 = 
0.9718). We then update the conversion factor by the CY 2015 HH payment 
update percentage (2.1 percent). We do not apply a standardization 
factor as the NRS payment amount calculated from the conversion factor 
is not wage or case-mix adjusted when the final claim payment amount is 
computed. The NRS conversion factor for CY 2015 is shown in Table 26.

   Table 26--CY 2015 NRS Conversion Factor for HHAs That DO Submit the
                          Required Quality Data
------------------------------------------------------------------------
                                         CY 2015 HH        CY 2015 NRS
   CY 2014 NRS      CY 2015 Rebasing   Payment update      Conversion
Conversion factor      adjustment        percentage          factor
------------------------------------------------------------------------
         $53.65          x; 0.9718           x; 1.021          = $53.23
------------------------------------------------------------------------

    Using the CY 2015 NRS conversion factor, the payment amounts for 
the six severity levels are shown in Table 27.

    Table 27--CY 2015 NRS Payment Amounts for HHAs That DO Submit the
                          Required Quality Data
------------------------------------------------------------------------
                                                             CY 2015 NRS
        Severity level              Points        Relative     Payment
                                  (scoring)        weight      amounts
------------------------------------------------------------------------
1............................  0..............       0.2698       $14.36
2............................  1 to 14........       0.9742        51.86
3............................  15 to 27.......       2.6712       142.19
4............................  28 to 48.......       3.9686       211.25
5............................  49 to 98.......       6.1198       325.76
6............................  99+............      10.5254       560.27
------------------------------------------------------------------------

    For HHAs that do not submit the required quality data, we again 
begin with the CY 2014 NRS conversion factor ($53.65) and apply the --
2.82 percent rebasing adjustment discussed in section II.C of this 
final rule (1 - 0.0282 = 0.9718). We then update the NRS conversion 
factor by the CY 2015 HH payment update percentage (2.1 percent) minus 
2 percentage points. The CY 2015 NRS conversion factor for

[[Page 66090]]

HHAs that do not submit quality data is shown in Table 28.

 Table 28--CY 2015 NRS Conversion Factor for HHAs That DO NOT Submit the
                          Required Quality Data
------------------------------------------------------------------------
                                         CY 2015 HH
                                       payment update      CY 2015 NRS
   CY 2014 NRS      CY 2015 rebasing  percentage minus     conversion
conversion factor      adjustment       2 percentage         factor
                                           points
------------------------------------------------------------------------
         $53.65          x; 0.9718           x; 1.001            $52.19
------------------------------------------------------------------------

    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 29.

  Table 29--CY 2015 NRS Payment Amounts for HHAs That DO NOT Submit the
                          Required Quality Data
------------------------------------------------------------------------
                                                             CY 2015 NRS
        Severity level              Points        Relative      payment
                                  (scoring)        weight      amounts
------------------------------------------------------------------------
1............................  0..............       0.2698      $ 14.08
2............................  1 to 14........       0.9742        50.84
3............................  15 to 27.......       2.6712       139.41
4............................  28 to 48.......       3.9686       207.12
5............................  49 to 98.......       6.1198       319.39
6............................  99+............      10.5254       549.32
------------------------------------------------------------------------

f. Rural Add-On
    Section 421(a) of the MMA required, for HH services furnished in a 
rural areas (as defined in section 1886(d)(2)(D) of the Act), for 
episodes or visits ending on or after April 1, 2004, and before April 
1, 2005, that the Secretary increase the payment amount that otherwise 
will have been made under section 1895 of the Act for the services by 5 
percent.
    Section 5201 of the DRA amended section 421(a) of the MMA. The 
amended section 421(a) of the MMA required, for HH services furnished 
in a rural area (as defined in section 1886(d)(2)(D) of the Act), on or 
after January 1, 2006 and before January 1, 2007, that the Secretary 
increase the payment amount otherwise made under section 1895 of the 
Act for those services by 5 percent.
    Section 3131(c) of the Affordable Care Act amended section 421(a) 
of the MMA to provide an increase of 3 percent of the payment amount 
otherwise made under section 1895 of the Act for HH services furnished 
in a rural area (as defined in section 1886(d)(2)(D) of the Act), for 
episodes and visits ending on or after April 1, 2010, and before 
January 1, 2016.
    Section 421 of the MMA, as amended, waives budget neutrality 
related to this provision, as the statute specifically states that the 
Secretary shall not reduce the standard prospective payment amount (or 
amounts) under section 1895 of the Act applicable to HH services 
furnished during a period to offset the increase in payments resulting 
in the application of this section of the statute.
    The comments we received regarding the rural add-on, along with our 
responses, appear below:
    Comment: One commenter questioned why the rural add-on will not 
apply after CY 2015. Several commenter urged CMS to not eliminate the 
rural add-on scheduled to sunset on December 31, 2015. A commenter 
stated that CMS should conduct a separate and comprehensive impact 
analysis on what the impact of elimination of the rural-add would have 
in the availability of home health services in rural areas. Another 
commenter asked if CMS would encourage the continuation of the rural 
add-on for the indefinite future beyond 2016.
    Response: The rural add-on is a legislative provision, mandated by 
the Affordable Care Act, and CMS does not have the authority to revise 
the date at which the rural add-on expires. Since the inception of the 
HH PPS, at various points in time, rural add-ons have been applied to 
home health payments due to legislation. These rural add-ons have not 
been subject to budget neutrality. If CMS were to propose a regulatory 
policy change to provide a rural add-on payment, we would have to apply 
the add-on in a budget neutral manner and adjust (decrease) other 
components of the payment rates.
    Comment: A commenter suggests that CMS should investigate the 
impact of a applying a population density adjustment factor to the 
rates. This adjustment factor would increase payments in less densely 
populated areas (primarily rural) to offset higher costs of providing 
care in rural areas. These costs include increases in transportation 
costs and the scarcity of skilled professionals in rural areas. The 
commenter states that an increase to rural payments rates is necessary 
as rural wage indices are uniformly lower than urban wage indices.
    Response: We do not have evidence that a population density 
adjustment is appropriate. While rural HHAs cite the added cost of long 
distance travel to provide care for their patients, urban HHAs cite 
added costs associated with needed security measures and traffic 
congestion. In regard to the commenters assertion that rural wage 
indices are uniformly lower than urban wage indices, our analysis shows 
that almost 18 percent of urban wage index values are less than the 
rural wage index in the corresponding state.
    Comment: Commenters recommend that the rural add-on should apply 
for at least one year for services provided to beneficiaries in 
counties that are transitioning from rural to urban status for wage 
index purposes. Other commenters requested that CMS clarify which areas 
qualify for the rural add-on on as numerous areas lose rural status 
under the new CBSAs. Some commenters state that in 2006 when CMS 
blended MSA and CBSA regions as

[[Page 66091]]

part of a comparable wage index transition policy, CMS applied the 
rural add-on for both patients residing in a non-MSA and non-CBSA area. 
In other words, the rural add-on applied in the rural areas under the 
old MSA designations as well as the new CBSA designations during the 
transition year.
    Response: When we implemented OMB revised delineations in CY 2006, 
we applied the rural add-on to counties in non-CBSA areas. If a county 
had been previously classified as rural but changed to urban 
classification under the new CBSAs, the rural add-on was not applied. 
The commenters who stated that CMS applied the rural add-on for 
patients residing in non-MSA areas and patients residing in non-CBSA 
areas are mistaken. This policy was implemented in CMS Transmittal 887 
which was published on March 10, 2006. In order to remain consistent 
with our previous policy for applying the rural add-on, we would 
implement the rural add-on in the same manner for CY 2015. That is, 
only counties that are classified as rural under the new area 
delineations would receive the rural add-on. As stated previously, we 
believe that this method of adopting the most current OMB delineations 
would increase the integrity of the wage index as it is a more 
accurately represents geographic variation in wage levels.
    Comment: One commenter recommended that CMS adopt the same 
definition of a ``rural'' area that is used by the Federal Office of 
Rural Health (ORH). The commenter states that the ORH explicitly 
recognizes that ``the New England states require special consideration 
as ``their geographic divisions are different than typical counties.'' 
There are many towns within Massachusetts that are very rural, yet they 
lie within large counties that are designated a CBSA based on the fact 
that there is a small city within that county. The commenter 
recommended that CMS modify the CBSA approach to recognize rural census 
tracts within large counties.
    Response: In the CY 2015 HH PPS proposed rule, we did not propose 
alternatives to the use of CBSAs, which were adopted in the CY 2006 HH 
PPS final rule, to classify areas as ``rural'' for wage adjustment 
purposes. In the CY 2006 HH PPS final rule (70 FR 68132), we proposed 
and finalized the adoption of revised labor market area definitions as 
discussed in the OMB Bulletin No. 03-04 (June 6, 2003). This bulletin 
announced revised definitions for MSAs and the creation of micropolitan 
statistical areas and core-based statistical areas (CBSAs).
    Comment: A commenter requested that CMS disclose the areas that 
would lose their rural status under the new CBSAs.
    Response: We provided several tables in the CY 2015 HH PPS proposed 
rule (79 FR 38392-38395) which display the counties whose status will 
change if we finalize our proposal to adopt the new OMB delineations. 
Table 13 shows the 37 counties that would change from urban to rural 
status. Table 14 shows the 105 counties that would change from rural to 
urban status. Lastly, Table 15 displays the 46 urban counties that 
would move from one urban CBSA to another urban CBSA.
    Final Decision: For CY 2015, home health payment rates for services 
provided to beneficiaries in areas that are defined as rural under the 
new OMB delineations will be increased by 3 percent as mandated by 
section 3131(c) of the Affordable Care Act. The 3 percent rural add-on 
is applied to the national, standardized 60-day episode payment rate, 
national per visit rates, and NRS conversion factor when HH services 
are provided in rural (non-CBSA) areas. Refer to Tables 30 through 33 
for these payment rates.

                               Table 30--CY 2015 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              For HHAs that DO submit quality [deg]Data                                     For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       CY 2015 rural       CY 2015                        CY 2015 rural
                                                                       Multiply by       national,        national,     Multiply by the     national,
     CY 2015 national, standardized 60-day episode payment rate       the 3 percent     standardized     standardized   3 percent rural  standardized 60-
                                                                      rural  add-on   60-day  episode   60-day episode       add-on        day episode
                                                                                        payment rate     payment rate                      payment rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,961.38..........................................................         x; 1.03        $3,050.22        $2,903.37          x; 1.03        $2,990.47
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                        Table 31--CY 2015 Per-Visit Amounts for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           For HHAs that DO submit quality data             For HHAs that DO NOT submit quality data
                                                   -----------------------------------------------------------------------------------------------------
                HH Discipline type                                   Multiply by the                                    Multiply by the
                                                      CY 2015 per-   3 percent rural   CY 2015 rural     CY 2015 per-   3 percent rural   CY 2015 rural
                                                       visit rate         add-on      per-visit rates     visit rate         add-on      per-visit rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide...........................................          $57.89          x; 1.03           $59.63           $56.75          x; 1.03           $58.45
MSS...............................................          204.91          x; 1.03           211.06           200.89          x; 1.03           206.92
OT................................................          140.70          x; 1.03           144.92           137.95          x; 1.03           142.09
PT................................................          139.75          x; 1.03           143.94           137.02          x; 1.03           141.13
SN................................................          127.83          x; 1.03           131.66           125.33          x; 1.03           129.09
SLP...............................................          151.88          x; 1.03           156.44           148.90          x; 1.03           153.37
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                      Table 32--CY 2015 NRS Conversion Factor for Services Provided in Rural Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 For HHAs that DO submit quality data                                       For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Multiply by the   CY 2015 rural       CY 2015      Multiply by the   CY 2015 rural
                     CY 2015 conversion factor                       3 percent rural   NRS conversion     Conversion    3 percent rural   NRS conversion
                                                                          add-on           factor           factor           add-on           factor
--------------------------------------------------------------------------------------------------------------------------------------------------------
$53.23.............................................................         x; 1.03           $54.83           $52.19          x; 1.03           $53.76
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 66092]]

                   Table 33--CY 2015 NRS Payment Amounts for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
                                                          For HHAs that DO submit    For HHAs that DO NOT submit
                                                         quality data (CY 2015 NRS    quality data (CY 2015 NRS
                                                        Conversion Factor = $54.83)  Conversion Factor = $53.76)
                                                      ----------------------------------------------------------
         Severity level             Points (scoring)                  CY 2015 NRS                   CY 2015 NRS
                                                         Relative       Payment        Relative       Payment
                                                          weight      amounts for       weight      amounts for
                                                                      rural areas                   rural areas
----------------------------------------------------------------------------------------------------------------
1...............................  0..................       0.2698          $14.79        0.2698          $14.50
2...............................  1 to 14............       0.9742           53.42        0.9742           52.37
3...............................  15 to 27...........       2.6712          146.46        2.6712          143.60
4...............................  28 to 48...........       3.9686          217.60        3.9686          213.35
5...............................  49 to 98...........       6.1198          335.55        6.1198          329.00
6...............................  99+................      10.5254          577.11       10.5254          565.85
----------------------------------------------------------------------------------------------------------------

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

1. Background
    Section 1895(b)(5) of the Act allows for the provision of an 
addition or adjustment to the national, standardized 60-day case-mix 
and wage-adjusted episode payment amounts in the case of episodes that 
incur unusually high costs due to patient care needs. Prior to the 
enactment of the Affordable Care Act, section 1895(b)(5) of the Act 
stipulated that projected total outlier payments could not exceed 5 
percent of total projected or estimated HH payments in a given year. In 
the Medicare Program; Prospective Payment System for Home Health 
Agencies final rule (65 FR 41188 through 41190), we described the 
method for determining outlier payments. Under this system, outlier 
payments are made for episodes whose estimated costs exceed a threshold 
amount for each HH Resource Group (HHRG). The episode's estimated cost 
is the sum of the national wage-adjusted per-visit payment amounts for 
all visits delivered during the episode. The outlier threshold for each 
case-mix group or PEP adjustment is defined as the 60-day episode 
payment or PEP adjustment for that group plus a fixed-dollar loss (FDL) 
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost beyond the wage-adjusted threshold. The 
threshold amount is the sum of the wage and case-mix adjusted PPS 
episode amount and wage-adjusted FDL amount. The proportion of 
additional costs over the outlier threshold amount paid as outlier 
payments is referred to as the loss-sharing ratio.
    In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we 
discussed excessive growth in outlier payments, primarily the result of 
unusually high outlier payments in a few areas of the country. Despite 
program integrity efforts associated with excessive outlier payments in 
targeted areas of the country, we discovered that outlier expenditures 
still exceeded the 5 percent, target and, in the absence of corrective 
measures, would continue do to so. Consequently, we assessed the 
appropriateness of taking action to curb outlier abuse. To mitigate 
possible billing vulnerabilities associated with excessive outlier 
payments and adhere to our statutory limit on outlier payments, we 
adopted an outlier policy that included a 10 percent agency-level cap 
on outlier payments. This cap was implemented in concert with a reduced 
FDL ratio of 0.67. These policies resulted in a projected target 
outlier pool of approximately 2.5 percent. (The previous outlier pool 
was 5 percent of total HH expenditure). For CY 2010, we first returned 
5 percent of these dollars back into the national, standardized 60-day 
episode rates, the national per-visit rates, the LUPA add-on payment 
amount, and the NRS conversion factor. Then, we reduced the CY 2010 
rates by 2.5 percent to account for the new outlier pool of 2.5 
percent. This outlier policy was adopted for CY 2010 only.
    As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 
70399), section 3131(b)(1) of the Affordable Care Act amended section 
1895(b)(3)(C) of the Act. As amended, ``Adjustment for outliers,'' 
states that ``The Secretary shall reduce the standard prospective 
payment amount (or amounts) under this paragraph applicable to HH 
services furnished during a period by such proportion as will result in 
an aggregate reduction in payments for the period equal to 5 percent of 
the total payments estimated to be made based on the prospective 
payment system under this subsection for the period.'' In addition, 
section 3131(b)(2) of the Affordable Care Act amended section 
1895(b)(5) of the Act by re-designating the existing language as 
section 1895(b)(5)(A) of the Act, and revising it to state that the 
Secretary, ``subject to [a 10 percent program-specific outlier cap], 
may provide for an addition or adjustment to the payment amount 
otherwise made in the case of outliers because of unusual variations in 
the type or amount of medically necessary care. The total amount of the 
additional payments or payment adjustments made under this paragraph 
for a fiscal year or year may not exceed 2.5 percent of the total 
payments projected or estimated to be made based on the prospective 
payment system under this subsection in that year.''
    As such, beginning in CY 2011, our HH PPS outlier policy is that we 
reduce payment rates by 5 percent and target up to 2.5 percent of total 
estimated HH PPS payments to be paid as outliers. To do so, we first 
returned the 2.5 percent held for the target CY 2010 outlier pool to 
the national, standardized 60-day episode rates, the national per visit 
rates, the LUPA add-on payment amount, and the NRS conversion factor 
for CY 2010. We then reduced the rates by 5 percent as required by 
section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of 
the Affordable Care Act. For CY 2011 and subsequent calendar years we 
target up to 2.5 percent of estimated total payments to be paid as 
outlier payments, and apply a 10 percent agency-level outlier cap.
2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing Ratio
    For a given level of outlier payments, there is a trade-off between 
the values selected for the FDL ratio and the loss-sharing ratio. A 
high FDL ratio reduces the number of episodes that can receive outlier 
payments, but makes it possible to select a higher loss-sharing ratio, 
and therefore, increase outlier payments for qualifying 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.

[[Page 66093]]

    The FDL ratio and the loss-sharing ratio must be selected so that 
the estimated total outlier payments do not exceed the 2.5 percent 
aggregate level (as required by section 1895(b)(5)(A) of the Act). 
Historically, we have used a value of 0.80 for the loss-sharing ratio 
which, we believe, preserves incentives for agencies to attempt to 
provide care efficiently for outlier cases. With a loss-sharing ratio 
of 0.80, Medicare pays 80 percent of the additional estimated costs 
above the outlier threshold amount.
    In the CY 2011 HH PPS final rule (75 FR 70398), in targeting total 
outlier payments as 2.5 percent of total HH PPS payments, we 
implemented an FDL ratio of 0.67, and we maintained that ratio in CY 
2012. Simulations based on CY 2010 claims data completed for the CY 
2013 HH PPS final rule showed that outlier payments were estimated to 
comprise approximately 2.18 percent of total HH PPS payments in CY 
2013, and as such, we lowered the FDL ratio from 0.67 to 0.45. We 
stated that lowering the FDL ratio to 0.45, while maintaining a loss-
sharing ratio of 0.80, struck an effective balance of compensating for 
high-cost episodes while allowing more episodes to qualify as outlier 
payments (77 FR 67080). The national, standardized 60-day episode 
payment amount is multiplied by the FDL ratio. That amount is wage-
adjusted to derive the wage-adjusted FDL amount, which is added to the 
case-mix and wage-adjusted 60-day episode payment amount to determine 
the outlier threshold amount that costs have to exceed before Medicare 
will pay 80 percent of the additional estimated costs.
    For this final rule, simulating payments using more complete CY 
2013 claims data (as of June 30, 2014 rather than preliminary data as 
of December 31, 2013) and the CY 2014 payment rates (78 FR 72304 
through 72308), we estimate that outlier payments in CY 2014 would 
comprise 2.00 percent of total payments. Based on simulations using CY 
2013 claims data and the CY 2015 payments rates in section III.D.4 of 
this final rule, we estimate that outlier payments will comprise 
approximately 2.25 percent of total HH PPS payments in CY 2015.
    Given the increases to the CY 2015 national per-visit payment rates 
and the national, standardized 60-day episode payment rate as a result 
of making the case-mix recalibration in section III.C budget neutral, 
our analysis estimates an additional 0.25 percentage point increase in 
outlier payments as a percent of total HH PPS payments each year that 
we phase-in the rebasing adjustments described in the background 
(section II.C). We estimate that by CY 2016 outlier payments as a 
percent of total HH PPS payments will be approximately 2.5 percent. We 
did not propose a change to the FDL ratio or loss-sharing ratio for CY 
2015 as we believed that maintaining an FDL of 0.45 and a loss-sharing 
ratio of 0.80 are appropriate given the percentage of outlier payments 
is estimated to increase as a result of the increasing the national 
per-visit amounts through the rebasing adjustments. We will continue to 
monitor the percent of total HH PPS payments paid as outlier payments 
to determine if future adjustments to either the FDL ratio or loss-
sharing ratio are warranted.
    Although we did not propose any changes to the outlier policy, the 
following is a summary of the comments we received regarding outlier 
payments.
    Comment: Several commenters stated that estimated outlier payments 
as a percent of total payments for CY 2015 is below the `budgeted' 
amount of 2.5 percent, which has `deprived' an appropriate level of 
payment for those HHAs that field high-cost cases (including cases for 
beneficiaries in very rural areas). These commenters further suggest 
that the FDL ratio and/or loss-sharing ratio should be modified so that 
estimated outlier payments as a percent of total payments would reach 
2.5 percent.
    Response: We did not propose a change to the FDL ratio for CY 2015 
given the finalized increases to the CY 2015 national per-visit payment 
rates, which our analysis estimates will yield an additional 0.25 
percentage point increase in estimated outlier payments as a percent of 
total HH PPS payments each year that we phase-in the rebasing 
adjustments described in section II.C. We estimate that for CY 2016, 
estimated outlier payments as a percent of total HH PPS payments will 
increase to 2.5 percent. We note that per section 1895(b)(5)(A) of the 
Act, outlier payments as a percent of total HH PPS payments ``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 statute does not require us to pay out 2.5 percent of 
total HH PPS payments as outlier payments; it requires us to pay no 
more than 2.5 percent of total HH PPS payments as outlier payments.
    Additionally, we noted that these estimates do not take in to 
account any changes in utilization that may have occurred in CY 2014, 
and will continue to occur in CY 2015. We are concerned that if we 
decreased the FDL ratio we could potentially pay more than 2.5 percent 
of estimated total payments as outlier payments and that episodes 
without unusual variations in the type or amount of medically-necessary 
care will qualify for outlier payments, which is contrary to the intent 
of the policy. Moreover, we remain committed to addressing potentially 
fraudulent activities, especially those in areas where we suspect 
suspicious outlier payments (74 FR 58085). We believe that maintaining 
the current thresholds supports our prudent approach in light of such 
studies as those conducted by the Office of Inspector General (August 
2013 Management Implications Report). We continue to examine potential 
revisions to the outlier payment methodology through the current 
contract with Abt Associates and will make recommendations and 
revisions if necessary.
    Consequently, for the above stated reasons, we believe that we 
should not make any changes/revisions to our outlier payment 
methodology at this time.
    Comment: One commenter recommended that CMS eliminate outlier 
payments in their entirety and return the 2.5 percent withhold to the 
base payment rates.
    Response: We believe that section 1895(b)(5)(A) of the Act allows 
the Secretary the discretion as to whether or not to have an outlier 
policy under the HH PPS. We plan to continue investigating whether or 
not an outlier policy remains appropriate as well as ways to maintain 
an outlier policy for episodes that incur unusually high costs due to 
patient care needs without qualifying episodes of care that do not meet 
that criteria or are potentially fraudulent. We recently awarded a 
contract to Abt Associates to address any findings from the home health 
study required by section 3131(d) of the Affordable Care Act, monitor 
the potential impact of the rebasing adjustments and other recent 
payment changes, and develop payment options to ensure ongoing access 
to care for vulnerable populations. The work may include potential 
revisions to the outlier payment methodology to better reflect costs of 
treating Medicare beneficiaries with high levels of severity of 
illness.
    Comment: Several commenters stated that CMS's oversight and 
monitoring of insulin injection-based outlier episodes will drive 
outlier payments down as well as cause incorrect projections for future 
outlier payment.
    Response: As we have noted in the past (74 FR 58085), we are 
committed to addressing potentially fraudulent activities, especially 
those in areas where we see suspicious outlier

[[Page 66094]]

payments. As we noted above, we plan to examine potential revisions to 
the outlier payment methodology through ongoing studies and analysis of 
home health claims and other utilization data. Monitoring of 
potentially fraudulent activity will be captured in this analysis, and 
we will make policy and other adjustments as necessary in light of the 
new data and outcomes.
    Comment: One commenter recommended that CMS calculate outlier 
payments based on actual costs rather than imputed costs.
    Response: Currently, an HHA episode's estimated cost is the sum of 
the national wage-adjusted per-visit payment amounts for all visits 
delivered during the episode, and the outlier payment is defined to be 
an estimate of the proportion of the wage-adjusted cost beyond the 
wage-adjusted threshold. We believe that this estimate serves as a 
valid proxy for the additional costs incurred by providers. However, in 
an effort to further the agency's mission of providing accurate 
payment, we continue to evaluate the effectiveness of the current 
outlier payment policy approach and are considering the investigation 
of alternative, cost-oriented mechanisms for determining the outlier 
payment amount for HHA providers for those episodes that incur 
unusually high costs due to patient care needs.
    Comment: One commenter questioned CMS's current outlier approach, 
which removes 5 percent from the payment rates, and then pays out 2.5 
percent in outlier payments. Additionally, the commenter wanted to 
understand what was done with the other 2.5 percent that is no longer 
being paid to providers.
    Response: Per section 1895(b)(3)(C) of the Act, as amended by 
section 3131(b)(1) of the Affordable Care Act, CMS is required to 
reduce payment rates by 5 percent and target up to 2.5 percent of total 
estimated HH PPS payments to be paid as outliers. This provision is a 
statutory requirement and thus we do not have the authority to rescind 
this policy. Consequently, to implement this particular Affordable Care 
Act provision, CMS reduced the standardized 60-day episode payment 
amount by 5 percent, and set the FDL ratio such that it would target up 
to 2.5 percent of total estimated HH PPS payments as outlier payments.
    Final Decision: We are finalizing no change to the FDL ratio or 
loss sharing ratio for CY 2015. However, we will continue to monitor 
outlier payments and continue to explore ways to maintain an outlier 
policy for episodes that incur unusually high costs due to patient care 
needs without qualifying episodes of care that do not meet that 
criteria.

F. Medicare Coverage of Insulin Injections Under the HH PPS

    Home health policy regarding coverage of home health visits for the 
sole purpose of insulin injections is limited to patients that are 
physically or mentally unable to self-inject and there is no other 
person who is able and willing to inject the patient.\28\ However, the 
Office of Inspector General concluded in August 2013 that some 
previously covered home health visits for the sole purpose of insulin 
injections were unnecessary because the patient was physically and 
mentally able to self-inject.\29\ In addition, results from analysis in 
response to public comments on the CY 2014 HH PPS final rule found that 
episodes that qualify for outlier payments in excess of $10,000 had, on 
average, 160 skilled nursing visits in a 60-day episode of care with 95 
percent of the episodes listing a primary diagnosis of diabetes or 
long-term use of insulin (78 FR 72310). Therefore, we conducted a 
literature review regarding generally accepted clinical management 
practices for diabetic patients and conducted further analysis of home 
health claims data to investigate the extent to which episodes with 
visits likely for the sole purpose of insulin injections are in fact 
limited to patients that are physically or mentally unable to self-
inject.
---------------------------------------------------------------------------

    \28\ Medicare Coverage Benefit Policy Manual (Pub. 100-02), 
Section 40.1.2.4.B.2 ``Insulin Injections.''
    \29\ Levinson, Daniel R. Management Implication Report 12-0011, 
Unnecessary Home Health Care for Diabetic Patients.
---------------------------------------------------------------------------

    As generally accepted by the medical community, older patients (age 
65 and older) are more likely to have impairments in dexterity, 
cognition, vision, and hearing.\30\ While studies have shown that most 
elderly patients starting or continuing on insulin can inject 
themselves, these conditions may affect the elderly individual's 
ability to self-inject insulin. It is clinically essential that there 
is careful assessment prior to the initiation of home care, and 
throughout the course of treatment, regarding the patient's capacity 
for self-injection. There are multiple reliable and validated 
assessment tools that may be used to assess the elderly individual's 
ability to self-inject. These tools assess the individual's ability to 
perform activities of daily living (ADLs), as well as, cognitive, 
functional, and behavioral status.\31\ These assessment tools have also 
proved valid for judging patients' ability to inject insulin 
independently and to recognize and deal with hypoglycemia.\32\
---------------------------------------------------------------------------

    \30\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \31\ Hendra, T.J. Starting insulin therapy in elderly patients. 
(2012). Journal of the Royal Society of Medicine. 95(9), 453-455.
    \32\ Sinclair AJ, Turnbull CJ, Croxson SCM. Document of care for 
older people with diabetes. Postgrad Med J 1996;72: 334-8.
---------------------------------------------------------------------------

    Another important consideration with regard to insulin 
administration in the elderly population is the possibility of dosing 
errors.\33\ Correct administration and accurate dosing is important in 
order to prevent serious complications, such as hypoglycemia and 
hyperglycemia. The traditional vial and syringe method of insulin 
administration involves several steps, including injecting air into the 
vial, drawing an amount out of the vial into a syringe with small 
measuring increments, and verifying the correct dose visually.\34\ In 
some cases, an insulin pen can be used as an alternative to the 
traditional vial and syringe method.
---------------------------------------------------------------------------

    \33\ Coscelli C, Lostia S, Lunetta M, Nosari I, Coronel GA. 
Safety, efficacy, acceptability of a pre-filled insulin pen in 
diabetic patients over 60 years old. Diabetes Research and Clinical 
Practice. 1995;38:173-7.[PubMed].
    \34\ Flemming DR. Mightier than the syringe. Am J Nurs. 
2000;100:44-8.[PubMed].
---------------------------------------------------------------------------

    Insulin pens are designed to facilitate easy self-administration, 
the possession of which would suggest the ability to self-inject. 
Additionally, insulin pens often come pre-filled with insulin or must 
be used with a pre-filled cartridge thus potentially negating the need 
for skilled nursing for the purpose of calculating and filling 
appropriate doses. It is recognized that visual impairment, joint 
immobility and/or pain, peripheral neuropathy, and cognitive issues may 
affect the ability of elderly patients to determine correct insulin 
dosing and injection. Our literature review indicates that insulin pen 
devices may be beneficial in terms of safety for elderly patients due 
to these visual or physical disabilities.\35\ To determine whether to 
use a traditional vial and syringe method of insulin administration 
versus an insulin pen, the physician must consider and understand the 
advantages these devices offer over traditional vials and syringes. 
These advantages include:
---------------------------------------------------------------------------

    \35\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534.
---------------------------------------------------------------------------

     Convenience, as the insulin pen eliminates the need to 
draw up a dose;

[[Page 66095]]

     Greater dose accuracy and reliability, especially for low 
doses which are often needed in the elderly;
     Sensory and auditory feedback associated with the dial 
mechanism on many pens may also benefit those with visual impairments;
     Pen devices are also more compact, portable and easier to 
grip, which may benefit those with impairments in manual dexterity; and
     Less painful injections and overall ease of use.\36\
---------------------------------------------------------------------------

    \36\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534.
---------------------------------------------------------------------------

    Although pen devices are often perceived to be more costly than 
vialed insulin, study results indicate that elderly diabetic patients 
are more likely to accept pen devices and adhere to therapy, which 
leads to better glycemic control that decreases long-term complications 
and associated healthcare costs.\37\ The significantly improved safety 
profiles of pen devices also avert costly episodes of hypoglycemia.\38\ 
It also should be noted that most insurance plans, including Medicare 
Part D plans, charge the patient the same amount for a month supply of 
insulin in the pen device as insulin in the vial.\39\ Additionally, in 
some cases the individual with coverage for insulin pens may have one 
co-pay, resulting in getting more insulin than if purchasing a vial. 
And, there is less waste with pens because insulin vials should be 
discarded after 28 days after opening. However, there may be clinical 
reasons for the use of the traditional vial and insulin syringe as 
opposed to the insulin pen, including the fact that not all insulin 
preparations are available via insulin pen. In such circumstances, 
there are multiple assistive aids and devices to facilitate self-
injection of insulin for those with cognitive or functional 
limitations. These include: nonvisual insulin measurement devices; 
syringe magnifiers; needle guides; prefilled insulin syringes; and vial 
stabilizers to help ensure accuracy and aid in insulin delivery.\40\ It 
is expected that providers will assess the needs, abilities, and 
preference of the patient requiring insulin to facilitate patient 
autonomy, efficiency, and safety in diabetes self-management, including 
the administration of insulin.
---------------------------------------------------------------------------

    \37\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \38\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
    \39\ Wright, B., Bellone, J., McCoy, E. (2010). A review of 
insulin pen devices and use in elderly, diabetic population. 
Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. 
Doi: 10.4137/CMED.S5534.
    \40\ Strategies for Insulin Injection Therapy in Diabetes Self-
Management. (2011). American Association of Diabetes Educators.
---------------------------------------------------------------------------

    Further research regarding self-injection of insulin, whether via a 
vial and syringe method or insulin pen, shows that education for 
starting insulin and monitoring should be provided by a diabetes nurse 
specialist, and typically entails 5 to 10 face-to-face contacts either 
in the patient's home or at the diabetes clinic; these are in addition 
to telephone contacts to further reinforce teaching and to answer 
patient questions.\41\ This type of assessment and education allows for 
patient autonomy and self-efficiency and is often a preferred mode for 
diabetes self-management.
---------------------------------------------------------------------------

    \41\ Hendra, T.J. Starting insulin therapy in elderly patients. 
(2012). Journal of the Royal Society of Medicine. 95(9), 453-455. 
http://www.ncbi.nlm.nih.gov.
---------------------------------------------------------------------------

    In the CY 2014 HH PPS final rule (78 FR 72256), we noted that the 
Office of Inspector General (OIG) released a ``Management Implications 
Report'' in August of 2013 that concluded that there was a ``systemic 
weakness that results in Medicare coverage of unnecessary home health 
care for diabetic patients''. The OIG report noted that investigations 
show that the majority of beneficiaries involved in fraudulent schemes 
have a primary diagnosis of diabetes. The report noted that OIG Special 
Agents found falsified medical records documenting patients having hand 
tremors and poor vision preventing them from drawing insulin into a 
syringe, visually verifying the correct dosage, and injecting the 
insulin themselves, when the patients did not in fact suffer those 
symptoms.
    In light of the OIG report, we conducted analysis and performed 
simulations using CY 2012 claims data and described our findings in the 
CY 2014 Home Health PPS Final Rule (78 FR 72310). We found that nearly 
44 percent of the episodes that would qualify for outlier payments had 
a primary diagnosis of diabetes and 16 percent of episodes that would 
quality for outlier payments had a primary diagnosis of ``Diabetes 
mellitus without mention of complication, type II or unspecified type, 
not stated as uncontrolled.'' Qualifying for outlier payments should 
indicate an increased resource and service need. However, uncomplicated 
and controlled diabetes typically would be viewed as stable without 
clinical complications and would not warrant increased resource and 
service needs nor would it appear to warrant outlier payments. Our 
simulations estimated that approximately 81 percent of outlier payments 
would be paid to proprietary HHAs and that approximately two-thirds of 
outlier payments would be paid to HHAs located in Florida (27 percent), 
Texas (24 percent) and California (15 percent). We also conducted 
additional analyses on episodes in our simulations that would have 
resulted in outlier payments of over $10,000. Of note, 95 percent of 
episodes that would have resulted in outlier payments of over $10,000 
were for patients with a primary diagnosis of diabetes or long-term use 
of insulin, and most were concentrated in Florida, Texas, New York, 
California, and Oklahoma. On average, these outlier episodes had 160 
skilled nursing visits in a 60-day episode of care.\42\
---------------------------------------------------------------------------

    \42\ This analysis simulated payments using CY 2012 claims data 
and CY 2012 payment rates. The simulations did not take into account 
the 10-percent outlier cap. Some episodes may have qualified for 
outlier payments in the simulations, but were not paid accordingly 
if the HHA was at or over its 10 percent cap on outlier payments as 
a percent of total payments.
---------------------------------------------------------------------------

    Based upon the initial data analysis described above and the 
information found in the literature review, we conducted further data 
analysis with more recent home health claims and OASIS data (CY 2012 
and CY 2013) to expand our understanding of the diabetic patient in the 
home health setting. Specifically, we investigated the extent to which 
beneficiaries with a diabetes-related principal diagnosis received home 
health services likely for the primary purpose of insulin injection 
assistance and whether such services were warranted by other documented 
medical conditions. We also analyzed the magnitude of Medicare payments 
associated with home health services provided to this population of 
interest. The analysis was conducted by Acumen, LLC because of their 
capacity to provide real-time claims data analysis across all parts of 
the Medicare program (that is, Part A, Part B, and Part D).
    Our analysis began with identifying episodes for the home health 
diabetic population based on claims and OASIS assessments most likely 
to be associated with insulin injection assistance. We used the 
following criteria to identify the home health diabetic population of 
interest: (1) A diabetic condition listed as the principal/primary 
diagnosis on the home health claim; (2) Medicare Part A or Part B 
enrollment for at least three months prior to the episode and during 
the episode; and (3) episodes with at least 45 skilled visits. This 
threshold was determined based on the

[[Page 66096]]

distribution in the average number and length of skilled nursing visits 
for episodes meeting criteria 1 and 2 above using CY 2013 home health 
claims data. The average number of skilled nursing visits for 
beneficiaries who receive at least one skilled nursing visit appeared 
to increase from 20 visits at the 90th percentile, to 50 visits at the 
95th percentile. Additionally, the average length of a skilled nursing 
visit for episodes between the 90th and 95th percentiles was 37 
minutes, less than half the length of visits for episode between the 
75th and 90th percentiles.
    Approximately 49,100 episodes met the study population criteria 
described above, accounting for approximately $298 million in Medicare 
home health payments in CY 2013. Of the 49,100 episodes of interest, 71 
percent received outlier payments and, on average, there were 86 
skilled nursing visits per episode. In addition, 12 percent of the 
episodes in the study population were for patients prescribed an 
insulin pen to self-inject and more than half of the episodes billed 
(27,439) were for claims that listed ICD-9-CM 2500x, ``Diabetes 
Mellitus without mention of complication'', as the principal diagnosis 
code. ICD-9-CM describes the code 250.0x as diabetes mellitus without 
mention of complications (complications can include hypo- or 
hyperglycemia, or manifestations classified as renal, ophthalmic, 
neurological, peripheral circulatory damage or neuropathy). Clinically, 
this code generally means that the diabetes is being well-controlled 
and there are no apparent complications or symptoms resulting from the 
diabetes. Diabetes that is controlled and without complications does 
not warrant intensive intervention or daily skilled nursing visits; 
rather, it warrants knowledge of the condition and routine monitoring.
    As discussed above in this section, the traditional vial and 
syringe method of insulin administration is one of two methods of 
insulin administration (excluding the use of insulin pumps). The 
alternative to the traditional vial and syringe method is the use of 
insulin pens. It would seem to be a reasonable assumption that the 
possession of a prescribed insulin pen would suggest the ability to 
self-inject. Since insulin pens often come pre-filled with insulin or 
must be used with a pre-filled cartridge, we believe there would not be 
a need for skilled nursing for the purpose of insulin injection 
assistance. We expect providers to assess the needs, abilities, and 
preference of the patient requiring insulin to facilitate patient 
autonomy, efficiency, and safety in diabetes self-management, including 
the administration of insulin. As noted above, approximately 12 percent 
of the episodes in the study population with visits likely for the 
purpose of insulin injection assistance were for patients prescribed an 
insulin pen to self-inject, which would seem to not conform to our 
current policy that home health visits for the sole purpose of insulin 
injection assistance is limited to patients that are physically or 
mentally unable to self-inject and there is no other person who is able 
and willing to inject the patient.
    Furthermore, we recognize that our current sub-regulatory guidance 
may not adequately address the method of delivery. We are considering 
additional guidance that may be necessary surrounding insulin injection 
assistance provided via a pen based upon our analyses described above. 
We have found that literature supports that insulin pens may reduce 
expenses for the patient in the form of co-pays and may increase 
patient adherence to their treatment plan. Therefore, we encourage 
physicians to consider the potential benefits derived in prescribing 
insulin pens, when clinically appropriate, given the patient's 
condition.
    We also investigated whether secondary diagnosis codes listed on 
home health claims support that the patient, either for physical or 
mental reasons, cannot self-inject. Our contractor, Abt Associates, 
with review and clinical input from CMS clinical staff and experts, 
created a list of ICD-9-CM codes that indicate a patient has 
impairments in dexterity, cognition, vision, and/or hearing that may 
cause the patient to be unable to self-inject insulin. We found that 49 
percent of home health episodes in our study population did not have a 
secondary diagnosis from that ICD-9-CM code list on the home health 
claim that supported that the patient was physically or mentally unable 
to self-inject. When examining only the initial home health episodes of 
our study population, we found that 67 percent of initial home health 
episodes with skilled nursing visits likely for insulin injections did 
not have a secondary diagnosis on the home health claim that supported 
that the patient was physically or mentally unable to self-inject. 
Using the same list of ICD-9-CM diagnosis codes, we examined both the 
secondary diagnoses on the home health claim and diagnoses on non-home 
health claims in the three months prior to starting home health care 
for initial home health episodes. We found that for initial home health 
episodes in our study population that the percentage of episodes that 
did not have a secondary diagnosis to support that the patient cannot 
self-inject would decrease from 67 percent to 47 percent if the home 
health claim included diagnoses found in other claim types during the 
three months prior to entering home care. We do recognize that, in 
spite of all of the education, assistive devices and support, there may 
still be those who are unable to self-inject insulin and will require 
ongoing skilled nursing visits for insulin administration assistance. 
However, there is an expectation that the physician and the HHA would 
clearly document detailed clinical findings and rationale as to why an 
individual is unable to self-inject, including the reporting of an 
appropriate secondary condition that supports the inability of the 
patient to self-inject.
    As described above, a group of CMS clinicians and contractor 
clinicians developed a list of conditions that would support the need 
for ongoing home health skilled nursing visits for insulin injection 
assistance for instances where the patient is physically or mentally 
unable to self-inject and there is no able or willing caregiver to 
provide assistance. We expect the conditions included in Table 34 to be 
listed on the claim and OASIS to support the need for skilled nursing 
visits for insulin injection assistance.
    Table 34: ICD-9-CM Diagnosis Codes That Indicate a Potential 
Inability to Self-Inject Insulin

 Table 34--ICD-9-CM Diagnosis Codes That Indicate a Potential Inability
                         to Self-Inject Insulin
------------------------------------------------------------------------
      ICD-9-CM Code                         Description
------------------------------------------------------------------------
                               Amputation
------------------------------------------------------------------------
V49.61...................  Thumb Amputation Status.
V49.63...................  Hand Amputation Status.

[[Page 66097]]

 
V49.64...................  Wrist Amputation Status.
V49.65...................  Below elbow amputation status.
V49.66...................  Above elbow amputation status.
V49.67...................  Shoulder amputation status.
885.0....................  Traumatic amputation of thumb w/o mention of
                            complication.
885.1....................  Traumatic amputation of thumb w/mention of
                            complication.
886.0....................  Traumatic amputation of other fingers w/o
                            mention of complication.
886.1....................  Traumatic amputation of other fingers w/
                            mention of complication.
887.0....................  Traumatic amputation of arm and hand,
                            unilateral, below elbow w/o mention of
                            complication.
887.1....................  Traumatic amputation of arm and hand,
                            unilateral, below elbow, complicated.
887.2....................  Traumatic amputation of arm and hand,
                            unilateral, at or above elbow w/o mention of
                            complication.
887.3....................  Traumatic amputation of arm and hand,
                            unilateral, at or above elbow, complicated.
887.4....................  Traumatic amputation of arm and hand,
                            unilateral, level not specified, w/o mention
                            of complication.
887.5....................  Traumatic amputation of arm and hand,
                            unilateral, level not specified,
                            complicated.
887.6....................  Traumatic amputation of arm and hand,
                            bilateral, any level, w/o mention of
                            complication.
887.7....................  Traumatic amputation of arm and hand,
                            bilateral, any level, complicated.
------------------------------------------------------------------------
                                 Vision
------------------------------------------------------------------------
362.01...................  Background diabetic retinopathy.
362.50...................  Macular degeneration (senile) of retina
                            unspecified.
362.51...................  Nonexudative senile macular degeneration of
                            retina.
362.52...................  Exudative senile macular degeneration of
                            retina.
362.53...................  Cystoid macular degeneration of retina.
362.54...................  Macular cyst hole or pseudohole of retina.
362.55...................  Toxic maculopathy of retina.
362.56...................  Macular puckering of retina.
362.57...................  Drusen (degenerative) of retina.
366.00...................  Nonsenile cataract unspecified.
366.01...................  Anterior subcapsular polar nonsenile
                            cataract.
366.02...................  Posterior subcapsular polar nonsenile
                            cataract.
366.03...................  Cortical lamellar or zonular nonsenile
                            cataract.
366.04...................  Nuclear nonsenile cataract.
366.09...................  Other and combined forms of nonsenile
                            cataract.
366.10...................  Senile cataract unspecified.
366.11...................  Pseudoexfoliation of lens capsule.
366.12...................  Incipient senile cataract.
366.13...................  Anterior subcapsular polar senile cataract.
366.14...................  Posterior subcapsular polar senile cataract.
366.15...................  Cortical senile cataract.
366.16...................  Senile nuclear sclerosis.
366.17...................  Total or mature cataract.
366.18...................  Hypermature cataract.
366.19...................  Other and combined forms of senile cataract.
366.20...................  Traumatic cataract unspecified.
366.21...................  Localized traumatic opacities.
366.22...................  Total traumatic cataract.
366.23...................  Partially resolved traumatic cataract.
366.8....................  Other cataract.
366.9....................  Unspecified cataract.
366.41...................  Diabetic cataract.
366.42...................  Tetanic cataract.
366.43...................  Myotonic cataract.
366.44...................  Cataract associated with other syndromes.
366.45...................  Toxic cataract.
366.46...................  Cataract associated with radiation and other
                            physical influences.
366.50...................  After-cataract unspecified.
369.00...................  Impairment level not further specified.
369.01...................  Better eye: total vision impairment; lesser
                            eye: total vision impairment.
369.10...................  Moderate or severe impairment, better eye,
                            impairment level not further specified.
369.11...................  Better eye: severe vision impairment; lesser
                            eye: blind not further specified.
369.13...................  Better eye: severe vision impairment; lesser
                            eye: near-total vision impairment.
369.14...................  Better eye: severe vision impairment; lesser
                            eye: profound vision impairment.
369.15...................  Better eye: moderate vision impairment;
                            lesser eye: blind not further specified.
369.16...................  Better eye: moderate vision impairment;
                            lesser eye: total vision impairment.
369.17...................  Better eye: moderate vision impairment;
                            lesser eye: near-total vision impairment.
369.18...................  Better eye: moderate vision impairment;
                            lesser eye: profound vision impairment.
369.20...................  Moderate to severe impairment; Low vision
                            both eyes not otherwise specified.
369.21...................  Better eye: severe vision impairment; lesser
                            eye; impairment not further specified.
369.22...................  Better eye: severe vision impairment; lesser
                            eye: severe vision impairment.
369.23...................  Better eye: moderate vision impairment;
                            lesser eye: impairment not further
                            specified.

[[Page 66098]]

 
369.24...................  Better eye: moderate vision impairment;
                            lesser eye: severe vision impairment.
369.25...................  Better eye: moderate vision impairment;
                            lesser eye: moderate vision impairment.
369.3....................  Unqualified visual loss both eyes.
369.4....................  Legal blindness as defined in U.S.A.
377.75...................  Cortical blindness.
379.21...................  Vitreous degeneration.
379.23...................  Vitreous hemorrhage.
------------------------------------------------------------------------
                          Cognitive/Behavioral
------------------------------------------------------------------------
290.0....................  Senile dementia uncomplicated.
290.3....................  Senile dementia with delirium.
290.40...................  Vascular dementia, uncomplicated.
290.41...................  Vascular dementia, with delirium.
290.42...................  Vascular dementia, with delusions.
290.43...................  Vascular dementia, with depressed mood.
294.11...................  Dementia in conditions classified elsewhere
                            with behavioral disturbance.
294.21...................  Dementia, unspecified, with behavioral
                            disturbance.
300.29...................  Other isolated or specific phobias.
331.0....................  Alzheimer's disease.
331.11...................  Pick's disease.
331.19...................  Other frontotemporal dementia.
331.2....................  Senile degeneration of brain.
331.82...................  Dementia with lewy bodies.
------------------------------------------------------------------------
                                Arthritis
------------------------------------------------------------------------
715.11...................  Osteoarthrosis localized primary involving
                            shoulder region.
715.21...................  Osteoarthrosis localized secondary involving
                            shoulder region.
715.31...................  Osteoarthrosis localized not specified
                            whether primary or secondary involving
                            shoulder region.
715.91...................  Osteoarthrosis unspecified whether
                            generalized or localized involving shoulder
                            region.
715.12...................  Osteoarthrosis localized primary involving
                            upper arm.
715.22...................  Osteoarthrosis localized secondary involving
                            upper arm.
715.32...................  Osteoarthrosis localized not specified
                            whether primary or secondary involving upper
                            arm.
715.92...................  Osteoarthrosis unspecified whether
                            generalized or localized involving upper
                            arm.
715.13...................  Osteoarthrosis localized primary involving
                            forearm.
715.23...................  Osteoarthrosis localized secondary involving
                            forearm.
715.33...................  Osteoarthrosis localized not specified
                            whether primary or secondary involving
                            forearm.
715.93...................  Osteoarthrosis unspecified whether
                            generalized or localized involving forearm.
715.04...................  Osteoarthrosis generalized involving hand.
715.14...................  Osteoarthrosis localized primary involving
                            hand.
715.24...................  Osteoarthrosis localized secondary involving
                            hand.
715.34...................  Osteoarthrosis localized not specified
                            whether primary or secondary involving hand.
715.94...................  Osteoarthrosis unspecified whether
                            generalized or localized involving hand.
716.51...................  Unspecified polyarthropathy or polyarthritis
                            involving shoulder region.
716.52...................  Unspecified polyarthropathy or polyarthritis
                            involving upper arm.
716.53...................  Unspecified polyarthropathy or polyarthritis
                            involving forearm.
716.54...................  Unspecified polyarthropathy or polyarthritis
                            involving hand.
716.61...................  Unspecified monoarthritis involving shoulder
                            region.
716.62...................  Unspecified monoarthritis involving upper
                            arm.
716.63...................  Unspecified monoarthritis involving forearm.
716.64...................  Unspecified monoarthritis involving hand.
716.81...................  Other specified arthropathy involving
                            shoulder region.
716.82...................  Other specified arthropathy involving upper
                            arm.
716.83...................  Other specified arthropathy involving
                            forearm.
716.84...................  Other specified arthropathy involving hand.
716.91...................  Unspecified arthropathy involving shoulder
                            region.
716.92...................  Unspecified arthropathy involving upper arm.
716.93...................  Unspecified arthropathy involving forearm.
716.94...................  Unspecified arthropathy involving hand.
716.01...................  Kaschin-Beck disease shoulder region.
716.02...................  Kaschin-Beck disease upper arm.
716.04...................  Kaschin-Beck disease forarm.
716.04...................  Kaschin-beck disease involving hand.
719.81...................  Other specified disorders of joint of
                            shoulder region.
719.82...................  Other specified disorders of upper arm joint.
719.83...................  Other specified disorders of joint, forearm.
719.84...................  Other specified disorders of joint, hand.
718.41...................  Contracture of joint of shoulder region.
718.42...................  Contracture of joint, upper arm.
718.43...................  Contracture of joint, forearm.

[[Page 66099]]

 
718.44...................  Contracture of hand joint.
714.0....................  Rheumatoid arthritis.
------------------------------------------------------------------------
                           Movement Disorders
------------------------------------------------------------------------
332.0....................  Paralysis agitans (Parkinson's).
332.1....................  Secondary parkinsonism.
333.1....................  Essential and other specified forms of
                            tremor.
736.05...................  Wrist drop (acquired).
------------------------------------------------------------------------
After Effects from Stroke/Other Disorders of the Central Nervous System/
                        Intellectual Disabilities
------------------------------------------------------------------------
438.21...................  Hemiplegia affecting dominant side.
438.22...................  Hemiplegia affecting nondominant side.
342.01...................  Flaccid hemiplegia and hemiparesis affecting
                            dominant side.
342.02...................  Flaccid hemiplegia and hemiparesis affecting
                            nondominant side.
342.11...................  Spastic hemiplegia and hemiparesis affecting
                            dominant side.
342.12...................  Spastic hemiplegia and hemiparesis affecting
                            nondominant side.
438.31...................  Monoplegia of upper limb affecting dominant
                            side.
438.32...................  Monoplegia of upper limb affecting
                            nondominant side.
343.3....................  Congenital monoplegia.
344.41...................  Monoplegia of upper limb affecting dominant
                            side.
344.42...................  Monoplegia of upper limb affecting
                            nondominant side.
344.81...................  Locked-in state.
344.00...................  Quadriplegia unspecified.
344.01...................  Quadriplegia c1-c4 complete.
344.02...................  Quadriplegia c1 c4 incomplete.
344.03...................  Quadriplegia c5-c7 complete.
344.04...................  Quadriplegia c5-c7 incomplete.
343.0....................  Congenital diplegia.
343.2....................  Congenital quadriplegia.
344.2....................  Diplegia of upper limbs.
318.0....................  Moderate intellectual disabilities.
318.1....................  Severe intellectual disabilities.
318.2....................  Profound intellectual disabilities.
------------------------------------------------------------------------

    Although we did not propose any policy changes at this time, we 
solicited public comments on whether the conditions in Table 34 
represent a comprehensive list of codes that appropriately indicate 
that a patient may not be able to self-inject and solicited comments on 
the use of insulin pens in home health. We plan to continue monitoring 
claims that are likely for the purpose of insulin injection assistance. 
Historical evidence in the medical record must support the clinical 
legitimacy of the secondary condition(s) and resulting disability that 
limit the beneficiary's ability to self-inject.
    The following is a summary of the comments we received regarding 
our discussion of Medicare Coverage of Insulin Injections under HH PPS.
    Comment: A few commenters provided additional ICD-9-CM codes that 
CMS should consider as supporting the need for insulin injections 
because a patient cannot self-inject.
    Response: We thank the commenters for identifying additional ICD-9-
CM codes for us to consider. The ICD-9-CM codes that were identified by 
the commenters will be reviewed by our clinical staff and our 
contractors and will be taken into consideration in developing any 
future sub-regulatory guidance on insulin injections.
    Comment: Many commenters noted their general support of a 
comprehensive list of codes that appropriately indicate that a patient 
may not be able to self-inject. However, several commenters also 
suggested that CMS develop guidelines that are evidenced-based along 
with clinical and practical reasoning. A few commenters suggested that 
the evidence-based guidelines should be developed through the National 
Coverage Determination process, with presumptive eligibility or 
ineligibility, and an opportunity for the patient or HHA to rebut the 
presumption of ineligibility prior to denial of coverage.
    Response: The list of codes included in the proposed rule was not 
designed to provide guidelines for determining eligibility for insulin 
injections during a home health episode. Rather, the list of codes was 
designed to identify conditions that support the need for home health 
skilled nursing visits for insulin injection assistance when the 
patient is physically or mentally unable to self-inject and there is no 
able or willing caregiver to provide assistance. The National Coverage 
Determination process describes whether specific medical items, 
services, treatment procedures, or technologies can be paid for under 
Medicare. Under current policy, insulin injection assistance can be 
paid for under the Medicare home health benefit. Therefore, a National 
Coverage Determination is not necessary for insulin injections provided 
within a home health episode of care.
    Comment: One commenter stated that it is sometimes difficult to 
specify a single condition that describes why the patient cannot self-
inject. The commenter also stated that the list of codes was developed 
using ICD-9-CM codes, which will be obsolete in the future given the 
expansion of codes available under ICD-10-CM. One commenter suggested 
that we convene stakeholders after ICD-10-CM is implemented to 
determine a comprehensive list based on ICD-10-CM codes.

[[Page 66100]]

    Response: The list of codes that appropriately indicate that a 
patient may not be able to self-inject was developed based on codes 
currently available and is aimed at assisting providers and contractors 
in identifying diabetic patients who may not be able self-inject 
insulin. The list of codes is not designed to limit the provider's 
ability to demonstrate the necessity for insulin injections based on 
other information in the medical record. We agree that there may be 
more codes available under ICD-10-CM and plan to appropriately 
crosswalk the list of ICD-9-CM codes to ICD-10-Codes. We would like to 
note that the ICD-9-CM codes are listed in this rule because they are 
currently the official code set for home health claims. In addition, 
convening a stakeholder panel to create a comprehensive list of ICD-10-
CM codes is not necessary. Any sub-regulatory guidance issued would 
include this list of ICD-9-CM codes appropriately translated into ICD-
10-CM codes developed using the general equivalency mapping software 
and the clinical judgment of our clinicians and contractor clinicians.
    Comment: One commenter noted that CMS should not consider a future 
proposal to use a list of conditions as the single means of 
establishing coverage eligibility for insulin injections. Many 
commenters stated that any sub-regulatory guidance that identifies 
conditions that support a patient's inability to self-inject will 
result in the inaccurate denial of coverage for insulin injections thus 
placing the beneficiary at risk.
    Response: The discussion surrounding insulin injections was 
included in the rule to invite public comment and gather industry input 
on potential sub-regulatory guidance on this issue. We did not propose 
that the list of codes identified in the CY 2015 HH PPS proposed and 
final rules would as the sole means of establishing coverage 
eligibility for insulin injection assistance under the Medicare home 
health benefit. Rather, we identified these conditions as a means for 
providers and contractors to identify patients who may not be able to 
self-inject insulin.
    Comment: One commenter stated that they are concerned they will be 
required to ``screen'' patients and as such, the patient may not be 
afforded appeal rights.
    Response: We will take this opportunity to remind HHAs that they 
are not to enroll patients that do not meet the eligibility criteria 
for home health services. A patient that has been determined to be 
ineligible by a HHA has the right to ask for a review of eligibility by 
the Quality Improvement Organization.
    Comment: A commenter noted a concern that ``Attachment D'' does not 
permit the HHA to report diagnoses that do not require interventions on 
the OASIS (and subsequently the home health claim), thus precluding the 
home health agency from reporting one of these supporting diagnoses.
    Response: ``Attachment D'' guidance requires that secondary 
diagnoses reported be addressed in the home health plan of care. The 
focus of this discussion surrounds home health visits for the sole 
purpose of insulin injections. If the patient requires home health 
services for the sole purpose of insulin injections, it appears logical 
for these services to be reported in the plan of care and require 
interventions that may be supported by the reporting of the appropriate 
diagnosis that prevents the patient from self-injecting. Additionally, 
ICD-9-CM and ICD-10-CM coding guidelines state ``for reporting purposes 
the definition for ``other diagnoses'' is interpreted as additional 
conditions that affect patient care in terms of requiring: Clinical 
evaluation; or therapeutic treatment; or diagnostic procedures; or 
extended length of hospital stay; or increased nursing care and/or 
monitoring.'' Therefore, reporting a diagnosis that supports the reason 
for daily nursing visits for insulin injections would be in adherence 
with ICD-9-CM and ICD-10-CM coding guidelines, even if that condition 
is not the primary reason for the home health encounter. Because that 
condition is affecting the home health plan of care with the need for 
daily skilled nursing visits for insulin injections, it would be 
appropriate to list that diagnosis on the OASIS as well as on the home 
health claim.
    Comment: One commenter noted that CMS should consider a range of 
clinical reasons that indicate a patient may not be able to self-
inject, which may or may not relate to the diagnosis associated with 
the current home health episode. The commenter provided an example of 
an amputation or a cognitive defect stemming from a prior stroke.
    Response: We have not proposed a policy that limits coverage to a 
list of conditions that would indicate why a home health beneficiary is 
unable to self-inject. We recognize that there can be a wide range of 
reasons and multiple reasons why a beneficiary is unable to self-
inject. The list of diagnoses in the CY 2015 HH PPS proposed and final 
rule was determined, through clinical review, to support reasons why a 
skilled nurse would have to administer a daily insulin injection(s). In 
the commenter's scenario, if an amputation or cognitive defect 
necessitates that a skilled nurse administer insulin injection(s), then 
those conditions would be related to the reason the patient needs home 
health care. The presence of such conditions could indicate why there 
is the need for the skilled nurse to provide the injection(s), even 
though the insulin injection itself is for the treatment and management 
of diabetes. If any of the diagnoses listed in the CY 2015 HH PPS 
proposed and final rules are the reason(s) for the inability for the 
beneficiary to self-inject, then it is appropriate for the home health 
agency to report these conditions as they would meet the ICD-9-CM and 
ICD-10-CM coding guidelines to report those conditions on the OASIS and 
home health claim. We would also note that the examples provided of an 
amputation or cognitive defect were included in our list of conditions 
that may support that a patient is unable to self-inject insulin.
    We thank the commenters for providing us with their feedback and 
will use the information collected to inform any sub-regulatory 
guidance. We will also continue to monitor home health claims likely 
for visits to provide insulin injection assistance and we remind 
providers that historical evidence in the medical record must support 
the patient's inability to self-inject.

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

    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) was enacted. Section 212 of the PAMA, titled 
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides that 
``[t]he Secretary of Health and Human Services may not, prior to 
October 1, 2015, adopt ICD-10 code sets as the standard for code sets 
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c)) 
and Sec.  162.1002 of title 45, Code of Federal Regulations.'' Since 
the release of the CY 2015 HH PPS proposed rule (79 FR 38366-38420), 
HHS has finalized the new compliance date for ICD-10-CM and ICD-10-PCS. 
The August 4, 2014 final rule titled ``Administrative Simplification: 
Change to the Compliance Date for the International Classification of 
Diseases, 10th Revision (ICD-10-CM and ICD-10-PCS Medical Data Code 
Sets'' (79 FR 45128) announced October 1, 2015 as the compliance date. 
Under that final rule, the transition to ICD-10-CM is required for 
entities covered by the Health

[[Page 66101]]

Insurance Portability and Accountability Act of 1996 (HIPAA)(Pub. L. 
104-91, enacted on August 21, 1996). The rule also requires covered 
entities to continue using ICD-9 through September 30, 2015. Diagnosis 
reporting on home health claims must adhere to ICD-9-CM coding 
conventions and guidelines regarding the selection of principal 
diagnosis and the reporting of additional diagnoses until that time. 
The current ICD-9-CM Coding Guidelines refer to the use of the 
International Classification of Diseases, 9th Revision, Clinical 
Modification (ICD-9-CM) and are available through the CMS Web site at: 
http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html or on the CDC's Web site at http://www.cdc.gov/nchs/icd/icd9cm.htm. We plan to disseminate more information about the 
transition from ICD-9-CM to ICD-10-CM through the HHA Center Web site, 
the Home Health, Hospice and DME Open Door Forum, and in future 
rulemaking.
    The following is a summary of the comments we received regarding 
the implementation of the International Classification of Diseases, 
10th Revision, Clinical Modification (ICD-10-CM).
    Comment: One commenter stated that certain codes were not included 
in the translation list provided in last year's rule and attributed the 
omission to the limitations of our GEMS tool.
    Response: The CY 2015 HH PPS proposed rule did not contain a 
discussion of the translation list. Rather, the translation list was 
discussed in the CY 2014 HH PPS proposed and final rules. We invite 
further comments on the translation list, which should be submitted via 
email to grouperemail@mmm.com. We will review the comments and provide 
a response.
    Comment: Several commenters suggested that CMS post ICD-10-CM 
information and the grouper in an expedited manner to afford additional 
lead time to make the system changes that support ICD-10-CM submission 
effective October 1, 2015.
    Response: We plan to adjust our schedule to provide additional lead 
time. The CY 2014 HH PPS final rule (77 FR 67450-67531) announced a 
grouper release date in July 2014, providing three months lead time 
when the previous implementation date was October 1, 2014. We are 
adjusting our scheduled to release the ICD-10-CM HH PPS Grouper on 
April 1, 2015, which provides six months of lead time for HHAs and 
vendors to prepare for the transition to an ICD-10-CM HH PPS Grouper. 
In addition, we are planning to conduct additional outreach activities 
that will be announced in the future.
    As background, CMS and our support contractors, Abt Associates and 
3M, spent over 2 years implementing a process for the transition from 
the use of ICD-9-CM diagnosis codes to ICD-10-CM diagnosis codes within 
the HH PPS Grouper and outlined the process in the CY 2014 HH PPS 
proposed and final rules. No additional changes have been identified 
since that time and no additional ICD-10-CM codes have been added that 
would cause us to revise the grouper that was designed based on the CY 
2014 HH PPS final rule.
    The final translation list (which includes all of the codes listed 
in the draft posted to the CMS Web site) will be posted to the Home 
Health section of the CMS Web site. A draft ICD-10-CM HH PPS Grouper 
will be released on or before January 1, 2015 to our vendors that have 
registered as beta-testers. Beta-testers are again being reminded to 
provide any comments or feedback within 2 weeks of receipt based upon 
the processed outlined on the CMS Web site. The purpose of an early 
release to the beta testers is to identify any significant issues early 
in the process. Providers who are interested in enrolling as a beta 
site can obtain more information on the HH PPS Grouper Web site at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/CaseMixGrouperSoftware.html. As we noted above, the final 
ICD-10-CM HH PPS Grouper will be posted via the CMS Web site by April 
1, 2015. As we are providing three months of additional lead-time, 
providers should take advantage of this time to prepare their systems 
to submit ICD-10-CM codes for any services that reflect a date of 
October 1, 2015 and later for item M0090 on the OASIS. Item M0090 is 
the assessment completion date reported by the HHA on the OASIS and the 
grouper logic requires that any assessment with a M0090 date on or 
after October 1, 2015 contain ICD-10-CM codes.

H. Proposed Change to the Therapy Reassessment Timeframes

    Effective January 1, 2011, therapy reassessments must be performed 
on or ``close to'' the 13th and 19th therapy visits and at least once 
every 30 days (75 FR 70372). A qualified therapist, of the 
corresponding discipline for the type of therapy being provided, must 
functionally reassess the patient using a method which would include 
objective measurement. The measurement results and corresponding 
effectiveness of the therapy, or lack thereof, must be documented in 
the clinical record. We anticipated that policy regarding therapy 
coverage and therapy reassessments would address payment 
vulnerabilities that have led to high use and sometimes overuse of 
therapy services. We also discussed our expectation that this policy 
change would ensure more qualified therapist involvement for 
beneficiaries receiving high amounts of therapy. In our CY 2013 HH PPS 
final rule, we provided further clarifications regarding therapy 
coverage and therapy reassessments (77 FR 67068). Specifically, similar 
to the existing requirements for therapy reassessments when the patient 
resides in a rural area, we finalized changes to Sec.  
409.44(c)(2)(i)(C)(2) and (D)(2) specifying that when multiple types of 
therapy are provided, each therapist must assess the patient after the 
10th therapy visit but no later than the 13th therapy visit and after 
the 16th therapy visit but no later than the 19th therapy visit for the 
plan of care. In Sec.  409.44(c)(2)(i)(E)(1), we specified that when a 
therapy reassessment is missed, any visits for that discipline prior to 
the next reassessment are non-covered.
    Analysis of data from CYs 2010 through 2013 shows that the 
frequency of episodes with therapy visits reaching 14 and 20 therapy 
visits did not change substantially as a result of the therapy 
reassessment policy implemented in CY 2011 (see Table 35). The 
percentage of episodes with at least 14 covered therapy visits was 17.2 
percent in CY 2010 and decreased to 16.0 percent in CY 2011. In CY 2013 
the percentage of episodes with at least 14 covered therapy visits 
increased to 16.3 percent. Likewise, the percentage of episodes with at 
least 20 covered therapy visits was 6.0 percent in CY 2010 and 
decreased to 5.4 percent in CY 2011. In CY 2013, the percentage of 
episodes with at least 20 covered therapy visits was 5.3 percent. We 
analyzed data for specific types of providers (for example, non-profit, 
for profit, freestanding, facility-based), and we found the similar 
trends in the number of episodes with at least 14 and 20 covered 
therapy visits. For example, for non-profit HHAs, the percentage of 
episodes with at least 14 covered therapy visits decreased from 11.8 
percent in CY 2010 to 11.1 in CY 2011 and episodes with at least 20 
covered therapy visits decreased from 4.2 percent in CY 2010 to 3.9 
percent in CY 2011. For proprietary HHAs, the percentage of episodes 
with at least 14 covered therapy visits decreased from 19.7 percent in 
CY 2010 to 18.2 percent in CY 2011 and episodes with at least 20 
covered therapy visits decreased

[[Page 66102]]

from 6.8 percent in CY 2010 to 6.1 percent in CY 2011.
    As we stated in section III.A of this final rule, in addition to 
the implementation of the therapy reassessment requirements in CY 2011, 
HHAs were also subject to the Affordable Care Act face-to-face 
encounter requirement, payments were reduced to account for increases 
nominal case-mix, and the Affordable Care Act mandated that the HH PPS 
payment rates be reduced by 5 percent to pay up to, but no more than 
2.5 percent of total HH PPS payments as outlier payments. The estimated 
net impact to HHAs for CY 2011 was a decrease in total HH PPS payments 
of 4.78 percent. The independent effects of any one policy may be 
difficult to discern in years where multiple policy changes occur in 
any given year. We note that in our CY 2012 HH PPS final rule (76 FR 
68526), we recalibrated and reduced the HH PPS case-mix weights for 
episodes reaching 14 and 20 therapy visits, thereby diminishing the 
payment incentive for episodes at those therapy thresholds.

              Table 35--Percentage of Episodes With 14 and 20 Therapy Visits, CY 2010 Through 2013
----------------------------------------------------------------------------------------------------------------
                                                              Episodes with     Episodes with     Episodes with
                                                               at least 1        at least 14       at least 20
                       Calendar year                         covered therapy   covered therapy   covered therapy
                                                                  visit            visits            visits
----------------------------------------------------------------------------------------------------------------
2010......................................................              54.1              17.2               6.0
2011......................................................              54.2              16.0               5.4
2012......................................................              55.2              15.6               5.2
2013......................................................              56.3              16.3               5.3
----------------------------------------------------------------------------------------------------------------
Source: CY 2010 claims from the Datalink file and CY 2011 through CY 2013 claims from the standard analytic file
  (SAF).
Note(s): For CY 2010, we included all episodes that began on or after January 1, 2010 and ended on or before
  December 31, 2010 and we included a 20% sample of episodes that began in CY 2009 but ended in CY 2010. For CY
  2011 and CY 2013, we included all episodes that ended on or before December 31 of that CY (including 100% of
  episodes that began in the previous CY, but ended in the current CY).

    Since the therapy reassessment requirements were implemented in CY 
2011, providers have expressed frustration regarding the timing of 
reassessments for multi-discipline therapy episodes. In multiple 
therapy episodes, therapists must communicate when a planned visit and/
or reassessment is missed to accurately track and count visits. 
Otherwise, therapy reassessments may be in jeopardy of not being 
performed during the required timeframe increasing the risk of 
subsequent visits being non-covered. As stated above, our recent 
analysis of claims data from CY 2010 through CY 2013 does not show 
significant change in the percentage of cases reaching the 14 therapy 
visit and 20 therapy visit thresholds between CY 2010 and CY 2011. 
Moreover, payment increases at the 14 therapy visit and 20 therapy 
visit thresholds have been somewhat mitigated since the recalibration 
of the case-mix weights in CY 2012. Therefore, we proposed to simplify 
Sec.  409.44(c)(2) to require a qualified therapist (instead of an 
assistant) from each discipline to provide the needed therapy service 
and functionally reassess the patient in accordance with Sec.  
409.44(c)(2)(i)(A) at least every 14 calendar days.
    The proposed requirement to perform a therapy reassessment at least 
once every 14 calendar days would apply to all episodes regardless of 
the number of therapy visits provided. All other requirements related 
to therapy reassessments will remain unchanged, such as a qualified 
therapist (instead of an assistant) from each therapy discipline 
provided will still be required to provide the ordered therapy service 
and functionally reassess the patient using a method which would 
include objective measurements. The measurement results and 
corresponding effectiveness of the therapy, or lack thereof, would be 
documented in the clinical record. In the proposed rule, we stated our 
belief that revising this requirement would make it easier and less 
burdensome for HHAs to track and to schedule therapy reassessments 
every 14 calendar days as opposed to tracking and counting therapy 
visits, especially for multiple-discipline therapy episodes. We also 
believed that this proposal would reduce the risk of non-covered visits 
so that therapists could focus more on providing quality care for their 
patients, while still promoting therapist involvement and quality 
treatment for all beneficiaries, regardless of the level of therapy 
provided.
    In the CY 2015 HH PPS proposed rule (79 FR 38366-38420), we invited 
comment on this proposal and the associated change in the regulation at 
Sec.  409.44. The following is a summary of comments we received 
regarding the proposed change to the therapy reassessment timeframes.
    Comment: Commenters strongly supported removing the requirement to 
perform therapy reassessments on or ``close to'' the 13th and 19th 
therapy visits. Commenters appreciate our effort to simplify the 
therapy reassessment timeframes in order to allow more time and energy 
to be focused on the patients and outcomes and less time on counting 
visits. However, the commenters believe that the proposed reassessment 
interval of every 14 days would be too frequent. They noted that the 
14-day interval is not linked to a clinical objective that benefits the 
patient. They note that changes in function as a result of improvements 
in functional strength, balance, and other impairments typically take 
longer than the 14 days. Commenters state that physiological change 
requires six to eight weeks to occur depending on the patient's 
individual goals. They believe this to be true especially in the case 
of home health patients who typically have complex, multi-system 
impairments. Most commenters believe that a 30 day reassessment would 
be more realistic in terms of commonly used functional tests, such as 
the Berg Balance test, Gait Velocity, Chair Rise test, Timed Up and Go, 
and Barthel Index, being able to detect a change. Several commenters 
believe the 14 day requirement would lead to scheduling congestion due 
to the shortage of qualified therapists and time constraints in rural 
areas where therapists spend a lot of time traveling to the patient's 
residence. Commenters state that this would make it exceedingly 
difficult for HHAs to accommodate both patient and staff scheduling 
needs, which would negatively impact patient care. Commenters believe 
that the proposed 14 day reassessment requirement discourages the 
proper use of assistants and their role in home health care. In 
addition, commenters state that the 14 day timeframe is burdensome in 
that it increases documentation requirements and does nothing to 
promote quality of

[[Page 66103]]

care. For example, commenters expect that the 14 day reassessment 
timeframe will result in patient complaints that therapists are 
spending too much treatment time on documentation. Additionally, the 14 
day reassessment timeframe negatively impacts continuity of care. For 
example, if a patient is being seen by a certified occupational therapy 
assistant and a physical therapy assistant, then the patient would be 
seen by four different therapists in a two week time period. This could 
be overwhelming for the patient. Continuity of care and personnel are 
important with this population to ensure trust and follow through which 
directly impacts the patient's adherence to a home exercise program and 
to follow the functional and safety recommendations made by the 
treating therapists.
    Several commenters stated that patient care should not be 
determined by a calendar and that the reassessment should still be 
based on the frequency of visits. Some commenters recommended that the 
reassessment be performed every 5th or 6th visit while others 
recommended that it be performed every 8th or 10th visit. However, the 
majority of commenters stated that converting this requirement to a 
calendar day based interval will be far easier to track and manage. 
Most commenters believe that a calendar day based interval will reduce 
the likelihood of inadvertently missing an assessment, especially when 
the patient is receiving multiple types of therapy. Several commenters 
suggested a reassessment timeframe in the range of every 20 to 28 days. 
A few commenters suggested every 6 to 8 weeks. One commenter 
recommended performing the assessment every 60 days. The overwhelming 
majority of commenters recommended reassessing the patient at least 
once every 30 days as the most appropriate time frame. Commenters 
stated that a 30 day reassessment timeframe aligns with many state 
practice acts, which require that a therapist reassess the patient at 
least once every 30 days.
    Response: As a result of the comments we received, in which most 
commenters suggested requiring therapy reassessments at least once 
every 30 days, we are finalizing our proposal to eliminate the therapy 
reassessments that are required to be performed on or ``close to'' the 
13th and 19th therapy visits. We are also finalizing that a qualified 
therapist (instead of an assistant) from each discipline provide the 
needed therapy service and functionally reassess the patient in 
accordance with Sec.  409.44(c)(2)(i)(A) at least once every 30 
calendar days, rather than at least every 14 calendar days, as 
proposed.
    Comment: Some commenters suggested that we provide either a 3 or 5 
day window or grace period before and after the 30th day in which to 
complete the reassessment.
    Response: A 3-5 day window before the 30th day is built into the 
requirement to perform the reassessment at least once every 30 calendar 
days. However, we will not adopt a policy of allowing for a 3 or 5 day 
window or grace period after the 30th calendar day as some of the 
commenters suggested. We believe that requiring therapy reassessments 
to be performed at least once every 30 calendar days is flexible and 
enhances patient care.
    Comment: Some commenters asked for clarification as to whether the 
proposed reassessment would be required at least once every 14 calendar 
days or exactly every 14th calendar day.
    Response: We had intended that the proposed requirement would be 
for the reassessment to be performed at least once every 14 calendar 
days. We will finalize a requirement that the reassessment be performed 
at least once every 30 days. The reassessment will not have to be done 
on exactly the 30th day. For example, the reassessment could be done on 
the 21st day or the 28th day as clinically appropriate and deemed 
necessary by the therapist.
    Comment: One commenter stated that it is in the best interest of 
the patient to have regular interaction with the actual therapist, not 
just the assistant. The commenter believes that assistants generally 
should not be routinely used in the home setting unless they have 
demonstrated advanced proficiencies in the setting and that assistant 
visits should be reimbursed at a lower level since HHAs pay them less.
    Response: We believe that therapy assistants play a very important 
role in supporting therapists and providing care to home health 
patients, especially in rural areas and areas where there is a shortage 
of therapists. The home health Conditions of Participation (CoPs), at 
Sec.  484.32, state that any therapy services offered by the HHA 
directly or under arrangement are given by a qualified therapist or by 
a qualified therapy assistant under the supervision of a qualified 
therapist and in accordance with the plan of care. The qualified 
therapist assists the physician in evaluating level of function, helps 
develop the plan of care (revising it as necessary), prepares clinical 
and progress notes, advises and consults with the family and other 
agency personnel, and participates in in-service programs. Services 
furnished by a qualified physical therapy assistant or qualified 
occupational therapy assistant may be furnished under the supervision 
of a qualified physical or occupational therapist. A physical therapy 
assistant or occupational therapy assistant performs services planned, 
delegated, and supervised by the therapist, assists in preparing 
clinical notes and progress reports, and participates in educating the 
patient and family, and in in-service programs. In addition, guidelines 
published by the American Physical Therapy Association (APTA) state:

    When supervising the physical therapist assistant in any off-
site setting, the following requirements must be observed:
    1. A physical therapist must be accessible by telecommunications 
to the physical therapist assistant at all times while the physical 
therapist assistant is treating patients/clients.
    2. There must be regularly scheduled and documented conferences 
with the physical therapist assistant regarding patients/clients, 
the frequency of which is determined by the needs of the patient/
client and the needs of the physical therapist assistant.
    3. In those situations in which a physical therapist assistant 
is involved in the care of a patient/client, a supervisory visit by 
the physical therapist will be made:
    a. Upon the physical therapist assistant's request for a 
reexamination, when a change in the plan of care is needed, prior to 
any planned discharge, and in response to a change in the patient's/
client's medical status.
    b. At least once a month, or at a higher frequency when 
established by the physical therapist, in accordance with the needs 
of the patient/client.
    c. A supervisory visit should include:
    i. An on-site reexamination of the patient/client.
    ii. On-site review of the plan of care with appropriate revision 
or termination.
    iii. Evaluation of need and recommendation for utilization of 
outside resources.''\43\

    \43\ http://www.apta.org/uploadedFiles/APTAorg/About_Us/Policies/Practice/DirectionSupervisionPTA.pdf.
---------------------------------------------------------------------------

We believe that requiring therapy reassessments at least once every 30 
days, the current CoP requirements, and the APTA guidelines together 
promote regular interaction between the therapist and the patient. We 
will continue to monitor the frequency of assistant visits. As shown in 
Table 36 below, CY 2011 through CY 2013 claims data indicates that 
about 30 percent of the time, physical therapy is provided by 
assistants and about 15 percent of the time, occupational therapy is 
provided by assistants.

[[Page 66104]]

    Table 36--Percentage of Visits Provided by a Physical Therapy and
          Occupational Therapy Assistants, CY 2011 Through 2013
------------------------------------------------------------------------
                                          Percentage  of  Percentage  of
                                             PT visits       OT visits
                  Year                     provided by a  provided by an
                                                PTA             OTA
------------------------------------------------------------------------
2011....................................            23.8            14.4
2012....................................            28.5            15.4
2013....................................            29.2            15.4
------------------------------------------------------------------------
Source: Analysis of CY 2011 through CY 2013 claims data from the
  Standard Analytic File (SAF).
Note(s): We included all episodes that ended on or before December 31 of
  that CY (including 100% of episodes that began in the previous CY, but
  ended in the current CY).

    Bureau of Labor Statistics (BLS) data on wage and fringe rates is 
currently used along with the minutes of care provided during home 
health episodes, as found on claims, to calculate an episode's resource 
use (an estimate of the relative cost of the episode). Data on resource 
use is used to construct case-mix weights that adjust the base payment 
rate in order to more accurately pay for home health episodes. Since CY 
2012, the case mix system takes into account whether visits were 
performed by a therapist or a therapy assistant when constructing the 
case mix weights by calculating an episode's resource use accordingly. 
The Medicare HHA cost report form may be revised in the near future, 
but currently the form does not allow us to differentiate the cost of a 
therapist visit from a therapy assistant visit. We will consider 
whether separate LUPA rates for therapists versus therapy assistants 
are needed in the future.
    Comment: A commenter requested clarification regarding the 
semantics of our proposal ``. . . to require a qualified therapist 
(instead of an assistant) from each discipline to provide the needed 
therapy service and functionally reassess the patient . . .'' as this 
could be interpreted two different ways. The commenter is concerned 
that the language could be interpreted to mean that therapy assistants 
will no longer be eligible to perform visits in the home health 
setting.
    Response: We are not changing our existing policy regarding therapy 
assistants. Assistants may still perform physical therapy services and 
occupational therapy services which they are qualified to perform. 
Therapy assistants may provide therapy visits as medically reasonable 
and necessary to treat the patient throughout the duration of the 
episode. As stated in our existing policy, during the visit in which 
the therapist performs the assessment, the qualified therapist (not a 
therapy assistant) must also provide the therapy service(s).
    Comment: One commenter asked if the new therapy reassessment 
timeframe will only apply to episodes beginning on or after January 1, 
2015 or if it will also apply to episodes spanning January 1, 2015.
    Response: The new therapy reassessment requirement will apply to 
episodes that begin on or after January 1, 2015.
    Comment: Several commenters questioned when the reassessment clock 
would start. They asked for more clarity about whether the count would 
begin at the start of the episode or from the date the patient is first 
seen by a therapist.
    Response: The clock would start from the date the patient is first 
seen by the qualified therapist, as per Sec.  409.44(c)(2)(i)(A) the 
patient's function must be initially assessed by a qualified therapist. 
As stated in current guidance, the reassessment clock is not measured 
by episode but by the patient's full course of treatment. That is, the 
reassessment clock starts with the therapist's first assessment/visit 
and continues until the patient is discharged from home health. In 
cases where more than one type of therapy is being provided, each 
therapy discipline has its own separate clock. The 30-day clock begins 
with the first therapy service (of that discipline) and the clock 
resets with each therapist's visit/assessment/measurement/documentation 
(of that discipline).
    In order to determine when the next therapy reassessment visit by a 
qualified therapist would be required, as it relates to the ``at least 
every 30 days'' requirement, the counting should begin the day after 
the service is provided. For example, if a therapist conducted and 
documented an assessment of a patient during a visit on April 1, the 
count would begin on April 2. In this case, in order to fulfill the 
requirement of reassessing the patient at least once every 30 days, the 
therapist rather than an assistant, would need to return by May 1.
    We note that the intent of the policy is to ensure that, at a 
minimum, a patient is seen by the therapist at least once every 30 
days. The intent is not for a therapist to wait until the 30th day to 
visit a patient. A therapy reassessment visit should include providing 
the actual therapy service(s), functionally assessing the patient, 
measuring progress to determine if the goals have been met, and 
documenting measurement results and corresponding therapy effectiveness 
in the clinical record.
    Comment: A commenter was supportive of a requirement for 
reassessing the patient every 30 days with the understanding that 
nothing precludes an agency from doing another assessment earlier than 
the 30th day if warranted by the patient's condition or ending of 
therapy.
    Response: The commenter is correct. Nothing precludes an agency 
from doing another assessment earlier than the 30th day if warranted by 
the patient's condition or ending of therapy. As stated above, the 
requirement is for the qualified therapist to reassess the patient at 
least once every 30 days.
    Comment: A commenter stated that education regarding any changes to 
the timing expectations is critical to reduce confusion and prevent 
misunderstandings and that clearly written instruction with specific 
examples would be extremely beneficial. The commenter further stated 
that partnering with the therapy associations in educational efforts 
will help get the correct word out to the therapists themselves.
    Response: We will be updating the policy as published in chapter 7 
``Home Health Services'' of the Medicare Benefit Policy Manual (Pub. 
100-20) and publishing a provider education article related to the 
revised policy. As always, we appreciate any educational efforts that 
the professional associations are able and willing to provide.
    Final Decision: In summary, we are finalizing changes to the 
regulations at Sec.  409.44, effective for episodes ending on or after 
January 1, 2015, to require that at least every 30 days a qualified 
therapist (instead of an assistant) must provide the needed therapy 
service and functionally reassess the patient. Where more than one 
discipline of therapy is being provided, a qualified therapist from 
each of the disciplines must provide the needed therapy service and 
functionally reassess the patient at least every 30 days. Therapy 
reassessments are to be performed using a method that would include 
objective measurement, in accordance with accepted professional 
standards of clinical practice, which enables comparison of successive 
measurements to determine the effectiveness of therapy goals. Such 
objective measurements would be made by the qualified therapist using 
measurements which assess activities of daily living that may include 
but are not limited to eating, swallowing, bathing, dressing, 
toileting, walking, climbing stairs, or using assistive devices, and 
mental and cognitive factors. The measurement results and corresponding 
effectiveness of the therapy, or lack

[[Page 66105]]

thereof, must be documented in the clinical record.

I. HHA Value-Based Purchasing Model

    As we discussed previously in the FY 2009 proposed rule for Skilled 
Nursing Facilities (73 FR 25918, 25932, May 7, 2008), value-based 
purchasing (VBP) programs, in general, are intended to tie a provider's 
payment to its performance in such a way as to reduce inappropriate or 
poorly furnished care and identify and reward those who furnish quality 
patient care. Section 3006(b)(1) of the Affordable Care Act directed 
the Secretary to develop a plan to implement a VBP program for home 
health agencies (HHAs) and to issue an associated Report to Congress 
(Report). The Secretary issued that Report, which is available online 
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/downloads/stage-2-NPRM.PDF.
    The Report included a roadmap for HHA VBP implementation. The 
Report outlined the need to develop a HHA VBP program that aligns with 
other Medicare programs and coordinates incentives to improve quality. 
The Report indicated that a HHA VBP program should build on and refine 
existing quality measurement tools and processes. In addition, the 
Report indicated that one of the ways that such a program could link 
payment to quality would be to tie payments to overall quality 
performance.
    Section 402(a)(1)(A), of the Social Security Amendments of 1967 (as 
amended), 42 U.S.C. 1395b-1(a)(1)(A) provided authority for CMS to 
conduct the Home Health Pay-for-Performance (HHPFP) Demonstration that 
ran from 2008 to 2010. The results of that Demonstration found limited 
quality improvement in certain measures after comparing the quality of 
care furnished by Demonstration participants to the quality of care 
furnished by the control group. One important lesson learned from the 
HHPFP Demonstration was the need to link the HHA's quality improvement 
efforts and the incentives. HHAs in three of the four regions generated 
enough savings to have incentive payments in the first year of the 
Demonstration, but the size of payments were unknown until after the 
conclusion of the Demonstration. This time lag on paying incentive 
payments did not provide a sufficient incentive to HHAs to make 
investments necessary to improve quality. The Demonstration suggested 
that future models could benefit from ensuring that incentives are 
reliable enough, of sufficient magnitude, and paid in a timely fashion 
to encourage HHAs to be fully engaged in the quality of care 
initiative. The evaluation report is available online at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/HHP4P_Demo_Eval_Final_Vol1.pdf.
    We have already successfully implemented the Hospital Value-Based 
Purchasing (HVBP) program where 1.25 percent of hospital payments in FY 
2014 are tied to the quality of care that the hospitals provide. This 
percentage amount will gradually increase to 2.0 percent in FY 2017 and 
subsequent years. The President's 2015 Budget proposes that value-based 
purchasing should be extended to additional providers including skilled 
nursing facilities, home health agencies, ambulatory surgical centers, 
and hospital outpatient departments. Therefore, we are now considering 
testing a HHA VBP model that builds on what we have learned from the 
HVBP program. The model also presents an opportunity to test whether 
larger incentives than what have been previously tested will lead to 
even greater improvement in the quality of care furnished to 
beneficiaries. The HHA VBP model that is being considered will offer 
both a greater potential reward for high performing HHAs as well as a 
greater potential downside risk for low performing HHAs. If 
implemented, the model will begin at the outset of CY 2016, and include 
an array of measures that can capture the multiple dimensions of care 
that HHAs furnish. Building upon the successes of other related 
programs, we are seeking to implement a model with greater upside 
benefit and downside risk to motivate HHAs to make the substantive 
investments necessary to improve the quality of care furnished by HHAs.
    As currently envisioned, the HHA VBP model would reduce or increase 
Medicare payments, in a 5-8 percent range, depending on the degree of 
quality performance in various measures to be selected. The model would 
apply to all HHAs in each of the projected five to eight states 
selected to participate in the model. The distribution of payments 
would be based on quality performance, as measured by both achievement 
and improvement across multiple quality measures. Some HHAs would 
receive higher payments than standard fee-for-service payments and some 
HHAs would receive lower payments, similar to the HVBP program. We 
believe the payment adjustment at risk would provide an incentive among 
all HHAs to provide significantly better quality through improved 
planning, coordination, and management of care. To be eligible for any 
incentive payments, HHAs would need to achieve a minimal threshold in 
quality performance with respect to the care that they furnish. The 
size of the award would be dependent on the level of quality furnished 
above the minimal threshold with the highest performance awards going 
to HHAs with the highest overall level of or improvement in quality.
    HHAs that meet or exceed the performance standards based on quality 
and efficiency metrics would be eligible to earn performance payments. 
The size of the performance payment would be dependent upon the 
provider's performance relative to other HHAs within its participating 
state. HHAs that exceed the performance standards and demonstrate the 
greatest level of overall quality or quality improvement on the 
selected measures would have the opportunity to receive performance 
payment adjustments greater than the amount of the payment reduction, 
and would therefore see a net payment increase as a result of this 
model. Those HHAs that fail to meet the performance standard would 
receive lower payments than what would have been reimbursed under the 
traditional FFS Medicare payment system, and would therefore see a net 
payment decrease to Medicare payments as a result of this model. We 
stated in the proposed rule that we are proposing to use the waiver 
authority under section 1115A of the Act to waive the applicable 
Medicare payment provisions for HHAs in the selected states and apply a 
reduction or increase to current Medicare payments to these HHAs, which 
will be dependent on their performance.
    We are considering a HHA VBP model in which participation by all 
HHAs in five to eight selected states is mandatory. We believe 
requiring all HHAs in selected states to participate in the model will 
ensure that: (1) There is no selection bias, (2) participating HHAs are 
representative of HHAs nationally, and (3) there is sufficient 
participation to generate meaningful results. In our experience, 
providers are generally reluctant to participate voluntarily in models 
in which their Medicare payments are subject to reduction. In the 
proposed rule, we invited comments on the HHA VBP model outlined above, 
including elements of the model, size of the payment incentives and 
percentage of payments that would need to be placed at risk in order to 
spur HHAs to make the necessary investments to improve the quality of 
care for Medicare beneficiaries, the timing of the incentive

[[Page 66106]]

payments, and how performance payments should be distributed. We also 
invited comments on the best approach for selecting states for 
participation in this model. Approaches could include: (1) Selecting 
states randomly, (2) selecting states based on quality, utilization, 
health IT, or efficiency metrics or a combination, or (3) other 
considerations. We noted that if we decide to move forward with the 
implementation of this HHA VBP model in CY 2016, we intended to invite 
additional comments on a more detailed model proposal to be included in 
future rulemaking.
    We received a number of comments on the model design, including the 
following:
     A number of commenters expressed concern regarding the 
magnitude of 5-8 percent payment adjustment incentives, particularly 
when considering HHA margins, and as compared to the Hospital Value-
based Purchasing program. A number of commenters also expressed support 
for a high payment incentive because they believe that this payment 
incentive will provide adequate remuneration for an investment in 
quality.
     A number of commenters encouraged a combination of pay-
for-performance and pay-for-reporting .
     A number of commenters expressed ideas on the evaluation 
criteria under the model, for example: Not using the 5-star system, 
giving higher weight to quality measures relating to conditions 
requiring home health intervention, excluding HHCAHPS from the criteria 
due to timeliness reasons, excluding re-hospitalization metrics since 
they are often determined by physician judgment, and excluding OASIS 
measures since they might be fraudulently manipulated.
     A number of commenters expressed support for the inclusion 
of a beneficiary risk adjustment strategy to help prevent cherry 
picking of easier cases.
     A number of commenters preferred for HHAs to be allowed to 
select participation as opposed to the mandatory participation being 
considered by CMS.
     A number of commenters expressed opinions about the 
methodology for selecting the participating states, including choosing 
them from various MAC regions, choosing a rural and frontier state, and 
excluding states with moratoria on new HHAs.
     A number of commenters supported the development of a VBP 
model.
    We thank all commenters for their input and will consider these 
comments as we make further decisions about implementing a HHA VBP 
model in CY 2016 which would assess performance from each of the 
preceding baseline years. As stated in the proposed rule, we intend to 
invite additional comments on a more detailed model proposal to be 
included in future rulemaking, including the selection of states and 
the criteria used for selection, the specific measures to be employed, 
how these measures are categorized within domains and the criteria used 
for selection, and the payment adjustment percentage.

J. Advancing Health Information Exchange

    HHS believes all patients, their families, and their healthcare 
providers should have consistent and timely access to their health 
information in a standardized format that can be securely exchanged 
between the patient, providers, and others involved in the patient's 
care. (HHS August 2013 Statement, ``Principles and Strategies for 
Accelerating Health Information Exchange.'') The Department is 
committed to accelerating health information exchange (HIE) through the 
use of electronic health records (EHRs) and other types of health 
information technology (health IT) across the broader care continuum 
through a number of initiatives including: (1) Alignment of incentives 
and payment adjustments to encourage provider adoption and optimization 
of health IT and HIE services through Medicare and Medicaid payment 
policies, (2) adoption of common standards and certification 
requirements for interoperable health IT, (3) support for privacy and 
security of patient information across all HIE-focused initiatives, and 
(4) governance of health information networks. These initiatives are 
designed to encourage HIE among all health care providers, including 
professionals and hospitals eligible for the Medicare and Medicaid EHR 
Incentive Programs and those who are not eligible for the EHR Incentive 
programs, and are designed to improve care delivery and coordination 
across the entire care continuum. We believe that HIE and the use of 
certified EHR technology by HHAs (and other providers ineligible for 
the Medicare and Medicaid EHR Incentive Programs) can effectively and 
efficiently help providers improve internal care delivery practices, 
support management of patient care across the continuum, and enable the 
reporting of electronically specified clinical quality measures 
(eCQMs).
    Comments: Responses from commenters generally supported the use of 
EHRs to advance standards-based interoperable health information 
exchange, ensure privacy and security protections, and improve patient-
centered quality care. Commenters noted the ability for health IT to 
enable access to essential information for decision-making by 
individuals, providers and their family caregivers. One commenter noted 
the possibility that some vendors may sunset products or increase costs 
as health IT standards are adopted. Other commenters noted the need for 
standards that recognize the distinct functional needs of the home care 
sector and requested notice regarding emerging standards to allow 
sufficient time for vendor and provider integration. Other commenters 
expressed concern regarding increased costs associated with 
implementing HIE and the lack of incentives to support capital 
expenditures.
    Response: We thank commenters for their responses. HHS will 
continue to promote the adoption and implementation of certified health 
IT. The use of certified health IT can improve interoperability through 
the use of national, consensus-based standards as well as facilitate 
the secure interoperable exchange of health information. To increase 
flexibility in the Office of the National Coordinator for Health 
Information Technology's (ONC) regulatory certification structure, ONC 
expressed in the 2014 Edition Release 2 final rule (79 FR 54472-73) an 
intent to propose future changes to the ONC HIT Certification Program 
that would permit the certification of health IT for other health care 
settings, such as long-term and post-acute care and behavioral health 
settings. For now, we direct stakeholders to the ONC guidance for EHR 
technology developers serving providers ineligible for the Medicare and 
Medicaid EHR Incentive Programs titled ``Certification Guidance for EHR 
Technology Developers Serving Health Care Providers Ineligible for 
Medicare and Medicaid EHR Incentive Payments.'' \44\ We encourage 
stakeholders to also review the Health IT Policy Committee (a Federal 
Advisory Committee) recommendations for areas in which certification 
under the ONC HIT Certification Program would help support long-term 
and post-acute care providers.\45\ Further,

[[Page 66107]]

stakeholders should consider emerging innovative payment models, 
quality reporting programs, state Medicaid reimbursement for remote 
monitoring (available in some states) and grants that could provide 
funding for health IT implementation for home health or incentivize 
other providers to assist home health providers' implementation 
efforts. For an overview of these opportunities, stakeholders are 
directed to the Health IT in Long-Term Post-Acute Care Issue Brief.\46\
---------------------------------------------------------------------------

    \44\ http://www.healthit.gov/sites/default/files/generalcertexchangeguidance_final_9-9-13.pdf. More information on 
the current development of standards applicable to HH can be found 
at: http://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWG and 
http://wiki.siframework.org/Longitudinal+Coordination+of+Care.
    \45\ http://www.healthit.gov/facas/sites/faca/files/TransmittalLetter_LTPAC_BH_Certification.pdf; http://www.healthit.gov/facas/sites/faca/files/HITPC_LTPAC_BH_Certification_Recommendations_FINAL.pdf.
    \46\ http://www.healthit.gov/sites/default/files/pdf/HIT_LTPAC_IssueBrief031513.pdf.
---------------------------------------------------------------------------

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

    We proposed to revise the personnel qualifications for speech-
language pathologists (SLP) to more closely align the regulatory 
requirements with those set forth in section 1861(ll) of the Act. We 
proposed to require that a qualified SLP be an individual who has a 
master's or doctoral degree in speech-language pathology, and who is 
licensed as a speech-language pathologist by the state in which he or 
she furnishes such services. To the extent of our knowledge, all states 
license SLPs; therefore, all SLPs would be covered by this option. We 
believe that deferring to the states to establish specific SLP 
requirements would allow all appropriate SLPs to provide services to 
Medicare beneficiaries. Should a state choose not to offer licensure at 
some point in the future, we proposed a second, more specific, option 
for qualification. In that circumstance, we proposed to require that a 
SLP successfully complete 350 clock hours of supervised clinical 
practicum (or be in the process of accumulating such supervised 
clinical experience); perform not less than 9 months of supervised 
full-time speech-language pathology services after obtaining a master's 
or doctoral degree in speech-language pathology or a related field; and 
successfully complete a national examination in speech-language 
pathology approved by the Secretary. These specific requirements are 
set forth in the Act, and we believe that they are appropriate for 
inclusion in the regulations as well.
    We invited comments on this technical correction and associated 
change in the regulations at Sec.  484.4 in section VI. We received 
five public comments regarding this proposal from individual HHAs, 
state HHA provider organizations, and a national organization 
representing SLPs.
    Comment: All comments supported the deferral to state licensure 
standards and validated CMS' understanding that all states currently 
have licensure standards for SLPs. One commenter supported the 
inclusion of separate qualifications for those SLPs located in areas 
without state licensure, noting that these regulations would also apply 
in US Territories, and that not all Territories have licensure 
standards for SLPs.
    Response: We agree with the commenters that the changes would be 
appropriate, and are finalizing them as such.
    Comment: A commenter suggested that we should replace the specific 
education, training, and experience requirements set forth in the 
Social Security Act with a requirement that an SLP must meet the 
certification standards established by the American Speech-Language-
Hearing Association (ASHA).
    Response: The Social Security Act (the Act), on which the 
regulation is based, does not limit SLPs to only those individuals who 
meet the ASHA certification standards. Since this limitation does not 
exist in the Act, we do not believe it should exist in the regulations. 
Therefore, in order to align the regulatory requirements with those 
requirements set forth in the Act, we are not making the suggested 
change. States are free to require ASHA certification as part of their 
SLP licensure standards.
    Comment: One comment sought clarification on why this change was 
being proposed at this time rather than as part of a comprehensive 
revision of the home health agency Conditions of Participation (CoPs).
    Response: While a comprehensive revision of the home health CoPs is 
underway, we have received information from those in the SLP community 
that the restrictions currently in place for SLPs are impeding the 
ability of SLPs to practice. Finalizing a comprehensive revision to the 
home health agency CoPs will require several years. We believe that it 
is in the interest of the HHA and SLP communities, as well as the 
Medicare program, to effect a more timely change to the SLP personnel 
qualifications. Therefore, we are finalizing the revised requirements, 
as proposed, in this rule, and the change will be effective on January 
1, 2015.
    Final decision: We are finalizing the proposal without change.

L. Technical Regulations Text Changes

    We proposed to make technical corrections in Sec.  424.22(b)(1) to 
better align the recertification requirements with the Medicare 
Conditions of Participation (CoPs) for home health services. 
Specifically, we proposed that Sec.  424.22(b)(1) will specify that 
recertification is required at least every 60 days when there is a need 
for continuous home health care after an initial 60-day episode to 
coincide with the CoP requirements in Sec.  484.55(d)(1), which require 
the HHA to update the comprehensive assessment in the last 5 days of 
every 60-day episode of care. As stated in Sec.  484.55, the 
comprehensive assessment must identify the patient's continuing need 
for home care and meet the patient's medical, nursing, rehabilitative, 
social, and discharge planning needs. We also proposed to specify in 
Sec.  424.22(b)(1) that recertification is required at least every 60 
days unless there is a beneficiary elected transfer or a discharge with 
goals met and return to the same HHA during the 60-day episode. The 
word ``unless'' was inadvertently left out of the payment regulations 
text. Inserting ``unless'' into Sec.  424.22(b)(1) realigns the 
recertification requirements with the CoPs at Sec.  484.55(d)(1).
    As outlined in the ``Medicare Program; Prospective Payment System 
for Home Health Agencies'' final rule published on July 3, 2000 (65 FR 
41188 through 41190), a partial episode payment (PEP) adjustment 
applies to two intervening events: (1) Where the beneficiary elects a 
transfer to another HHA during a 60-day episode or the patient; or (2) 
a discharge and return to the same HHA during the 60-day episode when a 
beneficiary reached the treatment goals in the plan of care. To 
discharge with goals met, the plan of care must be terminated with no 
anticipated need for additional home health services for the balance of 
the 60-day period. A PEP adjustment proportionally adjusts the 
national, standardized 60-day episode payment amount to reflect the 
length of time the beneficiary remained under the agency's care before 
the intervening event.
    We proposed to revised Sec.  424.22(b)(1)(ii) to clarify that if a 
beneficiary is discharged with goals met and/or no expectation of a 
return to home health care and returns to the same HHA during the 60-
day episode a new start of care would be initiated (rather than an 
update to the comprehensive assessment) and thus the second episode 
will be considered a

[[Page 66108]]

certification, not a recertification,\47\ and would be subject to Sec.  
424.22(a)(1).
---------------------------------------------------------------------------

    \47\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/downloads/OASISConsiderationsforPPS.pdf
---------------------------------------------------------------------------

    We also proposed to make a technical correction in Sec.  
484.250(a)(1) to remove the ``-C'' after ``OASIS'' in Sec.  
484.250(a)(1), so that the regulation refers generically to the version 
of OASIS currently approved by the Secretary, and to align this section 
with the payment regulations at Sec.  484.210(e). Specifically, an HHA 
must submit to CMS the OASIS data described at Sec.  484.55(b)(1) and 
(d)(1) for CMS to administer the payment rate methodologies described 
in Sec.  484.215, Sec.  484.230, and Sec.  484.235 and to meet the 
quality reporting requirements of section 1895(b)(3)(B)(v) of the Act.
    Most of the comments that we received, where the commenter 
indicated that they were commenting on these technical corrections and 
associated changes in the regulations at Sec.  424.22 and Sec.  484.250 
in section VI, were, in fact, also commenting on the proposed 
clarification on when documentation of a face-to-face encounter is 
required in section III.B.3. While we are finalizing these regulations 
text changes as proposed, we refer readers to the summary of the 
comments and responses in section III.B.3. for our rationale.
    Final Decision: We are finalizing the proposed regulations text 
changed at Sec.  424.22 and Sec.  484.250 as proposed.

M. Survey and Enforcement Requirements for Home Health Agencies

1. Statutory Background and Authority
    Section 4023 of the Omnibus Budget Reconciliation Act of 1987 (OBRA 
'87) (Pub. L 100-203, enacted on December 22, 1987) added subsections 
1891(e) and (f) to the Act, which expanded the Secretary's options to 
enforce federal requirements for home health agencies (HHAs or the 
agency). Sections 1861(e)(1) and (2) of the Act provide that if CMS 
determines that an HHA is not in compliance with the Medicare home 
health Conditions of Participation and the deficiencies involved either 
do, or do not, immediately jeopardize the health and safety of the 
individuals to whom the agency furnishes items and services, then we 
may terminate the provider agreement, impose an alternative 
sanction(s), or both. Section 1891(f)(1)(B) of the Act authorizes the 
Secretary to develop and implement appropriate procedures for appealing 
determinations relating to the imposition of alternative sanctions.
    In the November 8, 2012 Federal Register (77 FR 67068), we 
published the ``Alternative Sanctions for Home Health Agencies With 
Deficiencies'' final rule (part 488, subpart J), as well as made 
corresponding revisions to sections Sec.  489.53 and Sec.  498.3. This 
subpart J added the rules for enforcement actions for HHAs including 
alternative sanctions. Section 488.810(g) provides that 42 CFR part 498 
applies when an HHA requests a hearing on a determination of 
noncompliance that leads to the imposition of a sanction, including 
termination. Section 488.845(b) describes the ranges of CMPs that may 
be imposed for all condition-level findings: upper range ($8,500 to 
$10,000); middle range ($1,500 to $8,500); lower range ($500 to 
$4,000), as well as CMPs imposed per instance of noncompliance ($1,000 
to $10,000).
    Section 488.845(c)(2) addresses the appeals procedures when CMPs 
are imposed, including the need for any appeal request to meet the 
requirements of Sec.  498.40 and the option for waiver of a hearing.
2. Reviewability Pursuant to Appeals
    We proposed to amend Sec.  488.845 by adding a new paragraph (h) 
which would explain the reviewability of a CMP that is imposed on a HHA 
for noncompliance with federal participation requirements. The new 
language will provide that when administrative law judges (ALJs), state 
hearing officers (or higher administrative review authorities) find 
that the basis for imposing a civil money penalty exists, as specified 
in Sec.  488.485, he or she may not set a penalty of zero or reduce a 
penalty to zero; review the exercise of discretion by CMS or the state 
to impose a civil money penalty; or, in reviewing the amount of the 
penalty, consider any factors other than those specified in Sec. Sec.  
488.485(b)(1)(i) through (b)(1)(iv). That is, when the administrative 
law judge or state hearing officer (or higher administrative review 
authority) finds noncompliance supporting the imposition of the CMP, he 
or she must retain some amount of penalty consistent with the ranges of 
penalty amounts established in Sec.  488.845(b). The proposed language 
for HHA reviews is similar to the current Sec.  488.438(e) governing 
the scope of review for civil money penalties imposed against skilled 
nursing facilities, and is also consistent with section 1128A(d) of the 
Act which requires that specific factors be considered in determining 
the amount of any penalty.
    The following is a summary of the comments we received regarding 
the proposed amendment to Sec.  488.845 to explain the reviewability of 
a CMP by an ALJ.
    Comment: One commenter supported the proposal, as it would align 
HHA policy more closely with SNF policy regarding ALJ reviewability.
    Response: We agree with the commenter who observed that the 
proposal would align HHA policy with long-standing practice and policy 
with regard to the manner in which SNF CMPs are reviewed. We believe it 
is important that CMS be consistent in the application of CMPs among 
providers, and the proposed language for HHA CMPs is consistent with 
existing language for SNFs at Sec.  488.438(e).
    Comment: Two commenters believed that the HHA CMP process was too 
new for changes to be addressed in the ALJ review process.
    Response: The length of time the HHA CMPs have been in effect is 
not relevant to the implementation of the requirements of the Act and 
implementing regulations. Section 1891(f)(1)(B) of the Act requires the 
Secretary to provide appropriate procedures for appealing the 
determination relating to the imposition of a sanction. As provided at 
Sec.  488.845(c)(2)(i) ``Appeals Procedures'', the determination that 
is the basis for imposition of the CMP may be appealed. The proposed 
language does not revise the regulation at Sec.  488.845(c)(2)(i), but 
adds clarification regarding the scope of the review during the appeal 
process.
    Comment: One commenter believed that the ALJs should be allowed to 
eliminate CMPs as a part of their administrative review.
    Response: Section 1891(b) of the Act mandates that it is the duty 
and responsibility of the Secretary to assure that the conditions of 
participation as well as the enforcement of such conditions is adequate 
to protect the health and safety of individuals under the care of an 
HHA. Section 1891(f) of the Act further specifies that the Secretary 
establish a range of intermediate sanctions which shall include, among 
others, civil money penalties. Finally, section 1819(f)(1)(B) of the 
Act requires the Secretary to provide appropriate procedures for 
appealing the determination relating to the imposition of the sanction 
and the implementing regulations at Sec.  488.845(c)(2)(i), ``Appeals 
Procedures'' provide that the determination that is the basis for 
imposition of the CMP may be appealed. It is within our discretion as 
to the choice of remedy to be imposed. While an ALJ may review the 
underlying findings that support CMS's determination to impose a CMP 
and

[[Page 66109]]

whether or not the imposed amount falls within the regulatory range, 
elimination of any CMP is not within the scope of the appeal process.
    Comment: One commenter believed the denial of appeal of the 
implementation of the CMP may not be constitutionally valid. An 
additional two commenters believed this proposed language added 
additional restrictions to the ALJ which resulted in the lack of due 
process.
    Response: We do not believe that the proposed language raises 
constitutional issues or restricts due process. Section 1128A of the 
Act requires that specific factors be considered in determining the 
amount of the penalty. Those factors, particularly the deficiencies 
cited by the survey, are considered by CMS in the establishment of the 
CMP amount to be imposed. The deficiencies which give rise to a CMP may 
be appealed. Section 1891(f)(1)(B) of the Act requires the Secretary to 
provide appropriate procedures for appealing the determination relating 
to the imposition of the sanction. These procedures are provided at 
Sec.  488.845(c)(2)(i). The CMP itself would be affected if the 
deficiencies underlying the determination were not sustained on appeal.
    Final Decision: After careful consideration of the comments 
received, we are finalizing the regulatory language as proposed.
3. Technical Adjustment
    We also proposed to amend Sec.  498.3, Scope and Applicability, by 
revising paragraph (b)(13) to include specific cross reference to 
proposed Sec.  488.845(h) and to revise the reference to section Sec.  
488.740 which was a typographical error and replace it with section 
Sec.  488.820 which is the actual section that lists the sanctions 
available to be imposed against an HHA. We also amended Sec.  
498.3(b)(14)(i) to include cross reference to proposed Sec.  
488.845(h), which establishes the scope of CMP review for HHAs. 
Finally, we proposed to amend Sec.  498.60 to include specific 
references to HHAs and proposed Sec.  488.845(h).

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. To 
fairly evaluate whether an information collection should be approved by 
OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 
requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on the information collection 
requirement (ICR) related to the proposed changes to the home health 
face-to-face encounter requirements in section III.B and the proposed 
change to the therapy reassessment timeframes in section III.H. These 
proposed changes are associated with ICR approved under OMB control 
number as 0938-1083.

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

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

                    Table 37--Home Health Face-to-Face Encounter Burden Estimate Assumptions
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
# of Medicare-billing HHAs, from CY 2013 claims with         11,521
 matched OASIS assessments.
Hourly rate of an office employee (Executive Secretaries     $20.54 ($15.80 x; 1.30)
 and Executive Administrative Assistants, 43-6014).
Hourly rate of an administrator (General and Operations      $64.65 ($49.73 x; 1.30)
 Managers, 11-1021).
Hourly rate of Family and General Practitioners (29-1062)..  $112.91 ($86.85 x; 1.30)
----------------------------------------------------------------------------------------------------------------
Note: CY = Calendar Year.

All salary information is from the Bureau of Labor Statistics (BLS) Web 
site at http://www.bls.gov/oes/current/naics4_621600.htm and includes a 
fringe benefits package worth 30 percent of the base salary. The mean 
hourly wage rates are based on May 2013 BLS data for each discipline, 
for those providing ``home health care services.''
1. Proposed Changes to the Face-to-Face Encounter Narrative Requirement
    Sections 1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, as amended by 
section 6407 of the Affordable Care Act require that, as a condition 
for payment, prior to certifying a patient's eligibility for the 
Medicare home health benefit the physician must document that the 
physician himself or herself or an allowed nonphysician practitioner 
(NPP) had a face-to-face encounter with the patient. Section 
424.22(a)(1)(v) currently requires that that the face-to-face encounter 
be related to the primary reason the patient requires home health 
services and occur no more than 90 days prior to the home health start 
of care date or within 30 days after the start of the home health care. 
In addition, as part of the certification of eligibly, the certifying 
physician must document the date of the encounter and include an 
explanation (narrative) of why the clinical findings of such encounter 
support that the patient is homebound, as defined in section 1835(a) of 
the Act, and in need of either intermittent skilled nursing services or 
therapy services, as defined in Sec.  409.42(c).
    To simplify the face-to-face encounter regulations, reduce burden 
for HHAs and physicians, and to mitigate instances where physicians and 
HHAs unintentionally fail to comply with certification requirements, we 
propose to eliminate the narrative requirement at Sec.  
424.22(a)(1)(v). The certifying physician will still be required to 
certify that a face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care and was performed by a 
physician or allowed non-physician practitioner as defined in Sec.  
424.22(a)(1)(v)(A), and to document the date of the encounter as part 
of the certification of eligibility.
    In eliminating the face-to-face encounter narrative requirement, we 
assume that there will be a one-time burden for the HHA to modify the 
certification form, which the HHA provides to the certifying physician. 
The revised certification form must allow the certifying physician to 
certify that a face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care

[[Page 66110]]

and was performed by a physician or allowed NPP as defined in Sec.  
424.22(a)(1)(v)(A). In addition, the certification form must allow the 
certifying physician to document the date that the face-to-face 
encounter occurred.
    We estimate that it would take a home health clerical staff person 
15 minutes (\15/60\ = 0.25 hours) to modify the certification form, and 
the HHA administrator 15 minutes (\15/60\ = 0.25 hours) to review the 
revised form. The clerical time plus administrator time equals a one-
time burden of 30 minutes or (\30/60\) = 0.50 hours per HHA. For all 
11,521 HHAs, the total time required would be (0.50 x; 11,521) = 5,761 
hours. At $20.54 per hour for an office employee, the cost per HHA 
would be (0.25 x; $20.54) = $5.14. At $64.65 per hour for the 
administrator's time, the cost per HHA would be (0.25 x $64.65) = 
$16.16. Therefore, the total one-time cost per HHA would be $21.30, and 
the total one-time cost for all HHAs would be ($21.30 x 11,521) = 
$245,397.
    In the CY 2011 HH PPS final rule (75 FR 70455), we estimated that 
the certifying physician's burden for composing the face-to-face 
encounter narrative, which includes how the clinical findings of the 
encounter support eligibility (writing, typing, or dictating the face-
to-face encounter narrative) signing, and dating the patient's face-to-
face encounter, was 5 minutes for each certification (\5/60\ = 0.0833 
hours). Because it has been our longstanding manual policy that 
physicians sign and date certifications and recertifications, there is 
no additional burden to physicians for signing and dating the face-to-
face encounter documentation. We estimate that there would be 3,096,680 
initial home health episodes in a year based on 2012 claims data from 
the home health Datalink file. As such, the estimated burden for the 
certifying physician to write the face-to-face encounter narrative 
would have been 0.0833 hours per certification (\5/60\ = 0.0833 hours) 
or 257,953 hours total (0.0833 hours x 3,096,680 initial home health 
episodes). The estimated cost for the certifying physician to write to 
face-to-face encounter narrative would have been $9.41 per 
certification (0.0833 x $112.91) or $29,139,759 total ($9.41 x 
3,096,680) for CY 2015.
    Although we proposed to eliminate the narrative, the certifying 
physician will still be required to document the date of the face-to-
face encounter as part of the certification of eligibility. We estimate 
that it would take no more than 1 minute for the certifying physician 
to document the date that the face-to-face encounter occurred (\1/60\ = 
0.0166 hours). The estimated burden for the certifying physician to 
continue to document the date of the face-to-face encounter would be 
0.0166 hours per certification or 51,405 hours total (0.0166 hours x 
3,096,680 initial home health episodes). The estimated cost for the 
certifying physician to continue to document the date of the face-to-
face encounter would be $1.87 per certification (0.0166 x $112.91) or 
$5,790,792 total ($1.87 x 3,096,680) for CY 2015. Therefore, in 
eliminating the face-to-face encounter narrative requirement, as 
proposed in section III.B. of the proposed rule, we estimate that 
burden and costs will be reduced for certifying physicians by 206,548 
hours (257,953-51,405) and $23,348,967 ($29,139,759-$5,790,792), 
respectively for CY 2015.
    Comment: A commenter believed that the time estimates were under-
reported for the HHA administrator (15 minutes (\15/60\ = 0.25 hours)) 
to review the revised certification form. The commenter stated that the 
administrator would have to review the pertinent statutory and 
regulatory references to ensure that the certification form is in 
compliance.
    Response: Since all certification requirements are remaining the 
same, except for the elimination of the narrative, the administrator 
should already be knowledgeable about the current statutory and 
regulatory requirements with regard to certifying patient eligibility 
for the home health benefit. Therefore, we will maintain our original 
estimate that it will take no more than 15 minutes for the HHA 
administrator to review the necessary changes to the certification form 
as a result of the elimination of the face-to-face encounter narrative.
2. Proposed Clarification on When Documentation of a Face-to-Face 
Encounter Is Required
    To determine when documentation of a patient's face-to-face 
encounter is required under sections 1814(a)(2)(C) and 1835(a)(2)(A) of 
the Act, we proposed to clarify that the face-to-face encounter 
requirement is applicable for certifications (not recertifications), 
rather than initial episodes. A certification (versus recertification) 
is generally considered to be any time that a new SOC OASIS is 
completed to initiate care. We estimate that of the 6,562,856 episodes 
in the CY 2012 home health Datalink file, 3,096,680 SOC assessments 
were performed on initial home health episodes. If this proposal is 
implemented, an additional 830,287 episodes would require documentation 
of a face-to-face encounter for subsequent episodes that were initiated 
with a new SOC OASIS assessment. We estimate that it would take no more 
than 1 minute for the certifying physician to document the date that 
the face-to-face encounter occurred (\1/60\ = 0.0166 hours). The 
estimated burden for the certifying physician to document the date of 
the face-to-face encounter for each certification (any time a new SOC 
OASIS is completed to initiate care) would be 0.0166 hours or 13,783 
total hours (0.0166 hours x 830,287 additional home health episodes). 
The estimated cost for the certifying physician to document the date of 
the face-to-face encounter for each additional home health episode 
would be $1.87 per certification (0.0166 x $112.91) or $1,552,637 total 
($1.87 x 830,287) for CY 2015.

                                               Table 38--Estimated One-Time Form Revision Burden for HHAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Total time
            OMB#                    Requirement             HHAs          Responses        Hr. burden        (hours)       Total dollars
-----------------------------------------------------------------------------------------------------------------------------------------
0938-1083...................  Sec.   424.22(a)(1)(v)          11,521                1              0.5            5,761         $245,397
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 66111]]

                                             Table 39--Estimated Burden Reduction for Certifying Physicians
                                                 [No longer drafting a face-to-face encounter narrative]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Total time
              OMB#                       Requirement           Certifications      Responses        Hr. burden        (hours)          Total dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
0938-1083.......................  Sec.   424.22(a)(1)(v)            3,096,680                1         (0.0667)        (206,548)   ($23,348,967)
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                  Table 40--Estimated Burden for Certifying Physicians
                                   [Documenting the date of the face-to-face encounter for additional certifications]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Total time
                OMB#                          Requirement            Certifications      Responses        Hr. burden        (hours)       Total dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
0938-1083..........................  Sec.   424.22(a)(1)(v)                 830,287                1           0.0166           13,783       $1,552,637
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In summary, all of the changes to the face-to-face encounter 
requirements in section III.B of this final rule, including changes to 
Sec.  424.22(a)(1)(v), will result in an estimated net reduction in 
burden for certifying physicians of 192,765 hours or $21,796,330 (see 
Tables 39 and 40). The changes to the face-to-face encounter 
requirements at Sec.  424.22(a)(1)(v) will result in a one-time burden 
for HHAs to revise the certification form of 5,761 hours or $245,397 
(Table 38 above).

B. Proposed Change to the Therapy Reassessment Timeframes

    Currently, Sec.  409.44(c) requires that patient's function must be 
initially assessed and periodically reassessed by a qualified 
therapist, of the corresponding discipline for the type of therapy 
being provided, using a method which would include objective 
measurement. If more than one discipline of therapy is being provided, 
a qualified therapist from each of the disciplines must perform the 
assessment and periodic reassessments. The measurement results and 
corresponding effectiveness of the therapy, or lack thereof, must be 
documented in the clinical record. At least every 30 days a qualified 
therapist (instead of an assistant) must provide the needed therapy 
service and functionally reassess the patient. If a patient is expected 
to require 13 and/or 19 therapy visits, a qualified therapist (instead 
of an assistant) must provide all of the therapy services on the 13th 
visit and/or 19th therapy visit and functionally reassess the patient 
in accordance with Sec.  409.44(c)(2)(i)(A). When the patient resides 
in a rural area or if the patient is receiving multiple types of 
therapy, a therapist from each discipline (not an assistant) must 
assess the patient after the 10th therapy visit but no later than the 
13th therapy visit and after the 16th therapy visit but no later than 
the 19th therapy visit for the plan of care. In instances where the 
frequency of a particular discipline, as ordered by a physician, does 
not make it feasible for the reassessment to occur during the specified 
timeframes without providing an extra unnecessary visit or delaying a 
visit, then it is acceptable for the qualified therapist from that 
discipline to provide all of the therapy and functionally reassess the 
patient during the visit associated with that discipline that is 
scheduled to occur closest to the 14th and/or 20th Medicare-covered 
therapy visit, but no later than the 13th and/or 19th Medicare-covered 
therapy visit. When a therapy reassessment is missed, any visits for 
that discipline prior to the next reassessment are non-covered.
    To lessen the burden on HHAs of counting visits and to reduce the 
risk of non-covered visits so that therapists can focus more on 
providing quality care for their patients, we are simplifying Sec.  
409.44(c) to require that therapy reassessments must be performed at 
least once every 30 calendar days. The requirement to perform a therapy 
reassessment at least once every 30 calendar days would apply to all 
episodes regardless of the number of therapy visits provided. All other 
requirements related to therapy reassessments would remain unchanged. A 
qualified therapist (instead of an assistant), from each therapy 
discipline provided, must provide the ordered therapy service and 
functionally reassess the patient using a method which would include 
objective measurement. The measurement results and corresponding 
effectiveness of the therapy, or lack thereof, must be documented in 
the clinical record.
    In the CY 2011 HH PPS final rule we stated that the therapy 
reassessment requirements in Sec.  409.44(c) are already part of the 
home health CoPs, as well as from accepted standards of clinical 
practice, and therefore, we believe that these requirements do not 
create any additional burden on HHAs (75 FR 70454). As stated in the CY 
2011 HH PPS final rule, longstanding CoP policy at Sec.  484.55 
requires HHAs to document progress toward goals and the regulations at 
Sec.  409.44(c)(2)(i) already mandate that for therapy services to be 
covered in the home health setting, the services must be considered 
under accepted practice to be a specific, safe, and effective treatment 
for the beneficiary's condition. The functional assessment does not 
require a special visit to the patient, but is conducted as part of a 
regularly scheduled therapy visit. Functional assessments are necessary 
to demonstrate progress (or the lack thereof) toward therapy goals, and 
are already part of accepted standards of clinical practice, which 
include assessing a patient's function on an ongoing basis as part of 
each visit. The CY 2011 HH PPS final rule goes on to state that both 
the functional assessment and its accompanying documentation are 
already part of existing HHA practices and accepted standards of 
clinical practice. Therefore, we continue to believe that simplifying 
the required reassessment timeframes from every 30 days and prior to 
the 14th and 20th visits to every 30 calendar days does not place any 
new documentation requirements on HHAs.
    We are revising the currently approved PRA package (OMB# 0938-1083) 
to describe these changes to the regulatory text.

C. Submission of PRA-Related Comments

    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this final rule.
    PRA-specific comments must be received on/by December 8, 2014.

[[Page 66112]]

V. Regulatory Impact Analysis

A. Statement of Need

    Section 1895(b)(1) of the Act requires the Secretary to establish a 
HH PPS for all costs of HH services paid under Medicare. In addition, 
section 1895(b)(3)(A) of the Act requires (1) the computation of a 
standard prospective payment amount include all costs for home health 
services covered and paid for on a reasonable cost basis and that such 
amounts be initially based on the most recent audited cost report data 
available to the Secretary, and (2) the standardized prospective 
payment amount be adjusted to account for the effects of case-mix and 
wage levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the 
annual update to the standard prospective payment amounts by the 
applicable percentage increase. Section 1895(b)(4) of the Act governs 
the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of 
the Act require the standard prospective payment amount to be adjusted 
for case-mix and geographic differences in wage levels. Section 
1895(b)(4)(B) of the Act requires the establishment of appropriate 
case-mix adjustment factors for significant variation in costs among 
different units of services. Lastly, section 1895(b)(4)(C) of the Act 
requires the establishment of wage adjustment factors that reflect the 
relative level of wages, and wage-related costs applicable to home 
health services furnished in a geographic area compared to the 
applicable national average level.
    Section 1895(b)(5) of the Act gives the Secretary the option to 
make changes to the payment amount otherwise paid in the case of 
outliers because of unusual variations in the type or amount of 
medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires 
HHAs to submit data for purposes of measuring health care quality, and 
links the quality data submission to the annual applicable percentage 
increase. Also, section 1886(d)(2)(D) of the Act requires that home 
health services furnished in a rural area for episodes and visits 
ending on or after April 1, 2010, and before January 1, 2016, receive 
an increase of 3 percent the payment amount otherwise made under 
section 1895 of the Act.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C. 804(2).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated as economically 
significant under section 3(f)(1) of Executive Order 12866, since the 
aggregate transfer impacts in calendar year 2015 will exceed the $100 
million threshold. The net transfer impacts are estimated to be -$60 
million. Furthermore, we estimate a net reduction of $21.55 million in 
calendar year 2015 burden costs related to the certification 
requirements for home health agencies and associated physicians. 
Lastly, this final rule is a major rule under the Congressional Review 
Act and as a result, we have prepared a regulatory impact analysis 
(RIA) that, to the best of our ability, presents the costs and benefits 
of the rulemaking. In accordance with the provisions of Executive Order 
12866, this regulation was reviewed by the Office of Management and 
Budget.
    The update set forth in this rule applies to Medicare payments 
under HH PPS in CY 2015. Accordingly, the following analysis describes 
the impact in CY 2015 only. We estimate that the net impact of the 
proposals in this rule is approximately $60 million in decreased 
payments to HHAs in CY 2015. We applied a wage index budget neutrality 
factor and a case-mix weights budget neutrality factor to the rates as 
discussed in section III.D.4. of this final rule; therefore, the 
estimated impact of the 2015 wage index in section III.D.3. of this 
final rule and the recalibration of the case-mix weights for 2015 in 
section III.C. of this final rule is zero. The -$60 million impact 
reflects the distributional effects of the 2.1 percent home health 
payment update percentage ($390 million increase) and the effects of 
the second year of the four-year phase-in of the rebasing adjustments 
to the national, standardized 60-day episode payment amount, the 
national per-visit payment rates, and the NRS conversion factor for an 
impact of -2.4 percent ($450 million decrease). The $60 million in 
decreased payments is reflected in the last column of the first row in 
Table 41 as a 0.3 percent decrease in expenditures when comparing 
estimated CY 2014 payments to estimated CY 2015 payments.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other providers and 
suppliers are small entities, either by nonprofit status or by having 
revenues of less than $7.5 million to $38.5 million in any one year. 
For the purposes of the RFA, we consider all HHAs small entities as 
that term is used in the RFA. Individuals and states are not included 
in the definition of a small entity. The economic impact assessment is 
based on estimated Medicare payments (revenues) and HHS's practice in 
interpreting the RFA is to consider effects economically 
``significant'' only if greater than 5 percent of providers reach a 
threshold of 3 to 5 percent or more of total revenue or total costs. 
The majority of HHAs' visits are Medicare-paid visits and therefore the 
majority of HHAs' revenue consists of Medicare payments. Based on our 
analysis for this final rule, which incorporates additional Medicare 
home health claims data that were not available at the time the CY 2015 
HH PPS proposed rule was published, we conclude that the policies final 
in this rule will result in an estimated total impact of 3 to 5 percent 
or more on Medicare revenue for greater

[[Page 66113]]

than 5 percent of HHAs. Therefore, the Secretary has determined that 
this final rule will have a significant economic impact on a 
substantial number of small entities. Further detailed analysis is 
presented below and in Table 41, by HHA classification, type, and 
location.
    Executive Order 13563 specifies, to the extent practicable, 
agencies should assess the costs of cumulative regulations. However, 
given potential utilization pattern changes, wage index changes, 
changes to the market basket forecasts, and unknowns regarding future 
policy changes, we believe it is neither practicable nor appropriate to 
forecast the cumulative impact of the rebasing adjustments on Medicare 
payments to HHAs for future years at this time. Changes to the Medicare 
program may continue to be made as a result of the Affordable Care Act 
or new statutory provisions. Although these changes may not be specific 
to the HH PPS, the nature of the Medicare program is such that the 
changes may interact and the complexity of the interactions would make 
it difficult to predict accurately the full scope of the impact upon 
HHAs for future years beyond CY 2015. We note that the rebasing 
adjustments to the national, standardized 60-day episode payment rate 
and the national per-visit rates are capped at the statutory limit of 
3.5 percent of the CY 2010 amounts for each year, 2014 through 2017, 
and the NRS rebasing adjustment will be -2.82 percent in each year, 
2014 through 2017 (as described in section II.C. of this final rule).
    In addition, section 1102(b) of the Act requires us to prepare a 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 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 final rule applies to HHAs. Therefore, the 
Secretary has determined that this rule will not have a significant 
economic impact on the operations of small rural hospitals.

C. Detailed Economic Analysis

    This final rule sets forth updates for CY 2015 to the HH PPS rates 
contained in the CY 2014 HH PPS final rule (78 FR 72304 through 72308). 
The impact analysis of this final rule presents the estimated 
expenditure effects of policy changes final in this rule. We use the 
latest data and best analysis available, but we do not make adjustments 
for future changes in such variables as number of visits or case-mix.
    This analysis incorporates the latest estimates of growth in 
service use and payments under the Medicare home health benefit, 
primarily using Medicare claims data for CY 2013. We note that certain 
events may combine to limit the scope or accuracy of our impact 
analysis, because such an analysis is future-oriented and, thus, 
susceptible to errors resulting from other changes in the impact time 
period assessed. Some examples of such possible events are newly-
legislated general Medicare program funding changes made by the 
Congress, or changes specifically related to HHAs. In addition, changes 
to the Medicare program may continue to be made as a result of the 
Affordable Care Act or new statutory provisions. Although these changes 
may not be specific to the HH PPS, the nature of the Medicare program 
is such that the changes may interact and the complexity of the 
interactions could make it difficult to predict accurately the full 
scope of the impact upon HHAs.
    Table 41 represents how HHA revenues are likely to be affected by 
the policy changes finalized in this rule. For this analysis, we used 
an analytic file of CY 2013 home health claims data (as of June 30, 
2014) for dates of service that ended on or before December 31, 2013, 
linked to OASIS assessments. The first column of Table 41 classifies 
HHAs according to a number of characteristics including provider type, 
geographic region, and urban and rural locations. The third column 
shows the payment effects of CY 2015 wage index. The fourth column 
shows the payment effects of the CY 2015 case-mix weights. The fifth 
column shows the effects of the rebasing adjustments to the national, 
standardized 60-day episode payment rate, the national per-visit 
payment rates, and NRS conversion factor. The sixth column shows the 
effects of the CY 2015 home health payment update percentage (the home 
health market basket update adjusted for multifactor productivity as 
discussed in section III.D.1. of this final rule). The last column 
shows the overall payment effects of all the policies discussed in this 
final rule.
    As illustrated in Table 41, the combined effects of all of the 
changes vary by specific types of providers and by location. A 
substantial amount of the variation in the estimated impacts of the 
policies finalized in this rule in different areas of the country can 
be attributed to variations in the CY 2015 wage index used to adjust 
payments under the HH PPS and to the effects of the recalibration of 
the HH PPS case-mix weights. For example, the estimated impact due to 
the recalibration of the HH PPS case-mix weights for the West South 
Central census region is a 2.2 percent decrease in payments for CY 
2015. The case-mix weights for third or later episodes of care with no 
or low therapy generally decreased as a result of the recalibration of 
the HH PPS case-mix weights (see section III.C. of this final rule). In 
the West South Central region, approximately one-third of episodes are 
either the first or second episode of care and nearly two-thirds of 
episodes are the third or later episode of care (analysis of episodes 
with 0-19 therapy visits). This differs drastically from the rest of 
the nation where over two-thirds of episodes are either the first or 
second episode of care and less than one-third of episodes are the 
third or later episode of care (analysis of episodes with 0-19 therapy 
visits). Thus, the West South Central census region experiences a 
larger estimated reduction in payments due to the recalibration of the 
case-mix weights because it has a much larger share of episodes that 
are the third or later episode compared to the rest of the nation. 
Instances where the impact, due to the rebasing adjustments, is less 
than others can be attributed to differences in the incidence of 
outlier payments and LUPA episodes, which are paid using the national 
per-visit payment rates that are subject to payment increases due to 
the rebasing adjustments. We note that some individual HHAs within the 
same group may experience different impacts on payments than others due 
to the distributional impact of the CY 2015 wage index, the extent to 
which HHAs had episodes in case-mix groups where the case-mix weight 
decreased for CY 2015 relative to CY 2014, and the degree of Medicare 
utilization.
    For CY 2015, the average impact for all HHAs due to the effects of 
rebasing is an estimated 2.4 percent decrease in payments. The overall 
impact for all HHAs as a result of this final rule is a decrease of 
approximately 0.3 percent in estimated total payments from CY 2014 to 
CY 2015.

[[Page 66114]]

                            Table 41--Estimated Home Health Agency Impacts by Facility Type and Area of the Country, CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          CY 2015  case-                    CY 2015  HH   Impact of  all
                                                             Number of     CY 2015  wage   mix  weights    Rebasing \3\       payment         CY 2015
                                                             agencies        index \1\          \2\        (percentage)       update         policies
                                                                           (percentage)    (percentage)                   percentage \4\   (percentage)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Agencies............................................          11,781             0.0             0.0            -2.4             2.1            -0.3
Facility Type and Control:
    Free-Standing/Other Vol/NP..........................           1,062             0.3             1.0            -2.3             2.1             1.1
    Free-Standing/Other Proprietary.....................           9,194            -0.1            -0.5            -2.4             2.1            -0.9
    Free-Standing/Other Government......................             402             0.4             0.5            -2.3             2.1             0.7
    Facility-Based Vol/NP...............................             774             0.2             1.6            -2.3             2.1             1.6
    Facility-Based Proprietary..........................             115            -0.2             1.3            -2.3             2.1             0.9
    Facility-Based Government...........................             234             0.2             1.4            -2.4             2.1             1.3
        Subtotal: Freestanding..........................          10,658             0.0            -0.2            -2.4             2.1            -0.5
        Subtotal: Facility-based........................           1,123             0.2             1.5            -2.3             2.1             1.5
        Subtotal: Vol/NP................................           1,836             0.3             1.2            -2.3             2.1             1.3
        Subtotal: Proprietary...........................           9,309            -0.1            -0.5            -2.4             2.1            -0.9
        Subtotal: Government............................             636             0.3             0.9            -2.3             2.1             1.0
Facility Type and Control: Rural:
    Free-Standing/Other Vol/NP..........................             192             0.1             1.3            -2.3             2.1             1.2
    Free-Standing/Other Proprietary.....................             140             0.9             0.6            -2.4             2.1             1.2
    Free-Standing/Other Government......................             466             0.2            -0.6            -2.4             2.1            -0.7
    Facility-Based Vol/NP...............................             251             0.6             1.5            -2.5             2.1             1.8
    Facility-Based Proprietary..........................              27             0.1             0.3            -2.5             2.1             0.0
    Facility-Based Government...........................             137             0.6             1.3            -2.3             2.1             1.7
Facility Type and Control: Urban:
    Free-Standing/Other Vol/NP..........................             922             0.3             1.0            -2.3             2.1             1.1
    Free-Standing/Other Proprietary.....................           8,870            -0.1            -0.5            -2.4             2.1            -0.9
    Free-Standing/Other Government......................             164             0.3             0.5            -2.4             2.1             0.5
    Facility-Based Vol/NP...............................             523             0.2             1.6            -2.3             2.1             1.6
    Facility-Based Proprietary..........................              88            -0.2             1.4            -2.3             2.1             1.0
    Facility-Based Government...........................              97             0.0             1.4            -2.4             2.1             1.1
Facility Location: Urban or Rural:
    Rural...............................................           1,117             0.4             0.4            -2.4             2.1             0.5
    Urban...............................................          10,664             0.0             0.0            -2.4             2.1            -0.3
Facility Location: Region of the Country:
    Northeast...........................................             882             0.4             0.9            -2.2             2.1             1.2
    Midwest.............................................           3,165             0.2             0.8            -2.5             2.1             0.6
    South...............................................           5,722            -0.3            -0.9            -2.4             2.1            -1.5
    West................................................           1,962             0.5             0.9            -2.4             2.1             1.1
    Other...............................................              50             1.7             1.8            -2.4             2.1             3.2
Facility Location: Region of the Country (Census
 Region):
    New England.........................................             340             0.8             0.9            -2.2             2.1             1.6
    Mid Atlantic........................................             542             0.1             0.9            -2.1             2.1             1.0
    East North Central..................................           2,415             0.2             0.6            -2.5             2.1             0.4
    West North Central..................................             750             0.1             1.6            -2.4             2.1             1.4
    South Atlantic......................................           2,054            -0.1             0.0            -2.4             2.1            -0.4
    East South Central..................................             440            -0.6             0.0            -2.5             2.1            -1.0
    West South Central..................................           3,228            -0.5            -2.2            -2.4             2.1            -3.0
    Mountain............................................             689             0.4             1.5            -2.4             2.1             1.6
    Pacific.............................................           1,273             0.5             0.6            -2.4             2.1             0.8
Facility Size (Number of 1st Episodes):
    50 blend best mitigates the negative 
payment impacts associated with the implementation of the new OMB 
delineations. While we considered alternatives to the 50/50 blend, this 
type of split balances the increases and decreases in wage index values 
as well as provides a readily understandable calculation for HHAs.
    Next, we considered whether or not the blended wage index should be 
used for all HHAs or for only a subset of HHAs, such as those HHAs that 
would experience a decrease in their respective wage index values due 
to implementation of the revised OMB delineations. As required in 
section 1895(b)(3) of the Act, the wage index adjustment must be 
implemented in a budget-neutral manner. If we were to apply the 
transition policy only to those HHAs that would experience a decrease 
in their respective wage index values due to implementation of the 
revised OMB delineations, the wage index budget neutrality factor, 
discussed in section III.D.4, would result in reduced base rates for 
all HHAs as compared to the budget neutrality factor that results from 
applying the blended wage index to all HHAs.
    For the reasons discussed above, we believe that finalizing our 
proposal to use a one-year transition with a 50/50 blended wage index 
in CY 2015 as this policy balances the interests of all HHAs and will 
best achieve our objective of providing relief to negatively impacted 
HHAs.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017. Therefore, in the CY 2014 HH PPS final 
rule (78 FR 77256), we finalized rebasing adjustments to the national, 
standardized 60-day episode payment amount, the national per-visit 
rates and the NRS conversion factor. As we noted in the CY 2014 HH PPS 
final rule, because section 3131(a) of the Affordable Care Act requires 
a four year phase-in of rebasing, in equal increments, to start in CY 
2014 and be fully implemented in CY 2017, we do not have the discretion 
to delay, change, or eliminate the rebasing adjustments once we have 
determined that rebasing is necessary (78 FR 72283).
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2015 be increased by a factor equal 
to the applicable home health market basket update for those HHAs that 
submit quality data as required by the Secretary. For CY 2015, section 
3401(e) of the Affordable Care Act, requires that, in CY 2015 (and in 
subsequent calendar years), the market basket update under the HHA 
prospective payment system, as described in section 1895(b)(3)(B) of 
the Act, be annually adjusted by changes in economy-wide productivity. 
Beginning in CY 2015, section 1895(b)(3)(B)(vi)(I) of the Act, as 
amended by section 3401(e) of the Affordable Care Act, requires the 
application of the productivity

[[Page 66116]]

adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the 
HHA PPS for CY 2015 and each subsequent CY. The -0.5 percentage point 
productivity adjustment to the CY 2015 home health market basket update 
(2.6 percent) is discussed in the preamble of this rule and is not 
discretionary as it is a requirement in section 1895(b)(3)(B)(vi)(I) of 
the Act (as amended by the Affordable Care Act).

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 42, we have 
prepared an accounting statement showing the classification of the 
transfers and costs associated with the provisions of this final rule. 
Table 42 provides our best estimate of the decrease in Medicare 
payments under the HH PPS as a result of the changes finalized in this 
rule. Table 42 also reflects the estimated change in costs and burden 
for certifying physicians and HHAs as a result of the changes to the 
face-to-face encounter requirements finalized in section III.B. We 
estimate a net reduction in burden for certifying physicians of 192,765 
hours or $21,796,330 (see section IV of this rule). In addition, Table 
42 reflects our estimate of a one-time burden for HHAs to revise the 
certification form of 5,761 hours or $245,397 as described in section 
IV. of this rule.

  Table 42--Accounting Statement: Classification of Estimated Transfers
                 and Costs, From the CYs 2014 to 2015 *
------------------------------------------------------------------------
            Category                            Transfers
------------------------------------------------------------------------
Annualized monetized transfers.  -$60 million.
From Whom to Whom?.............  Federal Government to HHAs.
------------------------------------------------------------------------
            Category                              Costs
------------------------------------------------------------------------
Annualized Monetized Net Burden  -$21.55 million.
 for Physicians Certifying
 Patient Eligibility for Home
 Health Services & HHAs for
 Certification Form Revision.
------------------------------------------------------------------------
* The estimates reflect 2014 dollars.

G. Conclusion

    In conclusion, we estimate that the net impact of this final rule 
is a decrease in Medicare payments to HHAs of $60 million for CY 2015. 
The $60 million decrease in estimated payments for CY 2015 reflects the 
distributional effects of the 2.1 percent CY 2015 home health payment 
update percentage ($390 million increase) and the second year of the 4-
year phase-in of the rebasing adjustments required by section 3131(a) 
of the Affordable Care Act ($450 million decrease). Also, starting in 
CY 2015, certifying physicians are estimated to incur a net reduction 
in burden costs of $21,796,330 and HHAs are expected to incur a one-
time increase in burden costs to revise the certification form of 
$245,397 as a result of the elimination of the face-to-face encounter 
narrative requirement finalized in section III.B. This analysis, 
together with the remainder of this preamble, constitutes the 
Regulatory Flexibility Analysis.

VI. Federalism Analysis

    Executive Order 13132 on Federalism (August 4, 1999) establishes 
certain requirements that an agency must meet when it promulgates a 
final rule that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. We have reviewed this final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have substantial direct effects on the rights, roles, and 
responsibilities of states, local or tribal governments.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

42 CFR Part 424

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

42 CFR Part 484

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

42 CFR Part 488

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

42 CFR Part 498

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

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

PART 409--HOSPITAL INSURANCE BENEFITS

0
1. The authority citation for part 409 continues to read as follows:

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

Sec.  409.44  [Amended]

0
2. Section 409.44 is amended by--
0
a. Removing ``intermediary's'' from paragraph (a) and adding ``Medicare 
Administrative Contractor's'' in its place.
0
b. Adding ``calendar'' between ``30'' and ``days'' in paragraph 
(c)(2)(i)(B).
0
c. Removing paragraphs (c)(2)(i)(C) and (D).
0
d. Redesignating paragraphs (c)(2)(i)(E) through (H) as paragraphs 
(c)(2)(i)(C) through (F).
0
e. Removing ``(c)(2)(i)(A), (B), (C), and (D) of this section,'' from 
newly redesignated paragraph (c)(2)(i)(C) introductory text and adding 
``(c)(2)(i)(A) and (B) of this section,'' in its place.
0
f. Removing ``(c)(2)(i)(E)(2) and (c)(2)(i)(E)(3) of this section are 
met,'' from newly redesignated paragraph (c)(2)(i)(C)(1) and adding 
``(c)(2)(i)(C)(2) and (c)(2)(i)(C)(3) of this section are met,'' in its 
place.
0
g. Removing ``Sec.  409.44(c)(2)(i)(H) of this section.'' from newly 
redesignated paragraph (c)(2)(i)(C)(3) and adding ``paragraph 
(c)(2)(i)(F) of this section.'' in its place.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
3. The authority citation for part 424 continues to read as follows:

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

0
4. Section 424.22 is amended by--

[[Page 66117]]

0
a. Revising paragraphs (a) and (b) and adding new paragraph (c).
0
b. Removing ``(d)(i)'' from paragraph (d)(2) and adding ``(d)(1)'' in 
its place.
    The revisions read as follows:

Sec.  424.22  Requirements for home health services.

* * * * *
    (a) Certification--(1) Content of certification. As a condition for 
payment of home health services under Medicare Part A or Medicare Part 
B, a physician must certify the patient's eligibility for the home 
health benefit, as outlined in sections 1814(a)(2)(C) and 1835(a)(2)(A) 
of the Act, as follows in paragraphs (a)(1)(i) through (v) of this 
section. The patient's medical record, as specified in paragraph (c) of 
this section, must support the certification of eligibility as outlined 
in paragraph (a)(1)(i) through (v) of this section.
    (i) The individual needs or needed intermittent skilled nursing 
care, or physical therapy or speech-language pathology services as 
defined in Sec.  409.42(c) of this chapter. If a patient's underlying 
condition or complication requires a registered nurse to ensure that 
essential non-skilled care is achieving its purpose, and necessitates a 
registered nurse be involved in the development, management, and 
evaluation of a patient's care plan, the physician will include a brief 
narrative describing the clinical justification of this need. If the 
narrative is part of the certification form, then the narrative must be 
located immediately prior to the physician's signature. If the 
narrative exists as an addendum to the certification form, in addition 
to the physician's signature on the certification form, the physician 
must sign immediately following the narrative in the addendum.
    (ii) Home health services are or were required because the 
individual is or was confined to the home, as defined in sections 
1835(a) and 1814(a) of the Act, except when receiving outpatient 
services.
    (iii) A plan for furnishing the services has been established and 
will be or was periodically reviewed by a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine, and who is not precluded 
from performing this function under paragraph (d) of this section. (A 
doctor of podiatric medicine may perform only plan of treatment 
functions that are consistent with the functions he or she is 
authorized to perform under State law.)
    (iv) The services will be or were furnished while the individual 
was under the care of a physician who is a doctor of medicine, 
osteopathy, or podiatric medicine.
    (v) A face-to-face patient encounter, which is related to the 
primary reason the patient requires home health services, occurred no 
more than 90 days prior to the home health start of care date or within 
30 days of the start of the home health care and was performed by a 
physician or allowed non-physician practitioner as defined in paragraph 
(a)(1)(v)(A) of this section. The certifying physician must also 
document the date of the encounter as part of the certification.
    (A) The face-to-face encounter must be performed by one of the 
following:
    (1) The certifying physician himself or herself.
    (2) A physician, with privileges, who cared for the patient in an 
acute or post-acute care facility from which the patient was directly 
admitted to home health.
    (3) A nurse practitioner or a clinical nurse specialist (as those 
terms are defined in section 1861(aa)(5) of the Act) who is working in 
accordance with State law and in collaboration with the certifying 
physician or in collaboration with an acute or post-acute care 
physician with privileges who cared for the patient in the acute or 
post-acute care facility from which the patient was directly admitted 
to home health.
    (4) A certified nurse midwife (as defined in section 1861(gg) of 
the Act) as authorized by State law, under the supervision of the 
certifying physician or under the supervision of an acute or post-acute 
care physician with privileges who cared for the patient in the acute 
or post-acute care facility from which the patient was directly 
admitted to home health.
    (5) A physician assistant (as defined in section 1861(aa)(5) of the 
Act) under the supervision of the certifying physician or under the 
supervision of an acute or post-acute care physician with privileges 
who cared for the patient in the acute or post-acute care facility from 
which the patient was directly admitted to home health.
    (B) The face-to-face patient encounter may occur through 
telehealth, in compliance with section 1834(m) of the Act and subject 
to the list of payable Medicare telehealth services established by the 
applicable physician fee schedule regulation.
    (1) Timing and signature. The certification of need for home health 
services must be obtained at the time the plan of care is established 
or as soon thereafter as possible and must be signed and dated by the 
physician who establishes the plan.
    (2) [Reserved]
    (2) [Reserved]
    (b) Recertification--(1) Timing and signature of recertification. 
Recertification is required at least every 60 days when there is a need 
for continuous home health care after an initial 60-day episode. 
Recertification should occur at the time the plan of care is reviewed, 
and must be signed and dated by the physician who reviews the plan of 
care. Recertification is required at least every 60 days unless there 
is a--
    (i) Beneficiary elected transfer; or
    (ii) Discharge with goals met and/or no expectation of a return to 
home health care.
    (2) Content and basis of recertification. The recertification 
statement must indicate the continuing need for services and estimate 
how much longer the services will be required. Need for occupational 
therapy may be the basis for continuing services that were initiated 
because the individual needed skilled nursing care or physical therapy 
or speech therapy. If a patient's underlying condition or complication 
requires a registered nurse to ensure that essential non-skilled care 
is achieving its purpose, and necessitates a registered nurse be 
involved in the development, management, and evaluation of a patient's 
care plan, the physician will include a brief narrative describing the 
clinical justification of this need. If the narrative is part of the 
recertification form, then the narrative must be located immediately 
prior to the physician's signature. If the narrative exists as an 
addendum to the recertification form, in addition to the physician's 
signature on the recertification form, the physician must sign 
immediately following the narrative in the addendum.
    (c) Determining patient eligibility for Medicare home health 
services. Documentation in the certifying physician's medical records 
and/or the acute/post-acute care facility's medical records (if the 
patient was directly admitted to home health) shall be used as the 
basis for certification of home health eligibility. This documentation 
shall be provided upon request to the home health agency, review 
entities, and/or CMS. Criteria for patient eligibility are described in 
paragraphs (a)(1) and (b) of this section. If the documentation used as 
the basis for the certification of eligibility is not sufficient to 
demonstrate that the patient is or was eligible to receive services 
under the Medicare home health benefit, payment will not be rendered 
for home health services provided.
* * * * *

[[Page 66118]]

PART 484--HOME HEALTH SERVICES

0
5. The authority citation for part 484 continues to read as follows:

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

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

Sec.  484.4  Personnel qualifications.

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

0
7. Section 484.250 is amended by revising paragraph (a)(1) to read as 
follows:

Sec.  484.250  Patient assessment data.

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

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

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

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

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

Sec.  488.845  Civil money penalties.

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

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

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

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

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

Sec.  498.3  Scope and applicability.

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

0
12. Section 498.60 is amended by revising paragraphs (c)(1) and (2) to 
read as follows:

Sec.  498.60  Conduct of hearing.

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

    Dated: October 22, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: October 28, 2014.

Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-26057 Filed 10-30-14; 4:15 pm]
BILLING CODE 4120-01-P
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