DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

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

[CMS-1611-P] 

RIN 0938-AS14

Medicare and Medicaid Programs; CY 2015 Home Health Prospective Payment System 

Rate Update; Home Health Quality Reporting Requirements; and Survey and 

Enforcement Requirements for Home Health Agencies 

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

ACTION: Proposed rule. 

SUMMARY: This proposed rule would update the Home Health Prospective Payment System 

(HH PPS) rates, including the national, standardized 60-day episode payment rates, the national 

per-visit rates, and the non-routine medical supply (NRS) conversion factor under the Medicare 

prospective payment system for home health agencies (HHAs), effective January 1, 2015. As 

required by the Affordable Care Act, this rule implements the second year of the four-year 

phase-in of the rebasing adjustments to the HH PPS payment rates. This rule provides 

information on our efforts to monitor the potential impacts of the rebasing adjustments and the 

Affordable Care Act mandated face-to-face encounter requirement. This rule also proposes: 

changes to simplify the face-to-face encounter regulatory requirements; changes to the HH PPS 

case-mix weights; changes to the home health quality reporting program requirements; changes 

to simplify the therapy reassessment timeframes; a revision to the Speech-Language Pathology 

(SLP) personnel qualifications; minor technical regulations text changes; and limitations on the 

reviewability of the civil monetary penalty provisions. Finally, this proposed rule also discusses 
CMS-16

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 Mail Stop C4-26-05, 

 7500 Security Boulevard, 

Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your 

written comments before the close of the comment period to either of the following addresses: 

a. For delivery in Washington, DC-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

Room 445-G, Hubert H. Humphrey Building, 

 200 Independence Avenue, SW., 

 Washington, DC 20201 

(Because access to the interior of the Hubert H. Humphrey Building is not readily 

available to persons without federal government identification, commenters are encouraged to 

leave their comments in the CMS drop slots located in the main lobby of the building. A stampin clock is available for persons wishing to retain a proof of filing by stamping in and retaining 

an extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

7500 Security Boulevard, 

Baltimore, MD 21244-1850. 

If you intend to deliver your comments to the Baltimore address, please call 

(410) 786-7195 in advance to schedule your arrival with one of our staff members. 

 Comments mailed to the addresses indicated as appropriate for hand or courier delivery 
CMS-1611-P 4 

may be delayed and received after the comment period. 

For information on viewing public comments, see the beginning of the 

"SUPPLEMENTARY INFORMATION" section. 

FOR FURTHER INFORMATION CONTACT: 

Hillary Loeffler, (410)786-0456, for general information about the HH PPS. 

Joan Proctor, (410) 786-0949, for information about the HH PPS Grouper, ICD-9-CM coding, 

and ICD-10-CM Conversion. 

Kristine Chu, (410) 786-8953, for information about rebasing and the HH PPS case-mix weights. 

Hudson Osgood, (410) 786-7897, for information about the HH market basket. 

Caroline Gallaher, (410) 786-8705, for information about the HH quality reporting program. 

Lori Teichman, (410) 786-6684, for information about HHCAHPS. 

Peggye Wilkerson, (410) 786-4857, for information about survey and enforcement requirements 

for HHAs. 

Robert Flemming, (410) 786-4830, for information about the HH VBP model. 

Danielle Shearer, (410) 786-6617, for information about SLP personnel qualifications. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All comments received before the close of the comment period 

are available for viewing by the public, including any personally identifiable or confidential 

business information that is included in a comment. We post all comments received before the 

close of the comment period on the following website as soon as possible after they have been 

received: http://www.regulations.gov. Follow the search instructions on that website to view 

public comments. 

 Comments received timely will also be available for public inspection as they are 

received, generally beginning approximately 3 weeks after publication of a document, at the 
CMS-1611-P 5 

headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. EST. 

To schedule an appointment to view public comments, phone 1-800-743-3951. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs and Benefits

II. Background 

A. Statutory Background 

B. System for Payment of Home Health Services 

C. Updates to the HH PPS 

III. Provisions of the Proposed Rule 

A. Monitoring for Potential Impacts – Affordable Care Act Rebasing Adjustments and 

the Face-to-Face Encounter Requirement 

1. Affordable Care Act Rebasing Adjustments 

2. Affordable Care Act Face-to-Face Encounter Requirement 

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

1. Statutory and Regulatory Requirements 

2. Proposed Changes to the Face-to-Face Encounter Narrative Requirement and NonCoverage of Associated Physician Certification/Re-Certification Claims 

3. Proposed Clarification on When Documentation of a Face-to-Face Encounter is 

Required 

C. Proposed Recalibration of the HH PPS Case-Mix Weights 
CMS-1611-P 6 

D. CY 2015 Rate Update 

1. Proposed CY 2015 Home Health Market Basket Update 

2. Home Health Care Quality Reporting Program (HHQRP) 

a. General Considerations Used for Selection of Quality Measures for the HHQRP 

b. Background and Quality Reporting Requirements 

c. OASIS Data Submission and OASIS Data for Annual Payment Update 

d. Updates to HH QRP Measures Which Are Made as a Result of Review by the NQF 

Process 

e. Home Health Care CAHPS Survey (HHCAHPS) 

3. Proposed CY 2015 Home Health Wage Index 

 4. Home Health Wage Index 

 a. Background 

 b. Update 

 c. Proposed Implementation of New Labor Market Delineations 

5. Proposed CY 2015 Annual Payment Update 

a. Background 

b. Proposed CY 2015 National, Standardized 60-Day Episode Payment Rate 

 c. Proposed CY 2015 National Per-Visit Rates 

 d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors 

e. Proposed CY 2015 Nonroutine Medical Supply Conversion Factor and Relative 

Weights 

 f. Rural Add-On 

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

1. Background 
CMS-1611-P 7 

2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing Ratio 

F. Medicare Coverage of Insulin Injections under the HH PPS 

G. Implementation of the International Classification of Diseases, 10th Revision, Clinical 

Modification (ICD-10-CM) 

H. Proposed Change to the Therapy Reassessment Timeframes 

I. HHA Value-Based Purchasing Model 

J. Advancing Health Information Exchange 

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

L. Proposed Technical Regulations Text Changes 

M. Survey and Enforcement Requirements for Home Health Agencies 

1. Statutory Background and Authority 

2. Reviewability Pursuant to Appeals 

3. Technical Adjustment

IV. Collection of Information Requirements 

V. Response to Comments 

VI. Regulatory Impact Analysis 

VII. Federalism Analysis 

Regulations Text 

Acronyms 

In addition, because of the many terms to which we refer by abbreviation in this proposed 

rule, we are listing these abbreviations and their corresponding terms in alphabetical order 

below: 

ACH LOS Acute Care Hospital Length of Stay 

ADL Activities of Daily Living 
CMS-1611-P 8 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997, Pub. L. 105-33 

BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, Pub. 

L. 106-113 

CAD Coronary Artery Disease 

CAH Critical Access Hospital 

CBSA Core-Based Statistical Area 

CASPER Certification and Survey Provider Enhanced Reports 

CHF Congestive Heart Failure 

CMI Case-Mix Index 

CMP Civil Money Penalty 

CMS Centers for Medicare & Medicaid Services 

CoPs Conditions of Participation 

COPD Chronic Obstructive Pulmonary Disease 

CVD Cardiovascular Disease 

CY Calendar Year 

DM Diabetes Mellitus 

DRA Deficit Reduction Act of 2005, Pub. L. 109-171, enacted February 8, 2006 

FDL Fixed Dollar Loss 

FI Fiscal Intermediaries 

FR Federal Register 

FY Fiscal Year 

HAVEN Home Assessment Validation and Entry System 

HCC Hierarchical Condition Categories 
CMS-1611-P 9 

HCIS Health Care Information System 

HH Home Health 

HHA Home Health Agency 

HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers and Systems 

Survey 

HH PPS Home Health Prospective Payment System 

HHRG Home Health Resource Group 

HIPPS Health Insurance Prospective Payment System 

ICD-9-CM International Classification of Diseases, Ninth Revision, Clinical Modification 

ICD-10-CM International Classification of Diseases, Tenth Revision, Clinical Modification 

IH Inpatient Hospitalization 

IRF Inpatient Rehabilitation Facility 

LTCH Long-Term Care Hospital 

LUPA Low-Utilization Payment Adjustment 

MEPS Medical Expenditures Panel Survey 

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. 

L. 108-173, enacted December 8, 2003 

MSA Metropolitan Statistical Area 

MSS Medical Social Services 

NQF National Quality Forum 

NRS Non-Routine Supplies 

OASIS Outcome and Assessment Information Set 

OBRA Omnibus Budget Reconciliation Act of 1987, Pub. L. 100-2-3, enacted 

December 22, 1987 
CMS-1611-P 10 

OCESAA Omnibus Consolidated and Emergency Supplemental Appropriations Act, Pub. L. 

105-277, enacted October 21, 1998 

OES Occupational Employment Statistics 

OIG Office of Inspector General 

OT Occupational Therapy 

OMB Office of Management and Budget 

MFP Multifactor productivity 

PAMA Protecting Access to Medicare Act of 2014 

PAC-PRD Post-Acute Care Payment Reform Demonstration 

PEP Partial Episode Payment Adjustment 

PT Physical Therapy 

QAP Quality Assurance Plan 

PRRB Provider Reimbursement Review Board 

RAP Request for Anticipated Payment 

RF Renal Failure 

RFA Regulatory Flexibility Act, Pub. L. 96—354 

RHHIs Regional Home Health Intermediaries 

RIA Regulatory Impact Analysis 

SAF Standard Analytic File 

SLP Speech-Language Pathology 

SN Skilled Nursing 

SNF Skilled Nursing Facility 

UMRA Unfunded Mandates Reform Act of 1995. 
CMS-1611-P 11 

I. Executive Summary 

A. Purpose 

 This proposed rule would update the payment rates for HHAs for calendar year (CY) 

2015, as required under section 1895(b) of the Social Security Act (the Act). This would reflect 

the second year of the four-year phase-in of the rebasing adjustments to the national, 

standardized 60-day episode payment rate, the national per-visit rates, and the NRS conversion 

factor finalized in the CY 2014 HH PPS final rule (78 FR 72256), required under section 3131(a) 

of the Patient Protection and Affordable Care Act of 2010 (Pub. L 111-148), as amended by the 

Health Care and Education Reconciliation Act of 2010 (Pub. L 111-152) (collectively referred to 

as the “Affordable Care Act”). Updates to payment rates under the HH PPS would also include a 

proposal to change the home health wage index to incorporate the new Office of Management 

and Budget (OMB) core-based statistical area (CBSA) definitions and updates to the payment 

rates by the home health payment update percentage, which would reflect the productivity 

adjustment mandated by 3401(e) of the Affordable Care Act. 

 This proposed rule also discusses: our efforts to monitor the potential 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, P.L. 113-93 

(“PAMA”)). This proposed rule also proposes changes to simplify the regulations at 

§424.22(a)(1)(v) that govern the face-to-face encounter requirement mandated by section 6407 

of the Affordable Care Act; changes to the HH PPS case-mix weights under section 

1895(b)(4)(A)(i) and (b)(4)(B) of the Act; changes to the home health quality reporting program 
CMS-1611-P 12 

requirements under section 1895(b)(3)(B)(v)(II) of the Act; changes to simplify the therapy 

reassessment timeframes specified in regulation at §409.44(c)(2)(C) and (D); a revision to the 

personnel qualifications for SLP at §484.4; and minor technical regulations text changes at 

§424.22(b)(1) and §484.250(a)(1). This proposed rule would also place limitations on the 

reviewability of CMS’s decision to impose a civil monetary penalty for noncompliance with 

federal participation requirements. Finally, the proposed rule discusses and solicits comments on 

a HH VBP model. 

B. Summary of the Major Provisions 

 As required by section 3131(a) of the Affordable Care Act and finalized in the CY 2014 

HH final rule, “Medicare and Medicaid Programs; Home Health Prospective Payment System 

Rate Update for CY 2014, Home Health Quality Reporting Requirements, and Cost Allocation 

of Home Health Survey Expenses” (78 FR 77256, December 2, 2013), we are implementing the 

second year of the four-year phase-in of the rebasing adjustments to the national, standardized 

60-day episode payment amount, the national per-visit rates and the NRS conversion factor in 

section III.D.4. The rebasing adjustments for CY 2015 would reduce the national, standardized 

60-day episode payment amount by $80.95, increase the national per-visit payment amounts by 

3.5 percent of the national per-visit payment amounts in CY 2010 with the increases ranging 

from $6.34 for medical social services to $1.79 for home health aide services as described in 

section III.A, and reduce the NRS conversion factor by 2.82 percent. 

 This proposed rule also discusses our efforts to monitor the potential impacts of the 

rebasing adjustments and the Affordable Care Act mandated face-to-face encounter requirement 

in section III.A and, in section III.B. We would propose changes to the face-to-face encounter 

narrative requirement. In addition, we are proposing that associated physician claims for 

certification/re-certification of eligibility (patient not present) not be eligible to be paid when a 
CMS-1611-P 13 

patient does not meet home health eligibility criteria. We would also clarify in sub-regulatory 

guidance when the face-to-face encounter requirement would be applicable. In section III.C, we 

are proposing to recalibrate the HH PPS case-mix weights, using the most current cost and 

utilization data available, in a budget neutral manner. In section III.D.1, we propose to update 

the payment rates under the HH PPS by the home health payment update percentage of 

2.2 percent (using the 2010-based Home Health Agency (HHA) market basket update of 

2.6 percent, minus a 0.4 percentage point reduction for productivity as required by 

1895(b)(3)(B)(vi)(I) of the Act. In section III.D.3, we propose to update the home health wage 

index using a 50/50 blend of the existing core-based statistical area (CBSA) designations and the 

new CBSA designations outlined in a February 28, 2013, Office of Management and Budget 

(OMB) bulletin, respectively. In section III.E, we propose no changes to the fixed-dollar loss 

(FDL) and loss-sharing ratios used in calculating high-cost outlier payments under the HH PPS. 

 This proposed rule also proposes changes to the home health quality reporting program in 

section III.D.2, including the establishment of a minimum threshold for submission of OASIS 

assessments for purposes of quality reporting compliance, the establishment of a policy for the 

adoption of changes to measures that occur in-between rulemaking cycles as a result of the NQF 

process, and submission dates for the HHCAHPS Survey moving forward through CY 2017. In 

section III.F, we discuss recent analysis of home health claims identified with skilled nursing 

visits likely done for the sole purpose of insulin injection assistance, and the lack of any 

secondary diagnoses on the home health claim to support that the patient was physically or 

mentally unable to self-inject. We discuss, in section III.G, the delay in the implementation of 

ICD-10-CM as a result of section 212 of PAMA. In section III.H we seek to simplify the therapy 

reassessment regulations by proposing that therapy reassessments are to occur every 14 calendar 

days rather than before the 14th and 20th visits and once every 30 calendar days. Finally, in 
CMS-1611-P 14 

section III.I, we plan to discuss and solicit comments on an HH VBP model; in section III.J, we 

propose to revise the personnel qualifications for SLP; in section III.K we are proposing minor 

technical regulations text changes; and in section III.L we are proposing to place limitations on 

the reviewability of the civil monetary penalty that is imposed on a HHA for noncompliance 

with federal participation requirements. 

C. Summary of Costs and Transfers 

TABLE 1: Summary of Costs and Transfers 

Provision 

Description 

Costs Transfers 

CY 2015 HH 

PPS Payment 

Rate Update 

A net reduction in 

burden of $21.55 

million associated 

with certifying 

patient eligibility 

for home health 

services & 

certification form 

revisions. 

The overall economic impact 

of this proposed rule is an 

estimated $58 million in 

decreased payments to HHAs. 

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 Medicarecovered 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. 
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 Section 1895(b)(3)(A) of the Act requires the following: (1) the computation of a 

standard prospective payment amount include all costs for HH services covered and paid for on a 

reasonable cost basis and that such amounts be initially based on the most recent audited cost 

report data available to the Secretary; and (2) the standardized prospective payment amount be 

adjusted to account for the effects of case-mix and wage levels among HHAs. 

 Section 1895(b)(3)(B) of the Act addresses the annual update to the standard prospective 

payment amounts by the HH applicable percentage increase. Section 1895(b)(4) of the Act 

governs the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require 

the standard prospective payment amount to be adjusted for case-mix and geographic differences 

in wage levels. Section 1895(b)(4)(B) of the Act requires the establishment of an appropriate 

case-mix change adjustment factor for significant variation in costs among different units of 

services. 

 Similarly, section 1895(b)(4)(C) of the Act requires the establishment of wage adjustment 

factors that reflect the relative level of wages, and wage-related costs applicable to HH services 

furnished in a geographic area compared to the applicable national average level. Under section 

1895(b)(4)(C) of the Act, the wage-adjustment factors used by the Secretary may be the factors 

used under section 1886(d)(3)(E) of the Act. 

 Section 1895(b)(5) of the Act gives the Secretary the option to make additions or 

adjustments to the payment amount otherwise paid in the case of outliers due to unusual 

variations in the type or amount of medically necessary care. Section 3131(b)(2) of the Patient 

Protection and Affordable Care Act of 2010 (the Affordable Care Act) (Pub. L. 111-148, enacted 

March 23, 2010) revised section 1895(b)(5) of the Act so that total outlier payments in a given 

year would not exceed 2.5 percent of total payments projected or estimated. The provision also 

made permanent a 10 percent agency-level outlier payment cap. 
CMS-1611-P 16 

 In accordance with the statute, as amended by the BBA, we published a final rule in the 

July 3, 2000 Federal Register (65 FR 41128) to implement the HH PPS legislation. The July 

2000 final rule established requirements for the new HH PPS for HH services as required by 

section 4603 of the BBA, as subsequently amended by section 5101 of the Omnibus 

Consolidated and Emergency Supplemental Appropriations Act (OCESAA) for Fiscal Year 

1999, (Pub. L. 105-277, enacted October 21, 1998); and by sections 302, 305, and 306 of the 

Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999, (Pub. L. 

106-113, enacted November 29, 1999). The requirements include the implementation of a HH 

PPS for HH services, consolidated billing requirements, and a number of other related changes. 

The HH PPS described in that rule replaced the retrospective reasonable cost-based system that 

was used by Medicare for the payment of HH services under Part A and Part B. For a complete 

and full description of the HH PPS as required by the BBA, see the July 2000 HH PPS final rule 

(65 FR 41128 through 41214). 

 Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted 

February 8, 2006) added new section 1895(b)(3)(B)(v) to the Act, requiring HHAs to submit data 

for purposes of measuring health care quality, and links the quality data submission to the annual 

applicable percentage increase. This data submission requirement is applicable for CY 2007 and 

each subsequent year. If an HHA does not submit quality data, the HH market basket percentage 

increase is reduced by 2 percentage points. In the November 9, 2006 Federal Register

(71 FR 65884, 65935), we published a final rule to implement the pay-for-reporting requirement 

of the DRA, which was codified at §484.225(h) and (i) in accordance with the statute. The payfor-reporting requirement was implemented on January 1, 2007. 

 The Affordable Care Act made additional changes to the HH PPS. One of the changes in 

section 3131 of the Affordable Care Act is the amendment to section 421(a) of the Medicare 
CMS-1611-P 17 

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). 
CMS-1611-P 18 

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 casemix 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 
CMS-1611-P 19 

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 casemix change would be 2.18 percent. Although we considered proposing a 2.18 percent reduction 

to account for the remaining increase in measured nominal case-mix, we finalized the 1.32 

percent payment reduction to the national, standardized 60-day episode rates in the CY 2012 HH 

PPS final rule (76 FR 68532). 

 Section 3131(a) of the Affordable Care Act requires that, beginning in CY 2014, CMS 

apply an adjustment to the national, standardized 60-day episode rate and other amounts that 

reflect factors such as changes in the number of visits in an episode, the mix of services in an 
CMS-1611-P 20 

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 fouryear 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) 

2010 National Per-Visit 

Payment Rates 

Maximum Adjustments Per 

Year (CY 2014 through CY 

2017) 

Skilled Nursing $113.01 $3.96 

Home Health Aide $51.18 $1.79 

Physical Therapy $123.57 $4.32 

Occupational Therapy $124.40 $4.35 

Speech- Language Pathology $134.27 $4.70 

Medical Social Services $181.16 $6.34 

III. Provisions of the Proposed Rule 

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

1. Affordable Care Act Rebasing Adjustments 

As stated in the CY 2014 HH PPS final rule, we plan to monitor potential impacts of 

rebasing. Although we do not have enough CY 2014 home health claims data to analyze as part 
CMS-1611-P 21 

of our effort in monitoring the potential impacts of the rebasing adjustments finalized in the CY 

2014 HH PPS final rule (78 FR 72293), we have analyzed 2012 home health agency cost report 

data to determine whether the average cost per episode was higher using 2012 cost report data 

compared to the 2011 cost report data used in calculating the rebasing adjustments. Specifically, 

we re-estimated the cost of a 60-day episode using 2012 cost report and 2012 claims data, rather 

than using 2011 cost report and 2012 claims data. To determine the 2012 average cost per visit 

per discipline, we applied the same trimming methodology outlined in the CY 2014 HH PPS 

proposed rule (78 FR 40284) and weighted the costs per visit from the 2012 cost reports by size, 

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 

Source: FY 2012 Medicare cost report data and 2012 Medicare claims data from the standard analytic file (as of June 2013) for 

episodes ending on or before December 31, 2012 for which we could link an OASIS assessment. 

Using the most current claims data--CY 2013 data (as of December 31, 2013), we reexamined the 2012 visit distribution and re-calculated the 2013 estimated cost per episode using 

the updated 2013 visit profile. We estimate the 2013 60-day episode cost to be $2,477.01(Table 

4). 

Discipline 2012 Average 

costs per visit 

2012 Average 

number of visits 

2012 60-day 

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 
CMS-1611-P 22 

TABLE 4: 2013 Estimated Cost per Episode 

Discipline 2012 Average 

costs per visit 

2013 Average 

number of visits 

2013 HH 

Market Basket 

2013 

Estimated Cost 

per Episode 

Skilled Nursing $ 130.49 9.30 1.023 $ 1,241.47 

Home Health Aide $ 61.62 2.42 1.023 $ 152.55 

Physical Therapy $ 160.03 4.99 1.023 $ 816.92 

Occupational Therapy $ 157.78 1.20 1.023 $ 193.69 

Speech-Language Pathology $ 172.08 0.24 1.023 $ 42.25 

Medical Social Services $ 210.36 0.14 1.023 $ 30.13 

Total $ 2,477.01 

Source: FY 2012 Medicare cost report data and 2013 Medicare claims data from the standard analytic file (as of December 2013) 

for episodes ending on or before December 31, 2013 for which we could link an OASIS assessment. 

In the CY 2014 HH PPS final rule (78 FR 72277), using 2011 cost report data, we 

estimated the 2012 60-day episode cost to be about $2,507.83 ($2,453.71 * 0.9981 * 1.024) and 

the 2013 60-day episode cost to be $2,565.51 ($2,453.71 * 0.9981 * 1.024 * 1.023). Using 2012 

cost report data, the 2012 and 2013 estimated cost per episode ($2,413.82 and $2,477.01, 

respectively) are lower than the episode costs we estimated using 2011 cost report data for the 

CY 2014 HH PPS final rule. We note that the proposed CY 2015 national, standardized 60-day 

episode payment rate is $2,922.76 as described in section III.D.4. of this proposed rule. 

In the CY 2014 HH PPS final rule, we stated that our analysis of 2011 cost report data 

and 2012 claims data indicated a need for a -3.45 percent rebasing adjustment to the national, 

standardized 60-day episode payment rate each year for four years. However, as specified by 

statute, the rebasing adjustment is limited to 3.5 percent of the CY 2010 national, standardized 

60-day episode payment rate of $2,312.94 (74 FR 58106), or $80.95. We stated that given that a 

-3.45 percent adjustment for CY 2014 through CY 2017 would result in larger dollar amount 

reductions than the maximum dollar amount allowed under section 3131(a) of the Affordable 

Care Act of $80.95, we are limited to implementing a reduction of $80.95 (approximately 2.8 

percent) to the national, standardized 60-day episode payment amount each year for CY 2014 
CMS-1611-P 23 

through CY 2017. Our latest analysis of 2012 cost report data suggests that an even larger 

reduction (4.29 percent) than the reduction described in the CY 2014 final rule (3.45 percent) 

would be needed in order to align payments to costs. We will continue to monitor potential 

impacts of rebasing. 

2. Affordable Care Act Face-to-Face Encounter Requirement 

Effective January 1, 2011, section 6407 the Affordable Care Act requires that as a 

condition for payment, prior to certifying a patient’s eligibility for the Medicare home health 

benefit, the physician must document that the physician himself or herself, or an allowed 

nonphysician practitioner (NPP), as described below, had a face-to-face encounter with the 

patient. The regulations at 424.22(a)(1)(v) currently require that that the face-to-face encounter 

be related to the primary reason the patient requires home health services and occur no more than 

90 days prior to the home health start of care date or within 30 days of the start of the home 

health care. In addition, as part of the certification of eligibility, the certifying physician must 

document the date of the encounter and include an explanation (narrative) of why the clinical 

findings of such encounter support that the patient is homebound, as defined in subsections 

1814(a) and 1835(a) of the Act, and in need of either intermittent skilled nursing services or 

therapy services, as defined in §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), 
CMS-1611-P 24 

the year of implementation (CY 2011), and the years following implementation (CY 2012 and 

CY 2013), to determine whether there were indications of access issues as a result of this 

requirement. Nationally, utilization held relatively constant between CY 2010 and CY 2011 and 

decreased slightly in CY 2012 (see Table 5). While Table 5 contains preliminary CY 2013 data, 

the discussion in this section will focus mostly on CY 2010 through CY 2012 data. We will 

update our analysis with complete CY 2013 data in the final rule. Between CY 2010 and CY 

2011, there was a 0.81 percent decrease in number of episodes, and a 1.37percent decrease in the 

number of episodes between CY 2011 and CY 2012. However, there was a 0.51 percent 

increase in the number of beneficiaries with at least one home health episode between CY 2010 

and CY 2011 and between CY 2011 and CY 2012 the number of beneficiaries with at least one 

episode held relatively constant. Home health users (beneficiaries with at least one home health 

episode) as a percentage of Part A and/or Part B fee-for-service (FFS) beneficiaries decreased 

slightly from 9.3 percent in CY 2010 to 9.2 percent in CY 2011to 9.0 percent in CY 2012 and the 

number of episodes per Part A and/or Part B FFS beneficiaries decreased slightly between CY 

2010 and CY 2011, but remained relatively constant 0.18 or 18 episodes per 100 Medicare Part 

A FFS beneficiaries for CY 2012). We note these observed decreases between CY 2010 and CY 

2012, for the most part, are likely the result of increases in FFS enrollment between CY 2010 

and CY 2012. Newly eligibly Medicare beneficiaries are typically not of the age where home 

health services are needed and therefore, without any changes in utilization, we would expect 

home health users and the number of episodes per Part A and/or B FFS beneficiaries to decrease 

with an increase in the number of newly enrolled FFS beneficiaries. The number of HHAs 

providing at least one home health episode increased steadily from CY 2010 through CY 2013 

(see Table 5). 
CMS-1611-P 25 

TABLE 5: Home Health Statistics, CY 2010 through CY 2013

 2010 2011 2012 2013 (Preliminary) 

Number of episodes 6,833,669 6,821,459 6,727,875 6,600,631 

Beneficiaries receiving at least 1 

episode (Home Health Users) 3,431,696 3,449,231 3,446,122 3,432,571 

Part A and/or B FFS beneficiaries 36,818,078 37,686,526 38,224,640 38,501,512 

Episodes per Part A and/or B FFS 

beneficiaries 0.19 0.18 0.18 0.17 

Home health users as a percentage 

of Part A and/or B FFS 

beneficiaries 9.3% 9.2% 9.0% 8.9% 

HHAs providing at least 1 episode 10,916 11,446 11,746 11,820 

Source: National claims history (NCH) data obtained from Chronic Condition 

Warehouse (CCW) - Accessed on May 14, 2014. Medicare enrollment information 

obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the 

total number of beneficiaries in a given year with at least 1 month of Part A or Part 

B Fee For Service Coverage without having any months of Medicare Advantage 

Coverage. 

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and 

also include episodes from outlying areas (outside of 50 States and District of 

Columbia). Only episodes with a through date in the year specified are included. 

Episodes with a claim frequency code equal to "0" ("Non-payment/zero claims") 

and "2" ("Interim - first claim") are excluded. If a beneficiary is treated by providers 

from multiple states within a year the beneficiary is counted within each state's 

unique number of beneficiaries served. 

Although home health utilization at the national level appears to have held relatively 

constant between CY 2010 and CY 2011 with a slight decrease in utilization in CY 2012, the 

decrease in utilization in CY 2012 did not occur in all states. For example, the number of 

episodes increased between CY 2010 and CY 2011 and again, in some instances, between CY 

2011 and CY 2012 in Alabama, California, and Virginia, to name a few. The number of episodes 

per Part A and/or Part B FFS beneficiaries for these states also remained roughly the same 

between CY 2010 through CY 2012 (see Table 6). 
CMS-1611-P 26 

TABLE 6: Home Health Statistics for Select States with Increasing Numbers of 

Home Health Episodes, CY 2010 through CY 2012 

 Year AL CA MA NJ VA 

Number of Episodes 

2010 149,242 428,491 183,271 142,328 142,660 

2011 151,131 451,749 186,849 143,127 149,154 

2012 151,812 477,732 183,625 142,129 154,677 

Beneficiaries Receiving at Least 

1 Episode (Home Health Users) 

2010 68,949 259,013 103,954 95,804 83,933 

2011 70,539 270,259 107,520 97,190 86,796 

2012 71,186 281,023 106,910 96,534 89,879 

Part A and/or Part B FFS 

Beneficiaries 

2010 689,302 3,199,845 890,472 1,205,049 1,014,248 

2011 717,413 3,294,574 934,312 1,228,239 1,055,516 

2012 732,952 3,397,936 959,015 1,232,950 1,086,474 

Episodes per Part A and/or Part 

B FFS beneficiaries 

2010 0.22 0.13 0.21 0.12 0.14 

2011 0.21 0.14 0.20 0.12 0.14 

2012 0.21 0.14 0.19 0.12 14 

Home Health Users as a 

Percentage of Part A and/or B 

FFS beneficiaries 

2010 10.00% 8.09% 11.67% 7.95% 8.28% 

2011 9.83% 8.20% 11.51% 7.91% 8.22% 

2012 9.71% 8.27% 11.15% 7.83% 8.27% 

Providers Providing at Least 1 

Episode 

2010 148 925 138 49 196 

2011 150 1,013 150 48 209 

2012 148 1,073 160 47 219 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW) - Accessed on 

May 14, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary 

File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A or Part B Fee 

For Service Coverage without having any months of Medicare Advantage Coverage.

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from 

outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year 

specified are included. Episodes with a claim frequency code equal to "0" ("Non-payment/zero claims") and "2" 

("Interim - first claim") are excluded. If a beneficiary is treated by providers from multiple states within a year the 

beneficiary is counted within each state's unique number of beneficiaries served. 

In general, between CY 2010 and CY 2012 the number of episodes for states with the 

highest utilization of Medicare home health (as measured by the number of episodes per Part A 

and/or Part B FFS beneficiary) decreased; however, even with this decrease between CY 2010 

and CY 2012, the five states listed in Table 7 continue to be among the states with the highest 

utilization of Medicare home health nationally (see Figure 1). If we were to exclude the five 

states listed in Table 7 from the national figures in Table 5, home health users (beneficiaries with 

at least one home health episode) as a percentage of Part A and/or Part B fee-for-service (FFS) 
CMS-1611-P 27 

beneficiaries would decrease from to 9.0 percent to 8.1 percent for CY 2012 and the number of 

episodes per Part A and/or Part B FFS beneficiaries would decrease from 0.18 (or 18 episodes 

per 100 Medicare Part A and/or Part B FFS beneficiaries) to 0.14 (or 14 episodes per 100 

Medicare Part A and/or Part B FFS beneficiaries) for CY 2012. We also note that two of the 

states with the greatest number of home health episodes per Part A and/or Part B FFS 

beneficiaries (Table 7 and Figure 1) have areas with suspect billing practices. Moratoria on 

enrollment of new HHAs, effective January 30, 2014, were put in place for: Miami, FL; Chicago, 

IL; Fort Lauderdale, FL; Detroit, MI; Dallas, TX; and Houston, TX. 
CMS-1611-P 28 

TABLE 7: Home Health Statistics for the States with the Highest Number of Home Health 

Episodes per Part A and/or Part B FFS Beneficiaries, CY 2010 through CY 2012

 Year TX FL OK MS LA 

Number of Episodes 

2010 1,127,852 689,183 208,555 153,169 256,014 

2011 1,107,605 701,426 203,112 153,983 249,479 

2012 1,054,244 691,255 196,887 148,516 230,115 

Beneficiaries Receiving at 

Least 1 Episode (Home 

Health Users) 

2010 366,844 355,181 68,440 55,132 77,976 

2011 363,474 355,900 67,218 55,818 77,677 

2012 350,803 354,838 65,948 55,438 74,755 

Part A and/or Part B FFS 

Beneficiaries 

2010 2,500,237 2,422,141 533,792 465,129 544,555 

2011 2,597,406 2,454,124 549,687 476,497 561,531 

2012 2,604,458 2,451,790 558,500 480,218 568,483 

Episodes per Part A and/or 

Part B FFS beneficiaries 

2010 0.45 0.28 0.39 0.33 0.47 

2011 0.43 0.29 0.37 0.32 0.44 

2012 0.40 0.28 0.35 0.31 0.40 

Home Health Users as a 

Percentage of Part A and/or 

Part B FFS Beneficiaries 

2010 14.67% 14.66% 12.82% 11.85% 14.32% 

2011 13.99% 14.50% 12.23% 11.71% 13.83% 

2012 13.47% 14.47% 11.81% 11.54% 13.15% 

Providers Providing at Least 

1 Episode 

2010 2,352 1,348 240 53 213 

2011 2,472 1,426 252 51 216 

2012 2,549 1,430 254 48 213 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW) - Accessed on 

May 14, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary 

File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A or Part B 

Fee For Service Coverage without having any months of Medicare Advantage Coverage. 

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from 

outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year 

specified are included. Episodes with a claim frequency code equal to "0" ("Non-payment/zero claims") and "2" 

("Interim - first claim") are excluded. If a beneficiary is treated by providers from multiple states within a year the 

beneficiary is counted within each state's unique number of beneficiaries served. 
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CMS-1611-P 30 

to HHAs, and reduced HH PPS rates in CY 2012 by 3.79 percent to account for additional 

growth in aggregate case-mix that was unrelated to changes in patients’ health status. The 

estimated net impact to HHAs for CY 2012 was a decrease in total HH PPS payments of 2.31 

percent. Again, any changes in utilization between CY 2011 and CY 2012 cannot be solely 

attributable to the implementation of the face-to-face encounter requirement. Given that a 

decrease in the number of episodes between CY 2010 and CY 2012 occurred in states that have 

the highest home health utilization (number of episodes per Part A and/or Part B FFS 

beneficiaries) and not all states experienced declines in episode volume during that time period, 

we believe that the implementation of the face-to-face encounter requirement could be 

considered a contributing factor. We will continue to monitor for potential impacts due to the 

implementation of the face-to-face encounter requirements and other policy changes in the 

future. Independent effects of any one policy may be difficult to discern in years where multiple 

policy changes occur in any given year. 

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

1. Statutory and Regulatory Requirements 

As a condition for payment, section 6407 of the Affordable Care Act requires that, prior 

to certifying a patient’s eligibility for the Medicare home health benefit, the physician must 

document that the physician himself or herself or an allowed nonphysician practitioner (NPP) 

had a face-to-face encounter with the patient. Specifically, sections 1814(a)(2)(C) and 1835 

(a)(2)(A) of the Act, as amended by the Affordable Care Act, state that a nurse practitioner or 

clinical nurse specialist, as those terms are defined in section 1861(aa)(5) of the Act, working in 

collaboration with the physician in accordance with state law, or a certified nurse-midwife (as 

defined in section 1861(gg) of the Act) as authorized by state law, or a physician assistant (as 

defined in section 1861(aa)(5) of the Act) under the supervision of the physician may perform 
CMS-1611-P 31 

the face-to-face encounter. 

The goal of the Affordable Care Act provision was to achieve greater physician 

accountability in certifying a patient’s eligibility and in establishing a patient’s plan of care. We 

believed this goal could be better achieved if the face-to-face encounter occurred closer to the 

start of home health care, increasing the likelihood that the clinical conditions exhibited by the 

patient during the encounter are related to the primary reason the patient comes to need home 

health care. The certifying physician is responsible for determining whether the patient meets 

the eligibility criteria (that is, homebound and skilled need) and for understanding the current 

clinical needs of the patient such that he or she can establish an effective plan of care. As such, 

CMS regulations at §424.22(a)(1)(v) require that that the face-to-face encounter be related to the 

primary reason the patient requires home health services and occur no more than 90 days prior to 

the home health start of care date or within 30 days of the start of the home health care. In 

addition, as part of the certification of eligibility, the certifying physician must document the date 

of the encounter and include an explanation (narrative) of why the clinical findings of such 

encounter support that the patient is homebound, as defined in sections 1835(a) and 1814(a) of 

the Act, and in need of either intermittent skilled nursing services or therapy services, as defined 

in §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 

§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 §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 
CMS-1611-P 32 

services. 

• A plan for furnishing the services has been established and is or will be periodically 

reviewed by a physician who is a doctor of medicine, osteopathy, or podiatric medicine (a doctor 

of podiatric medicine may perform only plan of treatment functions that are consistent with the 

functions he or she is authorized to perform under state law).1

 

• 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 §1835(a) and §1814(a) of the Act) and in 

need of either intermittent skilled nursing services or therapy services as defined in §409.42(c). 

The documentation must be clearly titled and dated and the documentation must be signed by the 

certifying physician. 

For instances where the physician orders skilled nursing visits for management and 

evaluation of the patient's care plan,2

 the physician must include a brief narrative that describes 

the clinical justification of this need and the narrative must be located immediately before the 

 

1

The physician cannot have a financial relationship as defined in §411.354 of this chapter, with that HHA, unless the 

physician's relationship meets one of the exceptions in section 1877 of the Act, which sets forth general exceptions 

to the referral prohibition related to both ownership/investment and compensation; exceptions to the referral 

prohibition related to ownership or investment interests; and exceptions to the referral prohibition related to 

compensation arrangements.

2 Skilled nursing visits for management and evaluation of the patient's care plan are reasonable and necessary where 

underlying conditions or complications require that only a registered nurse can ensure that essential unskilled care is 

achieving its purpose. For skilled nursing care to be reasonable and necessary for management and evaluation of the 

patient's plan of care, the complexity of the necessary unskilled services that are a necessary part of the medical 

treatment must require the involvement of skilled nursing personnel to promote the patient's recovery and medical 

safety in view of the patient's overall condition (reference §409.33 and section 40.1.2.2 in Chapter 7 of the Medicare 

Benefits Policy Manual (Pub. 100-02)).
CMS-1611-P 33 

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. 

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 §424.22 (b), a recertification is required at least every 60 days, preferably at 

the time the plan is reviewed, and must be signed and dated by the physician who reviews the 

plan of care. In recertifying the patient’s eligibility for the home health benefit, the recertification 

must indicate the continuing need for skilled services and estimate how much longer the skilled 

services will be required. The need for occupational therapy may be the basis for continuing 

services that were initiated because the individual needed skilled nursing care or physical therapy 

or speech–language pathology services. Again, for instances where the physician ordering skilled 

nursing visits for management and evaluation of the patient's care plan, the physician must 

include a brief narrative that describes the clinical justification of this need and the narrative 

must be located immediately before the physician's signature. If the narrative exists as an 

addendum to the recertification form, in addition to the physician's signature on the 

recertification form, the physician must sign immediately after the narrative in the addendum. 

In the CY 2012 HH PPS final rule (76 FR 68597), we stated that, in addition to the 

certifying physician and allowed NPPs (as defined by the Act and outlined above), the physician 

who cared for the patient in an acute or post-acute care facility from which the patient was 

directly admitted to home health care, and who had privileges in such facility, could also perform 

the face-to-face encounter. In the CY 2013 HH PPS final rule (77 FR 67068) we revised our 

regulations so that an allowed NPP, collaborating with or under the supervision of the physician 

who cared for the patient in the acute/post-acute care facility, can communicate the clinical 
CMS-1611-P 34 

findings that support the patient’s needs for skilled care and homebound status to the acute/postacute care physician. In turn, the acute/post-acute care physician would communicate the clinical 

findings that support the patient’s needs for skilled care and homebound status from the 

encounter performed by the NPP to the certifying physician to document. Policy always 

permitted allowed NPPs in the acute/post-acute care setting from which the patient is directly 

admitted to home health care to perform the face-to-face encounter and communicate directly 

with the certifying physician the clinical findings from the encounter and how such findings 

support that the patient is homebound and needs skilled services (77 FR 67106). 

2. Proposed Changes to the Face-to-Face Encounter Narrative Requirement and Non-Coverage 

of Associated Physician Certification/Re-Certification Claims 

Each year, the CMS’ Office of Financial Management (OFM), under the Comprehensive 

Error Rate Testing (CERT) program, calculates the Medicare Fee-for-Service (FFS) improper 

payment rate. For the FY 2013 report period (reflecting claims processed between July 2011 and 

June 2012), the national Medicare FFS improper payment rate was calculated to be 10.1 

percent.3

 For that same report period, the improper payment rate for home health services was 

17.3 percent, representing a projected improper payment amount of approximately $3 billion.4

 

The improper payments identified by the CERT program represent instances in which a health 

care provider fails to comply with the Medicare coverage and billing requirements and are not 

necessarily a result of fraudulent activity.5

 

The majority of home health improper payments were due to “insufficient 

 

3

 U.S. Department of Health and Human Services, “FY 2013 Agency Financial Report”, accessed on April, 23, 2014 

at: http://www.hhs.gov/afr/2013-hhs-agency-financial-report.pdf 4

 U.S. Department of Health and Human Services, “The Supplementary Appendices for the Medicare Fee-forService 2013 Improper Payment Rate Report”, accessed on April, 23, 2014 at: http://www.cms.gov/ResearchStatistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-CompliancePrograms/CERT/Downloads/November2013ReportPeriodAppendixFinal12-13-2013_508Compliance_Approved12-

27-13.pdf

5 The CERT improper payment rate is not a “fraud rate,” but is a measurement of payments made that did not meet 

Medicare requirements. The CERT program cannot label a claim fraudulent.
CMS-1611-P 35 

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 §424.22(a)(1)(v). 

The home health industry continues to voice concerns regarding the implementation of 

the Affordable Care Act face-to-face encounter documentation requirement. The home health 

industry cites challenges that HHAs face in meeting the face-to-face encounter documentation 

requirements regarding the required narrative, including a perceived lack of established standards 

for compliance that can be adequately understood and applied by the physicians and HHAs. In 

addition, the home health industry conveys frustration with having to rely on the physician to 

satisfy the face-to-face encounter documentation requirements without incentives to encourage 

physician compliance. Correspondence received to date has expressed concern over the 

“extensive and redundant” narrative required by regulation for face-to-face encounter 

documentation purposes when detailed evidence to support the physician certification of 

homebound status and medical necessity is available in clinical records. In addition, 

correspondence stated that the narrative requirement was not explicit in the Affordable Care Act 

provision requiring a face-to-face encounter as part of the certification of eligibility and that a 

narrative requirement goes beyond Congressional intent. 

We agree that there should be sufficient evidence in the patient’s medical record to 

demonstrate that the patient meets the Medicare home health eligibility criteria. Therefore, in an 

effort to simplify the face-to-face encounter regulations, reduce burden for HHAs and 
CMS-1611-P 36 

physicians, and to mitigate instances where physicians and HHAs unintentionally fail to comply 

with certification requirements, we propose that: 

(1) The narrative requirement in regulation at §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 

§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/recertification of eligibility as outlined in §424.22(a)(1)(i) and §424.22(b)(2). This requirement 

was implemented in the CY 2010 HH PPS final rule (74 FR 58111) and is not changing. 

(2) In determining whether the patient is or was eligible to receive services under the 

Medicare home health benefit at the start of care, we would review only the medical record for 

the patient from the certifying physician or the acute/post-acute care facility (if the patient in that 

setting was directly admitted to home health) used to support the physician’s certification of 

patient eligibility, as described in paragraphs (a)(1) and (b) of this section. If the patient’s 

medical record, used by the physician in certifying eligibility, was not sufficient to demonstrate 

that the patient was eligible to receive services under the Medicare home health benefit, payment 

would not be rendered for home health services provided. 

(3) Physician claims for certification/recertification of eligibility for home health services 

(G0180 and G0179, respectively) would not be covered if the HHA claim itself was non-covered 
CMS-1611-P 37 

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 believe that these proposals are responsive to home health industry concerns 

regarding the face-to-face encounter requirements articulated above. We invite comment on 

these proposals and the associated change in the regulation at §424.22 in section VI. 

3. Proposed Clarification on When Documentation of a Face-to-Face Encounter is Required 

In the CY 2011 HH PPS final rule (75 FR 70372), in response to a commenter who asked 

whether the face-to-face encounter is required only for the first episode, we stated that the 

Congress enacted the face-to-face encounter requirement to apply to the physician’s certification, 

not recertifications. In sub-regulatory guidance (face-to-face encounter Q&As on the CMS 

website at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf ), response to Q&A 

#11 states that the face-to-face encounter requirement applies to “initial episodes” (the first in a 

series of episodes separated by no more than a 60-day gap). The distinction between what is 

considered a certification (versus a recertification) and what is considered an initial episode is 

important in determining whether the face-to-face encounter requirement is applicable. 

Recent inquiries question whether the face-to-face encounter requirement applies to 

situations where the beneficiary was discharged from home health with goals met/no expectation 

of return to home health care and readmitted to home health less than 60 days later. In this 

situation, the second episode would be considered a certification, not a recertification, because 

the HHA would be required to complete a new start of care OASIS to initiate care. However, for 

payment purposes, the second episode would be considered a subsequent episode, because there 
CMS-1611-P 38 

was no gap of 60 days or more between the first and second episodes of care. Therefore, in order 

to determine when documentation of a patient’s face-to-face encounter is required under sections 

1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, we are proposing to clarify that the face-to-face 

encounter requirement is applicable for certifications (not recertifications), rather than initial 

episodes. A certification (versus recertification) is considered to be any time that a new start of 

care OASIS is completed to initiate care. Because we are proposing to clarify that a certification 

is considered to be any time a that a new start of care OASIS is completed to initiate care, we 

would also revise Q&A #11 on the CMS website (http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/Downloads/Home-Health-Questions-Answers.pdf) to 

reflect this proposed clarification. If a patient was transferred to the hospital and remained in the 

hospital after day 61 (or after the first day of the next certification period) , once the patient 

returns home, a new start of care OASIS must be completed. Therefore, this new episode would 

not be considered continuous and a face-to-face encounter needs to be documented as part of the 

certification of patient eligibility.6

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

For CY 2012, we removed two hypertension codes from our case-mix system and 

recalibrated the case-mix weights in a budget neutral manner. When recalibrating the case-mix 

weights for the CY 2012 HH PPS final rule, we used CY 2005 data in the four-equation model 

used to determine the clinical and functional points for a home health episode and CY 2007 data 

in the payment regression model used to determine the case-mix weights. We estimated the 

coefficients for the variables in the four-equation model using CY 2005 data to maintain the 

same variables we used for CY 2008 when we implemented the four-equation model, thus 

minimizing substantial changes. Due to a noticeable shift in the number of therapy visits 

 

6 http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/OASIS/downloads/OASISConsiderationsforPPS.pdf 
CMS-1611-P 39 

provided as a result of the 2008 refinements, at the time, we decided to use CY 2007 data in the 

payment regression. As part of the CY 2012 recalibration, we lowered the high therapy weights 

and raised the low or no therapy weights to address MedPAC’s concerns that the HH PPS 

overvalues therapy episodes and undervalues non-therapy episodes (March 2011 MedPAC 

Report to the Congress: Medicare Payment Policy, p. 176). These adjustments better aligned the 

case-mix weights with episode costs estimated from cost report data. The CY 2012 recalibration, 

itself, was implemented in a budget neutral manner. However, we note that in the CY 2012 HH 

PPS final rule, we also finalized a 3.79 percent reduction to payments in CY 2012 and a 

1.32 percent reduction for CY 2013 to account for the nominal case-mix growth identified 

through CY 2009. 

For CY 2014, as part of the Affordable Care Act mandated rebasing effort, we reset the 

case-mix weights, lowering the average case-mix weight to 1.0000. To lower the case-mix 

weights to 1.0000, each case-mix weight was decreased by the same factor (1.3464), thereby 

maintaining the same relative values between the weights. This resetting of the case-mix 

weights was done in a budget neutral manner, inflating the starting point for rebasing by the 

same factor that was used to decrease the weights. In the CY 2014 HH PPS final rule, we also 

finalized a reduction ($80.95) to the national, standardized 60-day episode payment amount each 

year from CY 2014 through CY 2017 to better align payments with costs (78 FR 72293). 

For CY 2015, we propose to recalibrate the case-mix weights, adjusting the weights 

relative to one another using more current data and aligning payments with current utilization 

data in a budget neutral manner. We are also proposing to recalibrate the case-mix weights in 

subsequent payment updates based on the methodology finalized in the CY 2012 HH PPS final 

rule (76 FR 68526) and the 2008 refinements (72 FR 25359-25392), with the proposed minor 

changes outlined below. We used preliminary CY 2013 home health claims data (as of 
CMS-1611-P 40 

December 31, 2013) to generate the proposed CY 2015 case-mix weights using the same 

methodology finalized in the CY 2012 HH PPS final rule, except where noted below. Similar to 

the CY 2012 recalibration, some exclusion criteria were applied to the CY 2013 home health 

claims data used to generate the proposed CY 2015 case-mix weights. Specifically, we excluded 

Request for Anticipated Payment (RAP) claims, claims without a matched OASIS, claims where 

total minutes equal 0, claims where the payment amount equals 0, claims where paid days equal 

0, claims where covered visits equal 0, and claims without a HIPPS code. In addition, the 

episodes used in the recalibration were normal episodes. PEP, LUPA, outlier, and capped outlier 

(that is, episodes that are paid as normal episodes, but would have been outliers had the HHA not 

reached the outlier cap) episodes were dropped from the data file.7

Similar to the CY 2012 recalibration, the first step in the proposed CY 2015 recalibration 

was to re-estimate the four-equation model used to determine the clinical and functional points 

for an episode. The dependent variable for the CY 2015 recalibration is the same as the CY 

2012 recalibration, wage-weighted minutes of care. The wage-weighted minutes of care are 

determined using the CY 2012 Bureau of Labor Statistics national hourly wage plus fringe rates 

for the six home health disciplines and the minutes per visit from the claim. 

The CY 2012 four-equation model contained the same variables and restrictions as the 

four-equation model used in the CY 2008 refinements (http://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trends-andReports/Reports/Downloads/Coleman_Final_April_2008.pdf). The model was estimated using 

CY 2005 data, same data used in the CY 2008 refinements, thereby minimizing changes in the 

points for the CY 2012 four-equation model. For the CY 2015 four-equation model, we reexamined all of the four-equation or “leg” variables for each of the 51 grouper variables in the 

 

7

 At a later point, when normalizing the weights, PEP episodes are included in the analysis. 
CMS-1611-P 41 

CY 2008 model. Therefore, a grouper variable that may have dropped out of the model in one of 

the four equations in CY 2008 may be in the CY 2015 four-equation model and vice versa. 

Furthermore, the specific therapy indicator variables that were in the CY 2012 four-equation 

model were dropped in the CY 2015 four-equation model so that the number of therapy visits 

provided had less of an impact on the process used to create the case-mix weights. 

The steps used to estimate the four-equation model are similar to the steps used in the CY 

2008 refinements. They are as follows8: 

(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 visits9. Also, independent variables for each of the 51 grouper variables for each leg 

of the model are included in the model. 

(2) Once the four-equation model is estimated, we drop all grouper variables with a 

coefficient less than 5 from the model. We re-estimate the model and continue to drop variables 

and re-estimate until there are no grouper variables with a coefficient of 5 or less. 

(3) Taking the final iteration of the model in the previous step, we drop all grouper 

variables with a p-value greater than 0.10. We then re-estimate the model. 

(4) Taking the model in the previous step, we begin to apply restrictions to certain 

coefficients. Within a grouper variable we first look across the coefficients for leg1 and leg3. 

We perform an equality test on those coefficients. If the coefficients are not significantly 

 

8

 All the regressions mentioned in steps 1-4 are estimated with robust standard errors clustered at the beneficiary ID level. This is to account for 

beneficiaries appearing in the data multiple times. When that occurs, the standard errors can be correlated causing the p-value to be biased 

downward. Clustered standard errors account for that bias. 9

 Early episodes are defined as the 1st or 2nd episode in a sequence of adjacent covered episodes. Later episodes are defined as the 3rd episode 

and beyond in a sequence of adjacent covered episodes. Episodes are considered to be adjacent if they are separated by no more than a 60-day 

period between claims. 
CMS-1611-P 42 

different from one another (using a p-value of 0.05), we set a restriction for that grouper variable 

such that the coefficients are equal across leg1 and leg3. We run these tests for all grouper 

variables for leg1 and leg3. We also run these tests for all grouper variables for leg2 and leg4.10 

After all restrictions are set, we re-run the regression again taking those restrictions into account. 

(5) Taking in the model from step 4, we drop variables that have a coefficient less than 5 

and re-estimate the model a final time. Using preliminary 2013 claims data, there was only 1 

grouper variable with a negative coefficient that was dropped from the model. 

The results from the final four-equation model are used to determine the clinical and 

functional points for an episode and place episodes in the different clinical and functional levels 

used to estimate the payment regression model. We take the coefficients from the four equation 

model, divide them by 10, and round to the nearest integer to determine the points associated 

with each variable. The points for each of the grouper variables for each leg of the model are 

shown in Table 8. The points for the clinical variables are added together to determine an 

episode’s clinical score. The points for the functional variables are added together to determine 

an episode’s functional score. 

 

10 In the CY 2008 rule, there was a further step taken to determine if the coefficients of a grouper variable are equal across all 4 legs. This step 

was not taken at this time. 
CMS-1611-P 43 

TABLE 8: Case-Mix Adjustment Variables and Scores

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

 Therapy visits 0-13 14+ 0-13 14+ 

 EQUATION: 1 2 3 4 

CLINICAL DIMENSION 

1 Primary or Other Diagnosis = Blindness/Low Vision 

2 Primary or Other Diagnosis = Blood disorders 6 3 

3 Primary or Other Diagnosis = Cancer, selected benign 

neoplasms 8 8 

4 Primary Diagnosis = Diabetes 8 8 

5 Other Diagnosis = Diabetes 1 

6 

Primary or Other Diagnosis = Dysphagia 

AND

Primary or Other Diagnosis = Neuro 3 – Stroke 

2 16 1 9 

7 

Primary or Other Diagnosis = Dysphagia 

AND

M1030 (Therapy at home) = 3 (Enteral) 

2 7 7 

8 Primary or Other Diagnosis = Gastrointestinal disorders 

9 

Primary or Other Diagnosis = Gastrointestinal disorders 

AND 

M1630 (ostomy)= 1 or 2 

 5 

10 

Primary or Other Diagnosis = Gastrointestinal disorders 

AND

Primary or Other Diagnosis = Neuro 1 - Brain disorders and 

paralysis, OR Neuro 2 - Peripheral neurological disorders, OR

Neuro 3 - Stroke, OR Neuro 4 - Multiple Sclerosis 

 

11 Primary or Other Diagnosis = Heart Disease OR Hypertension 1 

12 Primary Diagnosis = Neuro 1 - Brain disorders and paralysis 3 11 6 11 

13 

Primary or Other Diagnosis = Neuro 1 - Brain disorders and 

paralysis 

AND

M1840 (Toilet transfer) = 2 or more 

 

14 

Primary or Other Diagnosis = Neuro 1 - Brain disorders and 

paralysis OR Neuro 2 - Peripheral neurological disorders 

AND

M1810 or M1820 (Dressing upper or lower body)= 1, 2, or 3 

2 7 1 7 

15 Primary or Other Diagnosis = Neuro 3 - Stroke 3 10 2 

16 Primary or Other Diagnosis = Neuro 3 - Stroke AND

M1810 or M1820 (Dressing upper or lower body)= 1, 2, or 3 4 9 
CMS-1611-P 44 

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

 Therapy visits 0-13 14+ 0-13 14+ 

 EQUATION: 1 2 3 4 

17 

Primary or Other Diagnosis = Neuro 3 - Stroke 

AND

M1860 (Ambulation) = 4 or more 

 

18 

Primary or Other Diagnosis = Neuro 4 - Multiple Sclerosis 

AND AT LEAST ONE OF THE FOLLOWING:

M1830 (Bathing) = 2 or more 

OR

M1840 (Toilet transfer) = 2 or more 

OR

M1850 (Transferring) = 2 or more 

OR

M1860 (Ambulation) = 4 or more 

3 8 6 14 

19 

Primary or Other Diagnosis = Ortho 1 - Leg Disorders or Gait 

Disorders 

AND

M1324 (most problematic pressure ulcer stage)= 1, 2, 3 or 4 

8 1 8 4 

20 

Primary or Other Diagnosis = Ortho 1 - Leg OR Ortho 2 - 

Other orthopedic disorders 

AND

M1030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) 

3 4 3 

21 Primary or Other Diagnosis = Psych 1 – Affective and other 

psychoses, depression 

22 Primary or Other Diagnosis = Psych 2 - Degenerative and 

other organic psychiatric disorders 

23 Primary or Other Diagnosis = Pulmonary disorders 

24 Primary or Other Diagnosis = Pulmonary disorders AND

M1860 (Ambulation) = 1 or more 

25 Primary Diagnosis = Skin 1 -Traumatic wounds, burns, and 

post-operative complications 4 20 8 20 

26 Other Diagnosis = Skin 1 - Traumatic wounds, burns, postoperative complications 5 14 7 14 

27 

Primary or Other Diagnosis = Skin 1 -Traumatic wounds, 

burns, and post-operative complications OR Skin 2 – Ulcers 

and other skin conditions

AND

M1030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) 

4 1 
CMS-1611-P 45 

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

 Therapy visits 0-13 14+ 0-13 14+ 

 EQUATION: 1 2 3 4 

28 Primary or Other Diagnosis = Skin 2 - Ulcers and other skin 

conditions 2 17 8 17 

29 Primary or Other Diagnosis = Tracheostomy 4 16 4 16 

30 Primary or Other Diagnosis = Urostomy/Cystostomy 18 14 

31 M1030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral) 17 5 17 

32 M1030 (Therapy at home) = 3 (Enteral) 16 7 

33 M1200 (Vision) = 1 or more 

34 M1242 (Pain)= 3 or 4 2 1 

35 M1308 = Two or more pressure ulcers at stage 3 or 4 4 7 4 7 

36 M1324 (Most problematic pressure ulcer stage)= 1 or 2 3 18 7 15 

37 M1324 (Most problematic pressure ulcer stage)= 3 or 4 8 31 11 26 

38 M1334 (Stasis ulcer status)= 2 4 12 7 22 

39 M1334 (Stasis ulcer status)= 3 7 17 10 17 

40 M1342 (Surgical wound status)= 2 1 7 6 14 

41 M1342 (Surgical wound status)= 3 6 5 10 

42 M1400 (Dyspnea) = 2, 3, or 4 2 3 

43 M1620 (Bowel Incontinence) = 2 to 5 3 3 

44 M1630 (Ostomy)= 1 or 2 4 11 3 11 

45 M2030 (Injectable Drug Use) = 0, 1, 2, or 3 

FUNCTIONAL DIMENSION 

46 M1810 or M1820 (Dressing upper or lower body)= 1, 2, or 3 2 1 

47 M1830 (Bathing) = 2 or more 6 3 5 

48 M1840 (Toilet transferring) = 2 or more 1 3 3 

49 M1850 (Transferring) = 2 or more 3 4 2 

50 M1860 (Ambulation) = 1, 2 or 3 7 3 

51 M1860 (Ambulation) = 4 or more 7 8 6 8 

Source: CY 2013 home health claims data as of December 31, 2013 from the home health Standard Analytic File 

(SAF). We excluded LUPA episodes, outlier episodes, and episodes with PEP adjustments. 

Note(s): Points are additive, however points may not be given for the same line item in the table more than once. 

Please see Medicare Home Health Diagnosis Coding guidance at: 

http://www.cms.hhs.gov/HomeHealthPPS/03_coding&billing.asp for definitions of primary and secondary 

diagnoses. 

In updating the four-equation model with 2013 data (the last update to the four-equation 

model used 2005 data), there were significant changes to the point values for the variables in the 

four-equation model. These reflect changes in the relationship between the grouper variables 

and resource use since 2005. The CY 2015 four-equation model resulted in 121 point-giving 
CMS-1611-P 46 

variables being used in the model (as compared to the 164 variables for the 2012 recalibration). 

There were 19 variables that were added to the model and 62 variables that were dropped from 

the model due to the lack of additional resources associated with the variable. The points for 56 

variables increased in the CY 2015 four-equation model and the points for 28 variables in 

decreased in the CY 2015 four-equation model. 

Since there were a number of significant changes to the point values associated with the 

four-equation model, we are proposing to redefine the clinical and functional thresholds so that 

they would be reflective of the new points associated with the CY 2015 four-equation model. 

Specifically, after estimating the points for each of the variables and summing the clinical and 

functional points for each episode, we looked at the distribution of the clinical score and 

functional score, breaking the episodes into different steps. The categorizations for the steps are 

as follows: 

● Step 1: First and second episodes, 0-13 therapy visits. 

● Step 2.1: First and second episodes, 14-19 therapy visits. 

● Step 2.2: Third episodes and beyond, 14-19 therapy visits. 

● Step 3: Third episodes and beyond, 0-13 therapy visits. 

● Step 4: Episodes with 20+ therapy visits 

Similar to the methodology used in the CY 2008 refinements, we then divide the 

distribution of the clinical score for episodes within a step such that a third of episodes are 

classified as low clinical score, a third of episodes are classified as medium clinical score, and a 

third of episodes are classified as high clinical score. The same approach is then done looking at 

the functional score. It was not always possible to evenly divide the episodes within each level, 

by step, into thirds due to many episodes being clustered around one particular score. 11 Also, we 

 

11 For Step 1, 55% of episodes were in the medium functional level (All with score 15). 
CMS-1611-P 47 

looked at the average resource use associated with each clinical and functional score and used 

that to guide where we placed our thresholds. We tried to group scores with similar average 

resource use within the same level (even if it means that more or less than a third of episodes are 

placed within a level by step). The new thresholds based off of the CY 2015 four-equation 

model points are shown in Table 9. 

TABLE 9: CY 2015 Clinical and Functional Thresholds 

1st and 2nd Episodes 3rd+ Episodes All Episodes 

 

0 to 13 

therapy 

visits 

14 to 19 

therapy 

visits 

0 to 13 

therapy 

visits 

14 to 19 

therapy 

visits 

20+ therapy 

visits 

Grouping Step: 1 2 3 4 5 

Equation(s) used to calculate 

points: (see Table 8) 1 2 3 4 (2&4) 

Dimension Severity Level 

Clinical C1 0 to 1 0 0 0 to 3 0 to 3 

 C2 2 to 3 1 to 7 1 4 to 12 4 to 16 

 C3 4+ 8+ 2+ 13+ 17+ 

Functional F1 0 to 14 0 to 3 0 to 8 0 0 to 2 

 F2 15 4 to 12 9 1 to 7 3 to 4 

 F3 16+ 13+ 10+ 8+ 5+ 

 Once the thresholds were determined and each episode was assigned a clinical and 

functional level, the payment regression was estimated with an episode’s wage-weighted minutes 

of care as the dependent variable. Independent variables in the model were indicators for the 

step of the episode as well for the clinical and functional levels within each step of the episode. 

Like the four-equation model, the payment regression model is also estimated with robust 

standard errors that are clustered at the beneficiary level. Table 10 shows the regression 

coefficients for the variables in the proposed payment regression model. The R-squared value 

 

For Step 2.1, 60.9% of episodes were in the low functional level (Most with score 3, some with score 0). 

For Step 2.2, 70.3% of episodes were in the low functional level (All with score 0). 

For Step 3, 52.3% of episodes were in the medium functional level (all with score 9). 

For Step 4, 41.6% of episodes were in the medium functional level (almost all with score 3). 
CMS-1611-P 48 

for the payment regression model is 0.4691 (an increase from 0.3769 for the CY 2012 

recalibration). 

TABLE 10: Proposed Payment Regression Model

Variable Description 

Proposed CY 2015 

Payment Regression 

Coefficients 

Step 1, Clinical Score Medium $24.43 

Step 1, Clinical Score High $59.46 

Step 1, Functional Score Medium $81.03 

Step 1, Functional Score High $120.87 

Step 2.1, Clinical Score Medium $56.61 

Step 2.1, Clinical Score High $175.83 

Step 2.1, Functional Score Medium $25.84 

Step 2.1, Functional Score High $90.77 

Step 2.2, Clinical Score Medium $90.83 

Step 2.2, Clinical Score High $201.06 

Step 2.2, Functional Score Medium $18.50 

Step 2.2, Functional Score High $91.18 

Step 3, Clinical Score Medium $10.42 

Step 3, Clinical Score High $85.74 

Step 3, Functional Score Medium $49.62 

Step 3, Functional Score High $84.57 

Step 4, Clinical Score Medium $77.85 

Step 4, Clinical Score High $237.87 

Step 4, Functional Score Medium $38.26 

Step 4, Functional Score High $93.84 

Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits $438.76 

Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits $448.05 

Step 3, 3rd+ Episodes, 0-13 Therapy Visits -$65.84 

Step 4, All Episodes, 20+ Therapy Visits $857.63 

Intercept $368.93 

Source: CY 2013 home health claims data as of December 31, 2013 from the home health 

standard analytic file (SAF). 

The method used to derive the proposed CY 2015 case-mix weights from the payment 

regression model coefficients is the same as the method used to derive the CY 2012 case-mix 

weights. This method is described below. 
CMS-1611-P 49 

(1) We used the coefficients from the payment regression model to predict each 

episode’s wage-weighted minutes of care (resource use). We then divided these predicted values 

by the mean of the dependent variable (that is, the average wage-weighted minutes of care across 

all episodes used in the payment regression). This division constructs the weight for each 

episode, which is simply the ratio of the episode’s predicted wage-weighted minutes of care 

divided by the average wage-weighted minutes of care in the sample. Each episode was then 

aggregated into one of the 153 home health resource groups (HHRGs) and the “raw” weight for 

each HHRG was calculated as the average of the episode weights within the HHRG. 

(2) In the next step of weight revision, the weights associated with 0 to 5 therapy visits 

were increased by 3.75 percent. Also, the weights associated with 14–15 therapy visits were 

decreased by 2.5 percent and the weights associated with 20+ therapy visits were decreased by 5 

percent. These adjustments were made to discourage inappropriate use of therapy while 

addressing concerns that non-therapy services are undervalued. These adjustments to the casemix weights are the same as the ones used in the CY 2012 recalibration (76 FR 68557). 

(3) After the adjustments in step (2) were applied to the raw weights, the weights were 

further adjusted to create an increase in the payment weights for the therapy visit steps between 

the therapy thresholds. Weights with the same clinical severity level, functional severity level, 

and early/later episode status were grouped together. Then within those groups, the weights for 

each therapy step between thresholds were gradually increased. We did this by interpolating 

between the main thresholds on the model (from 0–5 to 14–15 therapy visits, and from 14–15 to 

20+ therapy visits). We used a linear model to implement the interpolation so the payment 

weight increase for each step between the thresholds (such as the increase between 0–5 therapy 

visits and 6 therapy visits and the increase between 6 therapy visits and 7–9 therapy visits) was 
CMS-1611-P 50 

constant. This interpolation is the identical to the process finalized in the CY 2012 final rule (76 

FR 68555). 

(4) The interpolated weights were then adjusted so that the average case-mix for the 

weights was equal to 1.12 This last step creates the proposed CY 2015 case-mix weights shown 

in Table 11. 

TABLE 11: Proposed CY 2015 Case-Mix Payment Weights

Payment 

Group Step (Episode and/or Therapy Visit Ranges) 

Clinical and 

Functional 

Levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

Proposed 

Case-Mix 

Weights 

10111 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F1S1 0.5984 

10112 1st and 2nd Episodes, 6 Therapy Visits C1F1S2 0.7250 

10113 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F1S3 0.8515 

10114 1st and 2nd Episodes, 10 Therapy Visits C1F1S4 0.9781 

10115 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F1S5 1.1046 

10121 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F2S1 0.7299 

10122 1st and 2nd Episodes, 6 Therapy Visits C1F2S2 0.8380 

10123 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F2S3 0.9461 

10124 1st and 2nd Episodes, 10 Therapy Visits C1F2S4 1.0543 

10125 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F2S5 1.1624 

10131 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F3S1 0.7945 

10132 1st and 2nd Episodes, 6 Therapy Visits C1F3S2 0.9095 

10133 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F3S3 1.0245 

10134 1st and 2nd Episodes, 10 Therapy Visits C1F3S4 1.1395 

10135 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F3S5 1.2545 

10211 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F1S1 0.6381 

10212 1st and 2nd Episodes, 6 Therapy Visits C2F1S2 0.7739 

10213 1st and 2nd Episodes, 7 to 9 Therapy Visits C2F1S3 0.9098 

10214 1st and 2nd Episodes, 10 Therapy Visits C2F1S4 1.0457 

10215 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F1S5 1.1816 

10221 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F2S1 0.7695 

10222 1st and 2nd Episodes, 6 Therapy Visits C2F2S2 0.8870 

10223 1st and 2nd Episodes, 7 to 9 Therapy Visits C2F2S3 1.0044 

10224 1st and 2nd Episodes, 10 Therapy Visits C2F2S4 1.1219 

10225 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F2S5 1.2394 

 

12When 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. 
CMS-1611-P 51 

Payment 

Group Step (Episode and/or Therapy Visit Ranges) 

Clinical and 

Functional 

Levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

Proposed 

Case-Mix 

Weights 

10231 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F3S1 0.8341 

10232 1st and 2nd Episodes, 6 Therapy Visits C2F3S2 0.9585 

10233 1st and 2nd Episodes, 7 to 9 Therapy Visits C2F3S3 1.0828 

10234 1st and 2nd Episodes, 10 Therapy Visits C2F3S4 1.2071 

10235 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F3S5 1.3315 

10311 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F1S1 0.6949 

10312 1st and 2nd Episodes, 6 Therapy Visits C3F1S2 0.8557 

10313 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F1S3 1.0166 

10314 1st and 2nd Episodes, 10 Therapy Visits C3F1S4 1.1775 

10315 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F1S5 1.3383 

10321 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F2S1 0.8263 

10322 1st and 2nd Episodes, 6 Therapy Visits C3F2S2 0.9688 

10323 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F2S3 1.1112 

10324 1st and 2nd Episodes, 10 Therapy Visits C3F2S4 1.2537 

10325 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F2S5 1.3961 

10331 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F3S1 0.8909 

10332 1st and 2nd Episodes, 6 Therapy Visits C3F3S2 1.0403 

10333 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F3S3 1.1896 

10334 1st and 2nd Episodes, 10 Therapy Visits C3F3S4 1.3389 

10335 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F3S5 1.4882 

21111 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F1S1 1.2312 

21112 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F1S2 1.4280 

21113 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F1S3 1.6249 

21121 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F2S1 1.2706 

21122 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F2S2 1.4732 

21123 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F2S3 1.6759 

21131 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F3S1 1.3695 

21132 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F3S2 1.5667 

21133 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F3S3 1.7639 

21211 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F1S1 1.3175 

21212 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F1S2 1.5241 

21213 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F1S3 1.7307 

21221 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F2S1 1.3569 

21222 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F2S2 1.5693 

21223 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F2S3 1.7817 

21231 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F3S1 1.4558 

21232 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F3S2 1.6628 

21233 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F3S3 1.8698 
CMS-1611-P 52 

Payment 

Group Step (Episode and/or Therapy Visit Ranges) 

Clinical and 

Functional 

Levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

Proposed 

Case-Mix 

Weights 

21311 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F1S1 1.4992 

21312 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F1S2 1.7245 

21313 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F1S3 1.9498 

21321 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F2S1 1.5386 

21322 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F2S2 1.7697 

21323 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F2S3 2.0008 

21331 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F3S1 1.6376 

21332 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F3S2 1.8632 

21333 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F3S3 2.0888 

22111 3rd+ Episodes, 14 to 15 Therapy Visits C1F1S1 1.2454 

22112 3rd+ Episodes, 16 to 17 Therapy Visits C1F1S2 1.4375 

22113 3rd+ Episodes, 18 to 19 Therapy Visits C1F1S3 1.6296 

22121 3rd+ Episodes, 14 to 15 Therapy Visits C1F2S1 1.2736 

22122 3rd+ Episodes, 16 to 17 Therapy Visits C1F2S2 1.4752 

22123 3rd+ Episodes, 18 to 19 Therapy Visits C1F2S3 1.6769 

22131 3rd+ Episodes, 14 to 15 Therapy Visits C1F3S1 1.3843 

22132 3rd+ Episodes, 16 to 17 Therapy Visits C1F3S2 1.5766 

22133 3rd+ Episodes, 18 to 19 Therapy Visits C1F3S3 1.7689 

22211 3rd+ Episodes, 14 to 15 Therapy Visits C2F1S1 1.3838 

22212 3rd+ Episodes, 16 to 17 Therapy Visits C2F1S2 1.5683 

22213 3rd+ Episodes, 18 to 19 Therapy Visits C2F1S3 1.7529 

22221 3rd+ Episodes, 14 to 15 Therapy Visits C2F2S1 1.4120 

22222 3rd+ Episodes, 16 to 17 Therapy Visits C2F2S2 1.6061 

22223 3rd+ Episodes, 18 to 19 Therapy Visits C2F2S3 1.8001 

22231 3rd+ Episodes, 14 to 15 Therapy Visits C2F3S1 1.5228 

22232 3rd+ Episodes, 16 to 17 Therapy Visits C2F3S2 1.7074 

22233 3rd+ Episodes, 18 to 19 Therapy Visits C2F3S3 1.8921 

22311 3rd+ Episodes, 14 to 15 Therapy Visits C3F1S1 1.5518 

22312 3rd+ Episodes, 16 to 17 Therapy Visits C3F1S2 1.7596 

22313 3rd+ Episodes, 18 to 19 Therapy Visits C3F1S3 1.9673 

22321 3rd+ Episodes, 14 to 15 Therapy Visits C3F2S1 1.5800 

22322 3rd+ Episodes, 16 to 17 Therapy Visits C3F2S2 1.7973 

22323 3rd+ Episodes, 18 to 19 Therapy Visits C3F2S3 2.0146 

22331 3rd+ Episodes, 14 to 15 Therapy Visits C3F3S1 1.6908 

22332 3rd+ Episodes, 16 to 17 Therapy Visits C3F3S2 1.8987 

22333 3rd+ Episodes, 18 to 19 Therapy Visits C3F3S3 2.1065 

30111 3rd+ Episodes, 0 to 5 Therapy Visits C1F1S1 0.4916 

30112 3rd+ Episodes, 6 Therapy Visits C1F1S2 0.6424 
CMS-1611-P 53 

Payment 

Group Step (Episode and/or Therapy Visit Ranges) 

Clinical and 

Functional 

Levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

Proposed 

Case-Mix 

Weights 

30113 3rd+ Episodes, 7 to 9 Therapy Visits C1F1S3 0.7931 

30114 3rd+ Episodes, 10 Therapy Visits C1F1S4 0.9439 

30115 3rd+ Episodes, 11 to 13 Therapy Visits C1F1S5 1.0946 

30121 3rd+ Episodes, 0 to 5 Therapy Visits C1F2S1 0.5721 

30122 3rd+ Episodes, 6 Therapy Visits C1F2S2 0.7124 

30123 3rd+ Episodes, 7 to 9 Therapy Visits C1F2S3 0.8527 

30124 3rd+ Episodes, 10 Therapy Visits C1F2S4 0.9930 

30125 3rd+ Episodes, 11 to 13 Therapy Visits C1F2S5 1.1333 

30131 3rd+ Episodes, 0 to 5 Therapy Visits C1F3S1 0.6288 

30132 3rd+ Episodes, 6 Therapy Visits C1F3S2 0.7799 

30133 3rd+ Episodes, 7 to 9 Therapy Visits C1F3S3 0.9310 

30134 3rd+ Episodes, 10 Therapy Visits C1F3S4 1.0821 

30135 3rd+ Episodes, 11 to 13 Therapy Visits C1F3S5 1.2332 

30211 3rd+ Episodes, 0 to 5 Therapy Visits C2F1S1 0.5085 

30212 3rd+ Episodes, 6 Therapy Visits C2F1S2 0.6836 

30213 3rd+ Episodes, 7 to 9 Therapy Visits C2F1S3 0.8586 

30214 3rd+ Episodes, 10 Therapy Visits C2F1S4 1.0337 

30215 3rd+ Episodes, 11 to 13 Therapy Visits C2F1S5 1.2088 

30221 3rd+ Episodes, 0 to 5 Therapy Visits C2F2S1 0.5890 

30222 3rd+ Episodes, 6 Therapy Visits C2F2S2 0.7536 

30223 3rd+ Episodes, 7 to 9 Therapy Visits C2F2S3 0.9182 

30224 3rd+ Episodes, 10 Therapy Visits C2F2S4 1.0828 

30225 3rd+ Episodes, 11 to 13 Therapy Visits C2F2S5 1.2474 

30231 3rd+ Episodes, 0 to 5 Therapy Visits C2F3S1 0.6457 

30232 3rd+ Episodes, 6 Therapy Visits C2F3S2 0.8211 

30233 3rd+ Episodes, 7 to 9 Therapy Visits C2F3S3 0.9965 

30234 3rd+ Episodes, 10 Therapy Visits C2F3S4 1.1720 

30235 3rd+ Episodes, 11 to 13 Therapy Visits C2F3S5 1.3474 

30311 3rd+ Episodes, 0 to 5 Therapy Visits C3F1S1 0.6307 

30312 3rd+ Episodes, 6 Therapy Visits C3F1S2 0.8149 

30313 3rd+ Episodes, 7 to 9 Therapy Visits C3F1S3 0.9992 

30314 3rd+ Episodes, 10 Therapy Visits C3F1S4 1.1834 

30315 3rd+ Episodes, 11 to 13 Therapy Visits C3F1S5 1.3676 

30321 3rd+ Episodes, 0 to 5 Therapy Visits C3F2S1 0.7112 

30322 3rd+ Episodes, 6 Therapy Visits C3F2S2 0.8850 

30323 3rd+ Episodes, 7 to 9 Therapy Visits C3F2S3 1.0587 

30324 3rd+ Episodes, 10 Therapy Visits C3F2S4 1.2325 

30325 3rd+ Episodes, 11 to 13 Therapy Visits C3F2S5 1.4063 
CMS-1611-P 54 

Payment 

Group Step (Episode and/or Therapy Visit Ranges) 

Clinical and 

Functional 

Levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

Proposed 

Case-Mix 

Weights 

30331 3rd+ Episodes, 0 to 5 Therapy Visits C3F3S1 0.7679 

30332 3rd+ Episodes, 6 Therapy Visits C3F3S2 0.9525 

30333 3rd+ Episodes, 7 to 9 Therapy Visits C3F3S3 1.1370 

30334 3rd+ Episodes, 10 Therapy Visits C3F3S4 1.3216 

30335 3rd+ Episodes, 11 to 13 Therapy Visits C3F3S5 1.5062 

40111 All Episodes, 20+ Therapy Visits C1F1S1 1.8217 

40121 All Episodes, 20+ Therapy Visits C1F2S1 1.8786 

40131 All Episodes, 20+ Therapy Visits C1F3S1 1.9611 

40211 All Episodes, 20+ Therapy Visits C2F1S1 1.9374 

40221 All Episodes, 20+ Therapy Visits C2F2S1 1.9942 

40231 All Episodes, 20+ Therapy Visits C2F3S1 2.0767 

40311 All Episodes, 20+ Therapy Visits C3F1S1 2.1750 

40321 All Episodes, 20+ Therapy Visits C3F2S1 2.2319 

40331 All Episodes, 20+ Therapy Visits C3F3S1 2.3144 

To ensure the changes to the case-mix weights are implemented in a budget neutral 

manner, we propose to apply a case-mix budget neutrality factor to the CY 2015 national, 

standardized 60-day episode payment rate (see section III.D.4. of this proposed rule). The casemix 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 casemix weights are applied to CY 2013 utilization data. This produces the proposed case-mix 

budget neutrality factor for CY 2015 of 1.0237. We note that the CY 2013 data used to develop 

the proposed case-mix weights is preliminary (CY 2013 claims data as of December 31, 2013) 

and we propose to update the case-mix weights with more complete CY 2013 data (as of June 

30, 2014) in the final rule. Therefore, the points associated with each of the grouper variables, 

the new clinical and functional thresholds, and the CY 2015 case-mix weights may change 

between the CY 2015 HH PPS proposed and final rules. 

Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to implement payment 
CMS-1611-P 55 

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 casemix growth from 2000 to 2009 through case-mix reductions implemented from 2008 through 

2013 (76 FR 68528-68543). In the CY 2013 HH PPS proposed rule, we stated that we found that 

15.97 percent of the total case-mix change was real from 2000 to 2010 (77 FR 41553). In the 

CY 2014 HH PPS final rule, we used 2012 claims data to rebase payments (78 FR 72277). Since 

we were resetting the payment amounts with 2012 data, we did not take into account nominal 

case-mix growth from 2009 through 2012. 

For this proposed rule, we examined case-mix growth from CY 2012 to CY 2013 using 

CY 2012 and preliminary CY 2013 claims data. In applying the 15.97 percent estimate of real 

case-mix growth to the total estimated case-mix growth from CY 2012 to CY 2013 (2.37 

percent), we estimate that a case-mix reduction of 2.00 percent, to account for nominal case-mix 

growth, would be warranted. We considered adjusting the case-mix budget neutrality factor to 

take into account the 2.00 percent growth in nominal case-mix, which would result in a case-mix 

budget neutrality adjustment of 1.0037 rather than 1.0237. However, we are proposing to apply 

the full 1.0237 case-mix budget neutrality factor to the national, standardized 60-day episode 

payment rate. We will continue to monitor case-mix growth and may consider whether to 

propose nominal case-mix reductions in future rulemaking. 

D. Proposed CY 2015 Rate Update 

1. Proposed CY 2015 Home Health Market Basket Update 

 Section 1895(b)(3)(B) of the Act, as amended by section 3401(e) of the Affordable 

Care Act, adds new clause (vi) which states, ‘‘After determining the home health market basket 

percentage increase . . . the Secretary shall reduce such percentage . . . for each of 2011, 2012, 

and 2013, by 1 percentage point. The application of this clause may result in the home health 
CMS-1611-P 56 

market basket percentage increase under clause (iii) being less than 0.0 for a year, and may result 

in payment rates under the system under this subsection for a year being less than such payment 

rates for the preceding year.’’ Therefore, as mandated by the Affordable Care Act, for CYs 

2011, 2012, and 2013, the HH market basket update was reduced by 1 percentage point. 

 Section 1895(b)(3)(B) of the Act requires that the standard prospective payment 

amounts for CY 2015 be increased by a factor equal to the applicable HH market basket update 

for those HHAs that submit quality data as required by the Secretary. The proposed HH PPS 

market basket update for CY 2015 is 2.6 percent. This is based on Global Insight Inc.’s first 

quarter 2014 forecast of the 2010-based HH market basket, with historical data through the 

fourth quarter of 2013. A detailed description of how we derive the HHA market basket is 

available in the CY 2013 HH PPS final rule (77 FR 67080 - 67090). 

 For CY 2015, section 3401(e) of the Affordable Care Act, requires that, in CY 2015 

(and in subsequent calendar years), the market basket percentage under the HHA prospective 

payment system as described in section 1895(b)(3)(B) of the Act be annually adjusted by 

changes in economy-wide productivity. The statute defines the productivity adjustment, 

described in section 1886(b)(3)(B)(xi)(II) of the Act, to be equal to the 10-year moving average 

of change in annual economy-wide private nonfarm business multifactor productivity (MFP) (as 

projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar 

year, cost reporting period, or other annual period) (the ‘‘MFP adjustment’’). The Bureau of 

Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm 

business MFP. Please see http://www.bls.gov/mfp to obtain the BLS historical published MFP 

data. We note that the proposed methodology for calculating and applying the MFP adjustment 

to the HHA payment update is similar to the methodology used in other Medicare provider 

payment systems as required by section 3401 of the Affordable Care Act. 
CMS-1611-P 57 

 The projection of MFP is currently produced by IHS Global Insight, Inc.’s (IGI), an 

economic forecasting firm. To generate a forecast of MFP, IGI replicated the MFP measure 

calculated by the BLS using a series of proxy variables derived from IGI’s U.S. macroeconomic 

models. These models take into account a very broad range of factors that influence the total 

U.S. economy. IGI forecasts the underlying proxy components such as gross domestic product 

(GDP), capital, and labor inputs required to estimate MFP and then combines those projections 

according to the BLS methodology. In Table 12, we identify each of the major MFP component 

series employed by the BLS to measure MFP. We also provide the corresponding concepts 

forecasted by IGI and determined to be the best available proxies for the BLS series. 

TABLE 12—Multifactor Productivity Component Series Employed By the Bureau of 

Labor Statistics and IHS Global Insight 

BLS Series IGI Series 

Real value-added output Non-housing non-government non-farm real 

GDP 

Private non-farm business sector labor input Hours of all persons in private nonfarm 

establishments adjusted for labor composition 

Aggregate capital inputs Real effective capital stock used for full 

employment GDP 

 IGI found that the historical growth rates of the BLS components used to calculate 

MFP and the IGI components identified are consistent across all series and therefore suitable 

proxies for calculating MFP. For more information regarding the BLS method for estimating 

productivity, please see the following link: http://www.bls.gov/mfp/mprtech.pdf. 

 During the development of this proposed rule, the BLS published a historical time 

series of private nonfarm business MFP for 1987 through 2012. Using this historical MFP series 

and the IGI forecasted series, IGI has developed a forecast of MFP for 2013 through 2024, as 

described below. 

 To create a forecast of the BLS’ MFP index, the forecasted annual growth rates of the 

‘‘non-housing, nongovernment, non-farm, real GDP,’’ ‘‘hours of all persons in private nonfarm 
CMS-1611-P 58 

establishments adjusted for labor composition,’’ and ‘‘real effective capital stock’’ series 

(ranging from 2013 to 2024) are used to ‘‘grow’’ the levels of the ‘‘real value-added output,’’ 

‘‘private non-farm business sector labor input,’’ and ‘‘aggregate capital input’’ series published 

by the BLS. Projections of the ‘‘hours of all persons’’ measure are calculated using the 

difference between the projected growth rates of real output per hour and real GDP. This 

difference is then adjusted to account for changes in labor composition in the forecast interval. 

Using these three key concepts, MFP is derived by subtracting the contribution of labor and 

capital inputs from output growth. However, to estimate MFP, we need to understand the 

relative contributions of labor and capital to total output growth. Therefore, two additional 

measures are needed to operationalize the estimation of the IGI MFP projection: Labor 

compensation and capital income. The sum of labor compensation and capital income represents 

total income. The BLS calculates labor compensation and capital income (in current dollar 

terms) to derive the nominal values of labor and capital inputs. IGI uses the ‘‘nongovernment 

total compensation’’ and ‘‘flow of capital services from the total private non-residential capital 

stock’’ series as proxies for the BLS’ income measures. These two proxy measures for income 

are divided by total income to obtain the shares of labor compensation and capital income to total 

income. To estimate labor’s contribution and capital’s contribution to the growth in total output, 

the growth rates of the proxy variables for labor and capital inputs are multiplied by their 

respective shares of total income. These contributions of labor and capital to output growth is 

subtracted from total output growth to calculate the ‘‘change in the growth rates of multifactor 

productivity:’’ 

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

growth * capital income share)) 

 The change in the growth rates (also referred to as the compound growth rates) of the 
CMS-1611-P 59 

IGI MFP are multiplied by 100 to calculate the percent change in growth rates (the percent 

change in growth rates are published by the BLS for its historical MFP measure). Finally, the 

growth rates of the IGI MFP are converted to index levels to be consistent with the BLS’ 

methodology. For benchmarking purposes, the historical growth rates of IGI’s proxy variables 

were used to estimate a historical measure of MFP, which was compared to the historical MFP 

estimate published by the BLS. The comparison revealed that the growth rates of the 

components were consistent across all series, and therefore validated the use of the proxy 

variables in generating the IGI MFP projections. The resulting MFP index was then interpolated 

to a quarterly frequency using the Bassie method for temporal disaggregation. The Bassie 

technique utilizes an indicator (pattern) series for its calculations. IGI uses the index of output 

per hour (published by the BLS) as an indicator when interpolating the MFP index. 

 As described previously, the proposed CY 2015 HHA market basket percentage update 

would be 2.6 percent. Section 3401(e) of the Affordable Care Act amends section 1895(b)(3)(B) 

of the Act by adding a new clause, which requires that after establishing the percentage update 

for calendar year 2015 (and each subsequent year), ‘‘the Secretary shall reduce such percentage 

by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)’’ (which we refer to as 

the multifactor productivity adjustment or MFP adjustment). 

 To calculate the MFP-adjusted update for the HHA market basket, we propose that the 

MFP percentage adjustment be subtracted from the CY 2015 market basket update calculated 

using the CY 2010-based HHA market basket. We propose that the end of the 10-year moving 

average of changes in the MFP should coincide with the end of the appropriate CY update 

period. Since the market basket update is reduced by the MFP adjustment to determine the 

annual update for the HH PPS, we believe it is appropriate for the data and time period 

associated with both components of the calculation (the market basket and the productivity 
CMS-1611-P 60 

adjustment) to end on December 15, 2015, so that changes in market conditions are aligned. 

 Therefore, for the CY 2015 update, we propose that the MFP adjustment be calculated 

as the 10-year moving average of changes in MFP for the period ending December 31, 2015. 

We propose to round the final annual adjustment to the one-tenth of one percentage point level 

up or down as applicable according to conventional rounding rules (that is, if the number we are 

rounding is followed by 5, 6, 7, 8, or 9, we will round the number up; if the number we are 

rounding is followed by 1, 2, 3, or 4, we will round the number down). 

 The market basket percentage we are proposing for CY 2015 for the HHA market 

basket is based on the 1st quarter 2014 forecast of the CY 2010-based HHA market basket 

update, which is estimated to be 2.6 percent. This market basket percentage would then be 

reduced by the MFP adjustment (the 10-year moving average of MFP for the period ending 

December 31, 2015) of 0.4 percent, which is calculated as described above and based on IGI’s 

1st quarter 2014 forecast. The resulting MFP-adjusted HHA market basket update is equal to 

2.2 percent, or 2.6 percent less 0.4 percent. We propose that if more recent data are subsequently 

available (for example, a more recent estimate of the market basket and MFP adjustment), we 

would use such data, if appropriate, to determine the CY 2015 market basket update and MFP 

adjustment in the CY 2015 HHA PPS final rule. 

Section 1895(b)(3)(B) of the Act requires that the home health market basket percentage 

increase be decreased by 2 percentage points for those HHAs that do not submit quality data as 

required by the Secretary. For HHAs that do not submit the required quality data for CY 2015, 

the home health market basket update will be 0.2 percent (2.2 percent minus 2 percent). 

As noted previously, the home health market basket was rebased and revised in CY 2013. A 

detailed description of how we derive the HHA market basket is available in the CY 2013 HH 

PPS final rule (77 FR 67080, 67090). 
CMS-1611-P 61 

2. Home Health Care Quality Reporting Program (HH QRP) 

a. General Considerations Used for Selection of Quality Measures for the HH QRP 

The successful development of the Home Health Quality Reporting Program (HH QRP) 

that promotes the delivery of high quality healthcare services is our paramount concern. We 

seek to adopt measures for the HH QRP that promote more efficient and safer care. Our 

measure selection activities for the HH QRP takes into consideration input we receive from the 

Measure Applications Partnership (MAP), convened by the National Quality Forum (NQF) as 

part of a pre-rulemaking process that we have established and are required to follow under 

section 1890A of the Act. The MAP is a public-private partnership comprised of multistakeholder 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-AssessmentInstruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html). 
CMS-1611-P 62 

To the extent practicable, we have sought to adopt measures that have been endorsed by the 

national consensus organization under contract to endorse standardized healthcare quality 

measures pursuant to section 1890 of the Act, recommended by multi-stakeholder organizations, 

and developed with the input of patients, providers, purchasers/payers, and other stakeholders. 

At this time, the National Quality Forum (NQF) is the national consensus organization that is 

under contract with HHS to provide review and endorsement of quality measures. 

b. Background and Quality Reporting Requirements 

Section 1895(b)(3)(B)(v)(II) of the Act states that ‘‘each home health agency shall 

submit to the Secretary such data that the Secretary determines are appropriate for the 

measurement of health care quality. Such data shall be submitted in a form and manner, and at 

a time, specified by the Secretary for purposes of this clause.’’ 

In addition, section 1895(b)(3)(B)(v)(I) of the Act states that ‘‘for 2007 and each 

subsequent year, in the case of a home health agency that does not submit data to the Secretary 

in accordance with subclause (II) with respect to such a year, the home health market basket 

percentage increase applicable under such clause for such year shall be reduced by 2 percentage 

points.’’ This requirement has been codified in regulations at §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.’’ 
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Medicare home health regulations , as codified at §484.250(a), require HHAs to submit 

OASIS assessments and Home Health Care Consumer Assessment of Healthcare Providers and 

Systems Survey (HH CAHPS®) 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) website since 2003. The CY 

2012 HH PPS final rule (76 FR 68576), identifies the current HH QRP measures. The selected 

measures that are made available to the public can be viewed on the HH Compare Web site 

located at http://www.medicare.gov/HHCompare/Home.asp. As stated in the CY 2012 and 

CY2013 HH PPS final rules (76 FR 68575 and 77 FR 67093, respectively), we finalized that we 

will also use measures derived from Medicare claims data to measure HH quality. 

In the CY 2014 HH PPS final rule, we finalized a proposal to add two claims-based 

measures to the HH QRP, and also stated that we would begin reporting the data from these 

measures to HHAs beginning in CY 2014. These claims based measures are: (1) 

Rehospitalization during the first 30 days of HH; and (2) Emergency Department Use without 

Hospital Readmission during the first 30 days of HH. Also, in this rule, we finalized our 

proposal to reduce the number of process measures reported on the CASPER reports by 

eliminating the stratification by episode length for 9 process measures. While no timeframe was 

given for the removal of these measures, we have scheduled them for removal from the CASPER 

folders in October 2014. In addition, five short stay measures which had previously been 

reported on Home Health Compare were recently removed from public reporting and replaced 

with non-stratified “all episodes of care” versions of these measures. 

c. OASIS Data Submission and OASIS Data for Annual Payment Update 
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(1) Statutory Authority 

The Home Health conditions of participation (CoPs) at §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 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. 
CMS-1611-P 65 

As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs that become 

Medicare-certified on or after May 31 of the preceding year are not subject to the OASIS quality 

reporting requirement nor any payment penalty for quality reporting purposes for the following 

year. For example, HHAs certified on or after May 31, 2013 are not subject to the 2 percentage 

point reduction to their market basket update for CY 2014. These exclusions only affect quality 

reporting requirements and do not affect the HHA’s reporting responsibilities as announced in 

the December 23, 2005 final rule, ‘‘Medicare and Medicaid Programs; Reporting Outcome and 

Assessment Information Set Data as Part of the Conditions of Participation for Home Health 

Agencies’’ (70 FR 76202). 

(2) Home Health Quality Reporting Program Requirements for CY 2015 Payment and 

Subsequent Years 

In the CY 2014 Home Health Final rule (78 FR 72297), we finalized a proposal to 

consider OASIS assessments submitted by HHAs to CMS in compliance with HH CoPs and 

Conditions for Payment for episodes beginning on or after July 1, 2012, and before July 1, 2013 

as fulfilling one portion of the quality reporting requirement for CY 2014. In addition, we 

finalized a proposal to continue this pattern for each subsequent year beyond CY 2014, 

considering OASIS assessments submitted for episodes beginning on July 1st of the calendar 

year 2 years prior to the calendar year of the Annual Payment Update (APU) effective date and 

ending June 30th of the calendar year 1 year prior to the calendar year of the APU effective date 

as fulfilling the OASIS portion of the HH quality reporting requirement. 

(3) Establishing A “Pay-for-Reporting” Performance Requirement for Submission of OASIS 

Quality Data 

Section 1895(b)(3)(B)(v)(I) of the Act states that ‘‘for 2007 and each subsequent year, in 

the case of a home health agency that does not submit data to the Secretary in accordance with 
CMS-1611-P 66 

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 “payfor-reporting” requirement was implemented on January 1, 2007. However, to date, the quantity 

of OASIS assessments each HHA must submit to meet this requirement has never been proposed 

and finalized through rulemaking or through the sub-regulatory process. We believe that this 

matter should be addressed for several reasons. 

We believe that defining a more explicit performance requirement for the submission of 

OASIS data by HHAs would better meet section 5201(c)(2) of the Deficit Reduction Act of 2005 

(DRA), which requires that “each home health agency shall submit to the Secretary such data 

that the Secretary determines are appropriate for the measurement of health care quality. Such 

data shall be submitted in a form and manner, and at a time, specified by the Secretary for 

purposes of this clause.” 

In February 2012, the Department of Health & Human Services Office of the Inspector 

General (OIG) performed a study to: (1) Determine the extent to which home health agencies 

(HHAs) meet Federal reporting requirements for the Outcome and Assessment Information Set 

(OASIS) data; (2) to determine the extent to which states meet federal reporting requirements for 

OASIS data; and (3) to determine the extent to which the Centers for Medicare & Medicaid 

Services (CMS) oversees the accuracy and completeness of OASIS data submitted by HHAs. In 

a report entitled, “Limited Oversight of Home Health Agency OASIS Data”13, the OIG stated 

their finding that “CMS did not ensure the accuracy or completeness of OASIS data.” The OIG 

recommended that we “identify all HHAs that failed to submit OASIS data and apply the 2-

percent payment reduction to them”. We believe that establishing a performance requirement for 

submission of OASIS quality data would be responsive to the recommendations of the OIG. 

 

13 http://oig.hhs.gov/oei/reports/oei-01-10-00460.asp 
CMS-1611-P 67 

In response to these requirements and the OIG report, we directed one of our contractors 

(the University of Colorado, Anschutz Medical Campus) to design a pay-for-reporting 

performance system model that could accurately measure the level of an HHA’s submission of 

OASIS quality data. After review and analysis of several years of OASIS data, the researchers at 

the University of Colorado were able to develop a performance system which is driven by the 

principle that each HHA would be expected to submit a minimum set of two “matching” 

assessments for each patient admitted to their agency. These matching assessments together 

create what is considered a “quality episode of care”, which would ideally consist of a Start of 

Care (SOC) or Resumption of Care (ROC) assessment and a matching End of Care (EOC) 

assessment. However, the researchers at the University of Colorado determined that there are 

several scenarios that could meet this “matching assessment requirement” of the new pay-forreporting performance requirement. These scenarios have been defined as “quality 

assessments”, which are defined as assessments that create a quality episode of care during the 

reporting period or could create a quality episode if the reporting period were expanded to an 

earlier reporting period or into the next reporting period. 

Seven types of assessments submitted by an HHA fit this definition of a quality 

assessment. These are: 

y A Start of Care (SOC) or Resumption of Care (ROC) assessment that has a matching 

End of Care (EOC) assessment. EOC assessments are assessments that are conducted at transfer 

to an inpatient facility (with or without discharge), death, or discharge from home health care. 

These two assessments (the SOC or ROC assessment and the EOC assessment) create a regular 

quality episode of care and both count as quality assessments. 

y An 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. 
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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. 

y An SOC/ROC assessment that is followed by one or more follow-up assessments, the 

last of which occurs in the last 60 days of the performance period. This is labeled as an 

“SOC/ROC Pseudo Episode” quality assessment. 

y 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. 

y An SOC/ROC assessment that is part of a known one-visit episode. This is labeled as 

a “One-visit episode” quality assessment. 

y 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: 

QAO ൌ ሺ#	of	Quality	Assessmentsሻ

ሺ#	of	Quality	Assessments	 ൅	#	of	NonQuality	Assessmentsሻ ∗ 100

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 
CMS-1611-P 69 

illustrated above. However, we propose to implement this performance requirement in an 

incremental fashion over a 3 year period. We propose to require each HHA to reach a 

compliance rate of 70 percent or better during the first reporting period14 that the new Pay-forReporting performance requirement is implemented. We further propose to increase the Pay-forReporting 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. 

To summarize, we propose to implement the pay-for- reporting performance requirement 

beginning with all episodes of care that occur on or after July 1, 2015, in accordance with the 

following schedule: 

y 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. 

y 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 

y 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-forreporting performance or be subject to a 2 percentage point reduction to their market basket 

update for CY 2019, and each subsequent year thereafter.

 

14 The term “reporting period” is defined as the submission of OASIS assessments for episodes between July 1 (of 

the calendar year two years prior to the calendar year of the APU effective date) through the following June 30th (of 

the calendar year one year prior to the calendar year of the APU effective date) each year. 

 
CMS-1611-P 70 

We solicit public comment on our proposal to implement the Pay-for-Reporting 

performance requirement, as described previously, for the Home Health Quality Reporting 

Program. 

d. Updates to HH QRP Measures Which Are Made as a Result of Review by the NQF Process 

Section 1895(b)(3)(B)(v)(II) of the Act generally requires the Secretary to adopt 

measures that have been endorsed by the entity with a contract under section 1890(a) of the Act. 

This contract is currently held by the NQF. The NQF is a voluntary consensus standard-setting 

organization with a diverse representation of consumer, purchaser, provider, academic, clinical, 

and other health care stakeholder organizations. The NQF was established to standardize health 

care quality measurement and reporting through its consensus development process.15

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 followup 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 

 

15 For more information about the NQF Consensus Development Process, please visit the NQF website using the 

following link: http://www.qualityforum.org/Measuring_Performance/Consensus_Development_Process.aspx 
CMS-1611-P 71 

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 nonsubstantive 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 are proposing that, if the NQF updates an endorsed measure that we have adopted for 

the HH QRP in a manner that we consider to not substantially change the nature of the measure, 

we would use a sub-regulatory process to incorporate those updates to the measure specifications 

that apply to the program. Specifically, we would revise the information that is posted on the 

CMS Home Health Quality Initiatives website at http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HomeHealthQualityInits/HHQIQualityMeasures.html so that it clearly identifies the 

updates and provides links to where additional information on the updates can be found. In 

addition, we would refer HHAs to the NQF website for the most up-to date information about the 

quality measures (http://www.qualityforum.org/). We would provide sufficient lead time for 

HHAs to implement the changes where changes to the data collection systems would be 
CMS-1611-P 72 

necessary. 

We would continue to use the rulemaking process to adopt changes to measures that we 

consider to substantially change the nature of the measure. Examples of changes that we might 

consider to be substantive would be those in which the changes are so significant that the 

measure is no longer the same measure, or when a standard of performance assessed by a 

measure becomes more stringent, such as changes in acceptable timing of medication, 

procedure/process, test administration, or expansion of the measure to a new setting. We believe 

that our proposal adequately balances our need to incorporate NQF updates to NQF endorsed 

measures used in the HH QRP in the most expeditious manner possible, while preserving the 

public’s ability to comment on updates to measures that so fundamentally change an endorsed 

measure that it is no longer the same measure that we originally adopted. 

We note that a similar policy was adopted for the Hospital IQR Program, the 

PPS-Exempt Cancer Hospital (PCH) Quality Reporting Program, the Long-Term Care Hospital 

Quality Reporting (LTCHQR) Program, the Inpatient Rehabilitation Facility Quality Reporting 

Program (IRF QRP) and the Inpatient Psychiatric Facility (IPF) Quality Reporting Program. 

We invite public comment on our proposal to adopt a policy in which NQF changes to a 

measure that are non-substantive in nature will be adopted using a sub-regulatory process and 

NQF changes that are substantive in nature will be adopted through the rulemaking process. 

e. Home Health Care CAHPS® 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® 

(HHCAHPS) Survey for the CY 2014 APU. We maintained the stated HHCAHPS data 

requirements for CY 2014 set out in previous rules, for the continuous monthly data collection 

and quarterly data submission of HHCAHPS data. 
CMS-1611-P 73 

(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®) program and endorsed by the NQF in March 2009 (NQF 

Number 0517). The HHCAHPS survey is part of a family of CAHPS® surveys that asks 

patients to report on and rate their experiences with health care. The Home Health Care 

CAHPS® (HHCAHPS) survey presents home health patients with a set of standardized 

questions about their home health care providers and about the quality of their home health care. 

Prior to this survey, there was no national standard for collecting information about 

patient experiences that 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 website 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 
CMS-1611-P 74 

● 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® website, https://homehealthcahps.org. We will continue 

to consider additional language translations of the HHCAHPS in response to the needs of the 

home health patient population. 

All of the requirements about home health patient eligibility for the HHCAHPS survey 

and conversely, which home health patients are ineligible for the HHCAHPS survey are 

delineated and detailed in the HHCAHPS Protocols and Guidelines Manual, which is 

downloadable at https://homehealthcahps.org. Home health patients are eligible for HHCAHPS 

if they received at least two skilled home health visits in the past 2 months, which are paid for by 

Medicare or Medicaid. 

Home health patients are ineligible for inclusion in HHCAHPS surveys if one of these 

conditions pertains to them: 

● Are under the age of 18; 

● Are deceased prior to the date the sample is pulled; 

● Receive hospice care; 

● Receive routine maternity care only; 

● Are not considered survey eligible because the state in which the patient lives restricts 

release of patient information for a specific condition or illness that the patient has; or 

● No Publicity patients, defined as patients who on their own initiative at their first 
CMS-1611-P 75 

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. 

As previously required, HHCAHPS survey vendors are required to attend introductory 

and all update trainings conducted by CMS and the HHCAHPS Survey Coordination Team, as 

well as to pass a post-training certification test. We have approximately 30 approved 

HHCAHPS survey vendors. The list of approved HHCAHPS survey vendors is available at 

https://homehealthcahps.org. 

(2) HHCAHPS Oversight Activities 

We stated in prior final rules that all approved HHCAHPS survey vendors are required to 

participate in HHCAHPS oversight activities to ensure compliance with HHCAHPS protocols, 

guidelines, and survey requirements. The purpose of the oversight activities is to ensure that 

approved HHCAHPS survey vendors follow the HHCAHPS Protocols and Guidelines Manual. 

As stated previously in the five prior final rules to this proposed rule, all HHCAHPS approved 

survey vendors must develop a Quality Assurance Plan (QAP) for survey administration in 

accordance with the HHCAHPS Protocols and Guidelines Manual. An HHCAHPS survey 

vendor’s first QAP must be submitted within 6 weeks of the data submission deadline date after 

the vendor’s first quarterly data submission. The QAP must be updated and submitted annually 

thereafter and at any time that changes occur in staff or vendor capabilities or systems. A model 

QAP is included in the HHCAHPS Protocols and Guidelines Manual. The QAP must include 
CMS-1611-P 76 

the following: 

● Organizational Background and Staff Experience; 

● Work Plan; 

● Sampling Plan; 

● Survey Implementation Plan; 

● Data Security, Confidentiality and Privacy Plan; and 

● Questionnaire Attachments 

As part of the oversight activities, the HHCAHPS Survey Coordination Team conducts 

on-site visits to all approved HHCAHPS survey vendors. The purpose of the site visits is to 

allow the HHCAHPS Coordination Team to observe the entire HHCAHPS Survey 

implementation process, from the sampling stage through file preparation and submission, as 

well as to assess data security and storage. The HHCAHPS Survey Coordination Team reviews 

the HHCAHPS survey vendor’s survey systems, and assesses administration protocols based on 

the HHCAHPS Protocols and Guidelines Manual posted at https://homehealthcahps.org. The 

systems and program site visit review includes, but is not limited to the following: 

● Survey management and data systems; 

● Printing and mailing materials and facilities; 

● Telephone call center facilities; 

● Data receipt, entry and storage facilities; and 

● Written documentation of survey processes. 

After the site visits, HHCAHPS survey vendors are given a defined time period in which 

to correct any identified issues and provide follow-up documentation of corrections for review. 

HHCAHPS survey vendors are subject to follow-up site visits on an as-needed basis. 

In the CY 2013 HH PPS final rule (77 FR 67094, 67164), we codified the current 
CMS-1611-P 77 

guideline that all approved HHCAHPS survey vendors fully comply with all HHCAHPS 

oversight activities. We included this survey requirement at §484.250(c)(3). 

(3) HHCAHPS Requirements for the CY 2015 APU 

In the CY 2014 HH PPS final rule (78 FR 72294), we stated that for the CY 2015 APU, 

we will require continued monthly HHCAHPS data collection and reporting for 4 quarters. The 

data collection period for CY 2015 APU includes the second quarter 2013 through the first 

quarter 2014 (the months of April 2013 through March 2014). Although these dates are past, we 

wished to state them in this proposed rule so that HHAs are again reminded of what months 

constituted the requirements for the CY 2015 APU. HHAs are required to submit their 

HHCAHPS data files to the HHCAHPS Data Center for the HHCAHPS data from the first 

quarter of 2014 data by 11:59 p.m., e.d.t. on July 17, 2014. This deadline is firm; no exceptions 

are permitted. 

(4) HHCAHPS Requirements for the CY 2016 APU 

For the CY 2016 APU, we require continued monthly HHCAHPS data collection and 

reporting for 4 quarters. The data collection period for the CY 2016 APU includes the second 

quarter 2014 through the first quarter 2015 (the months of April 2014 through March 2015). 

HHAs will be required to submit their HHCAHPS data files to the HHCAHPS Data Center for 

the second quarter 2014 by 11:59 p.m., e.d.t. on October 16, 2014; for the third quarter 2014 by 

11:59 p.m., e.s.t. on January 15, 2015; for the fourth quarter 2014 by 11:59 p.m., e.d.t. on 

April 16, 2015; and for the first quarter 2015 by 11:59 p.m., e.d.t. on July 16, 2015. These 

deadlines will be firm; no exceptions will be permitted. 

We will exempt HHAs receiving Medicare certification after the period in which HHAs 

do their patient count (April 1, 2013 through March 31, 2014) on or after April 1, 2014, from the 

full HHCAHPS reporting requirement for the CY 2016 APU, because these HHAs will not have 
CMS-1611-P 78 

been Medicare-certified throughout the period of April 1, 2013, through March 31, 2014. These 

HHAs will not need to complete a HHCAHPS Participation Exemption Request form for the CY 

2016 APU. 

We require that all HHAs that had fewer than 60 HHCAHPS-eligible unduplicated or 

unique patients in the period of April 1, 2013 through March 31, 2014 are exempt from the 

HHCAHPS data collection and submission requirements for the CY 2016 APU, upon completion 

of the CY 2016 HHCAHPS Participation Exemption Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or unique patients in the period of April 1, 2013, through 

March 31, 2014, will be required to submit their patient counts on the HHCAHPS Participation 

Exemption Request form for the CY 2016 APU posted on https://homehealthcahps.org on 

April 1, 2014, by 11:59 p.m., e.s.t. by March 31, 2015. This deadline will be firm, as will be all 

of the quarterly data submission deadlines. 

(5) HHCAHPS Requirements for the CY 2017 APU 

For the CY 2017 APU, we require continued monthly HHCAHPS data collection and 

reporting for 4 quarters. The data collection period for the CY 2017 APU includes the second 

quarter 2015 through the first quarter 2016 (the months of April 2015 through March 2016). 

HHAs will be required to submit their HHCAHPS data files to the HHCAHPS Data Center for 

the second quarter 2015 by 11:59 p.m., e.d.t. on October 15, 2015; for the third quarter 2015 by 

11:59 p.m., e.s.t. on January 12, 2016; for the fourth quarter 2015 by 11:59 p.m., e.d.t. on 

April 21, 2016; and for the first quarter 2016 by 11:59 p.m., e.d.t. on July 21, 2016. These 

deadlines will be firm; no exceptions will be permitted. 

We will exempt HHAs receiving Medicare certification after the period in which HHAs 

do their patient count (April 1, 2014 through March 31, 2015) on or after April 1, 2015, from the 

full HHCAHPS reporting requirement for the CY 2016 APU, because these HHAs will not have 
CMS-1611-P 79 

been Medicare-certified throughout the period of April 1, 2014, through March 31, 2015. These 

HHAs will not need to complete a HHCAHPS Participation Exemption Request form for the CY 

2017 APU. 

We require that all HHAs that had fewer than 60 HHCAHPS-eligible unduplicated or 

unique patients in the period of April 1, 2014, through March 31, 2015 are exempt from the 

HHCAHPS data collection and submission requirements for the CY 2017 APU, upon completion 

of the CY 2017 HHCAHPS Participation Exemption Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or unique patients in the period of April 1, 2014, through 

March 31, 2015, will be required to submit their patient counts on the HHCAHPS Participation 

Exemption Request form for the CY 2017 APU posted on https://homehealthcahps.org on 

April 1, 2015, by 11:59 p.m., e.s.t. by March 31, 2016. This deadline will be firm, as will be all 

of the quarterly data submission deadlines. 

(6) HHCAHPS Reconsiderations and Appeals Process 

HHAs should monitor their respective HHCAHPS survey vendors to ensure that vendors 

submit their HHCAHPS data on time, by accessing their HHCAHPS Data Submission Reports 

on https://homehealthcahps.org. This will help HHAs ensure that their data are submitted in the 

proper format for data processing to the HHCAHPS Data Center. 

We will continue HHCAHPS oversight activities as finalized in the CY 2014 rule. In the 

CY 2013 HH PPS final rule (77 FR 6704, 67164), we codified the current guideline that all 

approved HHCAHPS survey vendors must fully comply with all HHCAHPS oversight activities. 

We included this survey requirement at §484.250(c)(3). 

We will continue the HHCAHPS reconsiderations and appeals process that we have 

finalized and that we have used for prior periods for the CY 2012, CY 2013, and CY 2014 APU 

determinations. We have described the HHCAHPS reconsiderations process requirements in the 
CMS-1611-P 80 

Technical Direction Letter that we send to the affected HHAs, on or about the first Friday in 

September. HHAs have 30 days from their receipt of the Technical Direction Letter informing 

them that they did not meet the HHCAHPS requirements for the CY period, to send all 

documentation that supports their requests for reconsideration to CMS. It is important that the 

affected HHAs send in comprehensive information in their reconsideration letter/package 

because we will not contact the affected HHAs to request additional information or to clarify 

incomplete or inconclusive information. If clear evidence to support a finding of compliance is 

not present, the 2 percent reduction in the APU will be upheld. If clear evidence of compliance 

is present, the 2 percent reduction for the APU will be reversed. We will notify affected HHAs 

by about mid-December. If we determine to uphold the 2 percent reduction, the HHA may 

further appeal the 2 percent reduction via the Provider Reimbursement Review Board (PRRB) 

appeals process. 

(7) Summary 

We are not proposing any changes to the participation requirements, or to the requirements 

pertaining to the implementation of the Home Health CAHPS® Survey (HHCAHPS). We again 

strongly encourage HHAs to learn about the survey and view the HHCAHPS Survey website at 

the official website for the HHCAHPS at https://homehealthcahps.org. HHAs can also send an 

email to the HHCAHPS Survey Coordination Team at HHCAHPS@rti.org, or telephone toll-free 

(1-866-354-0985) for more information about HHCAHPS. 

4. Home Health Wage Index 

a. Background 

Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the Secretary to provide 

appropriate adjustments to the proportion of the payment amount under the HH PPS that account 

for area wage differences, using adjustment factors that reflect the relative level of wages and 
CMS-1611-P 81 

wage-related costs applicable to the furnishing of HH services. Since the inception of the HH 

PPS, we have used inpatient hospital wage data in developing a wage index to be applied to HH 

payments. We propose to continue this practice for CY 2015, as we continue to believe that, in 

the absence of HH-specific wage data, using inpatient hospital wage data is appropriate and 

reasonable for the HH PPS. Specifically, we propose to continue to use the pre-floor, prereclassified hospital wage index as the wage adjustment to the labor portion of the HH PPS rates. 

For CY 2015, the updated wage data are for hospital cost reporting periods beginning on or after 

October 1, 2010 and before October 1, 2011 (FY 2011 cost report data). 

We would apply the appropriate wage index value to the labor portion of the HH PPS 

rates based on the site of service for the beneficiary (defined by section 1861(m) of the Act as the 

beneficiary’s place of residence). Previously, we determined each HHA’s labor market area 

based on definitions of metropolitan statistical areas (MSAs) issued by the OMB. In the CY 

2006 HH PPS final rule (70 FR 68132), we began adopting revised labor market area definitions 

as discussed in the OMB Bulletin No. 03-04 (June 6, 2003). This bulletin announced revised 

definitions for MSAs and the creation of micropolitan statistical areas and core-based statistical 

areas (CBSAs). The bulletin is available online at www.whitehouse.gov/omb/bulletins/b03-

04.html. In adopting the CBSA geographic designations, we provided a one-year transition in 

CY 2006 with a blended wage index for all sites of service. For CY 2006, the wage index for 

each geographic area consisted of a blend of 50 percent of the CY 2006 MSA-based wage index 

and 50 percent of the CY 2006 CBSA-based wage index. We referred to the blended wage index 

as the CY 2006 HH PPS transition wage index. As discussed in the CY 2006 HH PPS final rule 

(70 FR 68132), since the expiration of this one-year transition on December 31, 2006, we have 

used the full CBSA-based wage index values. 

We propose to continue to use the same methodology discussed in the CY 2007 HH PPS 
CMS-1611-P 82 

final rule (71 FR 65884) to address those geographic areas in which there are no inpatient 

hospitals, and thus, no hospital wage data on which to base the calculation of the CY 2015 HH 

PPS wage index. For rural areas that do not have inpatient hospitals, we will use the average 

wage index from all contiguous CBSAs as a reasonable proxy. For CY 2015, there are no rural 

areas that do not have inpatient hospitals, and thus, this methodology would not be applied. For 

rural Puerto Rico, we do not apply this methodology due to the distinct economic circumstances 

that exist there (for example, due to the close proximity to one another of almost all of Puerto 

Rico’s various urban and non-urban areas, this methodology would produce a wage index for 

rural Puerto Rico that is higher than that in half of its urban areas). Instead, we would continue 

to use the most recent wage index previously available for that area. For urban areas without 

inpatient hospitals, we use the average wage index of all urban areas within the state as a 

reasonable proxy for the wage index for that CBSA. For CY 2015, the only urban area without 

inpatient hospital wage data is Hinesville, Georgia (CBSA 25980). 

b. Update 

On February 28, 2013, OMB issued Bulletin No. 13-01, announcing revisions to the 

delineations of MSAs, Micropolitan Statistical Areas, and CBSAs, and guidance on uses of the 

delineation of these areas. This bulletin is available online at 

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin 

states that it “provides the delineations of all Metropolitan Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, and New England City 

and Town Areas in the United States and Puerto Rico based on the standards published on June 

28, 2010, in the Federal Register (75 FR 37246-37252) and Census Bureau data.” 

While the revisions OMB published on February 28, 2013 are not as sweeping as the 

changes made when we adopted the CBSA geographic designations for CY 2006, the February 
CMS-1611-P 83 

28, 2013 bulletin does contain a number of significant changes. For example, there are new 

CBSAs, urban counties that have become rural, rural counties that have become urban, and 

existing CBSAs that have been split apart. 

As discussed in the CY 2014 HH PPS final rule (78 FR 72302), the changes made by the 

bulletin and their ramifications required extensive review by CMS before using them for the HH 

PPS wage index. We have completed our assessment and in the FY 2015 IPPS proposed rule (79 

FR 27978), we proposed to use the most recent labor market area delineations issued by OMB 

for payments for inpatient stays at general acute care and long-term care hospitals (LTCHs). In 

addition, in the FY 2015 Skilled Nursing Facility (SNF) PPS proposed rule (79 FR 25767), we 

proposed to use the new labor market delineations issued by OMB for payments for SNFs. We 

are proposing changes to the HH PPS wage index based on the newest OMB delineations, as 

described in OMB Bulletin No. 13-01. 

c. Proposed Implementation of New Labor Market Delineations 

We believe it is important for the HH PPS to use the latest OMB delineations available to 

maintain a more accurate and up-to-date payment system that reflects the reality of population 

shifts and labor market conditions. While CMS and other stakeholders have explored potential 

alternatives to the current CBSA-based labor market system (we refer readers to the CMS 

website at www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/Wage-Index-Reform.html), no consensus has been achieved 

regarding how best to implement a replacement system. As discussed in the FY 2005 IPPS final 

rule (69 FR 49027), “While we recognize that MSAs are not designed specifically to define labor 

market areas, we believe they do represent a useful proxy for this purpose.” We further believe 

that using the most current OMB delineations would increase the integrity of the HH PPS wage 

index by creating a more accurate representation of geographic variation in wage levels. We 
CMS-1611-P 84 

have reviewed our findings and impacts relating to the new OMB delineations, and have 

concluded that there is no compelling reason to further delay implementation. 

We propose incorporating the new CBSA delineations into the CY 2015 HH PPS wage 

index in the same manner in which the CBSAs were first incorporated into the HH PPS wage 

index in CY 2006 (70 FR 68138). We propose to use a one-year blended wage index for CY 

2015. We refer to this blended wage index as the CY 2015 HH PPS transition wage index. The 

transition wage index would consist of a 50/50 blend of the wage index values using OMB’s old 

area delineations and the wage index values using OMB’s new area delineations. That is, for 

each county, a blended wage index would be calculated equal to fifty percent of the CY 2015 

wage index using the old labor market area delineation and fifty percent of the CY 2015 wage 

index using the new labor market area delineation (both using FY 2011 hospital wage data). 

This ultimately results in an average of the two values. 

If we adopt the new OMB delineations, a total of 37 counties (and county equivalents) 

that are currently considered part of an urban CBSA would be considered rural beginning in CY 

2015. Table 13 below lists the 37 urban counties that would change to rural status.
CMS-1611-P 85 

TABLE 13: Counties That Would Change to Rural Status 

County State 

CBSA 

Number 

under 

CY 2014 

HH PPS 

CBSA Name 

Greene County IN 14020 Bloomington, IN

Anson County NC 16740 Charlotte-Gastonia-Rock Hill, NC-SC

Franklin County IN 17140 Cincinnati-Middletown, OH-KY-IN

Stewart County TN 17300 Clarksville, TN-KY

Howard County MO 17860 Columbia, MO

Delta County TX 19124 Dallas-Fort Worth-Arlington, TX

Pittsylvania County VA 19260 Danville, VA

Danville City VA 19260 Danville, VA

Preble County OH 19380 Dayton, OH

Gibson County IN 21780 Evansville, IN-KY

Webster County KY 21780 Evansville, IN-KY

Franklin County AR 22900 Fort Smith, AR-OK 

Ionia County MI 24340 Grand Rapids-Wyoming, MI 

Newaygo County MI 24340 Grand Rapids-Wyoming, MI 

Greene County NC 24780 Greenville, NC 

Stone County MS 25060 Gulfport-Biloxi, MS 

Morgan County WV 25180 Hagerstown-Martinsburg, MD-WV 

San Jacinto County TX 26420 Houston-Sugar Land-Baytown, TX 

Franklin County KS 28140 Kansas City, MO-KS 

Tipton County IN 29020 Kokomo, IN 

Nelson County KY 31140 Louisville/Jefferson County, KY-IN 

Geary County KS 31740 Manhattan, KS 

Washington County OH 37620 Parkersburg-Marietta-Vienna, WV-OH 

Pleasants County WV 37620 Parkersburg-Marietta-Vienna, WV-OH 

George County MS 37700 Pascagoula, MS 

Power County ID 38540 Pocatello, ID 

Cumberland County VA 40060 Richmond, VA 

King and Queen County VA 40060 Richmond, VA 

Louisa County VA 40060 Richmond, VA 

Washington County MO 41180 St. Louis, MO-IL 

Summit County UT 41620 Salt Lake City, UT 

Erie County OH 41780 Sandusky, OH 

Franklin County MA 44140 Springfield, MA 

Ottawa County OH 45780 Toledo, OH 

Greene County AL 46220 Tuscaloosa, AL 

Calhoun County TX 47020 Victoria, TX 

Surry County VA 47260 Virginia Beach-Norfolk-Newport News, VA-NC 
CMS-1611-P 86 

If we finalize our proposal to implement the new OMB delineations, a total of 105 

counties (and county equivalents) that are currently located in rural areas would be considered 

part of an urban CBSA beginning in CY 2015. Table 14 lists the 105 rural counties that would 

change to urban status. 

TABLE 14: Counties That Would Change to Urban Status 

County State CBSA 

Number CBSA Name 

Utuado Municipio PR 10380 Aguadilla-Isabela, PR 

Linn County OR 10540 Albany, OR 

Oldham County TX 11100 Amarillo, TX 

Morgan County GA 12060 Atlanta-Sandy Springs-Roswell, GA 

Lincoln County GA 12260 Augusta-Richmond County, GA-SC 

Newton County TX 13140 Beaumont-Port Arthur, TX 

Fayette County WV 13220 Beckley, WV 

Raleigh County WV 13220 Beckley, WV 

Golden Valley County MT 13740 Billings, MT 

Oliver County ND 13900 Bismarck, ND 

Sioux County ND 13900 Bismarck, ND 

Floyd County VI 13980 Blacksburg-Christiansburg-Radford, VA 

De Witt County IL 14010 Bloomington, IL 

Columbia County PA 14100 Bloomsburg-Berwick, PA 

Montour County PA 14100 Bloomsburg-Berwick, PA 

Allen County KY 14540 Bowling Green, KY 

Butler County KY 14540 Bowling Green, KY 

St. Mary’s County MD 15680 California-Lexington Park, MD 

Jackson County IL 16060 Carbondale-Marion, IL 

Williamson County IL 16060 Carbondale-Marion, IL 

Franklin County PA 16540 Chambersburg-Waynesboro, PA 

Iredell County NC 16740 Charlotte-Concord-Gastonia, NC-SC 

Lincoln County NC 16740 Charlotte-Concord-Gastonia, NC-SC 

Rowan County NC 16740 Charlotte-Concord-Gastonia, NC-SC 

Chester County SC 16740 Charlotte-Concord-Gastonia, NC-SC 

Lancaster County SC 16740 Charlotte-Concord-Gastonia, NC-SC 

Buckingham County VA 16820 Charlottesville, VA 

Union County IN 17140 Cincinnati, OH-KY-IN 

Hocking County OH 18140 Columbus, OH 

Perry County OH 18140 Columbus, OH 

Walton County FL 18880 Crestview-Fort Walton Beach-Destin, FL 

Hood County TX 23104 Dallas-Fort Worth-Arlington, TX 

Somervell County TX 23104 Dallas-Fort Worth-Arlington, TX 

Baldwin County AL 19300 Daphne-Fairhope-Foley, AL 

Monroe County PA 20700 East Stroudsburg, PA 
CMS-1611-P 87 

County State CBSA 

Number CBSA Name 

Hudspeth County TX 21340 El Paso, TX 

Adams County PA 23900 Gettysburg, PA 

Hall County NE 24260 Grand Island, NE 

Hamilton County NE 24260 Grand Island, NE 

Howard County NE 24260 Grand Island, NE 

Merrick County NE 24260 Grand Island, NE 

Montcalm County MI 24340 Grand Rapids-Wyoming, MI 

Josephine County OR 24420 Grants Pass, OR 

Tangipahoa Parish LA 25220 Hammond, LA 

Beaufort County SC 25940 Hilton Head Island-Bluffton-Beaufort, SC 

Jasper County SC 25940 Hilton Head Island-Bluffton-Beaufort, SC 

Citrus County FL 26140 Homosassa Springs, FL 

Butte County ID 26820 Idaho Falls, ID 

Yazoo County MS 27140 Jackson, MS 

Crockett County TN 27180 Jackson, TN 

Kalawao County HI 27980 Kahului-Wailuku-Lahaina, HI 

Maui County HI 27980 Kahului-Wailuku-Lahaina, HI 

Campbell County TN 28940 Knoxville, TN 

Morgan County TN 28940 Knoxville, TN 

Roane County TN 28940 Knoxville, TN 

Acadia Parish LA 29180 Lafayette, LA 

Iberia Parish LA 29180 Lafayette, LA 

Vermilion Parish LA 29180 Lafayette, LA 

Cotton County OK 30020 Lawton, OK 

Scott County IN 31140 Louisville/Jefferson County, KY-IN 

Lynn County TX 31180 Lubbock, TX 

Green County WI 31540 Madison, WI 

Benton County MS 32820 Memphis, TN-MS-AR 

Midland County MI 33220 Midland, MI 

Martin County TX 33260 Midland, TX 

Le Sueur County MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI 

Mille Lacs County MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI 

Sibley County MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI 

Maury County TN 34980 Nashville-Davidson—Murfreesboro—Franklin, TN 

Craven County NC 35100 New Bern, NC 

Jones County NC 35100 New Bern, NC 

Pamlico County NC 35100 New Bern, NC 

St. James Parish LA 35380 New Orleans-Metairie, LA 

Box Elder County UT 36260 Ogden-Clearfield, UT 

Gulf County FL 37460 Panama City, FL 

Custer County SD 39660 Rapid City, SD 

Fillmore County MN 40340 Rochester, MN 

Yates County NY 40380 Rochester, NY 

Sussex County DE 41540 Salisbury, MD-DE 
CMS-1611-P 88 

County State CBSA 

Number CBSA Name 

Worcester County MA 41540 Salisbury, MD-DE 

Highlands County FL 42700 Sebring, FL 

Webster Parish LA 43340 Shreveport-Bossier City, LA 

Cochise County AZ 43420 Sierra Vista-Douglas, AZ 

Plymouth County IA 43580 Sioux City, IA-NE-SD 

Union County SC 43900 Spartanburg, SC 

Pend Oreille County WA 44060 Spokane-Spokane Valley, WA 

Stevens County WA 44060 Spokane-Spokane Valley, WA 

Augusta County VA 44420 Staunton-Waynesboro, VA 

Staunton City VA 44420 Staunton-Waynesboro, VA 

Waynesboro City VA 44420 Staunton-Waynesboro, VA 

Little River County AR 45500 Texarkana, TX-AR 

Sumter County FL 45540 The Villages, FL 

Pickens County AL 46220 Tuscaloosa, AL 

Gates County NC 47260 Virginia Beach-Norfolk-Newport News, VA-NC 

Falls County TX 47380 Waco, TX 

Columbia County WA 47460 Walla Walla, WA 

Walla Walla County WA 47460 Walla Walla, WA 

Peach County GA 47580 Warner Robins, GA 

Pulaski County GA 47580 Warner Robins, GA 

Culpeper County VA 47894 

Washington-Arlington-Alexandria, DC-VA-MDWV 

Rappahannock 

County VA 47894 

Washington-Arlington-Alexandria, DC-VA-MDWV 

Jefferson County NY 48060 Watertown-Fort Drum, NY 

Kingman County KS 48620 Wichita, KS 

Davidson County NC 49180 Winston-Salem, NC 

Windham County CT 49340 Worcester, MA-CT 

In addition to rural counties becoming urban and urban counties becoming rural, several 

urban counties would shift from one urban CBSA to another urban CBSA under our proposal to 

adopt the new OMB delineations. In other cases, applying the new OMB delineations would 

involve a change only in CBSA name or number, while the CBSA continues to encompass the 

same constituent counties. For example, CBSA 29140 (Lafayette, IN), would experience both a 

change to its number and its name, and would become CBSA 29200 (Lafayette-West Lafayette, 

IN), while all of its three constituent counties would remain the same. We are not discussing 

these proposed changes in this section because they are inconsequential changes with respect to 
CMS-1611-P 89 

the HH PPS wage index. However, in other cases, if we adopt the new OMB delineations, 

counties would shift between existing and new CBSAs, changing the constituent makeup of the 

CBSAs. 

In one type of change, an entire CBSA would be subsumed by another CBSA. For 

example, CBSA 37380 (Palm Coast, FL) currently is a single county (Flagler, FL) CBSA. 

Flagler County would be a part of CBSA 19660 (Deltona-Daytona Beach-Ormond Beach, FL) 

under the new OMB delineations. 

In another type of change, some CBSAs have counties that would split off to become part 

of or to form entirely new labor market areas. For example, CBSA 37964 (Philadelphia 

Metropolitan Division of MSA 37980) currently is comprised of five Pennsylvania counties 

(Bucks, Chester, Delaware, Montgomery, and Philadelphia). If we adopt the new OMB 

delineations, Montgomery, Bucks, and Chester counties would split off and form the new CBSA 

33874 (Montgomery County-Bucks County-Chester County, PA Metropolitan Division of MSA 

37980), while Delaware and Philadelphia counties would remain in CBSA 37964. 

Finally, in some cases, a CBSA would lose counties to another existing CBSA if we 

adopt the new OMB delineations. For example, Lincoln County and Putnam County, WV would 

move from CBSA 16620 (Charleston, WV) to CBSA 26580 (Huntington-Ashland, WV KY 

OH). CBSA 16620 would still exist in the new labor market delineations with fewer constituent 

counties. Table 15 lists the urban counties that would move from one urban CBSA to another 

urban CBSA if we adopt the new OMB delineations. 
CMS-1611-P 90 

TABLE 15: Counties That Would Change to a Different CBSA 

Previous 

CBSA New CBSA County State 

11300 26900 Madison County IN 

11340 24860 Anderson County SC 

14060 14010 McLean County IL 

37764 15764 Essex County MA 

16620 26580 Lincoln County WV 

16620 26580 Putnam County WV 

16974 20994 DeKalb County IL 

16974 20994 Kane County IL 

21940 41980 Ceiba Municipio PR 

21940 41980 Fajardo Municipio PR 

21940 41980 Luquillo Municipio PR 

26100 24340 Ottawa County MI 

31140 21060 Meade County KY 

34100 28940 Grainger County TN 

35644 35614 Bergen County NJ 

35644 35614 Hudson County NJ 

20764 35614 Middlesex County NJ 

20764 35614 Monmouth County NJ 

20764 35614 Ocean County NJ 

35644 35614 Passaic County NJ 

20764 35084 Somerset County NJ 

35644 35614 Bronx County NY 

35644 35614 Kings County NY 

35644 35614 New York County NY 

35644 20524 Putnam County NY 

35644 35614 Queens County NY 

35644 35614 Richmond County NY 

35644 35614 Rockland County NY 

35644 35614 Westchester County NY 

37380 19660 Flagler County FL 

37700 25060 Jackson County MS 

37964 33874 Bucks County PA 

37964 33874 Chester County PA 

37964 33874 Montgomery County PA 

39100 20524 Dutchess County NY 

39100 35614 Orange County NY 

41884 42034 Marin County CA 

41980 11640 Arecibo Municipio PR 

41980 11640 Camuy Municipio PR 

41980 11640 Hatillo Municipio PR 

41980 11640 Quebradillas Municipio PR 

48900 34820 Brunswick County NC 

49500 38660 Guánica Municipio PR 
CMS-1611-P 91 

Previous 

CBSA New CBSA County State 

49500 38660 Guayanilla Municipio PR 

49500 38660 Peñuelas Municipio PR 

49500 38660 Yauco Municipio PR 

As discussed in the FY 2015 SNF PPS proposed rule (79 FR 25767), we proposed to 

adopt OMB’s new delineations in the SNF PPS in the same manner that we are proposing to 

adopt the new delineations in the HH PPS. The FY 2015 SNF PPS proposed rule includes 

extensive analysis of the application of OMB’s new delineations as well as other alternatives 

considered. 

For the reasons discussed above, and based on provider reaction during the CY 2006 

rulemaking cycle to the proposed adoption of the new CBSA definitions, we are proposing to 

apply a one-year blended wage index in CY 2015 for all geographic areas to assist providers in 

adapting to these proposed changes. This transition policy would be for a one-year period, going 

into effect January 1, 2015, and continuing through December 31, 2015. Thus, beginning 

January 1, 2016, the wage index for all HH PPS payments would be fully based on the new 

OMB delineations. We invite comments on our proposed transition methodology, as well as on 

the other transition options discussed above. 

The wage index Addendum provides a crosswalk between the CY 2015 wage index using the 

current OMB delineations in effect in CY 2014 and the CY 2015 wage index using the revised 

OMB delineations. Addendum A shows each state and county and its corresponding proposed 

transition wage index along with the previous CBSA number, the new CBSA number and the 

new CBSA name. Due to the calculation of the blended transition wage index, some CBSAs 

may have more than one transition wage index value associated with that CBSA. However, each 

county will have only one transition wage index. Therefore, for counties located in CBSAs that 

correspond to more than one transition wage index, a number other than the CBSA number 
CMS-1611-P 92 

would be used for claims submission for CY 2015 only. These numbers are shown in the last 

column of Addendum A. The proposed CY 2015 transition wage index as set forth in 

Addendum A is available on the CMS website at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulationsand-Notices.html. 

5. Proposed CY 2015 Annual Payment Update 

a. Background 

 The Medicare HH PPS has been in effect since October 1, 2000. As set forth in the 

July 3, 2000 final rule (65 FR 41128), the base unit of payment under the Medicare HH PPS is a 

national, standardized 60-day episode payment rate. As set forth in 42 CFR 484.220, we adjust 

the national, standardized 60-day episode payment rate by a case-mix relative weight and a wage 

index value based on the site of service for the beneficiary. 

 To provide appropriate adjustments to the proportion of the payment amount under the 

HH PPS to account for area wage differences, we apply the appropriate wage index value to the 

labor portion of the HH PPS rates. The labor-related share of the case-mix adjusted 60-day 

episode rate will continue to be 78.535 percent and the non-labor-related share will continue to 

be 21.465 percent as set out in the CY 2013 HH PPS final rule (77 FR 67068). The CY 2015 

HH PPS rates would use the same case-mix methodology as set forth in the CY 2008 HH PPS 

final rule with comment period (72 FR 49762) and adjusted as described in section III.C. of this 

rule. The following are the steps we take to compute the case-mix and wage-adjusted 60-day 

episode rate: 

(1) Multiply the national 60-day episode rate by the patient’s applicable case-mix weight. 

(2) Divide the case-mix adjusted amount into a labor (78.535 percent) and a non-labor 

portion (21.465 percent). 
CMS-1611-P 93 

(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 §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 

§484.205(b)(1) and §484.205(b)(2). We may base the initial percentage payment on the 

submission of a request for anticipated payment (RAP) and the final percentage payment on the 

submission of the claim for the episode, as discussed in §409.43. The claim for the episode that 

the HHA submits for the final percentage payment determines the total payment amount for the 

episode and whether we make an applicable adjustment to the 60-day case-mix and wageadjusted 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: 
CMS-1611-P 94 

● A low-utilization payment adjustment (LUPA) is provided on a per-visit basis as set 

forth in §484.205(c) and §484.230. 

● A partial episode payment (PEP) adjustment as set forth in §484.205(d) and §484.235. 

● An outlier payment as set forth in §484.205(e) and §484.240. 

b. Proposed CY 2015 National, Standardized 60-Day Episode Payment Rate 

Section 1895(3)(A)(i) of the Act required that the 60-day episode base rate and other 

applicable amounts be standardized in a manner that eliminates the effects of variations in 

relative case mix and area wage adjustments among different home health agencies in a budget 

neutral manner. To determine the proposed CY 2015 national, standardized 60-day episode 

payment rate, we would apply a wage index standardization factor, a case-mix budget neutrality 

factor described in section III.C, the rebasing adjustment described in section II.C, and the MFPadjusted home health market basket update discussed in section III.D.1 of this proposed rule. 

To calculate the wage index standardization factor, henceforth referred to as the wage 

index budget neutrality factor, we simulated total payments for non-LUPA episodes using the 

2015 wage index and compared it to our simulation of total payments for non-LUPA episodes 

using the 2014 wage index. By dividing the total payments for non-LUPA episodes using the 

2015 wage index by the total payments for non-LUPA episodes using the 2014 wage index, we 

obtain a wage index budget neutrality factor of 1.0012. We would apply the wage index budget 

neutrality factor of 1.0012 to the CY 2015 national, standardized 60-day episode rate. 

As discussed in section III.C of this proposed rule, to ensure the changes to the case-mix 

weights are implemented in a budget neutral manner, we would apply a case-mix weights budget 

neutrality factor to the CY 2015 national, standardized 60-day episode payment rate. The casemix 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 
CMS-1611-P 95 

2014 case-mix weights are applied to CY 2013 utilization data. The case-mix budget neutrality 

factor for CY 2015 would be 1.0237 as proposed in section III.C of this proposed rule. 

Then, we would apply the -$80.95 rebasing adjustment finalized in the CY 2014 HH PPS 

final rule (78 FR 72256) and discussed in section II.C. Lastly, we would update the payment 

rates by the CY 2015 HH payment update percentage of 2.2 percent (MFP-adjusted home health 

market basket update) as described in section III.D.1 of this proposed rule. The proposed CY 

2015 national, standardized 60-day episode payment rate would be $2,922.76 as calculated in 

Table 16. 

TABLE 16: CY 2015 60-day National, Standardized 60-Day Episode Payment Amount 

CY 2014 National, 

Standardized 60-

Day Episode 

Payment 

Wage Index 

Budget 

Neutrality 

Factor 

Case-Mix 

Weights 

Budget 

Neutrality 

Factor 

CY 2015 

Rebasing 

Adjustment 

CY 2015 HH 

Payment 

Update 

Percentage 

Proposed CY 2015 

National, 

Standardized 60-

Day Episode 

Payment 

$2,869.27 X 1.0012 X 1.0237 -$80.95 X 1.022 =$2,922.76 

 The proposed CY 2015 national, standardized 60-day episode payment rate for an HHA 

that does not submit the required quality data is updated by the CY 2015 HH payment update 

percentage (2.2 percent) minus 2 percentage points and is shown in Table 17. 

TABLE 17: For HHAs that Do Not Submit the Quality Data – Proposed CY 2015 

National, Standardized 60-Day Episode Payment Amount 

CY 2014 National, 

Standardized 60-

Day Episode 

Payment 

Wage Index 

Budget 

Neutrality 

Factor 

Case-Mix 

Weights 

Budget 

Neutrality 

Factor 

CY 2015 

Rebasing 

Adjustment 

CY 2015 HH 

Payment 

Update 

Percentage 

Minus 2 

Percentage 

Points 

Proposed CY 2015 

National, 

Standardized 60-

Day Episode 

Payment 

$2,869.27 X 1.0012 X 1.0237 -$80.95 X 1.002 =$2,865.57 

c. Proposed National Per-Visit Rates 

The national per-visit rates are used to pay LUPAs (episodes with four or fewer visits) 

and are also used to compute imputed costs in outlier calculations. The per-visit rates are paid by 
CMS-1611-P 96 

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 pervisit rates. We then apply a wage index budget neutrality factor to ensure budget neutrality for 

LUPA per-visit payments and increase each of the six per-visit rates by the maximum rebasing 

adjustments described in section II.C. of this rule. We calculate the wage index budget neutrality 

factor by simulating total payments for LUPA episodes using the 2015 wage index and 

comparing it to simulated total payments for LUPA episodes using the 2014 wage index. By 

dividing the total payments for LUPA episodes using the 2015 wage index by the total payments 

for LUPA episodes using the 2014 wage index, we obtain a wage index budget neutrality factor 

of 1.0000. We would apply the wage index budget neutrality factor of 1.0000 to the CY 2015 

national per-visit rates. 

The LUPA per-visit rates are not calculated using case-mix weights. Therefore, there is 

no case-mix weights budget neutrality factor is needed to ensure budget neutrality for LUPA 

payments. Finally, the per-visit rates for each discipline are updated by the CY 2015 HH 

payment update percentage of 2.2 percent. The national per-visit rates are adjusted by the wage 

index based on the site of service of the beneficiary. The per-visit payments for LUPAs are 

separate from the LUPA add-on payment amount, which is paid for episodes that occur as the 

only episode or initial episode in a sequence of adjacent episodes. The proposed CY 2015 
CMS-1611-P 97 

national per-visit rates are shown in Tables 18 and 19. 

TABLE 18: Proposed CY 2015 National Per-Visit Payment Amounts for HHAs That DO 

Submit the Required Quality Data 

HH Discipline 

Type 

CY 2014 PerVisit Payment 

Wage Index 

Budget 

Neutrality 

Factor 

CY 2015 

Rebasing 

Adjustment 

CY 2015 HH 

Payment 

Update 

Percentage 

Proposed CY 

2015 Per-Visit 

Payment 

Home Health 

Aide $54.84 X 1.0000 + $1.79 X 1.022 $57.88 

Medical Social 

Services $194.12 X 1.0000 + $6.34 X 1.022 $204.87 

Occupational 

Therapy $133.30 X 1.0000 + $4.35 X 1.022 $140.68 

Physical 

Therapy $132.40 X 1.0000 + $4.32 X 1.022 $139.73 

Skilled Nursing $121.10 X 1.0000 + $3.96 X 1.022 $127.81 

SpeechLanguage 

Pathology $143.88 X 1.0000 + 4.70 X 1.022 $151.85 

The proposed CY 2015 per-visit payment rates for an HHA that does not submit the 

required quality data are updated by the CY 2015 HH payment update percentage (2.2 percent) 

minus 2 percentage points and is shown in Table 19.

TABLE 19: Proposed CY 2015 National Per-Visit Payment Amounts for HHAs That DO 

NOT Submit the Required Quality Data 

HH Discipline 

Type 

CY 2014 PerVisit Rates 

Wage 

Index 

Budget 

Neutrality 

Factor 

CY 2015 

Rebasing 

Adjustment 

CY 2015 HH 

Payment 

Update 

Percentage 

Minus 2 

Percentage 

Points 

Proposed 

CY 2015 

Per-Visit 

Rates 

Home Health 

Aide $54.84 X 1.0000 + $1.79 X 1.002 $56.74 

Medical Social 

Services $194.12 X 1.0000 + $6.34 X 1.002 $200.86 

Occupational 

Therapy $133.30 X 1.0000 + $4.35 X 1.002 $137.93 

Physical Therapy $132.40 X 1.0000 + $4.32 X 1.002 $136.99 

Skilled Nursing $121.10 X 1.0000 + $3.96 X 1.002 $125.31 

SpeechLanguage 

Pathology $143.88 X 1.0000 + 4.70 X 1.002 $148.88 

d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors 
CMS-1611-P 98 

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 addon factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP (78 FR 72306). We multiply the 

per-visit payment amount for the first SN, PT, or SLP visit in LUPA episodes that occur as the 

only episode or an initial episode in a sequence of adjacent episodes by the appropriate factor to 

determine the LUPA add-on payment amount. For example, for LUPA episodes that occur as 

the only episode or an initial episode in a sequence of adjacent episodes, if the first skilled visit is 

SN, the payment for that visit will be $235.82 (1.8451 multiplied by $127.81). 

e. Proposed Non-routine Medical Supply (NRS) Conversion Factor Update 

Payments for NRS are computed by multiplying the relative weight for a particular 

severity level by the NRS conversion factor. To determine the CY 2015 NRS conversion factor, 

we start with the 2014 NRS conversion factor ($53.65) and apply the -2.82 percent rebasing 

adjustment calculated in section II.C. of this rule (1-0.0282 = 0.9718). We then update the 

conversion factor by the CY 2015 HH payment update percentage (2.2 percent). We do not 

apply a standardization factor as the NRS payment amount calculated from the conversion factor 

is not wage or case-mix adjusted when the final claim payment amount is computed. The 

proposed NRS conversion factor for CY 2015 is shown in Table 20. 

TABLE 20: Proposed CY 2015 NRS Conversion Factor for HHAs that DO Submit the 

Required Quality Data 

CY 2014 NRS 

Conversion Factor 

CY 2015 Rebasing 

Adjustment 

CY 2015 HH 

Payment Update 

Percentage 

Proposed CY 2015 NRS 

Conversion Factor 

$53.65 X 0.9718 X 1.022 =$53.28 

Using the proposed CY 2015 NRS conversion factor, the proposed payment amounts for 
CMS-1611-P 99 

the six severity levels are shown in Table 21.

TABLE 21: Proposed CY 2015 NRS Payment Amounts for HHAs that DO Submit the 

Required Quality Data 

Severity Level Points (Scoring) Relative Weight 

Proposed CY 2015 

NRS Payment 

Amounts 

1 0 0.2698 $ 14.37 

2 1 to 14 0.9742 $ 51.91 

3 15 to 27 2.6712 $ 142.32 

4 28 to 48 3.9686 $ 211.45 

5 49 to 98 6.1198 $ 326.06 

6 99+ 10.5254 $ 560.79 

For HHAs that do not submit the required quality data, we again begin with the CY 2014 

NRS conversion factor ($53.65) and apply the -2.82 percent rebasing adjustment discussed in 

section II.C of this proposed rule (1-0.0282= 0.9718). We then update the NRS conversion 

factor by the CY 2015 HH payment update percentage (2.2 percent) minus 2 percentage points. 

The proposed CY 2015 NRS conversion factor for HHAs that do not submit quality data is 

shown in Table 22. 

TABLE 22: Proposed CY 2015 NRS Conversion Factor for HHAs that DO NOT Submit 

the Required Quality Data

CY 2014 NRS 

Conversion Factor 

CY 2015 Rebasing 

Adjustment 

CY 2015 HH Payment Update 

Percentage Minus 2 Percentage 

Points 

Proposed CY 2015 

NRS Conversion 

Factor 

$53.65 X 0.9718 X 1.002 $52.24 

The proposed payment amounts for the various severity levels based on the updated 

conversion factor for HHAs that do not submit quality data are calculated in Table 23. 
CMS-1611-P 100 

TABLE 23: Proposed CY 2015 NRS Payment Amounts for HHAs that DO NOT Submit 

the Required Quality Data 

Severity Level Points (Scoring) Relative Weight 

Proposed CY 

2015 NRS 

Payment 

Amounts 

1 0 0.2698 $ 14.09 

2 1 to 14 0.9742 $ 50.89 

3 15 to 27 2.6712 $ 139.54 

4 28 to 48 3.9686 $ 207.32 

5 49 to 98 6.1198 $ 319.70 

6 99+ 10.5254 $ 549.85 

f. Rural Add-On 

Section 421(a) of the MMA required, for HH services furnished in a rural areas (as 

defined in section 1886(d)(2)(D) of the Act), for episodes or visits ending on or after 

April 1, 2004, and before April 1, 2005, that the Secretary increase the payment amount that 

otherwise will have been made under section 1895 of the Act for the services by 5 percent. 

Section 5201 of the DRA amended section 421(a) of the MMA. The amended section 

421(a) of the MMA required, for HH services furnished in a rural area (as defined in section 

1886(d)(2)(D) of the Act), on or after January 1, 2006 and before January 1, 2007, that the 

Secretary increase the payment amount otherwise made under section 1895 of the Act for those 

services by 5 percent. 

Section 3131(c) of the Affordable Care Act amended section 421(a) of the MMA to 

provide an increase of 3 percent of the payment amount otherwise made under section 1895 of 

the Act for HH services furnished in a rural area (as defined in section 1886(d)(2)(D) of the Act), 

for episodes and visits ending on or after April 1, 2010, and before January 1, 2016. 

Section 421 of the MMA, as amended, waives budget neutrality related to this provision, 

as the statute specifically states that the Secretary shall not reduce the standard prospective 

payment amount (or amounts) under section 1895 of the Act applicable to HH services furnished 
CMS-1611-P 101 

during a period to offset the increase in payments resulting in the application of this section of 

the statute. 

Refer to Tables 24 through 27 for the proposed payment rates for home health services 

provided in rural areas. 

TABLE 24: Proposed CY 2015 Payment Amounts for 60-Day Episodes for Services 

Provided in a Rural Area 

For HHAs that DO Submit Quality Data For HHAs that DO NOT Submit Quality Data 

CY 2015 National, 

Standardized 60-Day 

Episode Payment 

Rate 

Multiply 

by the 3 

Percent 

Rural 

Add-On 

Proposed CY 

2015 Rural 

National, 

Standardized 

60-Day Episode 

Payment Rate 

CY 2015 

National, 

Standardized 60-

Day Episode 

Payment Rate 

Multiply 

by the 3 

Percent 

Rural 

Add-On 

Proposed CY 2015 

Rural National, 

Standardized 60-

Day Episode 

Payment Rate 

$2,922.76 X 1.03 $3,010.44 $2,865.57 X 1.03 $2,951.54 

TABLE 25: Proposed CY 2015 Per-Visit Amounts for Services Provided in a Rural Area

TABLE 26: Proposed CY 2015 NRS Conversion Factor for Services Provided in Rural 

Areas 

For HHAs that DO submit quality data For HHAs that DO NOT submit quality data 

CY 2015 

Conversion 

Factor 

Multiply by 

the 3 

Percent 

Rural AddOn 

Proposed CY 

2015 Rural 

NRS 

Conversion 

Factor 

CY 2015 

Conversion 

Factor 

Multiply by 

the 3 

Percent 

Rural AddOn 

Proposed CY 

2015 Rural 

NRS 

Conversion 

Factor 

$53.28 X 1.03 $54.88 $52.24 X 1.03 $53.81 

 For HHAs that DO submit quality data For HHAs that DO NOT submit quality 

data 

HH 

Discipline 

Type 

CY 2015 

Per-visit 

rate 

Multiply by the 

3 Percent Rural 

Add-On 

Proposed 

CY 2015 

Rural PerVisit Rates 

CY 2015 

Per-visit 

rate 

Multiply by 

the 3 Percent 

Rural AddOn 

Proposed 

CY 2015 

Rural PerVisit Rates 

HH Aide $57.88 X 1.03 $59.62 $56.74 X 1.03 $58.44 

MSS $204.87 X 1.03 $211.02 $200.86 X 1.03 $206.89 

OT $140.68 X 1.03 $144.90 $137.93 X 1.03 $142.07 

PT $139.73 X 1.03 $143.92 $136.99 X 1.03 $141.10 

SN $127.81 X 1.03 $131.64 $125.31 X 1.03 $129.07 

SLP $151.85 X 1.03 $156.41 $148.88 X 1.03 $153.35 
CMS-1611-P 102 

TABLE 27: Proposed CY 2015 NRS Payment Amounts for Services Provided in Rural 

Areas

 

 For HHAs that DO submit quality data 

(Proposed CY 2015 NRS Conversion 

Factor=$54.88 

 For HHAs that DO NOT submit quality 

data (Proposed CY 2015 NRS 

Conversion Factor=$53.81) 

Severity 

Level 

Points 

(Scoring) 

Relative 

Weight 

Proposed CY 2015 NRS 

Payment Amounts for 

Rural Areas 

Relative 

Weight 

Proposed CY 2015 NRS 

Payment Amounts for 

Rural Areas 

1 0 0.2698 $14.81 0.2698 $14.52 

2 1 to 14 0.9742 $53.46 0.9742 $52.42 

3 15 to 27 2.6712 $146.60 2.6712 $143.74 

4 28 to 48 3.9686 $217.80 3.9686 $213.55 

5 49 to 98 6.1198 $335.85 6.1198 $329.31 

6 99+ 10.5254 $577.63 10.5254 $566.37 

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

1. Background 

Section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the 

national, standardized 60-day case-mix and wage-adjusted episode payment amounts in the case 

of episodes that incur unusually high costs due to patient care needs. Prior to the enactment of 

the Affordable Care Act, section 1895(b)(5)of the Act stipulated that projected total outlier 

payments could not exceed 5 percent of total projected or estimated HH payments in a given 

year. In the Medicare Program; Prospective Payment System for Home Health Agencies final 

rule (65 FR 41188 through 41190), we described the method for determining outlier payments. 

Under this system, outlier payments are made for episodes whose estimated costs exceed a 

threshold amount for each HH Resource Group (HHRG). The episode’s estimated cost is the 

sum of the national wage-adjusted per-visit payment amounts for all visits delivered during the 

episode. The outlier threshold for each case-mix group or PEP adjustment is defined as the 60-

day episode payment or PEP adjustment for that group plus a fixed-dollar loss (FDL) amount. 

The outlier payment is defined to be a proportion of the wage-adjusted estimated cost beyond the 

wage-adjusted threshold. The threshold amount is the sum of the wage and case-mix adjusted 
CMS-1611-P 103 

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 
CMS-1611-P 104 

Care Act amended section 1895(b)(5) of the Act by re-designating the existing language as 

section 1895(b)(5)(A) of the Act, and revising it to state that the Secretary, “subject to [a 10 

percent program-specific outlier cap], may provide for an addition or adjustment to the payment 

amount otherwise made in the case of outliers because of unusual variations in the type or 

amount of medically necessary care. The total amount of the additional payments or payment 

adjustments made under this paragraph for a fiscal year or year may not exceed 2.5 percent of the 

total payments projected or estimated to be made based on the prospective payment system under 

this subsection in that year.” 

As such, beginning in CY 2011, our HH PPS outlier policy is that we reduce payment 

rates by 5 percent and target up to 2.5 percent of total estimated HH PPS payments to be paid as 

outliers. To do so, we first returned the 2.5 percent held for the target CY 2010 outlier pool to 

the national, standardized 60-day episode rates, the national per visit rates, the LUPA add-on 

payment amount, and the NRS conversion factor for CY 2010. We then reduced the rates by 5 

percent as required by section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the 

Affordable Care Act. For CY 2011 and subsequent calendar years we target up to 2.5 percent of 

estimated total payments to be paid as outlier payments, and apply a 10 percent agency-level 

outlier cap. 

2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing Ratio 

For a given level of outlier payments, there is a trade-off between the values selected for 

the FDL ratio and the loss-sharing ratio. A high FDL ratio reduces the number of episodes that 

can receive outlier payments, but makes it possible to select a higher loss-sharing ratio, and 

therefore, increase outlier payments for outlier episodes. Alternatively, a lower FDL ratio means 

that more episodes can qualify for outlier payments, but outlier payments per episode must then 

be lower. 
CMS-1611-P 105 

The FDL ratio and the loss-sharing ratio must be selected so that the estimated total 

outlier payments do not exceed the 2.5 percent aggregate level (as required by section 

1895(b)(5)(A) of the Act). Historically, we have used a value of 0.80 for the loss-sharing ratio 

which, we believe, preserves incentives for agencies to attempt to provide care efficiently for 

outlier cases. With a loss-sharing ratio of 0.80, Medicare pays 80 percent of the additional 

estimated costs above the outlier threshold amount. We are not proposing a change to the losssharing ratio in this proposed rule. 

In the CY 2011 HH PPS final rule (75 FR 70398), in targeting total outlier payments as 

2.5 percent of total HH PPS payments, we implemented an FDL ratio of 0.67, and we maintained 

that ratio in CY 2012. Simulations based on CY 2010 claims data completed for the CY 2013 

HH PPS final rule showed that outlier payments were estimated to comprise approximately 2.18 

percent of total HH PPS payments in CY 2013, and as such, we lowered the FDL ratio from 0.67 

to 0.45. We stated that lowering the FDL ratio to 0.45, while maintaining a loss-sharing ratio of 

0.80, struck an effective balance of compensating for high-cost episodes while allowing more 

episodes to qualify as outlier payments (77 FR 67080). The national, standardized 60-day 

episode payment amount is multiplied by the FDL ratio. That amount is wage-adjusted to derive 

the wage-adjusted FDL amount, which is added to the case-mix and wage-adjusted 60-day 

episode payment amount to determine the outlier threshold amount that costs have to exceed 

before Medicare will pay 80 percent of the additional estimated costs. 

Based on simulations using preliminary CY 2013 claims data, the proposed CY 2015 

payments rates in section III.D.4 of this proposed rule, and the FDL ratio of 0.45; we estimate 

that outlier payments would comprise approximately 2.26 percent of total HH PPS payments in 

CY 2015. Simulating payments using preliminary CY 2013 claims data and the CY 2014 

payment rates (78 FR 72304 through 72308), we estimate that outlier payments would comprise 
CMS-1611-P 106 

2.01 percent of total payments. Given the proposed increases to the CY 2015 national per-visit 

payment rates, our analysis estimates an additional 0.25 percentage point increase in estimated 

outlier payments as a percent of total HH PPS payments each year that we phase-in the rebasing 

adjustments described in section II.C. We estimate that for CY 2016, estimated outlier payments 

as a percent of total HH PPS payments will increase to 2.51 percent. We note that these 

estimates do not take in to account any changes in utilization that may have occurred in CY 

2014, and would continue to occur in CY 2015. Therefore, we are not proposing a change to the 

FDL ratio for CY 2015. In the final rule, we will update our estimate of outlier payments as a 

percent of total HH PPS payments using the most current and complete year of HH PPS data. 

We will continue to monitor the percent of total HH PPS payments paid as outlier payments to 

determine if future adjustments to either the FDL ratio or loss-sharing ratio are warranted. 

F. Medicare Coverage of Insulin Injections under the HH PPS

 Home health policy regarding coverage of home health visits for the sole purpose of 

insulin injections is limited to patients that are physically or mentally unable to self-inject and 

there is no other person who is able and willing to inject the patient.16 However, the Office of 

Inspector General concluded in August 2013 that some previously covered home health visits for 

the sole purpose of insulin injections were unnecessary because the patient was physically and 

mentally able to self-inject.17 In addition, results from analysis in response to public comments 

on the CY 2014 HH PPS final rule found that episodes that qualify for outlier payments in excess 

of $10,000 had, on average, 160 skilled nursing visits in a 60-day episode of care with 95 percent 

of the episodes listing a primary diagnosis of diabetes or long-term use of insulin (78 FR 72310). 

Therefore, we conducted a literature review regarding generally accepted clinical management 

 

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

Patients 
CMS-1611-P 107 

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. 

As generally accepted by the medical community, older patients (age 65 and older) are 

more likely to have impairments in dexterity, cognition, vision, and hearing.18 While studies 

have shown that most elderly patients starting or continuing on insulin can inject themselves, 

these conditions may affect the elderly individual’s ability to self-inject insulin. It is clinically 

essential that there is careful assessment prior to the initiation of home care, and throughout the 

course of treatment, regarding the patient’s capacity for self-injection. There are multiple 

reliable, and validated assessment tools that may be used to assess the elderly individual’s ability 

to self-inject. These tools assess the individual’s ability to perform activities of daily living 

(ADLs), as well as, cognitive, functional, and behavioral status.19 These assessment tools have 

also proved valid for judging patients' ability to inject insulin independently and to recognize and 

deal with hypoglycemia.20

Another important consideration with regards to insulin administration in the elderly 

population is the possibility of dosing errors.21 Correct administration and accurate dosing is 

important in order to prevent serious complications, such as hypoglycemia and hyperglycemia. 

The traditional vial and syringe method of insulin administration involves several steps, 

including injecting air into the vial, drawing an amount out of the vial into a syringe with small 

 

18 Strategies for Insulin Injection Therapy in Diabetes Self-Management. (2011). American Association of Diabetes 

Educators. 

19 Hendra, T.J. Starting insulin therapy in elderly patients. (2012). Journal of the Royal Society of Medicine. 95(9), 

453-455. 

20 Sinclair AJ, Turnbull CJ, Croxson SCM. Document of care for older people with diabetes. Postgrad Med J 

1996;72: 334-8. 

21 Coscelli C, Lostia S, Lunetta M, Nosari I, Coronel GA. Safety, efficacy, acceptability of a pre-filled insulin pen in 

diabetic patients over 60 years old. Diabetes Research and Clinical Practice. 1995;38:173–7.[PubMed]
CMS-1611-P 108 

measuring increments, and verifying the correct dose visually.22 In some cases, an insulin pen 

can be used as an alternative to the traditional vial and syringe method. 

Insulin pens are designed to facilitate easy self-administration, the possession of which 

would suggest the ability to self-inject. Additionally, insulin pens often come pre-filled with 

insulin or must be used with a pre-filled cartridge thus potentially negating the need for skilled 

nursing for the purpose of calculating and filling appropriate doses. It is recognized that visual 

impairment, joint immobility and/or pain, peripheral neuropathy, and cognitive issues may affect 

the ability of elderly patients to determine correct insulin dosing and injection. Our literature 

review indicates that insulin pen devices may be beneficial in terms of safety for elderly patients 

due to these visual or physical disabilities.23 To determine whether to use a traditional vial and 

syringe method of insulin administration versus an insulin pen, the physician must consider and 

understand the advantages these devices offer over traditional vials and syringes. These 

advantages include: 

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

● Greater dose accuracy and reliability, especially for low doses which are often needed 

in the elderly; 

● Sensory and auditory feedback associated with the dial mechanism on many pens may 

also benefit those with visual impairments; 

● Pen devices are also more compact, portable and easier to grip, which may benefit 

those with impairments in manual dexterity; and 

● Less painful injections and overall ease of use. 24 

 

22 Flemming DR. Mightier than the syringe. Am J Nurs. 2000;100:44–8.[PubMed] 23 Wright, B., Bellone, J., McCoy, E. (2010). A review of insulin pen devices and use in elderly, diabetic population. 

Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. Doi: 10.4137/CMED.S5534. 

24 Wright, B., Bellone, J., McCoy, E. (2010). A review of insulin pen devices and use in elderly, diabetic population. 

Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. Doi: 10.4137/CMED.S5534. 
CMS-1611-P 109 

Although pen devices are often perceived to be more costly than vialed insulin, study 

results indicate that elderly diabetic patients are more likely to accept pen devices and adhere to 

therapy, which leads to better glycemic control that decreases long-term complications and 

associated healthcare costs.25 The significantly improved safety profiles of pen devices also 

avert costly episodes of hypoglycemia. 26 It also should be noted that most insurance plans, 

including Medicare Part D plans, charge the patient the same amount for a month supply of 

insulin in the pen device as insulin in the vial.27 Furthermore, pharmacoeconomic data reveal 

cost benefits for using pens versus syringes due to improved treatment adherence and reduced 

health care utilization.28 Additionally, in some cases the individual with coverage for insulin 

pens may have one co-pay, resulting in getting more insulin than if purchasing a vial. And, there 

is less waste with pens because insulin vials should be discarded after 28 days after opening. 

However, there may be clinical reasons for the use of the traditional vial and insulin syringe as 

opposed to the insulin pen, including the fact that not all insulin preparations are available via 

insulin pen. In such circumstances, there are multiple assistive aids and devices to facilitate selfinjection of insulin for those with cognitive or functional limitations. These include: nonvisual 

insulin measurement devices; syringe magnifiers; needle guides; prefilled insulin syringes; and 

vial stabilizers to help ensure accuracy and aid in insulin delivery.29 It is expected that providers 

will assess the needs, abilities, and preference of the patient requiring insulin to facilitate patient 

 

25 Strategies for Insulin Injection Therapy in Diabetes Self-Management. (2011). American Association of Diabetes 

Educators. 

26 Strategies for Insulin Injection Therapy in Diabetes Self-Management. (2011). American Association of Diabetes 

Educators. 

27 Wright, B., Bellone, J., McCoy, E. (2010). A review of insulin pen devices and use in elderly, diabetic population. 

Clinical Medicine Insights: Endocrinology and Diabetes. 3:53-63. Doi: 10.4137/CMED.S5534 28 Strategies for Insulin Injection Therapy in Diabetes Self-Management. (2011). American Association of Diabetes 

Educators. 

29 Strategies for Insulin Injection Therapy in Diabetes Self-Management. (2011). American Association of Diabetes 

Educators. 
CMS-1611-P 110 

autonomy, efficiency, and safety in diabetes self-management, including the administration of 

insulin. 

Further research regarding self-injection of insulin, whether via a vial and syringe method 

or insulin pen, shows that education for starting insulin and monitoring should be provided by a 

diabetes nurse specialist, and typically entails 5 to 10 face-to-face contacts either in the patient's 

home or at the diabetes clinic; these are in addition to telephone contacts to further reinforce 

teaching and to answer patient questions.30 This type of assessment and education allows for 

patient autonomy and self-efficiency and is often a preferred mode for diabetes selfmanagement.

In the CY 2014 HH PPS final rule (78 FR 72256), we noted “The Office of Inspector 

General (OIG) released a “Management Implications Report in August of 2013” that concluded 

there is a “systemic weakness that results in Medicare coverage of unnecessary home health care 

for diabetic patients”. The OIG report noted that investigations show that the majority of 

beneficiaries involved in fraudulent schemes have a primary diagnosis of diabetes. The report 

noted that OIG Special Agents found falsified medical records documenting patients having hand 

tremors and poor vision preventing them from drawing insulin into a syringe, visually verifying 

the correct dosage, and injecting the insulin themselves, when the patients did not in fact suffer 

those symptoms. 

In light of the OIG report, we conducted analysis and performed simulations using CY 

2012 claims data and described our findings in the CY 2014 Home Health PPS Final Rule (78 

FR 72310). We found that nearly 44 percent of the episodes that would qualify for outlier 

payments had a primary diagnosis of diabetes and 16 percent of episodes that would quality for 

outlier payments had a primary diagnosis of “Diabetes mellitus without mention of complication, 

 

30 Hendra, T.J. Starting insulin therapy in elderly patients. (2012). Journal of the Royal Society of Medicine. 95(9), 

453-455. http://www.ncbi.nlm.nih.gov. 
CMS-1611-P 111 

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.31 

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 

 

31 This analysis simulated payments using CY 2012 claims data and CY 2012 payment rates. The simulations did 

not take into account the 10-percent outlier cap. Some episodes may have qualified for outlier payments in the 

simulations, but were not paid accordingly if the HHA was at or over its 10 percent cap on outlier payments as a 

percent of total payments.
CMS-1611-P 112 

Acumen, LLC because of their capacity to provide real-time claims data analysis across all parts 

of the Medicare program (that is, Part A, Part B, and Part D). 

Our analysis began with identifying episodes for the home health diabetic population 

based on claims and OASIS assessments most likely to be associated with insulin injection 

assistance. We used the following criteria to identify the home health diabetic population of 

interest: (1) a diabetic condition listed as the principal/primary diagnosis on the home health 

claim; (2) Medicare Part A or Part B enrollment for at least three months prior to the episode and 

during the episode; and (3) episodes with at least 45 skilled visits. This threshold was 

determined based on the distribution in the average number and length of skilled nursing visits 

for episodes meeting criteria 1 and 2 above using CY 2013 home health claims data. The 

average number of skilled nursing visits for beneficiaries who receive at least one skilled nursing 

visit appeared to increase from 20 visits at the 90th percentile, to 50 visits at the 95th percentile. 

Additionally, the average length of a skilled nursing visit for episodes between the 90th and 95th 

percentiles was 37 minutes, less than half the length of visits for episode between the 75th and 

90th percentiles. 

Approximately 49,100 episodes met the study population criteria described above, 

accounting for approximately $298 million in Medicare home health payments in CY 2013. Of 

the 49,100 episodes of interest, 71 percent received outlier payments and, on average, there were 

86 skilled nursing visits per episode. In addition, 12 percent of the episodes in the study 

population were for patients prescribed an insulin pen to self-inject and more than half of the 

episodes billed (27,439) were for claims that listed ICD-9-CM 2500x, “Diabetes Mellitus 

without mention of complication”, as the principal diagnosis code. ICD-9-CM describes the 

code 250.0x as diabetes mellitus without mention of complications (complications can include 

hypo- or hyperglycemia, or manifestations classified as renal, ophthalmic, neurological, 
CMS-1611-P 113 

peripheral circulatory damage or neuropathy). Clinically, this code generally means that the 

diabetes is being well-controlled and there are no apparent complications or symptoms resulting 

from the diabetes. Diabetes that is controlled and without complications does not warrant 

intensive intervention or daily skilled nursing visits; rather, it warrants knowledge of the 

condition and routine monitoring. 

As discussed above in this section, the traditional vial and syringe method of insulin 

administration is one of two methods of insulin administration (excluding the use of insulin 

pumps). The alternative to the traditional vial and syringe method is the use of insulin pens. We 

believe that insulin pens are usually prescribed for those beneficiaries that are able to selfadminister the insulin via an insulin pen. Therefore, the possession of a prescribed insulin pen 

would suggest the ability to self-inject. Since insulin pens often come pre-filled with insulin or 

must be used with a pre-filled cartridge, we believe there would not be a need for skilled nursing 

for the purpose of insulin injection assistance. We expect providers to assess the needs, abilities, 

and preference of the patient requiring insulin to facilitate patient autonomy, efficiency, and 

safety in diabetes self-management, including the administration of insulin. As noted above, 

approximately 12 percent of the episodes in the study population with visits likely for the 

purpose of insulin injection assistance were for patients prescribed an insulin pen to self-inject, 

which does not conform to our current policy that home health visits for the sole purpose of 

insulin injection assistance is limited to patients that are physically or mentally unable to selfinject 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 
CMS-1611-P 114 

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 
CMS-1611-P 115 

and rationale as to why an individual is unable to self-inject, including the reporting of an 

appropriate secondary condition that supports the inability of the patient to self-inject. 

 As described above, a group of CMS clinicians and contractor clinicians developed a list 

of conditions that would support the need for ongoing home health skilled nursing visits for 

insulin injection assistance for instances where the patient is physically or mentally unable to 

self-inject and there is no able or willing caregiver to provide assistance. We expect the 

conditions included in Table 28 to be listed on the claim and OASIS to support the need for 

skilled nursing visits for insulin injection assistance. 

Table 28: ICD-9-CM Diagnosis Codes That Indicate a Potential Inability to Self-Inject 

Insulin 

ICD-9-CM Code Description 

Amputation 

V49.61 Thumb Amputation Status 

V49.63 Hand Amputation Status 

V49.64 Wrist Amputation Status 

V49.65 Below elbow amputation status 

V49.66 Above elbow amputation status 

V49.67 Shoulder amputation status 

885.0 Traumatic amputation of thumb w/o mention of complication 

885.1 Traumatic amputation of thumb w/ mention of complication 

886.0 Traumatic amputation of other fingers w/o mention of complication 

886.1 Traumatic amputation of other fingers w/ mention of complication 

887.0 Traumatic amputation of arm and hand, unilateral, below elbow w/o mention of complication 

887.1 Traumatic amputation of arm and hand, unilateral, below elbow, complicated 

887.2 Traumatic amputation of arm and hand, unilateral, at or above elbow w/o mention of 

complication 

887.3 Traumatic amputation of arm and hand, unilateral, at or above elbow, complicated 

887.4 Traumatic amputation of arm and hand, unilateral, level not specified, w/o mention of 

complication 

887.5 Traumatic amputation of arm and hand, unilateral, level not specified, complicated 

887.6 Traumatic amputation of arm and hand, bilateral, any level, w/o mention of complication 

887.7 Traumatic amputation of arm and hand, bilateral, any level, complicated 

Vision 

362.01 Background diabetic retinopathy 

362.50 Macular degeneration (senile) of retina unspecified 

362.51 Nonexudative senile macular degeneration of retina 

362.52 Exudative senile macular degeneration of retina 

362.53 Cystoid macular degeneration of retina 

362.54 Macular cyst hole or pseudohole of retina 

362.55 Toxic maculopathy of retina 

362.56 Macular puckering of retina 

362.57 Drusen (degenerative) of retina 

366.00 Nonsenile cataract unspecified 

366.01 Anterior subcapsular polar nonsenile cataract 

366.02 Posterior subcapsular polar nonsenile cataract 
CMS-1611-P 116 

ICD-9-CM Code Description 

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 

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 
CMS-1611-P 117 

ICD-9-CM Code Description 

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 

718.44 Contracture of hand joint 
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ICD-9-CM Code Description 

714.0 Rheumatoid arthritis 

Movement Disorders 

332.0 Paralysis agitans (Parkinson’s) 

332.1 Secondary parkinsonism 

333.1 Essential and other specified forms of tremor 

736.05 Wrist drop (acquired) 

After Effects from Stroke/ Other Disorders of the Central Nervous System/Intellectual Disabilities

438.21 Hemiplegia affecting dominant side 

438.22 Hemiplegia affecting nondominant side 

342.01 Flaccid hemiplegia and hemiparesis affecting dominant side 

342.02 Flaccid hemiplegia and hemiparesis affecting nondominant side 

342.11 Spastic hemiplegia and hemiparesis affecting dominant side 

342.12 Spastic hemiplegia and hemiparesis affecting nondominant side 

438.31 Monoplegia of upper limb affecting dominant side 

438.32 Monoplegia of upper limb affecting nondominant side 

343.3 Congenital monoplegia 

344.41 Monoplegia of upper limb affecting dominant side 

344.42 Monoplegia of upper limb affecting nondominant side 

344.81 Locked-in state 

344.00 Quadriplegia unspecified 

344.01 Quadriplegia c1-c4 complete 

344.02 Quadriplegia c1-c4 incomplete 

344.03 Quadriplegia c5-c7 complete 

344.04 Quadriplegia c5-c7 incomplete 

343.0 Congenital diplegia 

343.2 Congenital quadriplegia 

344.2 Diplegia of upper limbs 

318.0 Moderate intellectual disabilities 

318.1 Severe intellectual disabilities 

318.2 Profound intellectual disabilities 

Although we are not proposing any policy changes at this time, we are soliciting public 

comments on whether the conditions in Table 28 represent a comprehensive list of codes that 

appropriately indicate that a patient may not be able to self-inject and the use of insulin pens in 

home health. We plan to continue monitoring claims that are likely for the purpose of insulin 

injection assistance. Historical evidence in the medical record must support the clinical 

legitimacy of the secondary condition(s) and resulting disability that limit the beneficiary’s 

ability to self-inject. 

G. Implementation of the International Classification of Diseases, 10th Revision, Clinical 

Modification (ICD-10-CM) 

On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-
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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 §162.1002 of title 45, Code of Federal 

Regulations.” 

On May 1, 2014, the Secretary announced that HHS expects to issue an interim final rule 

that will require use of ICD-10 beginning October 1, 2015 and continue to require use of ICD-9-

CM through September 30, 2015. This announcement, which is available on the CMS website at 

http://cms.gov/Medicare/Coding/ICD10/index.html, means that ICD-9-CM diagnosis codes will 

continue to be used for home health claims reporting until October 1, 2015, when ICD-10-CM is 

required. Diagnosis reporting on home health claims must adhere to ICD-9-CM coding 

conventions and guidelines regarding the selection of principal diagnosis and the reporting of 

additional diagnoses until that time. The current ICD-9-CM Coding Guidelines refer to the use 

of the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) 

and are available through the CMS website at: 

http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html or on the 

CDC’s website at http://www.cdc.gov/nchs/icd/icd9cm.htm. We plan to disseminate this 

information through the HHA Center website, the Home Health, Hospice and DME Open Door 

Forum, and in the CY 2015 HH PPS final rule. 

H. Proposed Change to the Therapy Reassessment Timeframes 

As discussed in our CY 2011 HH PPS final rule (75 FR 70372), effective 

January 1, 2011, therapy reassessments must be performed on or “close to” the 13th and 19th 

therapy visits and at least once every 30 days. A qualified therapist, of the corresponding 

discipline for the type of therapy being provided, must functionally reassess the patient using a 
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method which would include objective measurement. The measurement results and 

corresponding effectiveness of the therapy, or lack thereof, must be documented in the clinical 

record. We anticipated that policy regarding therapy coverage and therapy reassessments would 

address payment vulnerabilities that have led to high use and sometimes overuse of therapy 

services. We also discussed our expectation that this policy change would ensure more qualified 

therapist involvement for beneficiaries receiving high amounts of therapy. In our CY 2013 HH 

PPS final rule (77 FR 67068), effective January 1, 2013, we provided further clarifications 

regarding therapy coverage and therapy reassessments. Specifically, similar to the existing 

requirements for therapy reassessments when the patient resides in a rural area, we finalized 

changes to §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 §409.44(c)(2)(i)(E)(1), we specified that when a therapy reassessment is missed, 

any visits for that discipline prior to the next reassessment are non-covered. 

Our analysis of data from CYs 2010 through 2013 shows that the frequency of episodes 

with therapy visits reaching 14 and 20 therapy visits did not change substantially as a result of 

the therapy reassessment policy implemented in CY 2011 (see Table 29). The percentage of 

episodes with at least 14 covered therapy visits was 17.2 percent in CY 2010 and decreased to 

16.0 percent in CY 2011. In CY 2013 the percentage of episodes with at least 14 covered 

therapy visits increased to 16.3 percent. Likewise, the percentage of episodes with at least 20 

covered therapy visits was 6.0 percent in CY 2010 and decreased to 5.4 percent in CY 2011. In 

CY 2013, the percentage of episodes with at least 20 covered therapy visits was 5.3 percent. We 

analyzed data for specific types of providers (for example, non-profit, for profit, freestanding, 

facility-based), and we found the similar trends in the number of episodes with at least 14 and 20 
CMS-1611-P 121 

covered therapy visits. For example, for non-profit HHAs, the percentage of episodes with at 

least 14 covered therapy visits decreased from 11.8 percent in CY 2010 to 11.1 in CY 2011 and 

episodes with at least 20 covered therapy visits decreased from 4.2 percent in CY 2010 to 3.9 

percent in CY 2011. For proprietary HHAs, the percentage of episodes with at least 14 covered 

therapy visits decreased from 19.7 percent in CY 2010 to 18.2 percent in CY 2011 and episodes 

with at least 20 covered therapy visits decreased from 6.8 percent in CY 2010 to 6.1 percent in 

CY 2011. 

As we stated in section III.A of this proposed rule, in addition to the implementation of 

the therapy reassessment requirements in CY 2011, HHAs were also subject to the Affordable 

Care Act face-to-face encounter requirement, payments were reduced to account for increases 

nominal case-mix, and the Affordable Care Act mandated that the HH PPS payment rates be 

reduced by 5 percent to pay up to, but no more than 2.5 percent of total HH PPS payments as 

outlier payments. The estimated net impact to HHAs for CY 2011 was a decrease in total HH 

PPS payments of 4.78 percent. The independent effects of any one policy may be difficult to 

discern in years where multiple policy changes occur in any given year. We note that in our CY 

2012 HH PPS final rule (76 FR 68526), we recalibrated and reduced the HH PPS case-mix 

weights for episodes reaching 14 and 20 therapy visits, thereby greatly diminishing the payment 

incentive for episodes at those therapy thresholds. 
CMS-1611-P 122 

TABLE 29: Percentage of Episodes with 14 and 20 Therapy Visits, CY 2010 through 2013 

Calendar 

Year 

Episodes with at Least 1 

Covered Therapy Visit 

Episodes with at Least 14 

Covered Therapy Visits 

Episodes with at Least 20 

Covered Therapy Visits 

2010 54.1% 17.2% 6.0% 

2011 54.2% 16.0% 5.4% 

2012 55.2% 15.6% 5.2% 

2013 56.3% 16.3% 5.3% 

Source: CY 2010 claims from the Datalink file and CY 2011 through CY 2013 claims from the standard analytic 

file (SAF). 

Note(s): For CY 2010, we included all episodes that began on or after January 1, 2010 and ended on or before 

December 31, 2010 and we included a 20% sample of episodes that began in CY 2009 but ended in CY 2010. For 

CY 2011 and CY 2013, we included all episodes that ended on or before December 31 of that CY (including 100% 

of episodes that began in the previous CY, but ended in the current CY). 

Since the therapy reassessment requirements were implemented in CY 2011, providers 

have expressed frustration regarding the timing of reassessments for multi-discipline therapy 

episodes. In multiple therapy episodes, therapists must communicate when a planned visit 

and/or reassessment is missed to accurately track and count visits. Otherwise, therapy 

reassessments may be in jeopardy of not being performed during the required timeframe 

increasing the risk of subsequent visits being non-covered. As stated above, our recent analysis 

of claims data from CY 2010 through CY 2013 shows no significant change in the percentage of 

cases reaching the 14 therapy visit and 20 therapy visit thresholds between CY 2010 and CY 

2011. Moreover, payment increases at the 14 therapy visit and 20 therapy visit thresholds have 

been mitigated since the recalibration of the case-mix weights in CY 2012. Therefore, we 

propose to simplify §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 §409.44(c)(2)(i)(A) at least every 14 calendar days. 

The requirement to perform a therapy reassessment at least once every 14 calendar days 

would apply to all episodes regardless of the number of therapy visits provided. All other 

requirements related to therapy reassessments would remain unchanged, such as a qualified 
CMS-1611-P 123 

therapist (instead of an assistant), from each therapy discipline provided, would still be required 

to provide the ordered therapy service and functionally reassess the patient using a method which 

would include objective measurements. The measurement results and corresponding 

effectiveness of the therapy, or lack thereof, would be documented in the clinical record. We 

believe that revising this requirement would make it easier and less burdensome for HHAs to 

track and to schedule therapy reassessments every 14 calendar days as opposed to tracking and 

counting therapy visits, especially for multiple-discipline therapy episodes. We also believe that 

this proposal would reduce the risk of non-covered visits so that therapists could focus more on 

providing quality care for their patients, while still promoting therapist involvement and quality 

treatment for all beneficiaries, regardless of the level of therapy provided. 

We invite comment on this proposal and the associated change in the regulation at 

§409.44 in section VI. of this proposed rule. 

I. HHA Value-Based Purchasing Model 

As we discussed previously in the FY 2009 proposed rule for Skilled Nursing Facilities 

(73 FR 25918, 25932, May 7, 2008), value-based purchasing (VBP) programs, in general, are 

intended to tie a provider’s payment to its performance in such a way as to reduce inappropriate 

or poorly furnished care and identify and reward those who furnish quality patient care. Section 

3006(b)(1) of the Affordable Care Act directed the Secretary to develop a plan to implement a 

VBP program for home health agencies (HHAs) and to issue an associated Report to Congress 

(Report). The Secretary issued that Report, which is available online at 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/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 
CMS-1611-P 124 

incentives to improve quality. The Report indicated that a HHA VBP program should build on 

and refine existing quality measurement tools and processes. In addition, the Report indicated 

that one of the ways that such a program could link payment to quality would be to tie payments 

to overall quality performance. 

Section 402 of Public Law 92-603 provided authority for the CMS to conduct the Home 

Health Pay-for-Performance (HHPFP) Demonstration that ran from 2008 to 2010. The results of 

that Demonstration found limited quality improvement in certain measures after comparing the 

quality of care furnished by Demonstration participants to the quality of care furnished by the 

control group. One important lesson learned from the HHPFP Demonstration was the need to 

link the home health agency’s quality improvement efforts and the incentives. HHAs in three of 

the four regions generated enough savings to have incentive payments in the first year of the 

Demonstration, but the size of payments were unknown until after the conclusion of the 

Demonstration. This time lag on paying incentive payments did not provide a sufficient 

incentive to HHAs to make investments necessary to improve quality. The Demonstration 

suggested that future models could benefit from ensuring that incentives are reliable enough, of 

sufficient magnitude, and paid in a timely fashion to encourage HHAs to be fully engaged in the 

quality of care initiative. The evaluation report is available online at 

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/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 
CMS-1611-P 125 

health agencies, ambulatory surgical centers, and hospital outpatient departments. Therefore, we 

are now considering testing a HHA VBP model that builds on what we have learned from the 

HVBP program. The model also presents an opportunity to test whether larger incentives than 

what have been previously tested will lead to even greater improvement in the quality of care 

furnished to beneficiaries. The HHA VBP model that is being considered would offer both a 

greater potential reward for high performing HHAs as well as a greater potential downside risk 

for low performing HHAs. If implemented, the model would begin at the outset of CY 2016, 

and include an array of measures that can capture the multiple dimensions of care that HHAs 

furnish. Building upon the successes of other related programs, we are seeking to implement a 

model with greater upside benefit and downside risk to motivate HHAs to make the substantive 

investments necessary to improve the quality of care furnished by HHAs. 

As currently envisioned, the HHA VBP model would reduce or increase Medicare 

payments, in a 5-8 percent range, depending on the degree of quality performance in various 

measures to be selected. The model would apply to all HHAs in each of the projected five to 

eight states selected to participate in the model. The distribution of payments would be based on 

quality performance, as measured by both achievement and improvement across multiple quality 

measures. Some HHAs would receive higher payments than standard fee-for-service payments 

and some HHAs would receive lower payments, similar to the HVBP program. We believe the 

payment adjustment at risk would provide an incentive among all HHAs to provide significantly 

better quality through improved planning, coordination, and management of care. To be eligible 

for any incentive payments, HHAs would need to achieve a minimal threshold in quality 

performance with respect to the care that they furnish. The size of the award would be 

dependent on the level of quality furnished above the minimal threshold with the highest 

performance awards going to HHAs with the highest overall level of or improvement in quality. 
CMS-1611-P 126 

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 are proposing to 

use the waiver authority under section 1115A of the Act to waive the applicable Medicare 

payment provisions for HHAs in the selected states and apply a reduction or increase to current 

Medicare payments to these HHAs, which would be dependent on their performance. 

We are considering 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 this proposed rule, we 

invite comments on the HHA VBP model outlined above, including elements of the model, size 

of the payment incentives and percentage of payments that would need to be placed at risk in 

order to spur HHAs to make the necessary investments to improve the quality of care for 

Medicare beneficiaries, the timing of the incentive payments, and how performance payments 

should be distributed. We also invite comments on the best approach for selecting states for 
CMS-1611-P 127 

participation in this model. Approaches could include: (1) Selecting states randomly, (2) 

selecting states based on quality, utilization, health IT, or efficiency metrics or a combination, or 

(3) other considerations. 

We note that if we decide to move forward with the implementation of this HHA VBP 

model in CY 2016, we intend to invite additional comments on a more detailed model proposal 

to be included in future rulemaking. 

J. Advancing Health Information Exchange 

HHS believes all patients, their families, and their healthcare providers should have 

consistent and timely access to their health information in a standardized format that can be 

securely exchanged between the patient, providers, and others involved in the patient’s care. 

(HHS August 2013 Statement, “Principles and Strategies for Accelerating Health Information 

Exchange.”) The Department is committed to accelerating health information exchange (HIE) 

through the use of electronic health records (EHRs) and other types of health information 

technology (HIT) across the broader care continuum through a number of initiatives including: 

(1) Alignment of incentives and payment adjustments to encourage provider adoption and 

optimization of HIT and HIE services through Medicare and Medicaid payment policies, (2) 

adoption of common standards and certification requirements for interoperable HIT, (3) support 

for privacy and security of patient information across all HIE-focused initiatives, and (4) 

governance of health information networks. These initiatives are designed to encourage HIE 

among all health care providers, including professionals and hospitals eligible for the Medicare 

and Medicaid EHR Incentive Programs and those who are not eligible for the EHR Incentive 

programs, and are designed to improve care delivery and coordination across the entire care 

continuum. To increase flexibility in the Office of the National Coordinator for Health 

Information Technology’s (ONC) regulatory certification structure and expand HIT certification, 
CMS-1611-P 128 

ONC has proposed a voluntary 2015 Edition EHR Certification rule to more easily accommodate 

HIT certification for technology used by other types of health care settings where individual or 

institutional health care providers are not typically eligible for incentive payments under the 

EHR Incentive Programs, such as long-term and post-acute care and behavioral health settings 

(79 FR 10880). 

We believe that HIE and the use of certified EHRs by HHAs (and other providers 

ineligible for the Medicare and Medicaid EHR Incentive programs) can effectively and 

efficiently help providers improve internal care delivery practices, support management of 

patient care across the continuum, and enable the reporting of electronically specified clinical 

quality measures (eCQMs). More information on the identification of EHR certification criteria 

and development of standards applicable to HH can be found at: 

• http://healthit.gov/policy-researchers-implementers/standards-and-certificationregulations

• http://www.healthit.gov/facas/FACAS/health-it-policy-committee/hitpcworkgroups/certificationadoption

• http://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWG

• http://wiki.siframework.org/Longitudinal+Coordination+of+Care

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

We propose to revise the personnel qualifications for speech-language pathologists (SLP) 

to more closely align the regulatory requirements with those set forth in section 1861(ll) of the 

Act. We propose to require that a qualified SLP be an individual who has a master’s or doctoral 

degree in speech-language pathology, and who is licensed as a speech-language pathologist by 

the State in which he or she furnishes such services. To the extent of our knowledge, all states 

license SLPs; therefore, all SLPs would be covered by this option. We believe that deferring to 
CMS-1611-P 129 

the states to establish specific SLP requirements would allow all appropriate SLPs to provide 

services to Medicare beneficiaries. Should a state choose to not offer licensure at some point in 

the future, we propose a second, more specific, option for qualification. In that circumstance, we 

would require that a SLP successfully complete 350 clock hours of supervised clinical practicum 

(or is in the process of accumulating such supervised clinical experience); perform not less than 

9 months of supervised full-time speech-language pathology services after obtaining a master’s 

or doctoral degree in speech-language pathology or a related field; and successfully complete a 

national examination in speech-language pathology approved by the Secretary. These specific 

requirements are set forth in the Act, and we believe that they are appropriate for inclusion in the 

regulations as well. 

We invite comments on this technical correction and associated change in the regulations 

at §484.4 in section VI. 

L. Proposed Technical Regulations Text Changes 

We propose to make technical corrections in §424.22(b)(1) to better align the 

recertification requirements with the Medicare Conditions of Participation (CoPs) for home 

health services. Specifically, we propose that §424.22(b)(1) would specify that recertification is 

required at least every 60 days when there is a need for continuous home health care after an 

initial 60-day episode to coincide with the CoP requirements in §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 §484.55, the comprehensive assessment must identify the patient's continuing need 

for home care and meet the patient's medical, nursing, rehabilitative, social, and discharge 

planning needs. We also propose to specify in §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 
CMS-1611-P 130 

left out of the payment regulations text. Inserting “unless” into §424.22(b) (1) realigns the 

recertification requirements with the CoPs at §484.55(d)(1). 

As outlined in the “Medicare Program; Prospective Payment System for Home Health 

Agencies” final rule published on July 3, 2000 (65 FR 41188 through 41190), a partial episode 

payment (PEP) adjustment applies to two intervening events: (1) where the beneficiary elects a 

transfer to another HHA during a 60-day episode or the patient; or (2) a discharge and return to 

the same HHA during the 60-day episode when a beneficiary reached the treatment goals in the 

plan of care. To discharge with goals met, the plan of care must be terminated with no 

anticipated need for additional home health services for the balance of the 60-day period. A PEP 

adjustment proportionally adjusts the national, standardized 60-day episode payment amount to 

reflect the length of time the beneficiary remained under the agency’s care before the intervening 

event. 

We propose to revise §424.22(b)(1)(ii) to clarify that if a beneficiary is discharged with 

goals met and/or no expectation of a return to home health care and returns to the same HHA 

during the 60-day episode a new start of care would be initiated (rather than an update to the 

comprehensive assessment) and thus the second episode would be considered a certification, not 

a recertification,32 and would be subject to §424.22(a)(1). 

We also propose to make a technical correction in §484.250(a)(1) to remove the “-C” 

after “OASIS” in §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 §484.210(e). Specifically, an HHA must submit to CMS the OASIS data 

described at §484.55(b)(1) and (d)(1) for CMS to administer the payment rate methodologies 

described in §484.215, §484.230, and §484.235 and to meet the quality reporting requirements of 

 

32 http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/OASIS/downloads/OASISConsiderationsforPPS.pdf 
CMS-1611-P 131 

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

We invite comments on these technical corrections and associated changes in the 

regulations at §424.22 and §484.250 in section VI. 

M. Survey and Enforcement Requirements for Home Health Agencies 

1. Statutory Background and Authority 

Section 4023 of the Omnibus Budget Reconciliation Act of 1987 (OBRA ’87) (Pub. L 

100-203, enacted on December 22, 1987) added subsections 1891(e) and (f) to the Act, which 

expanded the Secretary’s options to enforce federal requirements for home health agencies 

(HHAs or the agency). Sections 1861(e)(1) and (2) of the Act provide that if CMS determines 

that an HHA is not in compliance with the Medicare home health Conditions of Participation and 

the deficiencies involved either do or do not immediately jeopardize the health and safety of the 

individuals to whom the agency furnishes items and services, then we may terminate the 

provider agreement, impose an alternative sanction(s), or both. Section 1891(f)(1)(B) of the Act 

authorizes the Secretary to develop and implement appropriate procedures for appealing 

determinations relating to the imposition of alternative sanctions. 

In the November 8, 2012 Federal Register (77 FR 67068), we published in the 

“Alternative Sanctions for Home Health Agencies With Deficiencies” final rule (part 488, 

subpart J), as well as made corresponding revisions to sections §489.53 and §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). 
CMS-1611-P 132 

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 §498.40 and the option for 

waiver of a hearing. 

2. Reviewability Pursuant to Appeals 

We propose to amend §488.845 by adding a new paragraph (h) which would explain the 

reviewability of a CMP that is imposed on a HHA for noncompliance with federal participation 

requirements. The new language will provide that when administrative law judges, state hearing 

officers (or higher administrative review authorities) find that the basis for imposing a civil 

money penalty exists, as specified in §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 §488.485(b)(1)(i) through (b)(1)(iv). That is, when the administrative law judge or 

state hearing officer (or higher administrative authority) finds noncompliance supporting the 

imposition of the CMP, he or she must retain some amount of penalty consistent with the ranges 

of penalty amounts established in §488.845(b). The proposed language for HHA reviews is 

similar to the current §488.438(e) governing the scope of review for civil money penalties 

imposed against skilled nursing facilities, and is also consistent with section 1128A(d) of the Act 

which requires that specific factors be considered in determining the amount of any penalty. 

3. Technical Adjustment 

We are also proposing to amend §498.3, Scope and Applicability, by revising paragraph 

(b)(13) to include specific cross reference to proposed §488.845(h) and to revise the reference to 

section §488.740 which was a typographical error and replace it with section §488.820 which is 

the actual section that lists the sanctions available to be imposed against an HHA We are also 

amending §498.3(b)(14)(i) to include cross reference to proposed §488.845(h) which establishes 
CMS-1611-P 133 

the scope of CMP review for HHAs. Finally, we are proposing to amend §498.60 to include 

specific references to HHAs and proposed §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 are soliciting public comment the information collection requirement (ICR) related to 

the proposed changes to the home health face-to-face encounter requirements in section III.B and 

the proposed change to the therapy reassessment timeframes in section III.H. These proposed 

changes are associated with ICR approved under OMB control number as 0938-1083. 

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

 The following assumptions were used in estimating the burden for the proposed changes 

to the home health face-to-face requirements: 
CMS-1611-P 134 

TABLE 30. Home Health Face-to-Face Encounter Burden Estimate Assumptions 

# of Medicare-billing HHAs, from CY 2013 claims with 

matched OASIS assessments 

11,521 

Hourly rate of an office employee (Executive Secretaries 

and Executive Administrative Assistants, 43-6014) 

$20.54 ($15.80 x 1.30) 

Hourly rate of an administrator (General and Operations 

Managers, 11-1021) 

$64.65 ($49.73 x 1.30) 

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) website 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 §409.42(c). 

To simplify the face-to-face encounter regulations, reduce burden for HHAs and 
CMS-1611-P 135 

physicians, and to mitigate instances where physicians and HHAs unintentionally fail to comply 

with certification requirements, we propose to eliminate the narrative requirement at 

§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 nonphysician practitioner as defined in §424.22(a)(1)(v)(A), and to document the date of the 

encounter as part of the certification of eligibility. 

In eliminating the face-to-face encounter narrative requirement, we assume that there will 

be a one-time burden for the HHA to modify the certification form, which the HHA provides to 

the certifying physician. The revised certification form must allow the certifying physician to 

certify that a face-to-face patient encounter, which is related to the primary reason the patient 

requires home health services, occurred no more than 90 days prior to the home health start of 

care date or within 30 days of the start of the home health care and was performed by a physician 

or allowed NPP as defined in §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 onetime 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 
CMS-1611-P 136 

($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 are proposing to eliminate the narrative, the certifying physician will still be 

required to document the date of the face-to-face encounter as part of the certification of 

eligibility. We estimate that it would take no more than 1 minute for the certifying physician to 

document the date that the face-to-face encounter occurred (1 / 60 = 0.0166 hours). The 

estimated burden for the certifying physician to continue to document the date of the face-to-face 

encounter would be 0.0166 hours per certification or 51,405hours 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 
CMS-1611-P 137 

eliminating the face-to-face encounter narrative requirement, as proposed in section III.B. of this 

proposed rule, we estimate that burden and costs will be reduced for certifying physicians by 

206,548 hours (257,953 – 51,405) and $23,348,967 ($29,139,759 - $5,790,792), respectively for 

CY 2015. 

2. Proposed Clarification on When Documentation of a Face-to-Face Encounter is Required 

To determine when documentation of a patient’s face-to-face encounter is required under 

sections 1814(a)(2)(C) and 1835 (a)(2)(A) of the Act, we are proposing to clarify that the faceto-face encounter requirement is applicable for certifications (not recertifications), rather than 

initial episodes. A certification (versus recertification) is generally considered to be any time 

that a new start of care OASIS is completed to initiate care. We estimate that of the 6,562,856 

episodes in the CY 2012 home health Datalink file, 3,096,680 start of care assessments were 

performed on initial home health episodes. If this proposal is implemented, an additional 

830,287 episodes would require documentation of a face-to-face encounter for subsequent 

episodes that were initiated with a new start of care OASIS assessment. We estimate that it 

would take no more than 1 minute for the certifying physician to document the date that the faceto-face encounter occurred (1 / 60 = 0.0166 hours). The estimated burden for the certifying 

physician to document the date of the face-to-face encounter for each certification (any time a 

new start of care OASIS is completed to initiate care) would be 0.0166 hours or 13,783 total 

hours (0.0166 hours x 830,287 additional home health episodes). The estimated cost for the 

certifying physician to document the date of the face-to-face encounter for each additional home 

health episode would be $1.87 per certification (0.0166 x $112.91) or $1,552,637 total ($1.87 x 

830,287) for CY 2015. 
CMS-1611-P 138 

TABLE 31: Estimated One-Time Form Revision Burden for HHAs 

OMB# Requirement HHAs Responses Hr. 

Burden 

Total 

Time 

Total Dollars 

0938-1083 §424.22(a)(1)(v) 11,521 1 0.5 hours 5,761 

hours 

$245,397 

TABLE 32: Estimated Burden Reduction for Certifying Physicians 

(No Longer Drafting a Face-to-Face Encounter Narrative) 

OMB# Requirement Certifications Responses Hr. 

Burden 

Total 

Time 

Total Dollars 

0938-

1083 

§424.22(a)(1)(v) 3,096,680 1 (0.0667) (206,548) 

hours 

($23,348,967) 

TABLE 33: Estimated Burden for Certifying Physicians 

(Documenting the Date of the Face-to-Face Encounter for Additional Certifications) 

OMB# Requirement Certifications Responses Hr. 

Burden 

Total 

Time 

Total Dollars 

0938-

1083 

§424.22(a)(1)(v) 830,287 1 0.0166 13,783 

hours 

$1,552,637

In summary, all of the proposed changes to the face-to-face encounter requirements in 

section III.B of this proposed rule, including changes to §424.22(a)(1)(v), will result in an 

estimated net reduction in burden for certifying physicians of 192,765 hours or $21,796,330 (see 

Tables 32 and 33). The proposed changes to the face-to-face encounter requirements at 

§424.22(a)(1)(v) will result in a one-time burden for HHAs to revise the certification form of 

5,761 hours or $245,397 (Table 31). 

B. Proposed Change to the Therapy Reassessment Timeframes 

Currently, section 409.44(c) requires that patient's function must be initially assessed and 

periodically reassessed by a qualified therapist, of the corresponding discipline for the type of 

therapy being provided, using a method which would include objective measurement. If more 

than one discipline of therapy is being provided, a qualified therapist from each of the disciplines 

must perform the assessment and periodic reassessments. The measurement results and 

corresponding effectiveness of the therapy, or lack thereof, must be documented in the clinical 
CMS-1611-P 139 

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 §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 noncovered 

visits so that therapists can focus more on providing quality care for their patients, we propose to 

simplify §409.44(c) to require that therapy reassessments must be performed at least once every 

14 calendar days. The requirement to perform a therapy reassessment at least once every 14 

calendar days would apply to all episodes regardless of the number of therapy visits provided. 

All other requirements related to therapy reassessments would remain unchanged. A qualified 

therapist (instead of an assistant), from each therapy discipline provided, must provide the 

ordered therapy service and functionally reassess the patient using a method which would 
CMS-1611-P 140 

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 §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 §484.55 requires HHAs to document progress toward goals and the regulations at 

§409.44(c)(2)(i) already mandate that for therapy services to be covered in the home health 

setting, the services must be considered under accepted practice to be a specific, safe, and 

effective treatment for the beneficiary’s condition. The functional assessment does not require a 

special visit to the patient, but is conducted as part of a regularly scheduled therapy visit. 

Functional assessments are necessary to demonstrate progress (or the lack thereof) toward 

therapy goals, and are already part of accepted standards of clinical practice, which include 

assessing a patient’s function on an ongoing basis as part of each visit. The CY 2011 HH PPS 

final rule goes on to state that both the functional assessment and its accompanying 

documentation are already part of existing HHA practices and accepted standards of clinical 

practice. Therefore, we continue to believe that changing the required reassessment timeframes 

from every 30 days and prior to the 14th and 20th visits to every 14 calendar days does not place 

any new documentation requirements on HHAs. 

 We are revising the currently approved PRA package (OMB# 0938–1083) to describe 

these changes to the regulatory text. 

C. Submission of PRA-Related Comments 
CMS-1611-P 141 

If you comment on these information collection and recordkeeping requirements, please 

submit your comments electronically as specified in the ADDRESSES section of this proposed 

rule. 

 PRA-specific comments must be received on/by [INSERT DATE 30-DAYS AFTER 

THE DATE OF PUBLICATION IN THE FEDERAL REGISTER]. 

V. Response to Comments 

Because of the large number of public comments we normally receive on Federal 

Register documents, we are not able to acknowledge or respond to them individually. We will 

consider all comments we receive by the date and time specified in the "DATES" section of this 

preamble, and, when we proceed with a subsequent document, we will respond to the comments 

in the preamble to that document.

VI. Regulatory Impact Analysis 

A. Introduction

We have examined the impacts of this rule as required by Executive Order 12866 on 

Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving 

Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L. 104-4), Executive Order 13132 

on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of 

available regulatory alternatives and, if regulation is necessary, to select regulatory approaches 

that maximize net benefits (including potential economic, environmental, public health and 

safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the 

importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and 
CMS-1611-P 142 

of promoting flexibility. This proposed rule has been designated as economically significant 

under section 3(f)(1) of Executive Order 12866, since the aggregate transfer impacts in calendar 

year 2015 will exceed the $100 million threshold. The net transfer impacts are estimated to be 

 -$58 million. Furthermore, we estimate a net reduction of $21.55 million in calendar year 2015 

burden costs related to the certification requirements for home health agencies and associated 

physicians. Lastly, this proposed rule is a major rule under the Congressional Review Act and 

as a result, we have prepared a regulatory impact analysis (RIA) that, to the best of our ability, 

presents the costs and benefits of the rulemaking. In accordance with the provisions of Executive 

Order 12866, this regulation was reviewed by the Office of Management and Budget. 

B. Statement of Need 

Section 1895(b)(1) of the Act requires the Secretary to establish a HH PPS for all 

costs of HH services paid under Medicare. In addition, section 1895(b)(3)(A) of the Act 

requires (1) the computation of a standard prospective payment amount include all costs 

for HH services covered and paid for on a reasonable cost basis and that such amounts be 

initially based on the most recent audited cost report data available to the Secretary, and 

(2) the standardized prospective payment amount be adjusted to account for the effects of 

case-mix and wage levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the 

annual update to the standard prospective payment amounts by the HH applicable 

percentage increase. Section 1895(b)(4) of the Act governs the payment computation. 

Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the standard prospective 

payment amount to be adjusted for case-mix and geographic differences in wage levels. 

Section 1895(b)(4)(B) of the Act requires the establishment of appropriate case-mix 

adjustment factors for significant variation in costs among different units of services. 

Lastly, section 1895(b)(4)(C) of the Act requires the establishment of wage adjustment 
CMS-1611-P 143 

factors that reflect the relative level of wages, and wage-related costs applicable to HH 

services furnished in a geographic area compared to the applicable national average level. 

 Section 1895(b)(5) of the Act gives the Secretary the option to make changes to the 

payment amount otherwise paid in the case of outliers because of unusual variations in the type 

or amount of medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires HHAs to 

submit data for purposes of measuring health care quality, and links the quality data submission 

to the annual applicable percentage increase. Also, section 1886(d)(2)(D) of the Act requires 

that HH services furnished in a rural area for episodes and visits ending on or after April 1, 2010, 

and before January 1, 2016, receive an increase of 3 percent the payment amount otherwise made 

under section 1895 of the Act. 

 Section 3131(a) of the Affordable Care Act mandates that starting in CY 2014, the 

Secretary must apply an adjustment to the national, standardized 60-day episode payment rate 

and other amounts applicable under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors 

such as changes in the number of visits in an episode, the mix of services in an episode, the level 

of intensity of services in an episode, the average cost of providing care per episode, and other 

relevant factors. In addition, section 3131(a) of the Affordable Care Act mandates that rebasing 

must be phased-in over a 4-year period in equal increments, not to exceed 3.5 percent of the 

amount (or amounts) as of the date of enactment (2010) under section 1895(b)(3)(A)(i)(III) of 

the Act, and be fully implemented in CY 2017. 

C. Overall Impact 

The update set forth in this rule applies to Medicare payments under HH PPS in 

CY 2015. Accordingly, the following analysis describes the impact in CY 2015 only. We 

estimate that the net impact of the proposals in this rule is approximately $58 million in 

decreased payments to HHAs in CY 2015. We applied a wage index budget neutrality factor and 
CMS-1611-P 144 

a case-mix weights budget neutrality factor to the rates as discussed in section III.D.4. of this 

proposed rule; therefore, the estimated impact of the 2015 wage index proposed in section 

III.D.3. of this proposed rule and the recalibration of the case-mix weights for 2015 proposed in 

section III.C. of this proposed rule is zero. The -$58 million impact reflects the distributional 

effects of the 2.2 percent HH payment update percentage ($427 million increase) and the effects 

of the second year of the four-year phase-in of the rebasing adjustments to the national, 

standardized 60-day episode payment amount, the national per-visit payment rates, and the NRS 

conversion factor for an impact of -2.5 percent ($485 million decrease). The $58 million in 

decreased payments is reflected in the last column of the first row in Table 34 as a 0.3 percent 

decrease in expenditures when comparing CY 2014 payments to estimated CY 2015 payments. 

The RFA requires agencies to analyze options for regulatory relief of small entities, if a 

rule has a significant impact on a substantial number of small entities. For purposes of the RFA, 

small entities include small businesses, nonprofit organizations, and small governmental 

jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by 

nonprofit status or by having revenues of less than $7.0 million to $35.5 million in any one year. 

For the purposes of the RFA, we estimate that almost all HHAs are small entities as that term is 

used in the RFA. Individuals and states are not included in the definition of a small entity. The 

economic impact assessment is based on estimated Medicare payments (revenues) and HHS’s 

practice in interpreting the RFA is to consider effects economically ‘‘significant’’ only if greater 

than 5 percent of providers reach a threshold of 3 to 5 percent or more of total revenue or total 

costs. The majority of HHAs’ visits are Medicare-paid visits and therefore the majority of 

HHAs’ revenue consists of Medicare payments. Based on our analysis, we conclude that the 

policies proposed in this rule will not result in an estimated total impact of 3 to 5 percent or more 

on Medicare revenue for greater than 5 percent of HHAs. Therefore, the Secretary has 
CMS-1611-P 145 

determined that this proposed rule will not have a significant economic impact on a substantial 

number of small entities. Further detail is presented in Table 34, by HHA type and location. 

Executive Order 13563 specifies, to the extent practicable, agencies should assess the 

costs of cumulative regulations. However, given potential utilization pattern changes, wage 

index changes, changes to the market basket forecasts, and unknowns regarding future policy 

changes, we believe it is neither practicable nor appropriate to forecast the cumulative impact of 

the rebasing adjustments on Medicare payments to HHAs for future years at this time. Changes 

to the Medicare program may continue to be made as a result of the Affordable Care Act, or new 

statutory provisions. Although these changes may not be specific to the HH PPS, the nature of 

the Medicare program is such that the changes may interact, and the complexity of the 

interaction of these changes would make it difficult to predict accurately the full scope of the 

impact upon HHAs for future years beyond CY 2015. We note that the rebasing adjustments to 

the national, standardized 60-day episode payment rate and the national per-visit rates are capped 

at the statutory limit of 3.5 percent of the CY 2010 amounts (as described in the preamble in 

section II.C. of this proposed rule) for each year, 2014 through 2017. The NRS rebasing 

adjustment will be -2.82 percent in each year, 2014 through 2017. 

In addition, section 1102(b) of the Act requires us to prepare a RIA if a rule may have a 

significant impact on the operations of a substantial number of small rural hospitals. This 

analysis must conform to the provisions of section 603 of RFA. For purposes of section 1102(b) 

of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan 

statistical area and has fewer than 100 beds. This proposed rule applies to HHAs. Therefore, the 

Secretary has determined that this rule will not have a significant economic impact on the 

operations of small rural hospitals. 

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that 
CMS-1611-P 146 

agencies assess anticipated costs and benefits before issuing any rule whose mandates require 

spending in any one year of $100 million in 1995 dollars, updated annually for inflation. In 

2014, that threshold is approximately $141 million. This proposed rule is not anticipated to have 

an effect on state, local, or tribal governments in the aggregate, or by the private sector, of $141 

million or more in CY 2015. 

D. Detailed Economic Analysis 

 This proposed rule sets forth updates for CY 2015 to the HH PPS rates contained in the 

CY 2014 HH PPS final rule (78 FR 72304 through 72308). The impact analysis of this proposed 

rule presents the estimated expenditure effects of policy changes proposed in this rule. We use 

the latest data and best analysis available, but we do not make adjustments for future changes in 

such variables as number of visits or case-mix. 

This analysis incorporates the latest estimates of growth in service use and payments 

under the Medicare HH benefit, primarily on preliminary Medicare claims from 2013. We note 

that certain events may combine to limit the scope or accuracy of our impact analysis, because 

such an analysis is future-oriented and, thus, susceptible to errors resulting from other changes in 

the impact time period assessed. Some examples of such possible events are newly-legislated 

general Medicare program funding changes made by the Congress, or changes specifically 

related to HHAs. In addition, changes to the Medicare program may continue to be made as a 

result of the Affordable Care Act, or new statutory provisions. Although these changes may not 

be specific to the HH PPS, the nature of the Medicare program is such that the changes may 

interact, and the complexity of the interaction of these changes could make it difficult to predict 

accurately the full scope of the impact upon HHAs. 

Table 34 represents how HHA revenues are likely to be affected by the policy changes 

proposed in this rule. For this analysis, we used an analytic file with linked CY 2013 HH claims 
CMS-1611-P 147 

data (as of December 31, 2013) for dates of service that ended on or before December 31, 2013, 

and OASIS assessments. The first column of Table 34 classifies HHAs according to a number of 

characteristics including provider type, geographic region, and urban and rural locations. The 

third column shows the payment effects of proposed CY 2015 wage index. The fourth column 

shows the payment effects of the proposed CY 2015 case-mix weights. The fifth column shows 

the effects of the rebasing adjustments to the national, standardized 60-day episode payment rate, 

the national per-visit payment rates, and NRS conversion factor. The sixth column shows the 

effects of the CY 2015 home health payment update percentage (the home health market basket 

update adjusted for multifactor productivity as discussed in section III.D.1. of this proposed 

rule). The last column shows the payment effects of all the proposed policies. 

Overall, HHAs are anticipated to experience a 0.3 percent decrease in payment in CY 

2015, with freestanding HHAs anticipated to experience a 0.3 percent decrease in payments 

while facility-based HHAs and non-profit HHAs are anticipated to experience a 0.4 percent and 

a 0.6 percent increase in payments, respectively. Government-owned HHAs are anticipated to 

experience a 0.3 percent decrease in payments and proprietary HHAs are anticipated to 

experience a 0.6 percent decrease in payments. Rural HHAs are anticipated to experience a 

decrease in payments of 0.5 percent with rural freestanding government-owned HHAs and rural 

facility-based proprietary HHAs both estimated to experience a -1.1 percent decrease in 

payments. In contrast, rural facility-based non-profit HHAs are estimated to experience a 0.5 

percent increase in payments. Urban HHAs are anticipated to experience a decrease in payments 

of 0.2 percent. Urban freestanding proprietary HHAs estimated to experience a 0.5 percent 

decrease in payments, whereas urban freestanding and facility-based non-profit HHAs are 

estimated to experience a 0.6 percent increase in payments for CY 2015. The overall impact in 

the South is estimated to be a 0.9 percent decrease in payments whereas the overall impact in the 
CMS-1611-P 148 

North is estimated to be a 1.1 percent increase in payments. The West South Central census 

region is estimated to receive a 2.4 percent decrease in payments for CY 2015; however, in 

contrast, the New England census region is estimated to receive a 1.5 percent increase in 

payments for CY 2015. Finally, HHAs with less than 100 first episodes are anticipated to 

experience a 0.6 percent decrease in payments compared to a 0.00 percent decrease in payments 

in CY 2015 for HHAs with 1,000 or more first episodes. A substantial amount of the variation in 

the estimated impacts of the proposals in this proposed rule in different areas of the country can 

be attributed to variations in the CY 2015 wage index used to adjust payments under the HH PPS 

and to the effects of the recalibration of the case-mix weights. Instances where the impact, due 

to the rebasing adjustments, is less than others can be attributed to differences in the incidence of 

outlier payments and LUPA episodes, which are paid using the national per-visit payment rates 

that are subject to payment increases due to the rebasing adjustments. We note that some 

individual HHAs within the same group may experience different impacts on payments than 

others due to the distributional impact of the CY 2015 wage index, the extent to which HHAs 

had episodes in case-mix groups where the case-mix weight decreased for CY 2015 relative to 

CY 2014, and the degree of Medicare utilization. 

For CY 2015, the average impact for all HHAs due to the effects of rebasing is an 

estimated 2.5 percent decrease in payments. The overall impact for all HHAs as a result of this 

proposed rule is a decrease of approximately 0.3 percent in estimated total payments from CY 

2014 to CY 2015. 
CMS-1611-P 149 

TABLE 34: Estimated Home Health Agency Impacts by Facility Type and Area of the 

Country, CY 2015 

Number 

of 

Agencies 

Proposed 

CY 2015 

Wage 

Index1

CY 2015 

Case-Mix 

Weights2 Rebasing3

CY 2015 

HH 

Payment 

Update 

Percentage4

Impact of 

All CY 2015 

Policies 

All Agencies 11,521 0.0% 0.0% -2.5% 2.2% -0.3% 

Facility Type and Control 

Free-Standing/Other Vol/NP 1,031 0.4% 0.3% -2.3% 2.2% 0.6% 

Free-Standing/Other Proprietary 8,957 -0.1% -0.1% -2.5% 2.2% -0.6% 

Free-Standing/Other Government 398 0.1% -0.3% -2.4% 2.2% -0.4% 

Facility-Based Vol/NP 788 0.2% 0.6% -2.4% 2.2% 0.6% 

Facility-Based Proprietary 113 -0.4% 0.5% -2.5% 2.2% -0.2% 

Facility-Based Government 234 -0.1% 0.2% -2.4% 2.2% -0.2% 

Subtotal: Freestanding 10,386 0.0% -0.1% -2.5% 2.2% -0.3% 

Subtotal: Facility-based 1,135 0.2% 0.5% -2.4% 2.2% 0.4% 

Subtotal: Vol/NP 1,819 0.3% 0.4% -2.4% 2.2% 0.6% 

Subtotal: Proprietary 9,070 -0.1% -0.1% -2.5% 2.2% -0.6% 

Subtotal: Government 632 0.0% -0.1% -2.4% 2.2% -0.3% 

Facility Type and Control: Rural 

Free-Standing/Other Vol/NP 193 -0.3% 0.1% -2.4% 2.2% -0.4% 

Free-Standing/Other Proprietary 136 0.4% -0.1% -2.5% 2.2% 0.0% 

Free-Standing/Other Government 459 0.0% -0.9% -2.4% 2.2% -1.1% 

Facility-Based Vol/NP 255 0.4% 0.4% -2.5% 2.2% 0.5% 

Facility-Based Proprietary 31 0.0% -0.8% -2.5% 2.2% -1.1% 

Facility-Based Government 138 0.1% -0.1% -2.4% 2.2% -0.1% 

Facility Type and Control: Urban 

Free-Standing/Other Vol/NP 891 0.4% 0.4% -2.3% 2.2% 0.6% 

Free-Standing/Other Proprietary 8,644 -0.1% -0.1% -2.5% 2.2% -0.5% 

Free-Standing/Other Government 158 0.3% -0.3% -2.5% 2.2% -0.3% 

Facility-Based Vol/NP 533 0.2% 0.6% -2.4% 2.2% 0.6% 

Facility-Based Proprietary 82 -0.5% 0.7% -2.4% 2.2% 0.0% 

Facility-Based Government 96 -0.2% 0.3% -2.5% 2.2% -0.2% 

Facility Location: Urban or Rural 0.0% 

Rural 1,117 0.1% -0.3% -2.4% 2.2% -0.5% 

Urban 10,404 -0.0% 0.0% -2.5% 2.2% -0.2% 

Facility Location: Region of the 

Country 

North 857 0.7% 0.4% -2.2% 2.2% 1.1% 

Midwest 3,095 -0.1% 0.5% -2.5% 2.2% 0.1% 

South 5,613 -0.3% -0.4% -2.5% 2.2% -0.9% 

West 1,916 0.3% 0.2% -2.4% 2.2% 0.3% 

Other 40 0.2% -0.4% -2.5% 2.2% -0.5% 
CMS-1611-P 150 

 

Number 

of 

Agencies 

Proposed 

CY 2015 

Wage 

Index1

CY 2015 

Case-Mix 

Weights2 Rebasing3

CY 2015 

HH 

Payment 

Update 

Percentage4

Impact of 

All CY 2015 

Policies 

Facility Location: Region of the 

Country (Census Region) 

New England 336 1.1% 0.5% -2.3% 2.2% 1.5% 

Mid Atlantic 521 0.4% 0.4% -2.2% 2.2% 0.8% 

East North Central 2,358 -0.1% 0.4% -2.5% 2.2% -0.1% 

West North Central 737 0.2% 0.9% -2.5% 2.2% 0.8% 

South Atlantic 2,028 -0.3% 1.1% -2.5% 2.2% 0.5% 

East South Central 438 -0.7% -0.3% -2.6% 2.2% -1.4% 

West South Central 3,147 -0.2% -2.0% -2.5% 2.2% -2.4% 

Mountain 679 -0.1% 0.9% -2.4% 2.2% 0.7% 

Pacific 1,237 0.5% -0.1% -2.4% 2.2% 0.1% 

Facility Size (Number of 1st 

Episodes) 

< 100 episodes 3,126 -0.2% -0.2% -2.5% 2.2% -0.6% 

100 to 249 2,879 -0.2% -0.2% -2.5% 2.2% -0.7% 

250 to 499 2,453 -0.2% -0.2% -2.5% 2.2% -0.6% 

500 to 999 1,725 -0.1% 0.0% -2.5% 2.2% -0.4% 

1,000 or More 1,338 0.1% 0.1% -2.4% 2.2% 0.0% 

Source: CY 2013 Medicare claims data for episodes ending on or before December 31, 2013 (as of December 31, 2013) for 

which we had a linked OASIS assessment. 

1 The impact of the proposed CY 2015 home health wage index reflects the transition to new CBSA designations as outlined in 

section III.D.3 of this proposed rule offset by the wage index budget neutrality factor described in section III.D.4 of this proposed 

rule. 

2 The impact of the proposed CY 2015 home health case-mix weights reflects the recalibration of the case-mix weights as 

outlined in section III.C of this proposed rule offset by the case-mix weights budget neutrality factor described in section III.D.4 

of this proposed rule. 

3

 The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate (-2.75 

percent after the CY 2014 payment rate was adjusted for the wage index and case-mix weight budget neutrality factors), the 

national per-visit rates (+3.26 percent), and the NRS conversion factor (-2.82%). The estimated impact of the NRS conversion 

factor rebasing adjustment is an overall -0.01 percent decrease in estimated payments to HHAs. The overall impact of all the 

rebasing adjustments finalized in the CY 2014 HH PPS proposed rule and implemented for CY 2015 are lower than the overall 

impact in the CY 2014 due to an increase in estimated outlier payments. As the national per-visit rates increase and the national, 

standardized 60-day episode rate decreases more episodes qualify for outlier payments. In addition, we decreased the fixed-dollar 

loss (FDL) ratio from 0.67 to 0.45 effective CY 2013 in order to qualify more episodes as outliers and we use CY 2013 

utilization in simulating impacts for the CY 2015 HH PPS proposed rule. 4

 The CY 2015 home health payment update percentage reflects the home health market basket update of 2.6 percent, reduced by 

a 0.4 percentage point multifactor productivity (MFP) adjustment as required under section 1895(b)(3)(B)(vi)(I) of the Act, as 

described in section III.D.1 of this proposed rule. 

REGION KEY: 

New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; 

Middle Atlantic=Pennsylvania, New Jersey, New York; South Atlantic=Delaware, District of 

Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West 

Virginia; East North Central=Illinois, Indiana, Michigan, Ohio, Wisconsin; East South 

Central=Alabama, Kentucky, Mississippi, Tennessee; West North Central=Iowa, Kansas, 

Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas, 

Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New 

Mexico, Utah, Wyoming; Pacific=Alaska, California, Hawaii, Oregon, Washington; 

Outlying=Guam, Puerto Rico, Virgin Islands 
CMS-1611-P 151 

E. Alternatives Considered 

In recalibrating the HH PPS case-mix weights for CY 2015, as proposed in section III.C. 

of this proposed rule, we considered adjusting the payment rates in section III.D.4 to make the 

recalibration budget neutral only with regards to our estimate of real case-mix growth between 

CY 2012 and the CY 2013. Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to 

implement payment reductions for nominal case-mix growth—changes in case-mix that are 

unrelated to actual changes in patient health status. If we were to implement the recalibration of 

the case-mix weights outlined in section III.C in a budget neutral manner only with regards to 

our estimate of real case-mix growth between CY 2012 and CY 2013, we estimate that the 

aggregate impact would be a net decrease of $410 million in payments to HHAs, resulting from a 

$485 million decrease due to the second year of the Affordable Care Act mandated rebasing 

adjustments, a $427 million increase due to the home health payment update percentage, and a 

$350 million decrease (-1.8 percent) due to only making the case-mix weights recalibration 

budget neutral with regards to our estimate of real increases in patient severity. However, 

instead of implementing a case-mix budget neutrality factor that only reflects our estimate of real 

increases in patient severity; we plan to recalibrate the case-mix weights in a fully budget-neutral 

manner and continue to monitor case-mix growth (both real and nominal case-mix growth) as 

more data become available. 

With regard to the proposal discussed in section III.D.3 of this proposed rule related to 

our adoption of the revised OMB delineations for purposes of calculating the wage index, we 

believe implementing the new OMB delineations would result in wage index values being more 

representative of the actual costs of labor in a given area. We considered having no transition 

period and fully implementing the proposed new OMB delineations beginning in CY 2015. This 

would mean that we would adopt the revised OMB delineations on January 1, 2015. However, 
CMS-1611-P 152 

this would not provide any time for HHAs to adapt to the new OMB delineations. We believe 

that it would be appropriate to provide for a transition period to mitigate the potential for 

resulting short-term instability and negative impact on certain HHAs, and to provide time for 

HHAs to adjust to their new labor market area delineations. In determining an appropriate 

transition methodology, consistent with the objectives set forth in the FY 2006 SNF PPS final 

rule (70 FR 45041), we first considered transitioning the wage index to the revised OMB 

delineations over a number of years in order minimize the impact of the proposed wage index 

changes in a given year. However, we also believe this must be balanced against the need to 

ensure the most accurate payments possible, which argues for a faster transition to the revised 

OMB delineations. 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. As such, we believe that utilizing a one-year (rather than a multiple 

year) transition with a blended wage index in CY 2015 would strike the best balance. Second, 

we considered what type of blend would be appropriate for purposes of the transition wage 

index. We are proposing that HHAs would receive a one-year blended wage index using 

50 percent of their CY 2015 wage index based on the proposed new OMB delineations and 

50 percent of their CY 2015 wage index based on the FY 2014 OMB delineations. We believe 

that a 50/50 blend would best mitigate the negative payment impacts associated with the 

implementation of the proposed new OMB delineations. While we considered alternatives to the 

50/50 blend, we believe this type of split balances the increases and decreases in wage index 

values associated with this proposal, as well as provides a readily understandable calculation for 

HHAs. 

Next, we considered whether or not the blended wage index should be used for all HHAs 

or for only a subset of HHAs, such as those HHAs that would experience a decrease in their 
CMS-1611-P 153 

respective wage index values due to implementation of the revised OMB delineations. As 

required in section 1895(b)(3) of the Act, the wage index adjustment must be implemented in a 

budget-neutral manner. As such, if we were to apply the transition policy only to those HHAs 

that would experience a decrease in their respective wage index values due to implementation of 

the revised OMB delineations, the wage index budget neutrality factor, discussed in section 

III.D.4, would result in reduced base rates for all HHAs as compared to the budget neutrality 

factor that results from applying the blended wage index to all HHAs. 

For the reasons discussed above, we believe that our proposal to use a one-year transition 

with a blended wage index in CY 2015 appropriately balances the interests of all HHAs and 

would best achieve our objective of providing relief to negatively impacted HHAs. 

Section 3131(a) of the Affordable Care Act mandates that starting in CY 2014, the 

Secretary must apply an adjustment to the national, standardized 60-day episode payment rate 

and other amounts applicable under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors 

such as changes in the number of visits in an episode, the mix of services in an episode, the level 

of intensity of services in an episode, the average cost of providing care per episode, and other 

relevant factors. In addition, section 3131(a) of the Affordable Care Act mandates that rebasing 

must be phased-in over a 4-year period in equal increments, not to exceed 3.5 percent of the 

amount (or amounts) as of the date of enactment (2010) under section 1895(b)(3)(A)(i)(III) of 

the Act, and be fully implemented in CY 2017. Therefore, in the CY 2014 HH PPS final rule (78 

FR 77256), we finalized rebasing adjustments to the national, standardized 60-day episode 

payment amount, the national per-visit rates and the NRS conversion factor. As we noted in the 

CY 2014 HH PPS final rule, because section 3131(a) of the Affordable Care Act requires a four 

year phase-in of rebasing, in equal increments, to start in CY 2014 and be fully implemented in 

CY 2017, we do not have the discretion to delay, change, or eliminate the rebasing adjustments 
CMS-1611-P 154 

once we have determined that rebasing is necessary (78 FR 72283). 

Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts 

for CY 2015 be increased by a factor equal to the applicable HH market basket update for those 

HHAs that submit quality data as required by the Secretary. For CY 2015, section 3401(e) of the 

Affordable Care Act, requires that, in CY 2015 (and in subsequent calendar years), the market 

basket update under the HHA prospective payment system, as described in section 1895(b)(3)(B) 

of the Act, be annually adjusted by changes in economy-wide productivity. Beginning in CY 

2015, section 1895(b)(3)(B)(vi)(I) of the Act, as amended by section 3401(e) of the Affordable 

Care Act, requires the application of the productivity adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act to the HHA PPS for CY 2015 and each subsequent CY. The -

0.4 percentage point productivity adjustment to the proposed CY 2015 home health market 

basket update (2.6 percent), is discussed in the preamble of this rule and is not discretionary as it 

is a requirement in section 1895(b)(3)(B)(vi)(I) of the Act (as amended by the Affordable Care 

Act). 

We invite comments on the alternatives discussed in this analysis. 

F. Accounting Statement and Table 

As required by OMB Circular A-4 (available at 

http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 35, we have prepared an 

accounting statement showing the classification of the transfers and costs associated with the 

provisions of this proposed rule. Table 35 provides our best estimate of the decrease in Medicare 

payments under the HH PPS as a result of the changes presented in this proposed rule. Table 35 

also reflects the estimated change in costs and burden for certifying physicians and HHAs as a 

result of the proposed changes to the face-to-face encounter requirements in section III.B. We 

estimate a net reduction in burden for certifying physicians of 192,765 hours or $21,796,330 (see 
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section IV of this proposed rule). In addition, Table 35 reflects our estimate of a one-time 

burden for HHAs to revise the certification form of 5,761 hours or $245,397 as described in 

section IV. of this proposed rule. 

TABLE 35: Accounting Statement: Classification of Estimated Transfers and Costs, from 

the CYs 2014 to 2015* 

Category Transfers 

Annualized Monetized Transfers -$58 million 

From Whom to Whom? Federal Government to HHAs 

Category Costs 

Annualized Monetized Net 

Reduction in Burden for Physicians 

Certifying Patient Eligibility for 

Home Health Services & HHAs for 

Certification Form Revision 

-$21.55 million 

*The estimates reflect 2014 dollars. 

G. Conclusion 

In conclusion, we estimate that the net impact of the proposals in this rule is a decrease in 

Medicare payments to HHAs of $58 million for CY 2015. The $58 million decrease in estimated 

payments for CY 2015 reflects the distributional effects of the 2.2 percent CY 2015 HH payment 

update percentage ($427 million increase) and the second year of the 4-year phase-in of the 

rebasing adjustments required by section 3131(a) of the Affordable Care Act ($485 million 

decrease). Also, starting in CY 2015, certifying physicians are estimated to incur a net reduction 

in burden costs of $21,796,330 and HHAs are expected to incur a one-time increase in burden 

costs to revise the certification form of $245,397 as a result of the proposal to eliminate the faceto-face encounter narrative requirement. This analysis, together with the remainder of this 

preamble, provides an initial Regulatory Flexibility Analysis. 

VII. Federalism Analysis 

 Executive Order 13132 on Federalism (August 4, 1999) establishes certain requirements 

that an agency must meet when it promulgates a final rule that imposes substantial direct 
CMS-1611-P 156 

requirement costs on state and local governments, preempts state law, or otherwise has 

Federalism implications. We have reviewed this proposed rule under the threshold criteria of 

Executive Order 13132, Federalism, and have determined that it will not have substantial direct 

effects on the rights, roles, and responsibilities of states, local or tribal governments. 

 
CMS-1611-P 157 

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 

 
CMS-1611-P 158 

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services 

proposes to amend 42 CFR chapter IV as set forth below: 

PART 409—HOSPITAL INSURANCE BENEFITS 

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

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

1395hh). 

2. Section 409.44 is amended by— 

 A. Removing “intermediary’s” from paragraph (a) and adding “Medicare Administrative 

Contractor’s” in its place. 

 B. Removing “30” from paragraph (c)(2)(i)(B) adding “14 calendar” in its place each 

time it appears. 

 C. Removing paragraphs (c)(2)(i)(C) and (D). 

 D. Redesignating paragraphs (c)(2)(i)(E) through (H) as paragraphs (c)(2)(i)(C) through 

(F). 

 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. 

 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. 

 G. Removing “§409.44(c)(2)(i)(H) of this section.” from newly redesignated paragraph 

(c)(2)(i)(C)(3) and adding “§409.44(c)(2)(i)(F) of this section.” in its place. 

PART 424—CONDITIONS FOR MEDICARE PAYMENT 

3. The authority citation for part 424 continues to read as follows: 
CMS-1611-P 159 

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

1395hh). 

4. Section 424.22 is amended by— 

A. Revising paragraphs (a) and (b) and adding new paragraph (c). 

B. Removing “(d)(i)” from paragraph (d)(2) and adding “(d)(1)” in its place. 

The revisions read as follows: 

§424.22 Requirements for home health services. 

 * * * * * 

(a) Certification--(1) Content of certification. As a condition for payment of home health 

services under Medicare Part A or Medicare Part B, a physician must certify the patient’s 

eligibility for the home health benefit, as outlined in 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, 

as follows in paragraphs (a)(1)(i) through (v) of this section. The patient’s medical record, as 

specified in paragraph (c) of this section, must support the certification of eligibility as outlined 

in paragraph (a)(1)(i) through (v) of this section. 

(i) The individual needs or needed intermittent skilled nursing care, or physical therapy or 

speech-language pathology services as defined in §409.42(c) of this chapter. If a patient's 

underlying condition or complication requires a registered nurse to ensure that essential nonskilled 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. 
CMS-1611-P 160 

(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. 
CMS-1611-P 161 

(4) A certified nurse midwife (as defined in section 1861(gg)of the Act) as authorized by 

State law, under the supervision of the certifying physician or under the supervision of an acute 

or post-acute care physician with privileges who cared for the patient in the acute or post-acute 

care facility from which the patient was directly admitted to home health. 

(5) A physician assistant (as defined in section 1861(aa)(5) of the Act) under the 

supervision of the certifying physician or under the supervision of an acute or post-acute care 

physician with privileges who cared for the patient in the acute or post-acute care facility from 

which the patient was directly admitted to home health. 

(B) The face-to-face patient encounter may occur through telehealth, in compliance with 

Section 1834(m) of the Act and subject to the list of payable Medicare telehealth services 

established by the applicable physician fee schedule regulation. 

(1) Timing and signature. The certification of need for home health services must be 

obtained at the time the plan of care is established or as soon thereafter as possible and must be 

signed and dated by the physician who establishes the plan. 

(2) [Reserved] 

(b) Recertification—(1) Timing and signature of recertification. Recertification is 

required at least every 60 days when there is a need for continuous home health care after an 

initial 60-day episode. Recertification should occur at the time the plan of care is reviewed, and 

must be signed and dated by the physician who reviews the plan of care. Recertification is 

required at least every 60 days unless there is a— 

(i) Beneficiary elected transfer; or 

(ii) Discharge with goals met and/or no expectation of a return to home health care. 

(2) Content and basis of recertification. The recertification statement must indicate the 

continuing need for services and estimate how much longer the services will be required. Need 
CMS-1611-P 162 

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 nonskilled care is achieving its purpose, and necessitates a registered nurse be involved in the 

development, management, and evaluation of a patient's care plan, the physician will include a 

brief narrative describing the clinical justification of this need. If the narrative is part of the 

recertification form, then the narrative must be located immediately prior to the physician's 

signature. If the narrative exists as an addendum to the recertification form, in addition to the 

physician's signature on the recertification form, the physician must sign immediately following 

the narrative in the addendum. 

(c) Determining patient eligibility for Medicare home health services. In determining 

whether a patient is or was eligible to receive services under the Medicare home health benefit at 

the start of home health care, only the medical record for the patient from the certifying 

physician or the acute/post-acute care facility (if the patient in that setting was directly admitted 

to home health) used to support the physician’s certification of patient eligibility, as described in 

paragraphs (a)(1) and (b) of this section, will be reviewed. If the patient’s medical record used in 

certifying eligibility is not sufficient to demonstrate that the patient is or was eligible to receive 

services under the Medicare home health benefit, payment will not be rendered for home health 

services provided. 

 * * * * * 

PART 484 –HOME HEALTH SERVICES 

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. 
CMS-1611-P 163 

6. Section 484.4 is amended by revising the definition of “speech-language pathologist” 

to read as follows: 

§484.4 Personnel qualifications. 

* * * * * 

Speech-language pathologist. A person who has a master’s or doctoral degree in speechlanguage 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. 

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

§484.250 Patient assessment data. 

(a) * * * 

(1) The OASIS data described at §484.55(b)(1) and (d)(1) of this part for CMS to 

administer the payment rate methodologies described in §§484.215, 484.230, and 484.235 of this 

subpart, and to meet the quality reporting requirements of section 1895(b)(3)(B)(v) of the Act. 

 * * * * * 
CMS-1611-P 164 

PART 488 – SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES 

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. 

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

§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 

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, 1320a7j, and 1395hh). 

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

follows: 
CMS-1611-P 165 

§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 

§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 

§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 

§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 §488.845(h) of this chapter); or 

* * * * * 

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

follows: 

§498.60 Conduct of hearing. 

* * * * * 

(c) * * * 

(1) The scope of review is as specified in §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. 
CMS-1611-P 

Dated: June 16, 2014. 

 ______________________ 

 Marilyn Tavenner, 

 Administrator, 

Centers for Medicare & 

Medicaid Services. 

Approved: June 19, 2014. 

 _____________________ 

 Sylvia M. Burwell, 

Secretary, 

 Department of Health and Human Services. 

BILLING CODE 4120-01-P

[FR Doc. 2014-15736 Filed 07/01/2014 at 4:15 pm; Publication Date: 07/07/2014]