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 Ho me Health Prospective Payment System (HH PPS) rates, including the national, standard ized 60-day episode payment rates, the national per-visit rates, and the non-r outine medical supply (NRS) convers ion factor under the Medicare prospective payment system for home health ag encies (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 potentia l impacts of the rebasing adjustments and the Affordable Care Act mandated face-to-face encount er 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 qua lity reporting program requirements; changes to simplify the therapy reassessment timeframes; a revision to the Speech-Language Pathology (SLP) personnel qualifications; minor technical re gulations text changes; and limitations on the reviewability of the civil monetary penalty provisi ons. Finally, this proposed rule also discussesCMS-16

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t heCMS-1611-P 3 Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. If you prefer, y ou 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 Hube rt 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 reta in a proof of filing by st amping 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 deliveryCMS-1611-P 4 may be delayed and received after the comment period. For information on viewing public co mments, 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 informati on about the HH PPS Grouper, ICD-9-CM coding, and ICD-10-CM Conversion. Kristine Chu, (410) 786-8953, for in formation about rebasing and the HH PPS case-mix weights. Hudson Osgood, (410) 786-7897, for informa tion about the HH market basket. Caroline Gallaher, (410) 786-8705, for informa tion about the HH quality reporting program. Lori Teichman, (410) 786-6684, fo r information about HHCAHPS. Peggye Wilkerson, (410) 786-4857, for information about survey and enforcement requirements for HHAs. Robert Flemming, (410) 786-4830, for info rmation about the HH VBP model. Danielle Shearer, (410) 786-6617, for inform ation 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, includi ng any personally identif iable 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 instruct ions on that website to view public comments. Comments received timely will also be av ailable for public inspection as they are received, generally beginning approximately 3 w eeks after publication of a document, at theCMS-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 vi ew 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 – Affo rdable 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 Regul atory Requirements 2. Proposed Changes to the Face-to-Face En counter Narrative Requirement and NonCoverage of Associated Physician Ce rtification/Re-Certification Claims 3. Proposed Clarification on When Document ation of a Face-to-Face Encounter is Required C. Proposed Recalibration of the HH PPS Case-Mix WeightsCMS-1611-P 6 D. CY 2015 Rate Update 1. Proposed CY 2015 Home Health Market Basket Update 2. Home Health Care Qualit y 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, Standard ized 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 S upply Conversion F actor and Relative Weights f. Rural Add-On E. Payments for High-Cost Outliers under the HH PPS 1. BackgroundCMS-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 Classi fication 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 Backgr ound 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 th eir corresponding terms in alphabetical order below: ACH LOS Acute Care Hospital Length of Stay ADL Activities of Daily LivingCMS-1611-P 8 APU Annual Payment Update BBA Balanced Budget Act of 1997, Pub. L. 105-33 BBRA Medicare, Medicaid, and SCHIP Bala nced 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, P ub. 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 CategoriesCMS-1611-P 9 HCIS Health Care Information System HH Home Health HHA Home Health Agency HHCAHPS Home Health Care Consumer Assessme nt of Healthcare Pr oviders 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 Di seases, Ninth Revision, Clinical Modification ICD-10-CM International Classification of Di seases, Tenth Revision, Clinical Modification IH Inpatient Hospitalization IRF Inpatient Reha bilitation Facility LTCH Long-Term Care Hospital LUPA Low-Utilization Payment Adjustment MEPS Medical Expend itures Panel Survey MMA Medicare Prescription Drug, Improve ment, 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 Reconciliati on Act of 1987, Pub. L. 100-2-3, enacted December 22, 1987CMS-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 Flexibil ity 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 paym ent rates for HHAs for calendar year (CY) 2015, as required under section 1895(b) of the Social Securi ty Act (the Act). This would reflect the second year of the four-year phase-in of the rebasing adjustme nts to the national, standardized 60-day episode payment rate, the na tional per-visit rates, and the NRS conversion factor finalized in the CY 2014 HH PPS final ru le (78 FR 72256), required under section 3131(a) of the Patient Protection and Affordable Ca re Act of 2010 (Pub. L 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L 111-152) (co llectively referred to as the “Affordable Care Act”). Updates to pa yment rates under the HH PPS would also include a proposal to change the home h ealth wage index to incorporat e the new Office of Management and Budget (OMB) core-based stat istical area (CBSA) definitions and updates to the payment rates by the home health payment update per centage, which would reflect the productivity adjustment mandated by 3401(e) of the Affordable Care Act. This proposed rule also disc usses: our efforts to monitor the potential impacts of the Affordable Care Act mandated rebasing adjustme nts and the face-to-face encounter requirement (sections 3131(a) and 6407, respec tively, 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 Prot ecting Access to Medicare Act, P.L. 113-93 (“PAMA”)). This proposed ru le also proposes changes to simplify the regulations at §424.22(a)(1)(v) that govern the face-to-face en counter 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 programCMS-1611-P 12 requirements under section 1895(b) (3)(B)(v)(II) of the Act; change s 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 mi nor technical regulatio ns 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 ci vil 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 Ac t 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 reba sing adjustments to the national, standardized 60-day episode payment amount, the national per-v isit rates and the NRS conversion factor in section III.D.4. The rebasing adjustments for CY 2015 would reduce the na tional, 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 c onversion factor by 2.82 percent. This proposed rule also discusses our effo rts to monitor the poten tial 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 woul d propose changes to the face-to-face encounter narrative requirement. In addition, we are prop osing that associated physician claims for certification/re-certification of elig ibility (patient not present) not be eligible to be paid when aCMS-1611-P 13 patient does not meet home health eligibility crit eria. We would also cl arify 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 hom e health payment update percentage of 2.2 percent (using the 2010-base d 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 ex isting core-based statistical ar ea (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 ch anges 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 es tablishment 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-b etween 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 hom e health claims identified with skilled nursing visits likely done for the sole purpose of insu lin 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 proposin g that therapy reassessments ar e to occur every 14 calendar days rather than before the 14th and 20th visits and once ever y 30 calendar days. Finally, inCMS-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 fo r SLP; in section III.K we are proposing minor technical regulations text cha nges; and in section III.L we ar e proposing to place limitations on the reviewability of the civil monetary pena lty 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 PP S 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 Secur ity Act (the Act), enti tled "Prospective Payment For Home Health Services." S ection 1895(b)(1) of the Act require s the Secretary to establish a HH PPS for all costs of HH serv ices paid under Medicare.CMS-1611-P 15 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 in itially based on the most recent audited cost report data available to the Secr etary; 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 ad justed for case-mix and geographic differences in wage levels. Section 1895(b)(4 )(B) of the Act requ ires the establishmen t of an appropriate case-mix change adjustment factor for significa nt variation in costs among different units of services. Similarly, section 1895(b)(4)(C) of the Act requ ires 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 a pplicable national average level. Under section 1895(b)(4)(C) of the Act, the wage-adjustment f actors used by the Secretary may be the factors used under section 1886(d)(3)(E) of the Act. Section 1895(b)(5) of the Ac t gives the Secretary the opt ion 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 tota l outlier payments in a given year would not exceed 2.5 percent of total paymen ts 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 th e new HH PPS for HH serv ices as required by section 4603 of the BBA, as subsequently amended by section 5101 of the Omnibus Consolidated and Emergency Supplemental Appr opriations 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 Budg et Refinement Act (BBRA) of 1999, (Pub. L. 106-113, enacted November 29, 1999). The require ments include the implementation of a HH PPS for HH services, consolidated billing requirements, and a numbe r 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 servi ces 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 Reduc tion 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 Ca re Act is the amendment to s ection 421(a) of the MedicareCMS-1611-P 17 Prescription Drug, Improvement, and Mode rnization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December 8, 2003) as amended by s ection 5201(b) of the DRA. The amended section 421(a) of the MMA now requires, for HH se rvices furnished in a ru ral area (as defined in section 1886(d)(2)(D) of th e Act) with respect to episodes an d visits ending on or after April 1, 2010, and before January 1, 2016, that the Secretar y 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 unde r the HH PPS on the basis of a national standardized 60-day episode paymen t rate that is adjusted for the applicable case-mix and wage index. The national stan dardized 60-day episode rate includ es the six HH disciplines (skilled nursing, HH aide, physical therapy, speech-langu age pathology, occupational therapy, and medical social services). Payment for non-ro utine 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 us es a 153-category case-mix classification system to assign patients to a home health resource group (HHRG). The clin ical 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 pa tient in a particular HHRG. Each HHRG has an associated case-mi x weight which is used in calculating the payment for an episode. For episodes with four or fewer visits, Medi care 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 standardi zed 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 nationa l episode rates and the national per-visit rates under the HH PPS for CY 2008. The CY 2008 HH PP S final rule included an analysis performed on CY 2005 HH claims data, which indi cated 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 deta iled analysis was performed on the 2005 casemix data to evaluate if any portion of the 12.78 per cent 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 Medica re expenditures to predict the average case-mix weight for 2005. We identified 8.03 per cent of the total case-mix change as real, and ther efore, 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 we re not related to an underlying change in patient health status, we implemented a reductio n, 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 four th 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 reductionCMS-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 pe r-visit rates. In a ddition, 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 per cent of that overall observed case-mix percentage increase was due to real case-mix cha nge. 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 cas e-mix change (23.90 percent) and the 15.97 percent of total case-mix change es timated 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 rema inder 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, st andardized 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 meas ured nominal case-mix, we finalized the 1.32 percent payment reduction to the national, standa rdized 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, be ginning in CY 2014, CMS apply an adjustment to the national, standard ized 60-day episode rate and other amounts that reflect factors such as changes in the number of visits in an ep isode, the mix of services in anCMS-1611-P 20 episode, the level of intensity of services in an episode, the average costof 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 ra te 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 finalize d 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 Nation al 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 partCMS-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 pe r episode was higher using 2012 cost report data compared to the 2011 cost report data used in ca lculating the rebasing adju stments. Specifically, we re-estimated the cost of a 60-day episode us ing 2012 cost report and 2 012 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 trim ming methodology outlined in the CY 2014 HH PPS proposed rule (78 FR 40284) and weighted the cost s per visit from the 2012 cost reports by size, facility type, and urban/rural location so the cost s per visit were nationally representative. The 2012 average number of visits was taken from 20 12 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 Aver age Number of Visits for a 60-day Episode

Source: FY 2012 Medicare cost report data and 2012 Medicare claims data from the stan dard analytic file (as of June 2013) for episodes ending on or before December 31, 2012 fo r 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 distributi on and re-calculated th e 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 $ 2,413.82CMS-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 estim ated cost per ep isode ($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 th e 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-da y episode payment amount each year for CY 2014CMS-1611-P 23 through CY 2017. Our latest analysis of 2012 cost report data suggests th at an even larger reduction (4.29 percent) than the reduction desc ribed in the CY 2014 final rule (3.45 percent) would be needed in order to align payments to costs. We will conti nue to monitor potential impacts of rebasing. 2. Affordable Care Act Face-to-Face Encounter Requirement Effective January 1, 2011, section 6407 the A ffordable Care Act requires that as a condition for payment, prior to certifying a pati ent’s eligibility for the Medicare home health benefit, the physician must document that the ph ysician 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 th e patient requires home health se rvices and occur no more than 90 days prior to the home health st art of care date or within 30 days of the start of the home health care. In addition, as part of the certifica tion 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 pa tient is homebound, as defined in subsections 1814(a) and 1835(a) of the Act, and in need of ei ther intermittent skille d nursing services or therapy services, as defined in §409.42(c). Th e face-to-face encounter re quirement was enacted, in part, to discourage physicians certifying pa tient eligibility for the Medicare home health benefit from relying solely on information provided by the HHAs when making eligibility determinations and other d ecisions 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 servic es (75 FR 70427). We examined home health claims data from before implementation of th e 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 indica tions of access issues as a result of this requirement. Nationally, utilization held rela tively constant between CY 2010 and CY 2011 and decreased slightly in CY 2012 (see Table 5). Wh ile 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 1.37pe rcent 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 per cent in CY 2011to 9.0 per cent in CY 2012 and the number of episodes per Part A and/or Part B FFS beneficiaries decrease d slightly between CY 2010 and CY 2011, but remained relatively consta nt 0.18 or 18 episodes per 100 Medicare Part A FFS beneficiaries for CY 2012). We note thes e observed decreases between CY 2010 and CY 2012, for the most part, are likely the result of increases in FFS en rollment between CY 2010 and CY 2012. Newly eligibly Medi care beneficiaries are typical ly 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 enro lled 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 St atistics, 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 Beneficiar y 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 t ypes (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 eq ual 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 nationa l 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 utilizati on in CY 2012 did not occur in all st ates. 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 Virg inia, 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 Se lect 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 fr om Chronic Condition Wareh ouse (CCW) - Accessed on May 14, 2014. Medicare enrollment information ob tained from the CCW Mast er 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 an d 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 benefi ciary) decreased; however, even w ith this decrease between CY 2010 and CY 2012, the five states liste d in Table 7 continue to be am ong the states with the highest utilization of Medicare home health nationally (s ee Figure 1). If we were to exclude the five states listed in Table 7 from the national figures in Table 5, home h ealth 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 benefi ciaries 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 Figur e 1) have areas with suspect billing practices. Moratoria on enrollment of new HHAs, effective January 30, 20 14, 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 St ates 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 fr om Chronic Condition Wareh ouse (CCW) - Accessed on May 14, 2014. Medicare enrollment information ob tained from the CCW Mast er 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 an d 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.CMS-16

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pactCMS-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 (numbe r of episodes per Part A and/or Part B FFS beneficiaries) and not all states experienced de clines 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 requ irements 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 Regul atory Requirements As a condition for payment, section 6407 of the Affordable Care Act requires that, prior to certifying a patient’ s eligibility for the Me dicare home health benef it, the physician must document that the physician himself or hersel f or an allowed nonphysic ian 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 sec tion 1861(aa)(5) of the Act, working in collaboration with the physician in accordance w ith state law, or a certified nurse-midwife (as defined in section 1861(gg) of the Act) as auth orized by state law, or a physician assistant (as defined in section 1861(aa)(5) of the Act) under the supervisi on of the physician may performCMS-1611-P 31

the face-to-face encounter. The goal of the Affordable Care Act pr ovision 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 th e face-to-face encounter o ccurred closer to the start of home health care, increa sing the likelihood that the clin ical conditions exhibited by the patient during the encounter are related to the primary reason the patient comes to need home health care. The certifying phys ician 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) re quire that that the face-to-face encounter be related to the primary reason the patient requires home health se rvices and occur no more than 90 days prior to the home health start of care date or within 30 days of the star t of the home health care. In addition, as part of the certificat ion of eligibility, the certifyi ng physician must document the date of the encounter and include an explanation (na rrative) of why the clinical findings of such encounter support that the patient is homebound, as defined in sections 18 35(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 stat ed in the “Content of the Certification” under §424.22 (a)(1), a physician must certify that: • The individual needs or needed intermitte nt 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 i ndividual was confined to the home (as defined in sections 1835(a) and 1814(a) of the Act), except when receiving outpatientCMS-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 authori zed to perform under state law). 1
• Home health services will be or were furn ished while the individua l is or was under the care of a physician who is a doctor of medicine, osteopa thy, or podiatric medicine. • A face-to-face patient encounter occurred no mo re than 90 days prior to the home health start of care date or within 30 da ys of the start of the home hea lth care and was related to the primary reason the patient requires home health services. This also includes documenting the date of the encounter and includi ng an explanation of why the clinic al findings of such encounter support that the patient is ho mebound (as defined in §1835(a) and §1814(a) of the Act) and in need of either intermittent skilled nursing servi ces or therapy services as defined in §409.42(c). The documentation must be clearly titled and date d and the documentation must be signed by the certifying physician. For instances where the physician orders sk illed 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 th e 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 r easonable 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 narra tive exists as an addendum to th e certification form, in addition to the physician's signature on th e certification form, the physicia n must sign immediately after the narrative in the addendum. When there is a continuous need for home h ealth 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 recer tification is required at leas t 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 pa tient’s eligibility for the home health benefit, the recertification must indicate the continuing need for skilled se rvices and estimate how much longer the skilled services will be required. The need for occupa tional therapy may be the basis for continuing services that were initiated b ecause the individual needed skille d 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 clini cal justification of this need and the narrative must be located immediately before the physicia n's signature. If the narrative exists as an addendum to the recertification form, in a ddition to the physicia n's signature on the recertification form, the physicia n 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 defi ned 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 unde r the supervision of the physician who cared for the patient in the acute/post-acute care facility, can comm unicate the clinicalCMS-1611-P 34 findings that support the patient’s needs for skill ed 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 fo r skilled care and homebound status from the encounter performed by the NPP to the certif ying 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 a nd communicate directly with the certifying physician the clinical findings from the en counter 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 Encount er 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, calculate s the Medicare Fee-for-Service (FFS) improper payment rate. For the FY 2013 report period (ref lecting claims processed between July 2011 and June 2012), the national Medicare FFS imprope r 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 imprope r 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 Ap ril, 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,” bu t is a measurement of paymen ts made that did not meet Medicare requirements. The CERT progr am cannot label a claim fraudulent.CMS-1611-P 35

documentation” errors. “Insufficient docum entation” errors occur when the medical documentation submitted is inadequate to support payment for the services billed or when a specific documentation element th at is required (as descri bed above) is missing. Most “insufficient documentation” errors for home hea lth occurred when the na rrative portion of the face-to-face encounter documentation did not sufficien tly 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 m eeting the face-to-face encounter documentation requirements regarding the require d narrative, including a perceived lack of established standards for compliance that can be adequately understo od and applied by the physicians and HHAs. In addition, the home health industr y conveys frustration with havi ng 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 expre ssed concern over the “extensive and redundant” narrative required by regulation for face -to-face encounter documentation purposes when detailed eviden ce to support the physic ian certification of homebound status and medical necessity is ava ilable in clinical re cords. In addition, correspondence stated that the narrative requirement was not explicit in th e Affordable Care Act provision requiring a face-to-f ace encounter as part of the certif ication of eligibility and that a narrative requirement goes beyond Congressional intent. We agree that there should be sufficient ev idence in the patient’s medical record to demonstrate that the patient meets the Medicare home health eligibil ity criteria. Therefore, in an effort to simplify the face-to-face encount er regulations, reduce burden for HHAs andCMS-1611-P 36 physicians, and to mitigate instances where physic ians 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 requir es home health services, occurred no more than 90 days prior to the home health st art of care date or within 30 days of the start of the home health care and was performed by a physician or a llowed non-physician practit ioner 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 physic ian 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 recei ve services under the Medicare home health benefit at the start of care, we would re view only the medical record for the patient from the certifying physicia n or the acute/post-acute care f acility (if the patient in that setting was directly admitted to home health) used to support the physician’s ce rtification 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 certifyi ng eligibility, was not sufficient to demonstrate that the patient was eligible to receive services under the Medi care home health benefit, payment would not be rendered for home health services provided. (3) Physician claims for certifi cation/recertification of eligibility for home health services (G0180 and G0179, respectively) would not be c overed if the HHA claim itself was non-coveredCMS-1611-P 37

because the certification/recertif ication of eligibility was not complete or because there was insufficient documentation to support that the patien t was eligible for the Medicare home health benefit. However, rather than specify this in our regulations, th is proposal would be implemented through future sub-regulatory guidance. We believe that these proposals are res ponsive to home health industry concerns regarding the face-to-face encounter requirement s 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 Documentati on 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 gui dance (face-to-face encounter Q&As on the CMS website at: http://www.cms.gov/Medicare/Me dicare-Fee-for-ServicePayment/HomeHealthPPS/Downloads/Ho me-Health-Questions-Answers.pdf ), response to Q&A #11 states that the face-to-face enco unter requirement applies to “ini tial 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 re certification, 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 c onsidered a subsequent episode, because thereCMS-1611-P 38 was no gap of 60 days or more between the first a nd second episodes of care. Therefore, in order to determine when documentation of a patient’s f ace-to-face encounter is required under sections 1814(a)(2)(C) and 1835 (a)(2)(A) of th e Act, we are proposing to cl arify that the face-to-face encounter requirement is applicable for certifications (not recertif ications), rather than initial episodes. A certification (versus r ecertification) is considered to be any time that a new start of care OASIS is completed to initiate care. Because we are proposing to clar ify 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/Downlo ads/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 af ter the first day of th e next certification pe riod) , 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 neut ral 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 poi nts for a home health episode and CY 2007 data in the payment regression model used to determ ine the case-mix weights. We estimated the coefficients for the variables in the four-equa tion 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 notic eable shift in the numbe r of therapy visits

6 http://www.cms.gov/Medicare/Quality -Initiatives-Patient-AssessmentInstruments/OASIS/downloads/OASISConsiderationsforPPS.pdfCMS-1611-P 39 provided as a result of the 2008 re finements, at the time, we deci ded to use CY 2007 data in the payment regression. As part of the CY 2012 r ecalibration, 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 undervalu es 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 mann er. However, we note that in the CY 2012 HH PPS final rule, we also finalized a 3.79 per cent 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-mi x weight to 1.0000. To lower the case-mix weights to 1.0000, each case-mix weight was de creased by the same factor (1.3464), thereby maintaining the same relative values between th e weights. This resetting of the case-mix weights was done in a budget neutral manner, in flating the starting poi nt for rebasing by the same factor that was used to decrease the weig hts. In the CY 2014 HH PPS final rule, we also finalized a reduction ($80.95) to the national, standard ized 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 re calibrate the case-mix wei ghts, 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 met hodology 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 preliminar y CY 2013 home health claims data (as ofCMS-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 ex clusion 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 HI PPS code. In addition, the episodes used in the recalibration were normal ep isodes. PEP, LUPA, outlier, and capped outlier (that is, episodes that are paid as normal episode s, but would have been outliers had the HHA not reached the outlier cap) episodes we re dropped from the data file. 7 Similar to the CY 2012 recalibration, the firs t step in the proposed CY 2015 recalibration was to re-estimate the four-equa tion model used to determine th e 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 mi nutes of care. The wage-weighted minutes of care are determined using the CY 2012 Bureau of Labor Sta tistics national hourly wa ge plus fringe rates for the six home health disciplines and th e 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 refine ments (http://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trends-andReports/Reports/Downloads/Coleman_Final_Apr il_2008.pdf). The model was estimated using CY 2005 data, same data used in the CY 2008 re finements, 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” vari ables for each of the 51 grouper variables in the

7 At a later point, when normali zing the weights, PEP episodes are included in the analysis.CMS-1611-P 41 CY 2008 model. Therefore, a grouper variable th at may have dropped out of the model in one of the four equations in CY 2008 may be in th e CY 2015 four-equation model and vice versa. Furthermore, the specific ther apy indicator variables that we re 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 proce ss used to create the case-mix weights. The steps used to estimate the four-equation m odel are similar to the steps used in the CY 2008 refinements. They are as follows 8 : (1) We estimated a regression model where the dependent variable is wage-weighted minutes of care. Independent variables were i ndicators for which equatio n or “leg” the episode is in. The four legs of the model are leg 1: early episodes 0-13 thera py visits, leg 2: early episodes 14+ therapy visits, leg 3: later episodes 0-13 therapy vi sits, and leg 4: later episodes 14+ therapy visits 9 . Also, independent variables for each of the 51 grouper variables for each leg of the model are included in the model. (2) Once the four-equation model is estimat ed, we drop all grouper variables with a coefficient less than 5 from the model. We re-es timate the model and conti nue to drop variables and re-estimate until there are no grouper variables with a coefficient of 5 or less. (3) Taking the final iterati on of the model in the previ ous 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 rest rictions to certain coefficients. Within a grouper variable we firs t look across the coeffici ents for leg1 and leg3. We perform an equality test on those coefficien ts. If the coefficients are not significantly

8 All the regressions mentioned in steps 1-4 are estimated with r obust standard errors clustered at the beneficiary ID level. T his is to account for beneficiaries appearing in the data multiple times. When that occurs, the standard errors can be correlated causing the p-valu e to be biased downward. Clustered standard errors account for that bias. 9 Early episodes are defined as the 1st or 2nd episode in a seque nce of adjacent covered episodes. Later episodes are defined a s the 3rd episode and beyond in a sequence of adjacent covered episodes. Episodes ar e 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 le g1 and leg3. We run thes e tests for all grouper variables for leg1 and leg3. We also run these tests for all grouper vari ables for leg2 and leg4. 10 After all restrictions are set, we re-run the regres sion again taking those rest rictions 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. Usi ng preliminary 2013 claims data, there was only 1 grouper variable with a nega tive coefficient that was dr opped from the model. The results from the final four-equation mode l 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 near est integer to determin e the points associated with each variable. The points fo r each of the grouper variables for each leg of the model are shown in Table 8. The points for the clinical variables are added toge ther 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 determin e if the coefficients of a group er variable are equal across al l 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 9CMS-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 1CMS-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 hea lth Standard Analytic File (SAF). We excluded LUPA epis odes, outlier episodes, and epis odes 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 va lues 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-givingCMS-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-equati on model and the points for 28 variables in decreased in the CY 2015 four-equation model. Since there were a number of significant change s to the point values associated with the four-equation model, we are proposing to redefine the clinical and functiona l thresholds so that they would be reflective of the new points asso ciated 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 th e clinical score and functional score, breaking the episodes into differe nt 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 scor e for episodes within a step such that a third of episodes are classified as low clinical score, a third of episode s 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 wi th each clinical and f unctional 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 mean s that more or less than a third of episodes are placed within a level by step). The new thre sholds based off of the CY 2015 four-equation model points are shown in Table 9.
TABLE 9: CY 2015 Clinical a nd 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 a nd each episode was assigned a clinical and functional level, the payment regression was estim ated 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 f unctional levels within each step of the episode. Like the four-equation model, the payment regr ession model is also estimated with robust standard errors that are clus tered 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 func tional 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 th e medium functional level (all with score 9). For Step 4, 41.6% of episodes were in the me dium 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 epis ode’s predicted wage-wei ghted minutes of care divided by the average wage-weigh ted minutes of care in the sample. Each episode was then aggregated into one of the 153 home health re source groups (HHRGs) and the “raw” weight for each HHRG was calculated as the average of th e 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 wei ghts associated with 14–15 therapy visits were decreased by 2.5 percent and the we ights associated with 20+ ther apy visits were decreased by 5 percent. These adjustments were made to di scourage inappropriate use of therapy while addressing concerns that non-ther apy 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 wei ghts, the weights were further adjusted to create an increase in the payment weights fo r the therapy visit steps between the therapy thresholds. Weights with the same clin ical severity level, functional severity level, and early/later episode status were grouped togeth er. Then within those groups, the weights for each therapy step between thresholds were gradua lly increased. We did this by interpolating between the main thresholds on the model (f rom 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 thresh olds (such as the increase between 0–5 therapy visits and 6 therapy visits and the increase betw een 6 therapy visits and 7–9 therapy visits) wasCMS-1611-P 50 constant. This interpolation is the identical to the pr ocess finalized in the CY 2012 final rule (76 FR 68555). (4) The interpolated weights were then adju sted 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

12 When computing the average, we compute a weighted average, assigning a value of one to each normal episode and a value equal t o 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 1.8698CMS-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 0.6424CMS-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 1.4063CMS-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 ne utrality factor to the CY 2015 national, standardized 60-day episode payment rate (see secti on III.D.4. of this proposed rule). The casemix budget neutrality factor is ca lculated 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 utilizati on 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 w ith 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 functiona l thresholds, and the CY 2015 case-mix weights may change between the CY 2015 HH PPS pr oposed and final rules. Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to implement paymentCMS-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-mi x 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 da ta to rebase payments (78 FR 72277). Since we were resetting the payment amounts with 201 2 data, we did not take into account nominal case-mix growth from 2009 through 2012. For this proposed rule, we examined cas e-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 cas e-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 ad justing the case-mix budget neutrality factor to take into account the 2.00 percent growth in nominal case-mi x, which would result in a case-mix budget neutrality adjustment of 1.0037 rather th an 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 Hea lth Market Basket Update Section 1895(b)(3)(B) of th e Act, as amended by section 3401(e) of the Affordable Care Act, adds new clause (vi) which states, ‘‘A fter 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. Th e application of this clause may result in the home healthCMS-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 subs ection 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 wa s 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 equa l 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 descripti on 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 Afford able Care Act, requires that, in CY 2015 (and in subsequent calendar years), the mark et 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 st atute 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 nonf arm business multifactor productivity (MFP) (as projected by the Secretary for th e 10-year period ending with the a pplicable fiscal year, calendar year, cost reporting period, or ot her annual period) (the ‘‘MFP ad justment’’). The Bureau of Labor Statistics (BLS) is the agency that publishes the o fficial 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 fo r calculating and applying the MFP adjustment to the HHA payment update is similar to th e methodology used in ot her Medicare provider payment systems as required by section 3401 of the Affordable Care Act.CMS-1611-P 57 The projection of MFP is currently produ ced by IHS Global Insight, Inc.’s (IGI), an economic forecasting firm. To generate a foreca st of MFP, IGI replicated the MFP measure calculated by the BLS using a series of proxy va riables derived from IGI’s U.S. macroeconomic models. These models take into account a very broad range of factors th at influence the total U.S. economy. IGI forecasts the underlying proxy components such as gross domestic product (GDP), capital, and labor inputs required to estim ate 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 Comp onent Series Employed By the Bureau of Labor Statistics and IHS Global Insight BLS Series IGI Series Real value-added output Non-hous ing 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 rate s of the BLS components used to calculate MFP and the IGI components identified are consis tent across all series and therefore suitable proxies for calculating MFP. For more info rmation 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 th rough 2012. Using this historical MFP series and the IGI forecasted series, IGI has devel oped a forecast of MFP for 2013 through 2024, as described below. To create a forecast of the BLS’ MFP inde x, the forecasted annual growth rates of the ‘‘non-housing, nongovernment, non-farm, real GDP,’’ ‘‘h ours of all persons in private nonfarmCMS-1611-P 58 establishments adjusted for labor composition, ’’ and ‘‘real effective cap ital stock’’ series (ranging from 2013 to 2024) are used to ‘‘grow’’ th e levels of the ‘‘real value-added output,’’ ‘‘private non-farm business sector labor input, ’’ and ‘‘aggregate capita l input’’ series published by the BLS. Projections of the ‘‘hours of all persons’’ measure ar e 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 cont ribution 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 es timation of the IGI M FP 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. IG I 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 a nd 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 co mpensation share) + (capital input growth * capital income share)) The change in the growth rates (also refe rred to as the compound growth rates) of theCMS-1611-P 59 IGI MFP are multiplied by 100 to calculate the pe rcent 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 in dex levels to be cons istent with the BLS’ methodology. For benchmarking purposes, the histor ical 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 M FP projections. The resulting M FP index was then interpolated to a quarterly frequency using the Bassie me thod for temporal disaggregation. The Bassie technique utilizes an indicator (pat tern) series for its calculations . IGI uses the index of output per hour (published by the BLS) as an indi cator 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 Af fordable Care Act amen ds 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 desc ribed 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 th e 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 re duced 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 calculati on (the market basket and the productivityCMS-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 propos e 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 conventiona l 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 ar e proposing for CY 2015 for the HHA market basket is based on the 1st quarter 2014 for ecast of the CY 2010-based HHA market basket update, which is estimated to be 2.6 percent. Th is 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 calc ulated as described above and based on IGI’s 1st quarter 2014 forecast. The resulting MFP-ad justed HHA market basket update is equal to 2.2 percent, or 2.6 percent less 0.4 percent. We propos e 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 dete rmine 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 pe rcentage points for those HHAs that do not submit quality data as required by the Secretary. For HHAs that do no t submit the required qu ality 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 Qualit y Reporting Program (HH QRP) a. General Considerations Used for Selection of Quality Measures for the HH QRP The successful development of the Home H ealth Quality Reporting Program (HH QRP) that promotes the delivery of high quality health care 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), c onvened by the National Quality Forum (NQF) as part of a pre-rulemaking pro cess that we have established and are required to follow under section 1890A of the Act. The MAP is a publ ic-private partnershi p comprised of multistakeholder groups convened for the primar y purpose of providing input to CMS on the selection of certain categories of quality and efficiency m easures, as required by section 1890A(a)(3) of the Act. By February 1 st of each year, the NQF must provide that input to CMS. More details about the pre-rule making process can be found at http://www.qualityforum.org/map. MAP reports to view and download are available at http://www.qualityforum.org/Setting_Priorit ies/Partnership/MAP_Final_Reports.aspx

. Our measure development and selection act ivities for the HH QRP take into account national priorities, such as those established by the Nati onal Priorities Partnership ( http://www.qualityforum.org/Se tting_Priorities/NPP/National_ Priorities_Partnership.aspx ), the Department of Health & Human Services (HHS) Strategic Plan ( http://www.hhs.gov/secretary/abou t/priorities/priorities.html , the National Quality Strategy (NQS) (http://www.ahrq.gov/workingforquality/re ports.htm), and the CMS Quality Strategy ( http://www.cms.gov/Medicare/Qual ity-Initiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html ).CMS-1611-P 62 To the extent practicable, we have sought to a dopt 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, provide rs, 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 revi ew 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 sh all be submitted in a fo rm 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 requirement s 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 furthe r 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 da ta being made public.’’CMS-1611-P 63 Medicare home health regulations , as codified at §484.250(a), require HHAs to submit OASIS assessments and Home Health Care Consum er Assessment of Hea lthcare Providers and Systems Survey (HH CAHPS ® ) data to meet the quality repo rting 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 re ports) 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 Compar e (HH Compare) website since 2003. The CY 2012 HH PPS final rule (76 FR 6857 6), identifies the current HH QR P measures. The selected measures that are made available to the publ ic 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 Medica re claims data to measure HH quality. In the CY 2014 HH PPS final rule, we finaliz ed a proposal to add two claims-based measures to the HH QRP, and also stated that we would begin reporti ng the data from these measures to HHAs beginning in CY 2014. Th ese claims based measures are: (1) Rehospitalization during the firs t 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 fo r 9 process measures. While no timeframe was given for the removal of these measures, we ha ve scheduled them for removal from the CASPER folders in October 2014. In addition, five s hort stay measures which had previously been reported on Home Health Compare were recent ly removed from public reporting and replaced with non-stratified “all episodes of ca re” versions of these measures. c. OASIS Data Submission and OASIS Data for Annual Payment UpdateCMS-1611-P 64 (1) Statutory Authority The Home Health conditions of participation (C oPs) 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 da ys of every 60 days beginning with the start of care date, unless there is a beneficiary elected transfer, si gnificant 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; an d (3) at discharge. It is important to note that to calculate quali ty 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 Transf er or Discharge OASIS assessment. Failure to submit sufficient OASIS assessments to a llow 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 t hose patients who are excluded from the OASIS submission requirements. As descri bed in the December 23, 2005 Medicare and Medicaid Programs: Reporting Outcome and Asse ssment Information Set Data as Part of the Conditions of Participation for Home Health Agencies final ru le (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 Ca re 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 prec eding year are not subject to the OASIS quality reporting requirement nor any payment penalty fo r quality reporting purp oses for the following year. For example, HHAs certified on or afte r May 31, 2013 are not subject to the 2 percentage point reduction to their market basket update fo r CY 2014. These exclusions only affect quality reporting requirements and do not affect the HHA’ s reporting responsibilit ies as announced in the December 23, 2005 final rule, ‘‘Medicare an d 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 conti nue this pattern for each s ubsequent year beyond CY 2014, considering OASIS assessments submitted for episodes beginning on July 1st of the calendar year 2 years prior to the calenda r year of the Annual Payment U pdate (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” Perf ormance 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 Secret ary in accordance withCMS-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 Janua ry 1, 2007. However, to date, the quantity of OASIS assessments each HHA must submit to m eet 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 pe rformance requirement for the submission of OASIS data by HHAs would better meet sectio n 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 ar e 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 Offi ce 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 whic h 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 comp leteness 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 accura cy 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 re sponsive to the recommendations of the OIG.

13 http://oig.hhs.gov/oei/reports/oei-01-10-00460.aspCMS-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 devel op 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) a ssessment and a matching End of Care (EOC) assessment. However, the researchers at the Un iversity of Colorado determined that there are several scenarios that could meet this “match ing assessment requirement” of the new pay-forreporting performance requirement. These s cenarios have been defined as “quality assessments”, which are defined as assessments that create a quality ep isode 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 di scharge from home health care. These two assessments (the SOC or ROC assessment and the EOC assessment) create a regular quality episode of care and bot h 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 labe led as a “Late SOC/ROC” quality assessment.CMS-1611-P 68 An EOC assessment that could end an epis ode of care that began in the previous reporting period, (that is, an EOC th at 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 Episod e” 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 perfor mance 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 no t 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” assessment s 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 Pa y for Reporting performan ce 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 qua lity episode of care are included in the computation. The formula based on this definition is as follows:
QAO ൌ ሺ #	of	Quality	Assessments ሻ ሺ #	of	Quality	Assessments	 ൅	# of	NonQuality	Assessments ሻ ∗ 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 metricCMS-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 be tter during the first reporting period 14 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 th e 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 1 st , 2015 and before June 30 th , 2016, HHAs must score at least 70 percent on the QAO metric of pay-for-repor ting performance or be subject to a 2 percentage point reduction to thei r market basket update for CY 2017.

y For episodes beginning on or after July 1 st , 2016 and before June 30 th , 2017, HHAs must score at least 80 percent on the QAO metric of pay-for-repor ting performance or be subject to a 2 percentage point reduction to th eir market basket update for CY 2018

y For episodes beginning on or after July 1 st , 2017, and thereafter, and before June 30 th , 2018 and thereafter, HHAs must score at leas t 90 percent on the QAO metric of pay-forreporting performance or be subject to a 2 perc entage 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 effectiv e date) through the following June 30 th (of the calendar year one year prior to the calenda r year of the APU effective date) each year.CMS-1611-P 70 We solicit public comment on our propos al to implement the Pay-for-Reporting performance requirement, as described previ ously, for the Home H ealth 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 requi res 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 he ld by the NQF. The NQF is a voluntary consensus standard-setting organization with a diverse representation of co nsumer, purchaser, provider, academic, clinical, and other health care stakeholde r organizations. The NQF was esta blished to standardize health care quality measurement a nd reporting through its consensus development process. 15 The NQF undertakes to: (1) Review ne w 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 measur e 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 endorse ment 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 fo r 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 ex isting 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 revi ew by a NQF Technical Expert panel which, in

15 For more information about the NQF Consensus Developm ent Process, please visit the NQF website using the following link: http://www.qualityforum.org/Measurin g_Performance/Consensus_Development_Process.aspxCMS-1611-P 71 turn, provides input to the Consensus Sta ndards Approval Committee which then makes a decision on endorsement status and/ or specification changes for the m easure, practice, or event. Through the NQF’s measure maintenance pr ocess, 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 constitu tes a substantive versus a non-substantive change, we expect to make this determination on a m easure-by-measure basis. Examples of such nonsubstantive changes might include updated diagnosis or procedur e codes, medication updates for categories of medications, broadeni ng 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 ch anges to measures that result in what can be considered new or different measures, and that they do not tr igger 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 s ubstantially change the na ture of the measure, we would use a sub-regulatory pr ocess to incorporate those update s to the measure specifications that apply to the program. Specifically, we woul d revise the information that is posted on the CMS Home Health Quality Initiatives website at http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HomeHealthQuality Inits/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 collecti on systems would beCMS-1611-P 72

necessary. We would continue to use the rulemaking proc ess to adopt changes to measures that we consider to substantially change the nature of th e 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 wh en a standard of performance assessed by a measure becomes more stringent, such as changes in acceptable timing of medication, procedure/process, test administ ration, or expansion of the measur e to a new setting. We believe that our proposal adequately balances our n eed to incorporate NQF updates to NQF endorsed measures used in the HH QRP in the most e xpeditious 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 adop ted for the Hospital IQR Program, the PPS-Exempt Cancer Hospital (PCH) Quality Reporting Program, the Long-Term Care Hospital Quality Reporting (LTCHQR) Program, the Inpatie nt 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 th e 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 c ontinuous 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 experien ces with home health care, us ing a survey developed by the Agency for Healthcare Research and Quality’s (AHRQ’s) Consumer Assessment of Healthcare Providers and Systems (CAHPS®) program a nd 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 hea lth 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 co mparisons across all HHAs. The history and development process for HHCAHPS has been describe d in previous rules and is also available on the official HHCAHPS website at https://homehealthcahps.org and in the annually-updated HHCAHPS Protocols and Guid elines 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 fo llowing related topics:

● Patient care (Q9, Q16, Q19, and Q24);

● Communications between providers and patients (Q2, Q15, Q17, Q18, Q22, and Q23); andCMS-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 th e overall rating of care gi ven by the HHA’s care providers (Q20), and the patient’s willingn ess 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 respons e 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 Prot ocols 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 vi sits in the past 2 months, which are paid for by Medicare or Medicaid. Home health patients are ineligible for in clusion 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 el igible because the state in wh ich the patient lives restricts release of patient information for a specific condition or illness that the patient has; or

● No Publicity patients, defined as patient s who on their own initia tive at their firstCMS-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-cer tified HHAs are required to contract with an approved HHCAHPS survey vendor. This requir ement continues, and Medicare-certified agencies also must provide on a monthly basis a li st of their patients served to their respective HHCAHPS survey vendors. Agencies are not a llowed to influence at all how their patients respond to the HHCAHPS survey. As previously required, HHCAHP S survey vendors are requir ed to attend introductory and all update trainings conduc ted by CMS and the HHCAHPS Survey Coordination Team, as well as to pass a post-training certification test. We have appr oximately 30 approved HHCAHPS survey vendors. The list of appr oved HHCAHPS survey vend ors is available at https://homehealthcahps.org

. (2) HHCAHPS Oversight Activities We stated in prior final ru les that all approved HHCAHPS su rvey vendors are required to participate in HHCAHPS oversight activities to ensure compliance w ith HHCAHPS protocols, guidelines, and survey requirements. The purpose of the oversight activities is to ensure that approved HHCAHPS survey vendors follow the HHC AHPS Protocols and Guidelines Manual. As stated previously in the fi ve prior final rules to this proposed rule, all HHCAHPS approved survey vendors must develop a Quality Assura nce Plan (QAP) for survey administration in accordance with the HHCAHPS Protocols and Gu idelines Manual. An HHCAHPS survey vendor’s first QAP must be submitted within 6 w eeks 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 ca pabilities or systems. A model QAP is included in the HHCAHPS Protocols and Guidelines Manual. The QAP must includeCMS-1611-P 76 the following:

● Organizational Background and Staff Experience;

● Work Plan;

● Sampling Plan;

● Survey Implementation Plan;

● Data Security, Confidentia lity 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 ve ndors. The purpose of the site visits is to allow the HHCAHPS Coordination Team to observe the entire HHCAHPS Survey implementation process, from the sampling stag e 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, a nd assesses administration protocols based on the HHCAHPS Protocols and Guidelines Manual posted at https://homehealthcahps.org . The systems and program site visit review incl udes, but is not limited to the following:

● Survey management and data systems;

● Printing and mailing ma terials and facilities;

● Telephone call cen ter facilities;

● Data receipt, entry an d storage facilities; and

● Written documentation of survey processes. After the site visits, HHCAHPS survey vendor s are given a defined time period in which to correct any identified issues and provide fo llow-up documentation of corrections for review. HHCAHPS survey vendors are subject to follo w-up site visits on an as-needed basis. In the CY 2013 HH PPS final rule (77 FR 67094, 67164), we codified the currentCMS-1611-P 77 guideline that all approved HHCAHPS surv ey vendors fully comply with all HHCAHPS oversight activities. We included th is 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 include s the second quarter 2013 through the first quarter 2014 (the months of April 2013 through Ma rch 2014). Although these dates are past, we wished to state them in this proposed rule so that HHAs are again re minded of what months constituted the requirements for the CY 2015 APU. HHAs are required to submit their HHCAHPS data files to the HHCAHPS Data Cent er 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 conti nued monthly HHCAHPS data collection and reporting for 4 quarters. The data collection period for th e 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 da ta files to the HHCAHPS Data Center for the second quarter 2014 by 11:59 p.m., e.d.t. on Oc tober 16, 2014; for the third quarter 2014 by 11:59 p.m., e.s.t. on January 15, 2015; for th e 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 certif ication after the period in which HHAs do their patient count (April 1, 2013 through Marc h 31, 2014) on or after April 1, 2014, from the full HHCAHPS reporting requirement for the CY 2016 APU, because these HHAs will not haveCMS-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 Part icipation 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 s ubmission 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 pe riod 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 conti nued monthly HHCAHPS data collection and reporting for 4 quarters. The data collection period for th e 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 da ta files to the HHCAHPS Data Center for the second quarter 2015 by 11:59 p.m., e.d.t. on Oc tober 15, 2015; for the third quarter 2015 by 11:59 p.m., e.s.t. on January 12, 2016; for th e 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 certif ication after the period in which HHAs do their patient count (April 1, 2014 through Marc h 31, 2015) on or after April 1, 2015, from the full HHCAHPS reporting requirement for the CY 2016 APU, because these HHAs will not haveCMS-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 Part icipation 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 s ubmission 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 pe riod 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 Reconsiderati ons and Appeals Process HHAs should monitor their resp ective 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 processi ng 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 comp ly 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 proce ss requirements in theCMS-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 Dire ction Letter informing them that they did not meet the HHCAHPS requirements for the CY period, to send all documentation that supports their requests for rec onsideration to CMS. It is important that the affected HHAs send in comprehensive informa tion in their reconsideration letter/package because we will not contact the affected HHAs to request additi onal information or to clarify incomplete or inconclusive information. If cl ear 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 reduc tion 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 re duction via the Provider Reimbursement Review Board (PRRB) appeals process. (7) Summary We are not proposing any changes to the particip ation requirements, or to the requirements pertaining to the implementation of the Home Health CAHPS® Survey (HHCAHPS). We again strongly encourage HHAs to lear n 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 re quire the Secretary to provide appropriate adjustments to th e proportion of the payment am ount under the HH PPS that account for area wage differences, using adjustment factor s that reflect the relative level of wages andCMS-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 fo r CY 2015, as we continue to believe that, in the absence of HH-specific wage data, using inpa tient hospital wage data is appropriate and reasonable for the HH PPS. Specifically, we pr opose 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 hosp ital cost reporting periods beginning on or after October 1, 2010 and before Octobe r 1, 2011 (FY 2011 cost report data). We would apply the appropriate wage inde x value to the labor portion of the HH PPS rates based on the site of service for the benefici ary (defined by section 1 861(m) of the Act as the beneficiary’s place of residence). Previousl y, we determined each HHA’s labor market area based on definitions of metropolit an statistical areas (MSAs) issued by the OMB. In the CY 2006 HH PPS final rule (70 FR 68132) , we began adopting revised la bor market area definitions as discussed in the OMB Bulletin No. 03-04 (J une 6, 2003). This bulletin announced revised definitions for MSAs and the creation of micropolit an 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 geogra phic designations, we provide d 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 th e CY 2006 MSA-based wage index and 50 percent of the CY 2006 CBSA-based wage i ndex. 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 PPSCMS-1611-P 82 final rule (71 FR 65884) to address those geogr aphic areas in which there are no inpatient hospitals, and thus, no hospital wage data on whic h to base the calculati on 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 r easonable proxy. For CY 2015, there are no rural areas that do not have inpatient hospitals, and thus, this met hodology would not be applied. For rural Puerto Rico, we do not a pply this methodology due to the di stinct economic circumstances that exist there (for example, due to the close pr oximity to one another of almost all of Puerto Rico’s various urban and non-urban areas, th is 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 av ailable for that area. For urban areas without inpatient hospitals, we use the average wage in dex of all urban areas within the state as a reasonable proxy for the wage inde x 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/defaul t/files/omb/bulle tins/2013/b-13-01.pdf . This bulletin states that it “provides the delineations of all Me tropolitan Statistical Areas, Metropolitan Divisions, Micropolitan Statisti cal 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 Febr uary 28, 2013 are not as sweeping as the changes made when we adopted the CBSA geog raphic designations for CY 2006, the FebruaryCMS-1611-P 83 28, 2013 bulletin does contain a number of significan t 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 ch anges 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 assessm ent 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 hos pitals (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 inde x 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 th e reality of population shifts and labor market conditions. While CMS a nd other stakeholders ha ve 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 sy stem. As discussed in the FY 2005 IPPS final rule (69 FR 49027), “While we r ecognize that MSAs are not designe d specifically to define labor market areas, we believe they do represent a usef ul 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. WeCMS-1611-P 84 have reviewed our findings and impacts rela ting to the new OMB delineations, and have concluded that there is no compelling r eason to further delay implementation. We propose incorporating the new CBSA de lineations 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 bl end of the wage index values using OMB’s old area delineations and the wage i ndex values using OMB’s new area delineations. That is, for each county, a blended wage index would be calc ulated equal to fifty percent of the CY 2015 wage index using the old labor market area deli neation and fifty percen t of the CY 2015 wage index using the new labor market area delineat ion (both using FY 2011 ho spital wage data). This ultimately results in an average of the two values. If we adopt the new OMB delineations, a to tal 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 countie s 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 Gra nd 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 Hous ton-Sugar Land-Baytown, TX Franklin County KS 28140 Kansas City, MO-KS Tipton County IN 29020 Kokomo, IN Nelson County KY 31140 Louisvil le/Jefferson County, KY-IN Geary County KS 31740 Manhattan, KS Washington County OH 37620 Parker sburg-Marietta-Vienna, WV-OH Pleasants County WV 37620 Parker sburg-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-NCCMS-1611-P 86 If we finalize our proposal to implemen t the new OMB delineations, a total of 105 counties (and county equivalents) that are currently lo cated in rural areas would be considered part of an urban CBSA beginning in CY 2015. Ta ble 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-Ch ristiansburg-Radford, VA De Witt County IL 14010 Bloomington, IL Columbia County PA 14100 Bloomsburg-Berwick, PA Montour County PA 14100 Bl oomsburg-Berwick, PA Allen County KY 14540 Bowling Green, KY Butler County KY 14540 Bowling Green, KY St. Mary’s County MD 15680 Ca lifornia-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 Charlo tte-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-Fo rt Worth-Arlington, TX Somervell County TX 23104 Dalla s-Fort Worth-Arlington, TX Baldwin County AL 19300 Da phne-Fairhope-Foley, AL Monroe County PA 20700 East Stroudsburg, PACMS-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 Gr and 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 Kahul ui-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 Minneapo lis-St. Paul-Bloomington, MN-WI Mille Lacs County MN 33460 Minneapo lis-St. Paul-Bloomington, MN-WI Sibley County MN 33460 Minneapo lis-St. Paul-Bloomington, MN-WI Maury County TN 34980 Nashville-Da vidson—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 Ne w 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-DECMS-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 Shre veport-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 St aunton-Waynesboro, VA Staunton City VA 44420 St aunton-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-Al exandria, DC-VA-MDWV Rappahannock County VA 47894 Washington-Arlington-Al exandria, DC-VA-MDWV Jefferson County NY 48060 Wate rtown-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 CBS A to another urban CBS A under our proposal to adopt the new OMB delineations. In other ca ses, 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, CBS A 29140 (Lafayette, IN), would experience both a change to its number and its name, and w ould 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 th ey are inconsequential ch anges with respect toCMS-1611-P 89 the HH PPS wage index. However, in other ca ses, 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 3798 0) 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 C ounty, PA Metropolitan Division of MSA 37980), while Delaware and Philadelphia counties would remain in CBSA 37964. Finally, in some cases, a CBS A 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 (Cha rleston, 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 ur ban 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 PRCMS-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 propos ed 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 applic ation of OMB’s new delineations as well as other alternatives considered. For the reasons discussed above, and ba sed on provider reaction during the CY 2006 rulemaking cycle to the proposed adoption of th e new CBSA definitions, we are proposing to apply a one-year blended wage index in CY 2015 fo r all geographic areas to assist providers in adapting to these proposed changes. This tran sition 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 crosswal k 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 stat e 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 th e blended transition wage index, some CBSAs may have more than one transition wage index va lue 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 numberCMS-1611-P 92

would be used for claims submission for CY 20 15 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 si nce 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 paymen t 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 th e proportion of the payment amount under the HH PPS to account for area wage differences, we a pply 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 a nd 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 me thodology as set forth in the CY 2008 HH PPS final rule with comment period (72 FR 49762) and adju sted as described in section III.C. of this rule. The following are the steps we take to compute the case-mix a nd 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 in to a labor (78.535 per cent) 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. Se ction 484.225 sets forth the speci fic 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-d ay episode rate is equal to the rate for the previous calendar year increas ed by the applicable HH market basket index amount minus two percentage points. Any reducti on of the percentage change will apply only to the calendar year involved and will not be cons idered 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 disc ussed 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 (L UPA) is provided on a per-visit basis as set forth in §484.205(c) and §484.230.

● A partial episode payment (PEP) adju stment 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, Standard ized 60-Day Episode Payment Rate Section 1895(3)(A)(i) of the Act required th at the 60-day episode base rate and other applicable amounts be standardized in a manner th at eliminates the eff ects of variations in relative case mix and area wage adjustments amo ng 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 stan dardization 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 disc ussed in section III.D.1 of this proposed rule. To calculate the wage index st andardization factor, hencefor th referred to as the wage index budget neutrality factor, we simulated to tal payments for non-LUPA episodes using the 2015 wage index and compared it to our simula tion of total payments for non-LUPA episodes using the 2014 wage index. By dividing the to tal 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 nationa l, 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 mann er, 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 utilizati on (claims) data to to tal payments when CYCMS-1611-P 95 2014 case-mix weights are applied to CY 2013 utili zation 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 ad justment finalized in the CY 2014 HH PPS final rule (78 FR 72256) and discussed in sectio n 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 II I.D.1 of this proposed rule. The proposed CY 2015 national, standardized 60-day episode paym ent rate would be $2,922.76 as calculated in Table 16. TABLE 16: CY 2015 60-day National, Standa rdized 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 require d quality data is updated by the CY 2015 HH payment update percentage (2.2 percent) minus 2 percen tage 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 f our or fewer visits) and are also used to compute imputed costs in outli er calculations. The per-visit rates are paid byCMS-1611-P 96 type of visit or HH discipline. Th e 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 ra tes, we start with the CY 2014 national pervisit rates. We then apply a wage index budget neutrality factor to en sure 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 LU PA 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 bu dget 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 fo r 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 bene ficiary. The per-visit payments for LUPAs are separate from the LUPA add-on payment amount, wh ich is paid for episodes that occur as the only episode or initial episode in a sequen ce of adjacent episodes. The proposed CY 2015CMS-1611-P 97 national per-visit rates are s hown in Tables 18 and 19.

TABLE 18: Proposed CY 2015 National Per-Vi sit 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 $127.81SpeechLanguage 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-Vi sit 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 $125.31SpeechLanguage Pathology $143.88 X 1.0000 + 4.70 X 1.002 $148.88

d. Low-Utilization Payment Adju stment (LUPA) Add-On FactorsCMS-1611-P 98 LUPA episodes that occur as the only episode or as an initial epis ode in a sequence of adjacent episodes are adjusted by applying an ad ditional amount to the LUPA payment before adjusting for area wage differences. In th e 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 th e 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 S upply (NRS) Conversio n Factor Update Payments for NRS are computed by multiplyi ng 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 upda te percentage (2.2 percent). We do not apply a standardization factor as the NRS paym ent 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 fa ctor, the proposed payment amounts forCMS-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 qual ity data, we again begin with the CY 2014 NRS conversion factor ($53.65) a nd apply the -2.82 percent reba sing adjustment discussed in section II.C of this propose d 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 fo r 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 subm it quality data are cal culated 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 se rvices 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 189 5 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 furn ished in a rural area (a s defined in section 1886(d)(2)(D) of the Act), on or after Janua ry 1, 2006 and before January 1, 2007, that the Secretary increase the payment am ount otherwise made under sect ion 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 percen t of the payment amount otherw ise made under section 1895 of the Act for HH services furnished in a rural area (as defined in section 18 86(d)(2)(D) of the Act), for episodes and visits ending on or afte r April 1, 2010, and before January 1, 2016. Section 421 of the MMA, as amended, waives bu dget neutrality related to this provision, as the statute specifically states that the Secr etary shall not reduce th e standard prospective payment amount (or amounts) under section 1895 of the Act applicable to HH services furnishedCMS-1611-P 101 during a period to offset the increase in payments resulting in the applica tion 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 Amo unts for 60-Day Episodes for Services Provided in a Rural Area For HHAs that DO Submit Quality Data Fo r 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 Amount s 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 Fo r HHAs that DO NOT submit quality data CY 2015 Conversion Factor Multiply by the 3 PercentRural AddOn Proposed CY 2015 Rural NRS Conversion Factor CY 2015 Conversion Factor Multiply by the 3 PercentRural 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 2015Rural PerVisit Rates CY 2015 Per-visit

rate Multiply by the 3 PercentRural AddOn Proposed CY 2015Rural 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 $153.35CMS-1611-P 102
TABLE 27: Proposed CY 2015 NRS Payment Am ounts 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 pr ovision 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 hi gh costs due to patient care needs. Prior to the enactment of the Affordable Care Act, section 1895(b)(5)of th e Act stipulated that projected total outlier payments could not exceed 5 percent of total pr ojected 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 th e 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-adjuste d per-visit payment amounts for a ll visits delivered during the episode. The outlier threshold for each case-mi x group or PEP adjustment is defined as the 60- day episode payment or PEP adjustment for th at group plus a fixed-dollar loss (FDL) amount. The outlier payment is defined to be a proportion of the wage-a djusted estimated cost beyond the wage-adjusted threshold. The threshold amount is the sum of the wage and case-mix adjustedCMS-1611-P 103 PPS episode amount and wage-adjusted FDL amo unt. The proportion of additional costs over the outlier threshold amount paid as outlier payments is referred to as th e loss-sharing ratio. In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we discussed excessive growth in outlier payments, prim arily 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 cu rb outlier abuse. To mitigate possible billing vulnerabilities associated with excessive outlie r 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 ta rget 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, standard ized 60-day episode rate s, 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 fina l rule (75 FR 70397 through 70399), section 3131(b)(1) of the Affordable Care Act amended section 1895(b)(3)(C) of th e Act. As amended, “Adjustment for outliers,” states that “The S ecretary 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 AffordableCMS-1611-P 104 Care Act amended section 1895(b)(5) of the Ac t 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 b ecause 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 ma de 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 pe rcent 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 fo r CY 2010. We then reduced the rates by 5 percent as required by section 1895 (b)(3)(C) of the Act, as ame nded 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 possibl e to select a higher lo ss-sharing ratio, and therefore, increase outlier payments for outlier episodes. Alternatively, a lower FDL ratio means that more episodes can qualify for outlier paymen ts, 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 per cent aggregate level (a s required by section 1895(b)(5)(A) of the Act). Historically, we have used a value of 0.80 fo r the loss-sharing ratio which, we believe, preserves incentives for agenci es 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 implemen ted 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 ra tio. 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 propos ed rule, and the FDL ratio of 0.45; we estimate that outlier payments would comprise approxima tely 2.26 percent of total HH PPS payments in CY 2015. Simulating payments using prelim inary CY 2013 claims data and the CY 2014 payment rates (78 FR 72304 through 72308), we esti mate that outlier payments would compriseCMS-1611-P 106 2.01 percent of total payments. Given the propos ed increases to the CY 2015 national per-visit payment rates, our analysis estimates an additi onal 0.25 percentage point increase in estimated outlier payments as a percent of total HH PPS pa yments each year that we phase-in the rebasing adjustments described in section II.C. We es timate that for CY 2016, estimated outlier payments as a percent of total HH PPS payments will incr ease 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 tota l HH PPS payments paid as outlier payments to determine if future adjustments to either the FDL ratio or loss-shari ng ratio are warranted. F. Medicare Coverage of Insu lin 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 ar e 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 unne cessary because the patient was physically and mentally able to self-inject. 17 In addition, results from analys is 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-t erm use of insulin (78 FR 72310). Therefore, we conducted a litera ture 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 PatientsCMS-1611-P 107 practices for diabetic patients and conducted furt her 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 una ble to self-inject. As generally accepted by the medical commun ity, 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 el derly 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 elde rly individual’s ability to self-inject. These tools asse ss the individual’s ability to pe rform 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 in ject insulin independently and to recognize and deal with hypoglycemia. 20 Another important consideration with regard s 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 complica tions, such as hypoglycemia and hyperglycemia. The traditional vial and syringe method of insu lin administration involves several steps, including injecting air into the vi al, drawing an amount out of the vial into a syringe with small

18 Strategies for Insulin Injection Ther apy in Diabetes Self-Management. (20 11). 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, Nosa ri I, Coronel GA. Safety, efficacy, accep tability of a pre-f illed insulin pen in diabetic patients over 60 years old. Diabetes Re search 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 altern ative 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. Add itionally, insulin pens often come pre-filled with insulin or must be used with a pre-filled cartridg e thus potentially negating the need for skilled nursing for the purpose of calculating and filling appropr iate doses. It is recognized that visual impairment, joint immobility and/or pain, periph eral neuropathy, and cognitive issues may affect the ability of elderly patients to determine corr ect insulin dosing and injection. Our literature review indicates that insulin pen devices may be beneficial in term s 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 elim inates 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, por table 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 syring e. Am J Nurs. 2000;100:44–8.[PubMed] 23 Wright, B., Bellone, J., McCoy, E. (2010). A review of in sulin 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 in sulin 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 ar e more likely to accept pen devices and adhere to therapy, which leads to better glycemic contro l that decreases long-te rm 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 plan s, 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 mo re insulin than if purch asing 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 us e of the traditional vial and insulin syringe as opposed to the insulin pen, includi ng the fact that not all insulin preparatio ns 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 f unctional limitations. These include: nonvisual insulin measurement devices; syri nge magnifiers; needle guides; prefilled insulin syringes; and vial stabilizers to help ensure ac curacy and aid in insulin delivery. 29 It is expected that providers will assess the needs, abilities, and preference of th e patient requiring insulin to facilitate patient

25 Strategies for Insulin Injection Therapy in Diabetes Se lf-Management. (2011). Americ an Association of Diabetes Educators. 26 Strategies for Insulin Injection Therapy in Diabetes Se lf-Management. (2011). Americ an Association of Diabetes Educators. 27 Wright, B., Bellone, J., McCoy, E. (2010). A review of in sulin 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 Se lf-Management. (2011). Americ an Association of Diabetes Educators. 29 Strategies for Insulin Injection Therapy in Diabetes Se lf-Management. (2011). Americ an Association of Diabetes Educators.CMS-1611-P 110 autonomy, efficiency, and safety in diabetes se lf-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 starti ng 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 Implicati ons 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 me dical records documenting patients having hand tremors and poor vision preventing them from draw ing insulin into a syringe, visually verifying the correct dosage, and injecting the insulin themse lves, when the patients did not in fact suffer those symptoms. In light of the OIG report, we conducted an alysis 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 an d 16 percent of episodes that would quality for outlier payments had a primary diagnosis of “Dia betes 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 n eed. However, uncomplicated and controlled diabetes typically would be viewed as stable without clinical comp lications and would not warrant increased resource and service needs nor would it appear to warr ant outlier payments. Our simulations estimated that approximately 81 pe rcent of outlier payments would be paid to proprietary HHAs and that approxim ately two-thirds of outlier payments would be paid to HHAs located in Florida (27 percent), Texas (24 perc ent) and California (15 percent). We also conducted additional analyses on episodes in our si mulations 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 vis its in a 60-day episode of care. 31 Based upon the initial data analysis descri bed above and the information found in the literature review, we conducted further data analys is with more recent home health claims and OASIS data (CY 2012 and CY 2013) to expand our understanding of the diab etic patient in the home health setting. Specificall y, we investigated the extent to which beneficiaries with a diabetes-related principal diagnos is 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 magn itude 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, Pa rt A, Part B, and Part D). Our analysis began with identifying epis odes for the home health diabetic population based on claims and OASIS assessments most likel y to be associated with insulin injection assistance. We used the following criteria to identify the home health diabetic population of interest: (1) a diabetic cond ition listed as the principal/prim ary diagnosis on the home health claim; (2) Medicare Part A or Pa rt B enrollment for at least thr ee months prior to the episode and during the episode; and (3) episodes with at l east 45 skilled visits. This threshold was determined based on the distribution in the aver age number and length of skilled nursing visits for episodes meeting criteria 1 and 2 above us ing CY 2013 home health claims data. The average number of skilled nursing visits for benefi ciaries 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 ep isodes 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 Medica re home health payments in CY 2013. Of the 49,100 episodes of interest, 71 pe rcent received outlier payments and, on average, there were 86 skilled nursing visits per ep isode. In addition, 12 percent of the episodes in the study population were for patients prescr ibed an insulin pen to self-inject and more than half of the episodes billed (27,439) were for claims th at listed ICD-9-CM 2500x, “Diabetes Mellitus without mention of complication” , as the principal diagnosis c ode. ICD-9-CM describes the code 250.0x as diabetes mellitus without mention of complications (complications can include hypo- or hyperglycemia, or manifestations cl assified as renal, opht halmic, 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 contro lled and without compli cations 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 trad itional 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 an d 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. Ther efore, the possession of a prescribed insulin pen would suggest the ability to self-i nject. Since insulin pens often come pre-filled with insulin or must be used with a pre-filled cartridge, we be lieve there would not be a need for skilled nursing for the purpose of insulin injecti on assistance. We expect providers to assess the needs, abilities, and preference of the patient re quiring 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 pa tients 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 lim ited to patients that are physica lly 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 consider ing additional guidance that may be necessary surrounding insulin injection assistance provided via a pen based upon our analyses described above. We have found that lite rature supports that insulin pens may reduce expenses for theCMS-1611-P 114 patient in the form of co-pays and may increas e patient adherence to their treatment plan. Therefore, we encourage physicia ns to consider the potential benefits derived in prescribing insulin pens, when clinically appropr iate, given the patient’s condition. We also investigated whether secondary dia gnosis codes listed on home health claims support that the patient, either fo r physical or mental reasons, cannot self-inject. Our contractor, Abt Associates, with review and cl inical input from CMS c linical staff and expe rts, created a list of ICD-9-CM codes that indicat e a patient has impairments in dexterity, cogniti on, vision, and/or hearing that may cause the patien t to be unable to self-inject in sulin. 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 th at supported that the pa tient was physically or mentally unable to self-inject. When examini ng only the initial home health episodes of our study population, we found that 67 pe rcent of initial home health episodes with skilled nursing visits likely for insulin inject ions did not have a secondary diagnosis on the home health claim that supported that the patient wa s physically or mentally unable to self-inject. Using the same list of ICD-9-CM diagnosis codes, we examin ed both the secondary diagnoses on the home health claim and diagnoses on non-ho me health claims in the three months prior to starting home health care for initial home hea lth episodes. We found that for initial home health episodes in our study population that the percen tage of episodes that did not have a secondary diagnosis to support that the patient cannot se lf-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 in sulin and will require ongoing skilled nursing visits for insulin administ ration assistance. However, there is an expectation that the physician and the HHA would clearly docume nt detailed clinical findingsCMS-1611-P 115 and rationale as to why an individual is unabl e to self-inject, including the reporting of an appropriate secondary condition that supports th e inability of the patient to self-inject. As described above, a group of CMS clinicians and contractor clinic ians developed a list of conditions that would support the need fo r ongoing home health skilled nursing visits for insulin injection assistance for in stances where the patient is phys ically or mentally unable to self-inject and there is no able or willing caregiver to provid e 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 in sulin injection assistance. Table 28: ICD-9-CM Diagnosis Codes That I ndicate 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 cataractCMS-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 moodCMS-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 jointCMS-1611-P 118

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 th e 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 change s at this time, we are soliciting public comments on whether the conditions in Table 28 represent a comp rehensive list of codes that appropriately indicate that a patie nt may not be able to self-inject and the use of insulin pens in home health. We plan to con tinue 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 re sulting disability that limit the beneficiary’s ability to self-inject. G. Implementation of the International Classi fication 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-CMS-1611-P 119 93) was enacted. Section 212 of the PAMA, title d “Delay in Transition from ICD-9 to ICD-10 Code Sets,” provides that “[t] he Secretary of Health and Hu man Services may not, prior to October 1, 2015, adopt ICD-10 code sets as the sta ndard for code sets und er 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 Octobe r 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 Oc tober 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 selectio n 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 Cl assification of Diseases, 9th Revisi on, Clinical Modification (ICD-9-CM) and are available through the CMS website at: http://www.cms.gov/Medicare/Coding/IC D9ProviderDiagnosticCodes/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 fi nal 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 thera py being provided, must functionally reassess the patient using aCMS-1611-P 120 method which would include objective measur ement. The measurement results and corresponding effectiveness of the therapy, or lack thereof, must be documented in the clinical record. We anticipated that pol icy 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 receiv ing 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 reassess ments. Specifically, similar to the existing requirements for therapy reassessments when the patient resides in a ru ral area, we finalized changes to §409.44(c)(2)(i)(C)(2) and (D)(2) specif ying 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 vis it 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 visi ts was 17.2 percent in CY 2010 and decreased to 16.0 percent in CY 2011. In CY 2013 the percenta ge of episodes with at least 14 covered therapy visits increased to 16.3 pe rcent. 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 thera py 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 si milar trends in the number of ep isodes with at least 14 and 20CMS-1611-P 121 covered therapy visits. For example, for non-pr ofit 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 visi ts decreased from 4.2 percent in CY 2010 to 3.9 percent in CY 2011. For proprietary HHAs, the per centage 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 thera py 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 propos ed 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 re duced 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 e ffects of any one policy may be difficult to discern in years where multiple policy changes occu r 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 vi sits, thereby greatly diminishing the payment incentive for episodes at t hose 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 fr om 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 episod es that began in CY 2009 but ended in CY 2010. For CY 2011 and CY 2013, we incl uded 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 reassessmen t requirements were implemented in CY 2011, providers have expressed frustration regarding the timing of reassessments for multi-discipline therapy episodes. In multiple therapy episodes, ther apists must communicate when a planned visit and/or reassessment is missed to accurately tr ack and count visits. Otherwise, therapy reassessments may be in jeopardy of not be ing performed during the required timeframe increasing the risk of subsequent visits being non-covered. As st ated above, our recent analysis of claims data from CY 2010 through CY 2013 show s no significant change in the percentage of cases reaching the 14 therapy vi sit and 20 therapy visit thres holds between CY 2010 and CY 2011. Moreover, payment increases at the 14 thera py visit and 20 therapy visit thresholds have been mitigated since the reca libration of the case-mix weights in CY 2012. Therefore, we propose to simplify §409.44(c)(2) to re quire a qualified therapist (ins tead of an assistant) from each discipline to provide the needed therapy se rvice 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 reasse ssment 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 qualifiedCMS-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 documente d in the clinical record. We believe that revising this requi rement would make it easier an d less burdensome for HHAs to track and to schedule therapy re assessments every 14 calendar days as opposed to tracking and counting therapy visits, especially for multiple-disci pline therapy episodes. We also believe that this proposal would reduce the risk of non-covered visits so th at therapists could focus more on providing quality care for their patients, while st ill promoting therapist involvement and quality treatment for all beneficiar ies, regardless of the le vel 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 purchas ing (VBP) programs, in general, are intended to tie a provider’s paym ent 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 th e Secretary to develop a plan to implement a VBP program for home health agencies (HHAs) a nd to issue an associated Report to Congress (Report). The Secretary issued that Report, which is available online athttp://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 pr ograms and coordinatesCMS-1611-P 124 incentives to improve quality. The Report i ndicated 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 pe rformance. Section 402 of Public Law 92-603 provided authority for the CMS to conduct the Home Health Pay-for-Performance (HHPFP) Demonstrati on that ran from 2008 to 2010. The results of that Demonstration found limited quality improveme nt in certain measures after comparing the quality of care furnished by Demonstration partic ipants to the quality of care furnished by the control group. One important le sson learned from the HHPFP De monstration 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 we re unknown until after th e conclusion of the Demonstration. This time lag on paying incen tive payments did not provide a sufficient incentive to HHAs to make investments necessa ry 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 fashio n to encourage HHAs to be fully engaged in the quality of care initiative. The eval uation report is available online at https://www.cms.gov/Research-Statistics-Da ta-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 pa yments 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 Presid ent’s 2015 Budget proposes that value-based purchasing should be extended to additional prov iders including skilled nursing facilities, homeCMS-1611-P 125 health agencies, ambulatory surgi cal 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 opportuni ty to test whether larger incentives than what have been previously tested will lead to even greater impr ovement 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, th e model would begin at the outset of CY 2016, and include an array of measures that can ca pture the multiple dimensions of care that HHAs furnish. Building upon the successes of other rela ted programs, we are seeking to implement a model with greater upside benef it and downside risk to motivate HHAs to make the substantive investments necessary to improve th e quality of care furnished by HHAs. As currently envisioned, the HHA VBP m odel 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 appl y to all HHAs in each of the projected five to eight states selected to participate in the model. The distribution of pa yments would be based on quality performance, as measured by both achievement and improvement across multiple quality measures. Some HHAs would receive higher paym ents than standard fee-for-service payments and some HHAs would receive lower payments, si milar 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 pla nning, 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 th ey 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 highes t 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 pr ovider’s performan ce relative to other HHAs within its participating state. HHAs that exceed the performance standard s and demonstrat e the greatest level of overall quality or quality improvement on the selected meas ures would have the opportunity to receive performance payment adjust ments greater than the amount of the payment reduction, and would therefore see a net payment in crease 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 Me dicare 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 wa ive the applicable Medicare payment provisions for HHAs in the selected stat es and apply a reduction or increase to current Medicare payments to these HHAs, which woul d be dependent on their performance. We are considering a HHA VBP model in whic h participation by all HHAs in five to eight selected states is mandatory. We belie ve requiring all HHAs in selected states to participate in the model will ensu re 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 reduc tion. In this proposed rule, we invite comments on the HHA VBP model outlined above, includi ng elements of the model, size of the payment incentives and percentage of paymen ts that would need to be placed at risk in order to spur HHAs to make the necessary in vestments to improve the quality of care for Medicare beneficiaries, the timing of the ince ntive payments, and how performance payments should be distributed. We also invite comments on the best approach for selecting states forCMS-1611-P 127 participation in this model. Approaches c ould include: (1) Selec ting states randomly, (2) selecting states based on quality, utilization, health IT, or efficien cy 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 additiona l comments on a more detailed model proposal to be included in future rulemaking. J. Advancing Health Information Exchange HHS believes all patients, their families, a nd their healthcare providers should have consistent and timely access to their health inform ation 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 St rategies for Accelerating Health Information Exchange.”) The Department is committed to ac celerating health information exchange (HIE) through the use of electronic hea lth records (EHRs) and other types of health information technology (HIT) across the broader care continuu m through a number of in itiatives including: (1) Alignment of incentives and payment adjustments to encourage provider adoption and optimization of HIT and HIE se rvices through Medicare and Me dicaid payment policies, (2) adoption of common standards and certification requirements for interoperable HIT, (3) support for privacy and security of pa tient information across all HIE-focused initiatives, and (4) governance of health information networks. Th ese initiatives are designed to encourage HIE among all health care providers, in cluding 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 de livery and coordination across the entire care continuum. To increase flexib ility in the Office of the Na tional Coordinator for Health Information Technology’s (ONC) regulatory certifi cation structure and ex pand HIT certification,CMS-1611-P 128 ONC has proposed a voluntary 2015 Edition EHR Certif ication rule to more easily accommodate HIT certification for technology used by other types of health care settings where individual or institutional health care provide rs are not typically eligible for incentive payments under the EHR Incentive Programs, such as long-term and pos t-acute care and behavi oral health settings (79 FR 10880 )

. We believe that HIE and the use of ce rtified EHRs by HHAs (and other providers ineligible for the Medicare and Medicaid EHR Incentive programs) can effectively and efficiently help providers improve internal ca re delivery practices, support management of patient care across the continuum, and enable th e 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-re searchers-implementers/sta ndards-and-certificationregulations

• http://www.healthit.gov/facas/FACAS/h ealth-it-policy-committee/hitpcworkgroups/certificationadoption

• http://wiki.siframework.org/L CC+LTPAC+Care+Transition+SWG

• http://wiki.siframework.org/Longi tudinal+Coordination+of+Care K. Proposed Revisions to the Speech-La nguage Pathologist Personnel Qualifications We propose to revise the personnel qualifica tions for speech-language pathologists (SLP) to more closely align the regulat ory requirements with those set fo rth 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 serv ices. To the extent of our knowledge, all states license SLPs; therefore, all SLPs would be cove red by this option. We believe that deferring toCMS-1611-P 129 the states to establish specific SLP requirement s would allow all appropriate SLPs to provide services to Medicare beneficiarie s. Should a state choose to not o ffer licensure at some point in the future, we propose a second, more specific, opti on for qualification. In that circumstance, we would require that a SLP successfully complete 350 clock hours of supervis ed clinical practicum (or is in the process of accumulating such supervised clini cal experience); perform not less than 9 months of supervised full-tim e speech-language pathology servic es after obtaining a master’s or doctoral degree in speech-langua ge pathology or a related field; and successfully complete a national examination in speech-language pathol ogy approved by the Secretary. These specific requirements are set forth in the Act, and we believ e that they are appropriate for inclusion in the regulations as well. We invite comments on this technical correcti on and associated change in the regulations at §484.4 in section VI. L. Proposed Technical Regulations Text Changes We propose to make technical correcti ons in §424.22(b)(1) to better align the recertification requirements with the Medicare Conditions of Pa rticipation (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 la st 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 recertif ication is required at least every 60 days unless there is a beneficiary elected transfer or a di scharge with goals met and return to the same HHA during the 60-day ep isode. The word “unless” was inadvertentlyCMS-1611-P 130 left out of the payment regulations text. In serting “unless” into §424.22(b) (1) realigns the recertification require ments with the CoPs at §484.55(d)(1). As outlined in the “Medicare Program; Pros pective 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 be neficiary 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 bene ficiary 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 woul d be initiated (rather than an update to the comprehensive assessment) and thus the second ep isode would be consider ed a certification, not a recertification, 32 and would be subject to §424.22(a)(1). We also propose to make a technical co rrection in §484.250(a)(1) to remove the “-C” after “OASIS” in §484.250(a)(1), so that the regulation refers ge nerically to the version of OASIS currently approved by the Secretary, a nd to align this section with the payment regulations at §484.210(e). Sp ecifically, 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/Qualit y-Initiatives-Patient-AssessmentInstruments/OASIS/downloads/OASISConsiderationsforPPS.pdfCMS-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 Rec onciliation Act of 1987 (OBRA ’87) (Pub. L 100-203, enacted on December 22, 1987) added subsect ions 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 Medica re 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 it ems 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 appropri ate procedures for appealing determinations relating to the impos ition of alternative sanctions. In the November 8, 2012 Federal Register (77 FR 67068), we published in the “Alternative Sanctions for Home Health Agenci es With Deficiencies” final rule (part 488, subpart J), as well as made correspo nding revisions to sections §489.53 and §498.3

. This subpart J added the rules for enforcement actions for HH As 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 th at leads to the imposition of a sanction, including termination. Section 488.845(b) describes the ra nges of CMPs that may be im posed for all condition-level findings: upper range ($8,500 to $10,000); middl e 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) addresse s the appeals procedures when CMPs are imposed, including the need for any app eal request to meet the require ments 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 author ities) find that the basis for imposing a civil money penalty exists, as specifi ed in §488.485, he or she may not se t a penalty of zero or reduce a penalty to zero; review the ex ercise of discretion by CMS or the state to impose a civil money penalty; or, in reviewing the am ount of the penalty, consider any factors other than those specified in §488.485(b)(1)(i) throug h (b)(1)(iv). That is, when th e administrative law judge or state hearing officer (or higher administrativ e authority) finds noncom pliance 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 revi ew 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 re vise the reference to section §488.740 which was a typographical erro r 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 incl ude cross reference to propos ed §488.845(h) which establishesCMS-1611-P 133 the scope of CMP review for HHAs. Finall y, 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 provi de 60-day notice in the Federal Register and solicit public comment before a co llection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. To fairly evaluate whether an information collection s hould be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 require s 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 inform ation collection burden on the affected public, including automate d collection techniques. We are soliciting public comment the informa tion 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 appr oved under OMB control number as 0938-1083. A. Proposed Changes to the Face-to-Face Encounter Requirements The following assumptions were used in es timating the burden fo r 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 administra tor (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 in cludes 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 th at, as a condition for payment, prior to certifying a patient’s eligibility for the Medicare home health benefi t the physician must docum ent that the physician himself or herself or an allo wed 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 th e patient requires home health se rvices and occur no more than 90 days prior to the home health st art of care date or within 30 days after the start of the home health care. In addition, as pa rt of the certificatio n of eligibly, the ce rtifying physician must document the date of the encounter and include an explanation (narrative) of why the clinical findings of such encounter support that the pa tient 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 andCMS-1611-P 135 physicians, and to mitigate instances where physic ians and HHAs unintentionally fail to comply with certification requi rements, we propose to eliminat e the narrative requirement at §424.22(a)(1)(v). The certifying phys ician will still be required to certify that a face-to-face patient encounter, which is related to the pr imary 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 cert ification of eligibility. In eliminating the face-to-face encounter narrati ve requirement, we assume that there will be a one-time burden for the HHA to modify th e certification form, which the HHA provides to the certifying physician. The re vised certification form must a llow the certifying physician to certify that a face-to-face patient encounter, whic h is related to the primary reason the patient requires home health services, occurred no more th an 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 cleri cal 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 h ours. 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 to tal one-time cost for all HHAs would beCMS-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-f ace encounter narrative, which includes how the clinical findings of the encounter support eligibi lity (writing, typing, or di ctating 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 cert ifications and recertifications, th ere 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 episode s in a year based on 2012 claims data from the home health Datalink file. As such, the es timated burden for the certifying physician to write the face-to-face encounter narrat ive 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 en counter 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 narra tive, the certifying phys ician will still be required to document the date of the face-to-f ace encounter as part of the certification of eligibility. We estimate that it would take no mo re than 1 minute for the certifying physician to document the date that the face-to-face enc ounter 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 certi fication or 51,405hours total (0.0166 hours x 3,096,680 initial home health episodes). The esti mated 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, inCMS-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 cost s 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 Documentati on of a Face-to-Face Encounter is Required To determine when documentation of a patien t’s face-to-face encount er is required under sections 1814(a)(2)(C) a nd 1835 (a)(2)(A) of the Act, we are proposing to clarify that the faceto-face encounter requirement is applicable for cert ifications (not recertifi cations), rather than initial episodes. A certification (versus recertifi cation) is generally considered to be any time that a new start of care OASIS is completed to initiate care. We esti mate that of the 6,562,856 episodes in the CY 2012 home health Datali nk file, 3,096,680 start of care assessments were performed on initial home health episodes. If this proposal is impl emented, 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 certifyi ng 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 in itiate 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 certif ication (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-Fa ce 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 certify ing 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 qualif ied therapist, of the corresp onding discipline for the type of therapy being provided, using a method which woul d include objective meas urement. If more than one discipline of therapy is being provided, a qualified therapist from each of the disciplines must perform the assessment and periodic re assessments. The measurement results and corresponding effectiveness of the therapy, or lack thereof, must be documented in the clinicalCMS-1611-P 139 record. At least every 30 days a qualified therapist (instead of an assistant) must provide the needed therapy service and functiona lly reassess the patient. If a patient is expected to require 13 and/or 19 therapy visits, a qualif ied therapist (instead of an assi stant) must provide all of the therapy services on the 13th visit and/or 19th ther apy visit and functionally reassess the patient in accordance with §409.44(c)(2)(i)(A). When the patient resides in a rura l 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 thera py visit but no later than the 13th therapy visit and after the 16 th therapy visit but no later than the 19 th therapy visit for the plan of care. In instances where the frequency of a particular discip line, as ordered by a physician, does not make it feasible for the reassessment to occur during th e specified timeframe s 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 reasse ss the patient during the visit associated with that discipline that is scheduled to occur cl osest 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 visi ts and to reduce th e risk of noncovered visits so that therapists can focus more on provi ding quality care for thei r 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 r eassessments would remain unchanged. A qualified therapist (instead of an assistant), from each therapy discipline provided, must provide the ordered therapy service and functionally reas sess the patient using a method which wouldCMS-1611-P 140 include objective measurement. The measurement results and co rresponding 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 progr ess toward goals and the regulations at §409.44(c)(2)(i) already mandate that for therapy se rvices 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 conditio n. The functional assessment does not require a special visit to the patient, but is conducted as part of a regu larly scheduled therapy visit. Functional assessments are necessa ry to demonstrate progress (o r 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 th e functional assessment and its accompanying documentation are already part of existing HHA practices and accepted st andards of clinical practice. Therefore, we conti nue 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 approve d PRA package (OMB# 0938–1083) to describe these changes to the regulatory text. C. Submission of PRA-Related CommentsCMS-1611-P 141 If you comment on these information collecti on and recordkeeping requirements, please submit your comments electronically as specified in the ADDRESSES section of this proposed rule. PRA-specific comments must be rece ived 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 subse quent 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 (Septemb er 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regul atory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, secti on 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 Congres sional 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, andCMS-1611-P 142 of promoting flexibility. This proposed rule ha s been designated as economically significant under section 3(f)(1) of Executiv e Order 12866, since the aggregate transfer impacts in calendar year 2015 will exceed the $100 million threshold. Th e 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 requireme nts 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 Ac t 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 am ount include all costs for HH services covered and paid for on a reas onable 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 amoun t be adjusted to account for the effects of case-mix and wage levels among HHAs. Sec tion 1895(b)(3)(B) of th e Act addresses the annual update to the standa rd prospective payment amounts by the HH applicable percentage increase. Sec tion 1895(b)(4) of the Act govern s the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act requ ire 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 establis hment of wage adjustmentCMS-1611-P 143

factors that reflect the relative level of wa ges, 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 Ac t 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. Sect ion 1895(b)(3)(B)(v) of th e Act requires HHAs to submit data for purposes of measuring health car e quality, and links the quality data submission to the annual applicable percen tage increase. Also, section 1886(d)(2)(D) of the Act requires that HH services furnished in a rural area for ep isodes 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 nati onal, standardized 60-da y episode payment rate and other amounts applicable unde r 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 averag e 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 equa l increments, not to ex ceed 3.5 percent of the amount (or amounts) as of the date of enactme nt (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 app lies 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 app lied a wage index budget neutrality factor andCMS-1611-P 144 a case-mix weights budget neutrality factor to the rates as discu ssed in section II I.D.4. of this proposed rule; therefore, the es timated impact of the 2015 wage index proposed in section III.D.3. of this proposed rule a nd 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 paymen t rates, and the NRS conversion factor for an impact of -2.5 per cent ($485 million decrease). The $58 million in decreased payments is reflected in the last colu mn 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 entit ies. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals a nd most other providers and supplie rs 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 almo st all HHAs are small entities as that term is used in the RFA. Individuals a nd states are not included in the de finition of a small entity. The economic impact assessment is based on esti mated Medicare payments (revenues) and HHS’s practice in interpreting the RFA is to consider e ffects economically ‘‘signif icant’’ 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 Medica re-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. Th erefore, the Secretary hasCMS-1611-P 145 determined that this proposed rule will not ha ve a significant economic impact on a substantial number of small entities. Further detail is pr esented 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, gi ven 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 th e 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 thes e changes may not be specific to the HH PPS, the nature of the Medicare program is such that the change s may interact, and the complexity of the interaction of these changes would make it diffi cult 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) fo r 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 th e 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 s ection 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 si gnificant economic impact on the operations of small rural hospitals. Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires thatCMS-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 tr ibal 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 expe nditure effects of polic y changes proposed in this rule. We use the latest data and best analysis available, but we do not make ad justments for future changes in such variables as number of visits or case-mix. This analysis incorporates the latest estimat es of growth in service use and payments under the Medicare HH benefit, primarily on pre liminary Medicare claims from 2013. We note that certain events may combine to limit the scop e or accuracy of our impact analysis, because such an analysis is future-orien ted 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 Me dicare program may continue to be made as a result of the Affordable Care Act, or new stat utory 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 likel y to be affected by the policy changes proposed in this rule. For this analysis, we us ed an analytic file with linked CY 2013 HH claimsCMS-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 Ta ble 34 classifies HHAs according to a number of characteristics including provide r type, geographic region, and ur ban and rural locations. The third column shows the payment effects of prop osed 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 na tional, standardized 60-day episode payment rate, the national per-visit payment rates, and NRS co nversion 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 paymen t 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 experi ence a 0.3 percent decrease in payments while facility-based HHAs and non-profit HHAs ar e 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 pe rcent with rural frees tanding 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 anticip ated 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 freesta nding and facility-bas ed 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 theCMS-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 d ecrease in payments for CY 2015; however, in contrast, the New England census region is es timated 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 episode s. A substantial amount of the variation in the estimated impacts of the proposals in this pro posed 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 recalib ration 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 e xperience different impacts on payments than others due to the distributional impact of th e CY 2015 wage index, the extent to which HHAs had episodes in case-mix groups where the case-mi x 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 decr ease 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 Im pacts by Facility Type and Area of the Country, CY 2015

Number of Agencies Proposed CY 2015

Wage Index 1 CY 2015 Case-Mix Weights 2 Rebasing 3 CY 2015 HH Payment Update Percentage 4 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 Index 1 CY 2015 Case-Mix Weights 2 Rebasing 3 CY 2015 HH Payment Update Percentage 4 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 refl ects the transition to new CBS A 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 pr oposed rule. 2 The impact of the proposed CY 2015 home he alth case-mix weights reflects the reca libration of the case-mix weights as outlined in section III.C of this proposed rule offset by the ca se-mix weights budget neutrality factor described in section II I.D.4 of this proposed rule. 3 The impact of rebasing includes the re basing adjustments to the national, standa rdized 60-day episode payment rate (-2.75 percent after the CY 2014 payment rate was adjusted for the wage index and case-mi x 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 decr ease in estimated payments to HHAs . The overall impa ct of all the rebasing adjustments finalized in the CY 2014 HH PPS proposed ru le 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 natio nal per-visit rates increase and the nation al, standardized 60-day episode rate decreases more episodes qualify for outlier payments. In addition, we decreased the fixed-doll ar loss (FDL) ratio from 0.67 to 0.45 effective CY 2013 in orde r 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 per centage reflects the home health market basket update of 2.6 percent, reduced by a 0.4 percentage point multifactor producti vity (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, Massac husetts, 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, Mi ssissippi, 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 IslandsCMS-1611-P 151

E. Alternatives Considered In recalibrating the HH PPS case-mix weights fo r 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 w ith 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 patie nt health status. If we were to implemen t 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 ho me health payment update percentage, and a $350 million decrease (-1.8 percent) due to onl y making the case-mix weights recalibration budget neutral with regards to our estimate of r eal increases in patient severity. However, instead of implementing a case-mix budget neutrality f actor that only reflects our estimate of real increases in patient severity; we plan to recalibra te 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 sec tion III.D.3 of this proposed rule related to our adoption of the revised OMB delineations fo r purposes of calculating the wage index, we believe implementing the new OMB delineations woul d result in wage index values being more representative of the actual cost s 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 revise d 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 in stability and negative impact on ce rtain 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 objec tives set forth in the FY 2006 SNF PPS final rule ( 70 FR 45041 ), we first considered transitioni ng the wage index to the revised OMB delineations over a number of years in order mi nimize 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, whic h argues for a faster transition to the revised OMB delineations. We believe that using the mo st 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 stri ke the best balance. Second, we considered what type of blend would be a ppropriate for purposes of the transition wage index. We are proposing that HHAs would r eceive a one-year blended wage index using 50 percent of their CY 2015 wage index base d 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 ne gative 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 blen ded 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 theirCMS-1611-P 153 respective wage index values due to implement ation 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 po licy 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 bu dget 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 th e blended wage index to all HHAs. For the reasons discussed above, we believe th at our proposal to us e a one-year transition with a blended wage index in CY 2015 appropria tely balances the interests of all HHAs and would best achieve our objective of provi ding 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 nati onal, standardized 60-da y episode payment rate and other amounts applicable unde r 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 averag e 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 equa l increments, not to ex ceed 3.5 percent of the amount (or amounts) as of the date of enactme nt (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-vis it rates and the NRS conversion factor. As we noted in the CY 2014 HH PPS final rule, because section 3131(a) of the Affordab le 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 adjustmentsCMS-1611-P 154 once we have determined that rebasing is necessary (78 FR 72283). Section 1895(b)(3)(B) of the Ac t requires that the standard prospective payment amounts for CY 2015 be increased by a factor equal to th e applicable HH market basket update for those HHAs that submit quality data as required by th e Secretary. For CY 2015, section 3401(e) of the Affordable Care Act, requires that, in CY 2015 (a nd in subsequent calend ar years), the market basket update under the HHA prospective payment sy stem, 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 se ction 3401(e) of the Affordable Care Act, requires the applic ation of the productivity adju stment 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 pream ble 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 alternativ es discussed in this analysis. F. Accounting Statement and Table As required by OMB Circul ar A-4 (available at http://www.whitehouse.gov/om b/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 estimat e of the decrease in Medicare payments under the HH PPS as a result of the change s 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-f ace encounter requirements in section III.B. We estimate a net reduction in burden for cer tifying physicians of 192,765 hours or $21,796,330 (seeCMS-1611-P 155 section IV of this proposed ru le). In addition, Table 35 refl ects our estimate of a one-time burden for HHAs to revise the certification fo rm of 5,761 hours or $245,397 as described in section IV. of this proposed rule.

TABLE 35: Accounting Statement: Classificati on 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 distributiona l effects of the 2.2 pe rcent 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 phys icians are estimated to incur a ne t reduction in burden costs of $21,796,330 and HHAs are expected to incur a one-time increase in burden costs to revise the certificati on form of $245,397 as a result of the proposal to eliminate the faceto-face encounter narrative requirement. This an alysis, together with the remainder of this preamble, provides an initial Re gulatory Flexibility Analysis. VII. Federalism Analysis Executive Order 13132 on Federalism (August 4, 1999) establishes cer tain requirements that an agency must meet when it promulgates a final rule that imposes substantial directCMS-1611-P 156 requirement costs on state and local governme nts, preempts state law, or otherwise has Federalism implications. We have reviewed th is 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, ro les, and responsibilities of stat es, 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 facili ties, Health professions, Medicare, and Reporting and recordkeeping requirements
42 CFR Part 484 Health facilities, Health professions, Medicare, and Reportin g and recordkeeping requirements
42 CFR Part 488 Administrative practice and pr ocedure, Health facilities, Medicare, and Reporting and recordkeeping requirements
42 CFR Part 498 Health facilities, Medicare, Reporting and recordkeeping requirementsCMS-1611-P 158 For the reasons set forth in the preamble, the Centers for Medicar e & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:
PART 409—HOSPITAL INSURANCE BENEFITS 1. The authority citation for part 40 9 continues to read as follows: Authority: Secs. 1102 and 1871 of the Social Se curity Act (42 U.S.C. 1302 and 1395hh). 2. Section 409.44 is amended by— A. Removing “intermediary’s” from para graph (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) throug h (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) a nd (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 se ction.” 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 42 4 continues to read as follows:CMS-1611-P 159
Authority: Secs. 1102 and 1871 of the Social Se curity 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) Co ntent of certification. As a conditi on for payment of home health services under Medicare Part A or Medicare Part B, a physicia n must certify the patient’s eligibility for the home health benefit, as outli ned in 1814(a)(2)(C) and 183 5(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 th is section, must support the certific ation of eligibility as outlined in paragraph (a)(1)(i) thr ough (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 complicati on requires a registered nurse to ensure that essential nonskilled care is achieving its purpose, and necessi tates a registered nurse be involved in the development, management, and evaluation of a pa tient'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 certific ation 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 requi red because the individua l 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 me dicine, osteopathy, or podiatric medicine, and who is not precluded from perfor ming this function under paragraph (d) of this section. (A doctor of podiatric medicine may perf orm only plan of treatm ent 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 th an 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 practitione r 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 cl inical nurse specialist (as those terms are defined in section 1861(aa)(5) of the Act) who is wo rking 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 unde r 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 wa s directly admitted to home health. (5) A physician assistant (as defined in s ection 1861(aa)(5) of the Act) under the supervision of the certifying phys ician 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 en counter may occur through tele health, in compliance with Section 1834(m) of the Act and subject to the li st of payable Medicare telehealth services established by the applicable physician fee sche dule regulation. (1) Timing and signature. The certification of need for home health services must be obtained at the time the plan of care is establishe d or as soon thereafter as possible and must be signed and dated by the physicia n who establishes the plan. (2) [Reserved] (b) Recertification—(1) Timi ng and signature of recertif ication. 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 occu r at the time the plan of care is reviewed, and must be signed and dated by the physician who re views 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 exp ectation of a return to home health care. (2) Content and basis of recertification. The r ecertification statemen t must indicate the continuing need for services and estimate how mu ch longer the services will be required. NeedCMS-1611-P 162 for occupational therapy may be the basis for con tinuing services that were initiated because the individual needed skilled nursing care or physic al therapy or speech therapy. If a patient's underlying condition or complicati on requires a registered nurse to ensure that essential nonskilled care is achieving its purpose, and necessi tates a registered nurse be involved in the development, management, and evaluation of a pa tient'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 imme diately 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 rece rtification 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 se rvices 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 sett ing was directly admitted to home health) used to support th e 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 demonstrat e 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.
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PART 484 –HOME HEALTH SERVICES 5. The authority citation for part 48 4 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 eith er of the following requirements: (a) Is licensed as a speech-language pathol ogist by the State in which the individual furnishes such services; or (b) In the case of an individual who furnishe s 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 su pervised clinical experience); (2) Performed not less than 9 months of s upervised full-time speech-language pathology services after obtaining a maste r’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 requi rements of section 1895(b) (3)(B)(v) of the Act.
* * * * *CMS-1611-P 164
PART 488 – SURVEY, CERTIFICATIO N, AND ENFORCEMENT PROCEDURES 8. The authority citation for part 48 8 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 pa ragraph (h) to read as follows: §488.845 Civil money penalties. * * * * * (h) Review of the penalty. When an administ rative law judge or state hearing officer (or higher administrative review aut hority) finds that the basis for imposing a civil monetary penalty exists, as specified in this pa rt, 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 D ETERMINATIONS
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 paragr aphs (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 pa ragraph (d)(12) of this section for SNFs, NFs and HHAs, the finding of noncompliance leading to the impo sition of enforcement actions specified in §488.406 or §488.820 of this ch apter, 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 th at CMS could collect (for SNFs or NFs, the scope of review during a h earing 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 dur ing 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 para graphs (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 cl early 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]