Vol. 79 Monday, 

No. 129 July 7, 2014 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 409, 424, 484, et al. 

Medicare and Medicaid Programs; CY 2015 Home Health Prospective 

Payment System Rate Update; Home Health Quality Reporting 

Requirements; and Survey and Enforcement Requirements for Home 

Health Agencies; Proposed Rule 

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38366 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

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

[CMS–1611–P] 

RIN 0938–AS14 

Medicare and Medicaid Programs; CY 

2015 Home Health Prospective 

Payment System Rate Update; Home 

Health Quality Reporting 

Requirements; and Survey and 

Enforcement Requirements for Home 

Health Agencies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the Home Health Prospective 

Payment System (HH PPS) rates, 

including the national, standardized 60- 

day episode payment rates, the national 

per-visit rates, and the non-routine 

medical supply (NRS) conversion factor 

under the Medicare prospective 

payment system for home health 

agencies (HHAs), effective January 1, 

2015. As required by the Affordable 

Care Act, this rule implements the 

second year of the four-year phase-in of 

the rebasing adjustments to the HH PPS 

payment rates. This rule provides 

information on our efforts to monitor 

the potential impacts of the rebasing 

adjustments and the Affordable Care Act 

mandated face-to-face encounter 

requirement. This rule also proposes: 

Changes to simplify the face-to-face 

encounter regulatory requirements; 

changes to the HH PPS case-mix 

weights; changes to the home health 

quality reporting program requirements; 

changes to simplify the therapy 

reassessment timeframes; a revision to 

the Speech-Language Pathology (SLP) 

personnel qualifications; minor 

technical regulations text changes; and 

limitations on the reviewability of the 

civil monetary penalty provisions. 

Finally, this proposed rule also 

discusses Medicare coverage of insulin 

injections under the HH PPS, the delay 

in the implementation of ICD–10–CM, 

and solicits comments on a HH valuebased purchasing (HH VBP) model. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on September 2, 2014. 

ADDRESSES: In commenting, please refer 

to file code CMS–1611–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions under the ‘‘More Search 

Options’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1611–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1611–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call (410) 786–7195 in advance to 

schedule your arrival with one of our 

staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Hillary Loeffler, (410) 786–0456, for 

general information about the HH PPS. 

Joan Proctor, (410) 786–0949, for 

information about the HH PPS Grouper, 

ICD–9–CM coding, and ICD–10–CM 

Conversion. 

Kristine Chu, (410) 786–8953, for 

information about rebasing and the HH 

PPS case-mix weights. 

Hudson Osgood, (410) 786–7897, for 

information about the HH market 

basket. 

Caroline Gallaher, (410) 786–8705, for 

information about the HH quality 

reporting program. 

Lori Teichman, (410) 786–6684, for 

information about HHCAHPS. 

Peggye Wilkerson, (410) 786–4857, for 

information about survey and 

enforcement requirements for HHAs. 

Robert Flemming, (410) 786–4830, for 

information about the HH VBP model. 

Danielle Shearer, (410) 786–6617, for 

information about SLP personnel 

qualifications. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. EST. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs and Benefits 

II. Background 

A. Statutory Background 

B. System for Payment of Home Health 

Services 

C. Updates to the HH PPS 

III. Provisions of the Proposed Rule 

A. Monitoring for Potential Impacts— 

Affordable Care Act Rebasing 

Adjustments and the Face-to-Face 

Encounter Requirement 

1. Affordable Care Act Rebasing 

Adjustments 

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2. Affordable Care Act Face-to-Face 

Encounter Requirement 

B. Proposed Changes to the Face-to-Face 

Encounter Documentation Requirements 

1. Statutory and Regulatory Requirements 

2. Proposed Changes to the Face-to-Face 

Encounter Narrative Requirement and 

Non-Coverage of Associated Physician 

Certification/Re-Certification Claims 

3. Proposed Clarification on When 

Documentation of a Face-to-Face 

Encounter is Required 

C. Proposed Recalibration of the HH PPS 

Case-Mix Weights 

D. CY 2015 Rate Update 

1. Proposed CY 2015 Home Health Market 

Basket Update 

2. Home Health Care Quality Reporting 

Program (HHQRP) 

a. General Considerations Used for 

Selection of Quality Measures for the 

HHQRP 

b. Background and Quality Reporting 

Requirements 

c. OASIS Data Submission and OASIS Data 

for Annual Payment Update 

d. Updates to HH QRP Measures Which 

Are Made as a Result of Review by the 

NQF Process 

e. Home Health Care CAHPS Survey 

(HHCAHPS) 

3. Proposed CY 2015 Home Health Wage 

Index 

4. Home Health Wage Index 

a. Background 

b. Update 

c. Proposed Implementation of New Labor 

Market Delineations 

5. Proposed CY 2015 Annual Payment 

Update 

a. Background 

b. Proposed CY 2015 National, 

Standardized 60-Day Episode Payment 

Rate 

c. Proposed CY 2015 National Per-Visit 

Rates 

d. Low-Utilization Payment Adjustment 

(LUPA) Add-On Factors 

e. Proposed CY 2015 Nonroutine Medical 

Supply Conversion Factor and Relative 

Weights 

f. Rural Add-On 

E. Payments for High-Cost Outliers under 

the HH PPS 

1. Background 

2. Fixed Dollar Loss (FDL) Ratio and LossSharing Ratio 

F. Medicare Coverage of Insulin Injections 

under the HH PPS 

G. Implementation of the International 

Classification of Diseases, 10th Revision, 

Clinical Modification (ICD–10–CM) 

H. Proposed Change to the Therapy 

Reassessment Timeframes 

I. HHA Value-Based Purchasing Model 

J. Advancing Health Information Exchange 

K. Proposed Revisions to the SpeechLanguage Pathologist Personnel 

Qualifications 

L. Proposed Technical Regulations Text 

Changes 

M. Survey and Enforcement Requirements 

for Home Health Agencies 

1. Statutory Background and Authority 

2. Reviewability Pursuant to Appeals 

3. Technical Adjustment 

IV. Collection of Information Requirements 

V. Response to Comments 

VI. Regulatory Impact Analysis 

VII. Federalism Analysis 

Regulations Text 

Acronyms 

In addition, because of the many 

terms to which we refer by abbreviation 

in this proposed rule, we are listing 

these abbreviations and their 

corresponding terms in alphabetical 

order below: 

ACH LOS Acute Care Hospital Length of 

Stay 

ADL Activities of Daily Living 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Pub. L. 106–113 

CAD Coronary Artery Disease 

CAH Critical Access Hospital 

CBSA Core-Based Statistical Area 

CASPER Certification and Survey Provider 

Enhanced Reports 

CHF Congestive Heart Failure 

CMI Case-Mix Index 

CMP Civil Money Penalty 

CMS Centers for Medicare & Medicaid 

Services 

CoPs Conditions of Participation 

COPD Chronic Obstructive Pulmonary 

Disease 

CVD Cardiovascular Disease 

CY Calendar Year 

DM Diabetes Mellitus 

DRA Deficit Reduction Act of 2005, Pub. L. 

109–171, enacted February 8, 2006 

FDL Fixed Dollar Loss 

FI Fiscal Intermediaries 

FR Federal Register 

FY Fiscal Year 

HAVEN Home Assessment Validation and 

Entry System 

HCC Hierarchical Condition Categories 

HCIS Health Care Information System 

HH Home Health 

HHA Home Health Agency 

HHCAHPS Home Health Care Consumer 

Assessment of Healthcare Providers and 

Systems Survey 

HH PPS Home Health Prospective Payment 

System 

HHRG Home Health Resource Group 

HIPPS Health Insurance Prospective 

Payment System 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

IH Inpatient Hospitalization 

IRF Inpatient Rehabilitation Facility 

LTCH Long-Term Care Hospital 

LUPA Low-Utilization Payment Adjustment 

MEPS Medical Expenditures Panel Survey 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Pub. L. 108–173, enacted December 

8, 2003 

MSA Metropolitan Statistical Area 

MSS Medical Social Services 

NQF National Quality Forum 

NRS Non-Routine Supplies 

OASIS Outcome and Assessment 

Information Set 

OBRA Omnibus Budget Reconciliation Act 

of 1987, Pub. L. 100–2–3, enacted 

December 22, 1987 

OCESAA Omnibus Consolidated and 

Emergency Supplemental Appropriations 

Act, Pub. L. 105–277, enacted October 21, 

1998 

OES Occupational Employment Statistics 

OIG Office of Inspector General 

OT Occupational Therapy 

OMB Office of Management and Budget 

MFP Multifactor productivity 

PAMA Protecting Access to Medicare Act of 

2014 

PAC–PRD Post-Acute Care Payment Reform 

Demonstration 

PEP Partial Episode Payment Adjustment 

PT Physical Therapy 

QAP Quality Assurance Plan 

PRRB Provider Reimbursement Review 

Board 

RAP Request for Anticipated Payment 

RF Renal Failure 

RFA Regulatory Flexibility Act, Pub. L. 96– 

354 

RHHIs Regional Home Health 

Intermediaries 

RIA Regulatory Impact Analysis 

SAF Standard Analytic File 

SLP Speech-Language Pathology 

SN Skilled Nursing 

SNF Skilled Nursing Facility 

UMRA Unfunded Mandates Reform Act of 

1995. 

I. Executive Summary 

A. Purpose 

This proposed rule would update the 

payment rates for HHAs for calendar 

year (CY) 2015, as required under 

section 1895(b) of the Social Security 

Act (the Act). This would reflect the 

second year of the four-year phase-in of 

the rebasing adjustments to the national, 

standardized 60-day episode payment 

rate, the national per-visit rates, and the 

NRS conversion factor finalized in the 

CY 2014 HH PPS final rule (78 FR 

72256), required under section 3131(a) 

of the Patient Protection and Affordable 

Care Act of 2010 (Pub. L. 111–148), as 

amended by the Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152) (collectively referred 

to as the ‘‘Affordable Care Act’’). 

Updates to payment rates under the HH 

PPS would also include a proposal to 

change the home health wage index to 

incorporate the new Office of 

Management and Budget (OMB) corebased statistical area (CBSA) definitions 

and updates to the payment rates by the 

home health payment update 

percentage, which would reflect the 

productivity adjustment mandated by 

3401(e) of the Affordable Care Act. 

This proposed rule also discusses: 

Our efforts to monitor the potential 

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impacts of the Affordable Care Act 

mandated rebasing adjustments and the 

face-to-face encounter requirement 

(sections 3131(a) and 6407, respectively, 

of the Affordable Care Act); coverage of 

insulin injections under the HH PPS; 

and the delay in the implementation of 

the International Classification of 

Diseases, 10th Edition, Clinical 

Modification (ICD–10–CM) as a result of 

recent Congressional action (section 212 

of the Protecting Access to Medicare 

Act, Public Law 113–93 (‘‘PAMA’’)). 

This proposed rule also proposes 

changes to simplify the regulations at 

§ 424.22(a)(1)(v) that govern the face-toface encounter requirement mandated 

by section 6407 of the Affordable Care 

Act; changes to the HH PPS case-mix 

weights under section 1895(b)(4)(A)(i) 

and (b)(4)(B) of the Act; changes to the 

home health quality reporting program 

requirements under section 

1895(b)(3)(B)(v)(II) of the Act; changes 

to simplify the therapy reassessment 

timeframes specified in regulation at 

§ 409.44(c)(2)(C) and (D); a revision to 

the personnel qualifications for SLP at 

§ 484.4; and minor technical regulations 

text changes at § 424.22(b)(1) and 

§ 484.250(a)(1). This proposed rule 

would also place limitations on the 

reviewability of CMS’s decision to 

impose a civil monetary penalty for 

noncompliance with federal 

participation requirements. Finally, the 

proposed rule discusses and solicits 

comments on a HH VBP model. 

B. Summary of the Major Provisions 

As required by section 3131(a) of the 

Affordable Care Act and finalized in the 

CY 2014 HH final rule, ‘‘Medicare and 

Medicaid Programs; Home Health 

Prospective Payment System Rate 

Update for CY 2014, Home Health 

Quality Reporting Requirements, and 

Cost Allocation of Home Health Survey 

Expenses’’ (78 FR 77256, December 2, 

2013), we are implementing the second 

year of the four-year phase-in of the 

rebasing adjustments to the national, 

standardized 60-day episode payment 

amount, the national per-visit rates and 

the NRS conversion factor in section 

III.D.4. The rebasing adjustments for CY 

2015 would reduce the national, 

standardized 60-day episode payment 

amount by $80.95, increase the national 

per-visit payment amounts by 3.5 

percent of the national per-visit 

payment amounts in CY 2010 with the 

increases ranging from $6.34 for medical 

social services to $1.79 for home health 

aide services as described in section 

III.A, and reduce the NRS conversion 

factor by 2.82 percent. 

This proposed rule also discusses our 

efforts to monitor the potential impacts 

of the rebasing adjustments and the 

Affordable Care Act mandated face-toface encounter requirement in section 

III.A and, in section III.B. We would 

propose changes to the face-to-face 

encounter narrative requirement. In 

addition, we are proposing that 

associated physician claims for 

certification/re-certification of eligibility 

(patient not present) not be eligible to be 

paid when a patient does not meet home 

health eligibility criteria. We would also 

clarify in sub-regulatory guidance when 

the face-to-face encounter requirement 

would be applicable. In section III.C, we 

are proposing to recalibrate the HH PPS 

case-mix weights, using the most 

current cost and utilization data 

available, in a budget neutral manner. In 

section III.D.1, we propose to update the 

payment rates under the HH PPS by the 

home health payment update percentage 

of 2.2 percent (using the 2010-based 

Home Health Agency (HHA) market 

basket update of 2.6 percent, minus a 

0.4 percentage point reduction for 

productivity as required by 

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

III.D.3, we propose to update the home 

health wage index using a 50/50 blend 

of the existing core-based statistical area 

(CBSA) designations and the new CBSA 

designations outlined in a February 28, 

2013, Office of Management and Budget 

(OMB) bulletin, respectively. In section 

III.E, we propose no changes to the 

fixed-dollar loss (FDL) and loss-sharing 

ratios used in calculating high-cost 

outlier payments under the HH PPS. 

This proposed rule also proposes 

changes to the home health quality 

reporting program in section III.D.2, 

including the establishment of a 

minimum threshold for submission of 

OASIS assessments for purposes of 

quality reporting compliance, the 

establishment of a policy for the 

adoption of changes to measures that 

occur in-between rulemaking cycles as a 

result of the NQF process, and 

submission dates for the HHCAHPS 

Survey moving forward through CY 

2017. In section III.F, we discuss recent 

analysis of home health claims 

identified with skilled nursing visits 

likely done for the sole purpose of 

insulin injection assistance, and the lack 

of any secondary diagnoses on the home 

health claim to support that the patient 

was physically or mentally unable to 

self-inject. We discuss, in section III.G, 

the delay in the implementation of ICD– 

10–CM as a result of section 212 of 

PAMA. In section III.H we seek to 

simplify the therapy reassessment 

regulations by proposing that therapy 

reassessments are to occur every 14 

calendar days rather than before the 

14th and 20th visits and once every 30 

calendar days. Finally, in section III.I, 

we plan to discuss and solicit comments 

on an HH VBP model; in section III.J, we 

propose to revise the personnel 

qualifications for SLP; in section III.K 

we are proposing minor technical 

regulations text changes; and in section 

III.L we are proposing to place 

limitations on the reviewability of the 

civil monetary penalty that is imposed 

on a HHA for noncompliance with 

federal participation requirements. 

C. Summary of Costs and Transfers 

TABLE 1—SUMMARY OF COSTS AND TRANSFERS

Provision Description Costs Transfers 

CY 2015 HH PPS Payment 

Rate Update.

A net reduction in burden of $21.55 million associated 

with certifying patient eligibility for home health services & certification form revisions.

The overall economic impact of this proposed rule is an 

estimated $58 million in decreased payments to 

HHAs. 

II. Background 

A. Statutory Background 

The Balanced Budget Act of 1997 

(BBA) (Pub. L. 105–33, enacted August 

5, 1997), significantly changed the way 

Medicare pays for Medicare HH 

services. Section 4603 of the BBA 

mandated the development of the HH 

PPS. Until the implementation of the 

HH PPS on October 1, 2000, HHAs 

received payment under a retrospective 

reimbursement system. 

Section 4603(a) of the BBA mandated 

the development of a HH PPS for all 

Medicare-covered HH services provided 

under a plan of care (POC) that were 

paid on a reasonable cost basis by 

adding section 1895 of the Social 

Security Act (the Act), entitled 

‘‘Prospective Payment For Home Health 

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

requires the Secretary to establish a HH 

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PPS for all costs of HH services paid 

under Medicare. 

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

requires the following: (1) The 

computation of a standard prospective 

payment amount include all costs for 

HH services covered and paid for on a 

reasonable cost basis and that such 

amounts be initially based on the most 

recent audited cost report data available 

to the Secretary; and (2) the 

standardized prospective payment 

amount be adjusted to account for the 

effects of case-mix and wage levels 

among HHAs. 

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

addresses the annual update to the 

standard prospective payment amounts 

by the HH applicable percentage 

increase. Section 1895(b)(4) of the Act 

governs the payment computation. 

Sections 1895(b)(4)(A)(i) and 

(b)(4)(A)(ii) of the Act require the 

standard prospective payment amount 

to be adjusted for case-mix and 

geographic differences in wage levels. 

Section 1895(b)(4)(B) of the Act requires 

the establishment of an appropriate 

case-mix change adjustment factor for 

significant variation in costs among 

different units of services. 

Similarly, section 1895(b)(4)(C) of the 

Act requires the establishment of wage 

adjustment factors that reflect the 

relative level of wages, and wage-related 

costs applicable to HH services 

furnished in a geographic area 

compared to the applicable national 

average level. Under section 

1895(b)(4)(C) of the Act, the wageadjustment factors used by the Secretary 

may be the factors used under section 

1886(d)(3)(E) of the Act. 

Section 1895(b)(5) of the Act gives the 

Secretary the option to make additions 

or adjustments to the payment amount 

otherwise paid in the case of outliers 

due to unusual variations in the type or 

amount of medically necessary care. 

Section 3131(b)(2) of the Patient 

Protection and Affordable Care Act of 

2010 (the Affordable Care Act) (Pub. L. 

111–148, enacted March 23, 2010) 

revised section 1895(b)(5) of the Act so 

that total outlier payments in a given 

year would not exceed 2.5 percent of 

total payments projected or estimated. 

The provision also made permanent a 

10 percent agency-level outlier payment 

cap. 

In accordance with the statute, as 

amended by the BBA, we published a 

final rule in the July 3, 2000 Federal 

Register (65 FR 41128) to implement the 

HH PPS legislation. The July 2000 final 

rule established requirements for the 

new HH PPS for HH services as required 

by section 4603 of the BBA, as 

subsequently amended by section 5101 

of the Omnibus Consolidated and 

Emergency Supplemental 

Appropriations Act (OCESAA) for Fiscal 

Year 1999, (Pub. L. 105–277, enacted 

October 21, 1998); and by sections 302, 

305, and 306 of the Medicare, Medicaid, 

and SCHIP Balanced Budget Refinement 

Act (BBRA) of 1999, (Pub. L. 106–113, 

enacted November 29, 1999). The 

requirements include the 

implementation of a HH PPS for HH 

services, consolidated billing 

requirements, and a number of other 

related changes. The HH PPS described 

in that rule replaced the retrospective 

reasonable cost-based system that was 

used by Medicare for the payment of HH 

services under Part A and Part B. For a 

complete and full description of the HH 

PPS as required by the BBA, see the July 

2000 HH PPS final rule (65 FR 41128 

through 41214). 

Section 5201(c) of the Deficit 

Reduction Act of 2005 (DRA) (Pub. L. 

109–171, enacted February 8, 2006) 

added new section 1895(b)(3)(B)(v) to 

the Act, requiring HHAs to submit data 

for purposes of measuring health care 

quality, and links the quality data 

submission to the annual applicable 

percentage increase. This data 

submission requirement is applicable 

for CY 2007 and each subsequent year. 

If an HHA does not submit quality data, 

the HH market basket percentage 

increase is reduced by 2 percentage 

points. In the November 9, 2006 Federal 

Register (71 FR 65884, 65935), we 

published a final rule to implement the 

pay-for-reporting requirement of the 

DRA, which was codified at 

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

the statute. The pay-for-reporting 

requirement was implemented on 

January 1, 2007. 

The Affordable Care Act made 

additional changes to the HH PPS. One 

of the changes in section 3131 of the 

Affordable Care Act is the amendment 

to section 421(a) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173, enacted on December 8, 

2003) as amended by section 5201(b) of 

the DRA. The amended section 421(a) of 

the MMA now requires, for HH services 

furnished in a rural area (as defined in 

section 1886(d)(2)(D) of the Act) with 

respect to episodes and visits ending on 

or after April 1, 2010, and before 

January 1, 2016, that the Secretary 

increase, by 3 percent, the payment 

amount otherwise made under section 

1895 of the Act. 

B. System for Payment of Home Health 

Services 

Generally, Medicare makes payment 

under the HH PPS on the basis of a 

national standardized 60-day episode 

payment rate that is adjusted for the 

applicable case-mix and wage index. 

The national standardized 60-day 

episode rate includes the six HH 

disciplines (skilled nursing, HH aide, 

physical therapy, speech-language 

pathology, occupational therapy, and 

medical social services). Payment for 

non-routine supplies (NRS) is no longer 

part of the national standardized 60-day 

episode rate and is computed by 

multiplying the relative weight for a 

particular NRS severity level by the NRS 

conversion factor (See section II.D.4.e). 

Payment for durable medical equipment 

covered under the HH benefit is made 

outside the HH PPS payment system. To 

adjust for case-mix, the HH PPS uses a 

153-category case-mix classification 

system to assign patients to a home 

health resource group (HHRG). The 

clinical severity level, functional 

severity level, and service utilization are 

computed from responses to selected 

data elements in the OASIS assessment 

instrument and are used to place the 

patient in a particular HHRG. Each 

HHRG has an associated case-mix 

weight which is used in calculating the 

payment for an episode. 

For episodes with four or fewer visits, 

Medicare pays national per-visit rates 

based on the discipline(s) providing the 

services. An episode consisting of four 

or fewer visits within a 60-day period 

receives what is referred to as a lowutilization payment adjustment (LUPA). 

Medicare also adjusts the national 

standardized 60-day episode payment 

rate for certain intervening events that 

are subject to a partial episode payment 

adjustment (PEP adjustment). For 

certain cases that exceed a specific cost 

threshold, an outlier adjustment may 

also be available. 

C. Updates to the HH PPS 

As required by section 1895(b)(3)(B) 

of the Act, we have historically updated 

the HH PPS rates annually in the 

Federal Register. The August 29, 2007 

final rule with comment period set forth 

an update to the 60-day national 

episode rates and the national per-visit 

rates under the HH PPS for CY 2008. 

The CY 2008 HH PPS final rule 

included an analysis performed on CY 

2005 HH claims data, which indicated 

a 12.78 percent increase in the observed 

case-mix since 2000. Case-mix 

represents the variations in conditions 

of the patient population served by the 

HHAs. Subsequently, a more detailed 

analysis was performed on the 2005 

case-mix data to evaluate if any portion 

of the 12.78 percent increase was 

associated with a change in the actual 

clinical condition of HH patients. We 

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examined data on demographics, family 

severity, and non-HH Part A Medicare 

expenditures to predict the average 

case-mix weight for 2005. We identified 

8.03 percent of the total case-mix 

change as real, and therefore, decreased 

the 12.78 percent of total case-mix 

change by 8.03 percent to get a final 

nominal case-mix increase measure of 

11.75 percent (0.1278 * (1 ¥ 0.0803) = 

0.1175). 

To account for the changes in casemix that were not related to an 

underlying change in patient health 

status, we implemented a reduction, 

over 4 years, to the national, 

standardized 60-day episode payment 

rates. That reduction was to be 2.75 

percent per year for 3 years beginning in 

CY 2008 and 2.71 percent for the fourth 

year in CY 2011. In the CY 2011 HH PPS 

final rule (76 FR 68532), we updated our 

analyses of case-mix change and 

finalized a reduction of 3.79 percent, 

instead of 2.71 percent, for CY 2011 and 

deferred finalizing a payment reduction 

for CY 2012 until further study of the 

case-mix change data and methodology 

was completed. 

In the CY 2012 HH PPS final rule (76 

FR 68526), we updated the 60-day 

national episode rates and the national 

per-visit rates. In addition, as discussed 

in the CY 2012 HH PPS final rule (76 

FR 68528), our analysis indicated that 

there was a 22.59 percent increase in 

overall case-mix from 2000 to 2009 and 

that only 15.76 percent of that overall 

observed case-mix percentage increase 

was due to real case-mix change. As a 

result of our analysis, we identified a 

19.03 percent nominal increase in casemix. At that time, to fully account for 

the 19.03 percent nominal case-mix 

growth identified from 2000 to 2009, we 

finalized a 3.79 percent payment 

reduction in CY 2012 and a 1.32 percent 

payment reduction for CY 2013. 

In the CY 2013 HH PPS final rule (77 

FR 67078), we implemented a 1.32 

percent reduction to the payment rates 

for CY 2013 to account for nominal 

case-mix growth from 2000 through 

2010. When taking into account the total 

measure of case-mix change (23.90 

percent) and the 15.97 percent of total 

case-mix change estimated as real from 

2000 to 2010, we obtained a final 

nominal case-mix change measure of 

20.08 percent from 2000 to 2010 (0.2390 

* (1 ¥ 0.1597) = 0.2008). To fully 

account for the remainder of the 20.08 

percent increase in nominal case-mix 

beyond that which was accounted for in 

previous payment reductions, we 

estimated that the percentage reduction 

to the national, standardized 60-day 

episode rates for nominal case-mix 

change would be 2.18 percent. Although 

we considered proposing a 2.18 percent 

reduction to account for the remaining 

increase in measured nominal case-mix, 

we finalized the 1.32 percent payment 

reduction to the national, standardized 

60-day episode rates in the CY 2012 HH 

PPS final rule (76 FR 68532). 

Section 3131(a) of the Affordable Care 

Act requires that, beginning in CY 2014, 

CMS apply an adjustment to the 

national, standardized 60-day episode 

rate and other amounts that reflect 

factors such as changes in the number 

of visits in an episode, the mix of 

services in an episode, the level of 

intensity of services in an episode, the 

average cost of providing care per 

episode, and other relevant factors. 

Additionally, CMS must phase in any 

adjustment over a four-year period in 

equal increments, not to exceed 3.5 

percent of the amount (or amounts) as 

of the date of enactment of the 

Affordable Care Act, and fully 

implement the rebasing adjustments by 

CY 2017. The statute specifies that the 

maximum rebasing adjustment is to be 

no more than 3.5 percent per year of the 

CY 2010 rates. Therefore, in the CY 

2014 HH PPS final rule (78 FR 72256) 

for each year, CY 2014 through CY 2017, 

we finalized a fixed-dollar reduction to 

the national, standardized 60-day 

episode payment rate of $80.95 per year, 

increases to the national per-visit 

payment rates per year as reflected in 

Table 2, and a decrease to the NRS 

conversion factor of 2.82 percent per 

year. We also finalized three separate 

LUPA add-on factors for skilled nursing, 

physical therapy, and speech-language 

pathology and removed 170 diagnosis 

codes from assignment to diagnosis 

groups in the HH PPS Grouper. 

TABLE 2—MAXIMUM ADJUSTMENTS TO THE NATIONAL PER-VISIT PAYMENT RATES

[Not to exceed 3.5 percent of the amount(s) in CY 2010] 

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 Face-to-Face 

Encounter Requirement 

1. Affordable Care Act Rebasing 

Adjustments 

As stated in the CY 2014 HH PPS final 

rule, we plan to monitor potential 

impacts of rebasing. Although we do not 

have enough CY 2014 home health 

claims data to analyze as part of our 

effort in monitoring the potential 

impacts of the rebasing adjustments 

finalized in the CY 2014 HH PPS final 

rule (78 FR 72293), we have analyzed 

2012 home health agency cost report 

data to determine whether the average 

cost per episode was higher using 2012 

cost report data compared to the 2011 

cost report data used in calculating the 

rebasing adjustments. Specifically, we 

re-estimated the cost of a 60-day episode 

using 2012 cost report and 2012 claims 

data, rather than using 2011 cost report 

and 2012 claims data. To determine the 

2012 average cost per visit per 

discipline, we applied the same 

trimming methodology outlined in the 

CY 2014 HH PPS proposed rule (78 FR 

40284) and weighted the costs per visit 

from the 2012 cost reports by size, 

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facility type, and urban/rural location so 

the costs per visit were nationally 

representative. The 2012 average 

number of visits was taken from 2012 

claims data. We estimate the cost of a 

60-day episode to be $2,413.82 using 

2012 cost report data (Table 3). 

TABLE 3—AVERAGE COSTS PER VISIT AND AVERAGE NUMBER OF VISITS FOR A 60-DAY EPISODE

Discipline 2012 Average 

costs per visit 

2012 Average 

number of visits 

2012 60-day 

episode costs 

Skilled Nursing ........................................................................................................... $130.49 9.55 $1,246.18 

Home Health Aide ..................................................................................................... 61.62 2.60 160.21 

Physical Therapy ....................................................................................................... 160.03 4.80 768.14 

Occupational Therapy ................................................................................................ 157.78 1.09 171.98 

Speech-Language Pathology .................................................................................... 172.08 0.22 37.86 

Medical Social Services ............................................................................................. 210.36 0.14 29.45 

Total .................................................................................................................... .............................. .............................. 2,413.82 

Source: FY 2012 Medicare cost report data and 2012 Medicare claims data from the standard analytic file (as of June 2013) for episodes ending on or before December 31, 2012 for which we could link an OASIS assessment. 

Using the most current claims data— 

CY 2013 data (as of December 31, 2013), 

we re-examined the 2012 visit 

distribution and re-calculated the 2013 

estimated cost per episode using the 

updated 2013 visit profile. We estimate 

the 2013 60-day episode cost to be 

$2,477.01(Table 4). 

TABLE 4—2013 ESTIMATED COST PER EPISODE

Discipline 2012 Average 

costs per visit 

2013 Average 

number of 

visits 

2013 HH 

market basket 

2013 

Estimated cost 

per episode 

Skilled Nursing ................................................................................................. $130.49 9.30 1.023 $1,241.47 

Home Health Aide ........................................................................................... 61.62 2.42 1.023 152.55 

Physical Therapy ............................................................................................. 160.03 4.99 1.023 816.92 

Occupational Therapy ...................................................................................... 157.78 1.20 1.023 193.69 

Speech-Language Pathology .......................................................................... 172.08 0.24 1.023 42.25 

Medical Social Services ................................................................................... 210.36 0.14 1.023 30.13 

Total .......................................................................................................... ........................ ........................ ........................ 2,477.01 

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

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

In the CY 2014 HH PPS final rule (78 

FR 72277), using 2011 cost report data, 

we estimated the 2012 60-day episode 

cost to be about $2,507.83 ($2,453.71 * 

0.9981 * 1.024) and the 2013 60-day 

episode cost to be $2,565.51 ($2,453.71 

* 0.9981 * 1.024 * 1.023). Using 2012 

cost report data, the 2012 and 2013 

estimated cost per episode ($2,413.82 

and $2,477.01, respectively) are lower 

than the episode costs we estimated 

using 2011 cost report data for the CY 

2014 HH PPS final rule. We note that 

the proposed CY 2015 national, 

standardized 60-day episode payment 

rate is $2,922.76 as described in section 

III.D.4. of this proposed rule. 

In the CY 2014 HH PPS final rule, we 

stated that our analysis of 2011 cost 

report data and 2012 claims data 

indicated a need for a ¥3.45 percent 

rebasing adjustment to the national, 

standardized 60-day episode payment 

rate each year for four years. However, 

as specified by statute, the rebasing 

adjustment is limited to 3.5 percent of 

the CY 2010 national, standardized 60- 

day episode payment rate of $2,312.94 

(74 FR 58106), or $80.95. We stated that 

given that a ¥3.45 percent adjustment 

for CY 2014 through CY 2017 would 

result in larger dollar amount reductions 

than the maximum dollar amount 

allowed under section 3131(a) of the 

Affordable Care Act of $80.95, we are 

limited to implementing a reduction of 

$80.95 (approximately 2.8 percent) to 

the national, standardized 60-day 

episode payment amount each year for 

CY 2014 through CY 2017. Our latest 

analysis of 2012 cost report data 

suggests that an even larger reduction 

(4.29 percent) than the reduction 

described in the CY 2014 final rule (3.45 

percent) would be needed in order to 

align payments to costs. We will 

continue to monitor potential impacts of 

rebasing. 

2. Affordable Care Act Face-to-Face 

Encounter Requirement 

Effective January 1, 2011, section 

6407 the Affordable Care Act requires 

that as a condition for payment, prior to 

certifying a patient’s eligibility for the 

Medicare home health benefit, the 

physician must document that the 

physician himself or herself, or an 

allowed nonphysician practitioner 

(NPP), as described below, had a faceto-face encounter with the patient. The 

regulations at 424.22(a)(1)(v) currently 

require that that the face-to-face 

encounter be related to the primary 

reason the patient requires home health 

services and occur no more than 90 days 

prior to the home health start of care 

date or within 30 days of the start of the 

home health care. In addition, as part of 

the certification of eligibility, the 

certifying physician must document the 

date of the encounter and include an 

explanation (narrative) of why the 

clinical findings of such encounter 

support that the patient is homebound, 

as defined in subsections 1814(a) and 

1835(a) of the Act, and in need of either 

intermittent skilled nursing services or 

therapy services, as defined in 

§ 409.42(c). The face-to-face encounter 

requirement was enacted, in part, to 

discourage physicians certifying patient 

eligibility for the Medicare home health 

benefit from relying solely on 

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information provided by the HHAs 

when making eligibility determinations 

and other decisions about patient care. 

In the CY 2011 HH PPS final rule, in 

which we implemented the face-to-face 

encounter provision of the Affordable 

Care Act, some commenters expressed 

concern that this requirement would 

diminish access to home health services 

(75 FR 70427). We examined home 

health claims data from before 

implementation of the face-to-face 

encounter requirement (CY 2010), the 

year of implementation (CY 2011), and 

the years following implementation (CY 

2012 and CY 2013), to determine 

whether there were indications of access 

issues as a result of this requirement. 

Nationally, utilization held relatively 

constant between CY 2010 and CY 2011 

and decreased slightly in CY 2012 (see 

Table 5). While Table 5 contains 

preliminary CY 2013 data, the 

discussion in this section will focus 

mostly on CY 2010 through CY 2012 

data. We will update our analysis with 

complete CY 2013 data in the final rule. 

Between CY 2010 and CY 2011, there 

was a 0.81 percent decrease in number 

of episodes, and a 1.37 percent decrease 

in the number of episodes between CY 

2011 and CY 2012. However, there was 

a 0.51 percent increase in the number of 

beneficiaries with at least one home 

health episode between CY 2010 and CY 

2011 and between CY 2011 and CY 2012 

the number of beneficiaries with at least 

one episode held relatively constant. 

Home health users (beneficiaries with at 

least one home health episode) as a 

percentage of Part A and/or Part B feefor-service (FFS) beneficiaries decreased 

slightly from 9.3 percent in CY 2010 to 

9.2 percent in CY 2011to 9.0 percent in 

CY 2012 and the number of episodes per 

Part A and/or Part B FFS beneficiaries 

decreased slightly between CY 2010 and 

CY 2011, but remained relatively 

constant 0.18 or 18 episodes per 100 

Medicare Part A FFS beneficiaries for 

CY 2012). We note these observed 

decreases between CY 2010 and CY 

2012, for the most part, are likely the 

result of increases in FFS enrollment 

between CY 2010 and CY 2012. Newly 

eligibly Medicare beneficiaries are 

typically not of the age where home 

health services are needed and 

therefore, without any changes in 

utilization, we would expect home 

health users and the number of episodes 

per Part A and/or B FFS beneficiaries to 

decrease with an increase in the number 

of newly enrolled FFS beneficiaries. The 

number of HHAs providing at least one 

home health episode increased steadily 

from CY 2010 through CY 2013 (see 

Table 5). 

TABLE 5—HOME HEALTH STATISTICS, CY 2010 THROUGH CY 2013 

2010 2011 2012 2013 

(Preliminary) 

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

Beneficiaries receiving at least 1 episode (Home Health Users) .................... 3,431,696 3,449,231 3,446,122 3,432,571 

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

Episodes per Part A and/or B FFS beneficiaries ............................................ 0.19 0.18 0.18 0.17 

Home health users as a percentage of Part A and/or B FFS beneficiaries ... 9.3% 9.2% 9.0% 8.9% 

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

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year 

with at least 1 month of Part A or Part B Fee For Service Coverage without having any months of Medicare Advantage Coverage. 

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 

States and District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code 

equal to ‘‘0’’ (‘‘Non-payment/zero claims’’) and ‘‘2’’ (‘‘Interim—first claim’’) are excluded. If a beneficiary is treated by providers from multiple 

states within a year the beneficiary is counted within each state’s unique number of beneficiaries served. 

Although home health utilization at 

the national level appears to have held 

relatively constant between CY 2010 

and CY 2011 with a slight decrease in 

utilization in CY 2012, the decrease in 

utilization in CY 2012 did not occur in 

all states. For example, the number of 

episodes increased between CY 2010 

and CY 2011 and again, in some 

instances, between CY 2011 and CY 

2012 in Alabama, California, and 

Virginia, to name a few. The number of 

episodes per Part A and/or Part B FFS 

beneficiaries for these states also 

remained roughly the same between CY 

2010 through CY 2012 (see Table 6). 

TABLE 6—HOME HEALTH STATISTICS FOR SELECT STATES WITH INCREASING NUMBERS OF HOME HEALTH EPISODES, CY 

2010 THROUGH CY 2012 

Year AL CA MA NJ VA 

Number of Episodes ............................................ 2010 149,242 428,491 183,271 142,328 142,660 

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

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

Beneficiaries Receiving at Least 1 Episode 

(Home Health Users) ....................................... 2010 68,949 259,013 103,954 95,804 83,933 

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

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

Part A and/or Part B FFS Beneficiaries .............. 2010 689,302 3,199,845 890,472 1,205,049 1,014,248 

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

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

Episodes per Part A and/or Part B FFS beneficiaries ............................................................. 2010 0.22 0.13 0.21 0.12 0.14 

2011 0.21 0.14 0.20 0.12 0.14 

2012 0.21 0.14 0.19 0.12 14 

Home Health Users as a Percentage of Part A 

and/or B FFS beneficiaries .............................. 2010 10.00% 8.09% 11.67% 7.95% 8.28% 

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TABLE 6—HOME HEALTH STATISTICS FOR SELECT STATES WITH INCREASING NUMBERS OF HOME HEALTH EPISODES, CY 

2010 THROUGH CY 2012—Continued 

Year AL CA MA NJ VA 

2011 9.83% 8.20% 11.51% 7.91% 8.22% 

2012 9.71% 8.27% 11.15% 7.83% 8.27% 

Providers Providing at Least 1 Episode .............. 2010 148 925 138 49 196 

2011 150 1,013 150 48 209 

2012 148 1,073 160 47 219 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year 

with at least 1 month of Part A or Part B Fee For Service Coverage without having any months of Medicare Advantage Coverage. 

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 

States and District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code 

equal to ‘‘0’’ (‘‘Non-payment/zero claims’’) and ‘‘2’’ (‘‘Interim—first claim’’) are excluded. If a beneficiary is treated by providers from multiple 

states within a year the beneficiary is counted within each state’s unique number of beneficiaries served. 

In general, between CY 2010 and CY 

2012 the number of episodes for states 

with the highest utilization of Medicare 

home health (as measured by the 

number of episodes per Part A and/or 

Part B FFS beneficiary) decreased; 

however, even with this decrease 

between CY 2010 and CY 2012, the five 

states listed in Table 7 continue to be 

among the states with the highest 

utilization of Medicare home health 

nationally (see Figure 1). If we were to 

exclude the five states listed in Table 7 

from the national figures in Table 5, 

home health users (beneficiaries with at 

least one home health episode) as a 

percentage of Part A and/or Part B feefor-service (FFS) beneficiaries would 

decrease from to 9.0 percent to 8.1 

percent for CY 2012 and the number of 

episodes per Part A and/or Part B FFS 

beneficiaries would decrease from 0.18 

(or 18 episodes per 100 Medicare Part A 

and/or Part B FFS beneficiaries) to 0.14 

(or 14 episodes per 100 Medicare Part A 

and/or Part B FFS beneficiaries) for CY 

2012. We also note that two of the states 

with the greatest number of home health 

episodes per Part A and/or Part B FFS 

beneficiaries (Table 7 and Figure 1) have 

areas with suspect billing practices. 

Moratoria on enrollment of new HHAs, 

effective January 30, 2014, were put in 

place for: Miami, FL; Chicago, IL; Fort 

Lauderdale, FL; Detroit, MI; Dallas, TX; 

and Houston, TX. 

TABLE 7—HOME HEALTH STATISTICS FOR THE STATES WITH THE HIGHEST NUMBER OF HOME HEALTH EPISODES PER

PART A AND/OR PART B FFS BENEFICIARIES, CY 2010 THROUGH CY 2012 

Year TX FL OK MS LA 

Number of Episodes ............................................ 2010 1,127,852 689,183 208,555 153,169 256,014 

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

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

Beneficiaries Receiving at Least 1 Episode 

(Home Health Users) ....................................... 2010 366,844 355,181 68,440 55,132 77,976 

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

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

Part A and/or Part B FFS Beneficiaries .............. 2010 2,500,237 2,422,141 533,792 465,129 544,555 

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

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

Episodes per Part A and/or Part B FFS beneficiaries ............................................................. 2010 0.45 0.28 0.39 0.33 0.47 

2011 0.43 0.29 0.37 0.32 0.44 

2012 0.40 0.28 0.35 0.31 0.40 

Home Health Users as a Percentage of Part A 

and/or Part B FFS Beneficiaries ...................... 2010 14.67% 14.66% 12.82% 11.85% 14.32% 

2011 13.99% 14.50% 12.23% 11.71% 13.83% 

2012 13.47% 14.47% 11.81% 11.54% 13.15% 

Providers Providing at Least 1 Episode .............. 2010 2,352 1,348 240 53 213 

2011 2,472 1,426 252 51 216 

2012 2,549 1,430 254 48 213 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year 

with at least 1 month of Part A or Part B Fee For Service Coverage without having any months of Medicare Advantage Coverage. 

Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 

States and District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code 

equal to ‘‘0’’ (‘‘Non-payment/zero claims’’) and ‘‘2’’ (‘‘Interim—first claim’’) are excluded. If a beneficiary is treated by providers from multiple 

states within a year the beneficiary is counted within each state’s unique number of beneficiaries served. 

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For CY 2011, in addition to the 

implementation of the Affordable Care 

Act face-to-face encounter requirement, 

HHAs were also subject to new therapy 

reassessment requirements, payments 

were reduced to account for increases in 

nominal case-mix, and the Affordable 

Care Act mandated that the HH PPS 

payment rates be reduced by 5 percent 

to pay up to, but no more than 2.5 

percent of total HH PPS payments as 

outlier payments. The estimated net 

impact to HHAs for CY 2011 was a 

decrease in total HH PPS payments of 

4.78 percent. Therefore, any changes in 

utilization between CY 2010 and CY 

2011 cannot be solely attributable to the 

implementation of the face-to-face 

encounter requirement. For CY 2012 we 

recalibrated the case-mix weights, 

including the removal of two 

hypertension codes from scoring points 

in the HH PPS Grouper and lowering 

the case-mix weights for high therapy 

cases estimated net impact to HHAs, 

and reduced HH PPS rates in CY 2012 

by 3.79 percent to account for additional 

growth in aggregate case-mix that was 

unrelated to changes in patients’ health 

status. The estimated net impact to 

HHAs for CY 2012 was a decrease in 

total HH PPS payments of 2.31 percent. 

Again, any changes in utilization 

between CY 2011 and CY 2012 cannot 

be solely attributable to the 

implementation of the face-to-face 

encounter requirement. Given that a 

decrease in the number of episodes 

between CY 2010 and CY 2012 occurred 

in states that have the highest home 

health utilization (number of episodes 

per Part A and/or Part B FFS 

beneficiaries) and not all states 

experienced declines in episode volume 

during that time period, we believe that 

the implementation of the face-to-face 

encounter requirement could be 

considered a contributing factor. We 

will continue to monitor for potential 

impacts due to the implementation of 

the face-to-face encounter requirements 

and other policy changes in the future. 

Independent effects of any one policy 

may be difficult to discern in years 

where multiple policy changes occur in 

any given year. 

B. Proposed Changes to the Face-to-Face 

Encounter Requirements 

1. Statutory and Regulatory 

Requirements 

As a condition for payment, section 

6407 of the Affordable Care Act requires 

that, prior to certifying a patient’s 

eligibility for the Medicare home health 

benefit, the physician must document 

that the physician himself or herself or 

an allowed nonphysician practitioner 

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

the patient. Specifically, sections 

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

Act, as amended by the Affordable Care 

Act, state that a nurse practitioner or 

clinical nurse specialist, as those terms 

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

Act, working in collaboration with the 

physician in accordance with state law, 

or a certified nurse-midwife (as defined 

in section 1861(gg) of the Act) as 

authorized by state law, or a physician 

assistant (as defined in section 

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

supervision of the physician may 

perform the face-to-face encounter. 

The goal of the Affordable Care Act 

provision was to achieve greater 

physician accountability in certifying a 


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1The 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. 

2Skilled nursing visits for management and 

evaluation of the patient’s care plan are reasonable 

and necessary where underlying conditions or 

complications require that only a registered nurse 

can ensure that essential unskilled care is achieving 

its purpose. For skilled nursing care to be 

reasonable and necessary for management and 

evaluation of the patient’s plan of care, the 

complexity of the necessary unskilled services that 

are a necessary part of the medical treatment must 

require the involvement of skilled nursing 

personnel to promote the patient’s recovery and 

medical safety in view of the patient’s overall 

condition (reference § 409.33 and section 40.1.2.2 in 

Chapter 7 of the Medicare Benefits Policy Manual 

(Pub. 100–02)). 

patient’s eligibility and in establishing a 

patient’s plan of care. We believed this 

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

start of home health care, increasing the 

likelihood that the clinical conditions 

exhibited by the patient during the 

encounter are related to the primary 

reason the patient comes to need home 

health care. The certifying physician is 

responsible for determining whether the 

patient meets the eligibility criteria (that 

is, homebound and skilled need) and for 

understanding the current clinical needs 

of the patient such that he or she can 

establish an effective plan of care. As 

such, CMS regulations at 

§ 424.22(a)(1)(v) require that that the 

face-to-face encounter be related to the 

primary reason the patient requires 

home health services and occur no more 

than 90 days prior to the home health 

start of care date or within 30 days of 

the start of the home health care. In 

addition, as part of the certification of 

eligibility, the certifying physician must 

document the date of the encounter and 

include an explanation (narrative) of 

why the clinical findings of such 

encounter support that the patient is 

homebound, as defined in sections 

1835(a) and 1814(a) of the Act, and in 

need of either intermittent skilled 

nursing services or therapy services, as 

defined in § 409.42(c). 

The ‘‘Requirements for Home Health 

Services’’ describes certifying a patient’s 

eligibility for the Medicare home health 

benefit, and as stated in the ‘‘Content of 

the Certification’’ under § 424.22 (a)(1), 

a physician must certify that: 

• The individual needs or needed 

intermittent skilled nursing care, 

physical therapy, and/or speechlanguage pathology services as defined 

in § 409.42(c). 

• Home health services are or were 

required because the individual was 

confined to the home (as defined in 

sections 1835(a) and 1814(a) of the Act), 

except when receiving outpatient 

services. 

• A plan for furnishing the services 

has been established and is or will be 

periodically reviewed by a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine (a doctor of 

podiatric medicine may perform only 

plan of treatment functions that are 

consistent with the functions he or she 

is authorized to perform under state 

law).1

• Home health services will be or 

were furnished while the individual is 

or was under the care of a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine. 

• A face-to-face patient encounter 

occurred no more than 90 days prior to 

the home health start of care date or 

within 30 days of the start of the home 

health care and was related to the 

primary reason the patient requires 

home health services. This also includes 

documenting the date of the encounter 

and including an explanation of why 

the clinical findings of such encounter 

support that the patient is homebound 

(as defined in § 1835(a) and § 1814(a) of 

the Act) and in need of either 

intermittent skilled nursing services or 

therapy services as defined in 

§ 409.42(c). The documentation must be 

clearly titled and dated and the 

documentation must be signed by the 

certifying physician. 

For instances where the physician 

orders skilled nursing visits for 

management and evaluation of the 

patient’s care plan,2 the physician must 

include a brief narrative that describes 

the clinical justification of this need and 

the narrative must be located 

immediately before the physician’s 

signature. If the narrative exists as an 

addendum to the certification form, in 

addition to the physician’s signature on 

the certification form, the physician 

must sign immediately after the 

narrative in the addendum. 

When there is a continuous need for 

home health care after an initial 60-day 

episode of care, a physician is also 

required to recertify the patient’s 

eligibility for the home health benefit. In 

accordance with § 424.22 (b), a 

recertification is required at least every 

60 days, preferably at the time the plan 

is reviewed, and must be signed and 

dated by the physician who reviews the 

plan of care. In recertifying the patient’s 

eligibility for the home health benefit, 

the recertification must indicate the 

continuing need for skilled services and 

estimate how much longer the skilled 

services will be required. The need for 

occupational therapy may be the basis 

for continuing services that were 

initiated because the individual needed 

skilled nursing care or physical therapy 

or speech–language pathology services. 

Again, for instances where the 

physician ordering skilled nursing visits 

for management and evaluation of the 

patient’s care plan, the physician must 

include a brief narrative that describes 

the clinical justification of this need and 

the narrative must be located 

immediately before the physician’s 

signature. If the narrative exists as an 

addendum to the recertification form, in 

addition to the physician’s signature on 

the recertification form, the physician 

must sign immediately after the 

narrative in the addendum. 

In the CY 2012 HH PPS final rule (76 

FR 68597), we stated that, in addition to 

the certifying physician and allowed 

NPPs (as defined by the Act and 

outlined above), the physician who 

cared for the patient in an acute or postacute care facility from which the 

patient was directly admitted to home 

health care, and who had privileges in 

such facility, could also perform the 

face-to-face encounter. In the CY 2013 

HH PPS final rule (77 FR 67068) we 

revised our regulations so that an 

allowed NPP, collaborating with or 

under the supervision of the physician 

who cared for the patient in the acute/ 

post-acute care facility, can 

communicate the clinical findings that 

support the patient’s needs for skilled 

care and homebound status to the acute/ 

post-acute care physician. In turn, the 

acute/post-acute care physician would 

communicate the clinical findings that 

support the patient’s needs for skilled 

care and homebound status from the 

encounter performed by the NPP to the 

certifying physician to document. Policy 

always permitted allowed NPPs in the 

acute/post-acute care setting from which 

the patient is directly admitted to home 

health care to perform the face-to-face 

encounter and communicate directly 

with the certifying physician the 

clinical findings from the encounter and 

how such findings support that the 

patient is homebound and needs skilled 

services (77 FR 67106). 

2. Proposed Changes to the Face-to-Face 

Encounter Narrative Requirement and 

Non-Coverage of Associated Physician 

Certification/Re-Certification Claims 

Each year, the CMS’ Office of 

Financial Management (OFM), under 

the Comprehensive Error Rate Testing 

(CERT) program, calculates the 

Medicare Fee-for-Service (FFS) 

improper payment rate. For the FY 2013 

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3U.S. Department of Health and Human Services, 

‘‘FY 2013 Agency Financial Report’’, accessed on 

April 23, 2014 at: http://www.hhs.gov/afr/2013-hhsagency-financial-report.pdf. 

4U.S. Department of Health and Human Services, 

‘‘The Supplementary Appendices for the Medicare 

Fee-for-Service 2013 Improper Payment Rate 

Report’’, accessed on April 23, 2014 at: http://

www.cms.gov/Research-Statistics-Data-andSystems/Monitoring-Programs/Medicare-FFSCompliance-Programs/CERT/Downloads/

November2013ReportPeriodAppendixFinal12-13- 

2013_508Compliance_Approved12-27-13.pdf. 

5The CERT improper payment rate is not a ‘‘fraud 

rate,’’ but is a measurement of payments made that 

did not meet Medicare requirements. The CERT 

program cannot label a claim fraudulent. 

report period (reflecting claims 

processed between July 2011 and June 

2012), the national Medicare FFS 

improper payment rate was calculated 

to be 10.1 percent.3 For that same report 

period, the improper payment rate for 

home health services was 17.3 percent, 

representing a projected improper 

payment amount of approximately $3 

billion.4 The improper payments 

identified by the CERT program 

represent instances in which a health 

care provider fails to comply with the 

Medicare coverage and billing 

requirements and are not necessarily a 

result of fraudulent activity.5

The majority of home health improper 

payments were due to ‘‘insufficient 

documentation’’ errors. ‘‘Insufficient 

documentation’’ errors occur when the 

medical documentation submitted is 

inadequate to support payment for the 

services billed or when a specific 

documentation element that is required 

(as described above) is missing. Most 

‘‘insufficient documentation’’ errors for 

home health occurred when the 

narrative portion of the face-to-face 

encounter documentation did not 

sufficiently describe how the clinical 

findings from the encounter supported 

the beneficiary’s homebound status and 

need for skilled services, as required by 

§ 424.22(a)(1)(v). 

The home health industry continues 

to voice concerns regarding the 

implementation of the Affordable Care 

Act face-to-face encounter 

documentation requirement. The home 

health industry cites challenges that 

HHAs face in meeting the face-to-face 

encounter documentation requirements 

regarding the required narrative, 

including a perceived lack of 

established standards for compliance 

that can be adequately understood and 

applied by the physicians and HHAs. In 

addition, the home health industry 

conveys frustration with having to rely 

on the physician to satisfy the face-toface encounter documentation 

requirements without incentives to 

encourage physician compliance. 

Correspondence received to date has 

expressed concern over the ‘‘extensive 

and redundant’’ narrative required by 

regulation for face-to-face encounter 

documentation purposes when detailed 

evidence to support the physician 

certification of homebound status and 

medical necessity is available in clinical 

records. In addition, correspondence 

stated that the narrative requirement 

was not explicit in the Affordable Care 

Act provision requiring a face-to-face 

encounter as part of the certification of 

eligibility and that a narrative 

requirement goes beyond Congressional 

intent. 

We agree that there should be 

sufficient evidence in the patient’s 

medical record to demonstrate that the 

patient meets the Medicare home health 

eligibility criteria. Therefore, in an effort 

to simplify the face-to-face encounter 

regulations, reduce burden for HHAs 

and physicians, and to mitigate 

instances where physicians and HHAs 

unintentionally fail to comply with 

certification requirements, we propose 

that: 

(1) The narrative requirement in 

regulation at § 424.22(a)(1)(v) would be 

eliminated. The certifying physician 

would still be required to certify that a 

face-to-face patient encounter, which is 

related to the primary reason the patient 

requires home health services, occurred 

no more than 90 days prior to the home 

health start of care date or within 30 

days of the start of the home health care 

and was performed by a physician or 

allowed non-physician practitioner as 

defined in § 424.22(a)(1)(v)(A), and to 

document the date of the encounter as 

part of the certification of eligibility. 

For instances where the physician is 

ordering skilled nursing visits for 

management and evaluation of the 

patient’s care plan, the physician will 

still be required to include a brief 

narrative that describes the clinical 

justification of this need as part of the 

certification/re-certification of eligibility 

as outlined in § 424.22(a)(1)(i) and 

§ 424.22(b)(2). This requirement was 

implemented in the CY 2010 HH PPS 

final rule (74 FR 58111) and is not 

changing. 

(2) In determining whether the patient 

is or was eligible to receive services 

under the Medicare home health benefit 

at the start of care, we would review 

only the medical record for the patient 

from the certifying physician or the 

acute/post-acute care facility (if the 

patient in that setting was directly 

admitted to home health) used to 

support the physician’s certification of 

patient eligibility, as described in 

paragraphs (a)(1) and (b) of this section. 

If the patient’s medical record, used by 

the physician in certifying eligibility, 

was not sufficient to demonstrate that 

the patient was eligible to receive 

services under the Medicare home 

health benefit, payment would not be 

rendered for home health services 

provided. 

(3) Physician claims for certification/ 

re-certification of eligibility for home 

health services (G0180 and G0179, 

respectively) would not be covered if 

the HHA claim itself was non-covered 

because the certification/re-certification 

of eligibility was not complete or 

because there was insufficient 

documentation to support that the 

patient was eligible for the Medicare 

home health benefit. However, rather 

than specify this in our regulations, this 

proposal would be implemented 

through future sub-regulatory guidance. 

We believe that these proposals are 

responsive to home health industry 

concerns regarding the face-to-face 

encounter requirements articulated 

above. We invite comment on these 

proposals and the associated change in 

the regulation at § 424.22 in section VI. 

3. Proposed Clarification on When 

Documentation of a Face-to-Face 

Encounter Is Required 

In the CY 2011 HH PPS final rule (75 

FR 70372), in response to a commenter 

who asked whether the face-to-face 

encounter is required only for the first 

episode, we stated that the Congress 

enacted the face-to-face encounter 

requirement to apply to the physician’s 

certification, not recertifications. In subregulatory guidance (face-to-face 

encounter Q&As on the CMS Web site 

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

Medicare-Fee-for-Service-Payment/

HomeHealthPPS/Downloads/HomeHealth-Questions-Answers.pdf), 

response to Q&A #11 states that the 

face-to-face encounter requirement 

applies to ‘‘initial episodes’’ (the first in 

a series of episodes separated by no 

more than a 60-day gap). The distinction 

between what is considered a 

certification (versus a recertification) 

and what is considered an initial 

episode is important in determining 

whether the face-to-face encounter 

requirement is applicable. 

Recent inquiries question whether the 

face-to-face encounter requirement 

applies to situations where the 

beneficiary was discharged from home 

health with goals met/no expectation of 

return to home health care and 

readmitted to home health less than 60 

days later. In this situation, the second 

episode would be considered a 

certification, not a recertification, 

because the HHA would be required to 

complete a new start of care OASIS to 

initiate care. However, for payment 

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6http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/OASIS/

downloads/OASISConsiderationsforPPS.pdf. 

7At a later point, when normalizing the weights, 

PEP episodes are included in the analysis. 

8All the regressions mentioned in steps 1–4 are 

estimated with robust standard errors clustered at 

the beneficiary ID level. This is to account for 

beneficiaries appearing in the data multiple times. 

When that occurs, the standard errors can be 

correlated causing the p-value to be biased 

downward. Clustered standard errors account for 

that bias. 

purposes, the second episode would be 

considered a subsequent episode, 

because there was no gap of 60 days or 

more between the first and second 

episodes of care. Therefore, in order to 

determine when documentation of a 

patient’s face-to-face encounter is 

required under sections 1814(a)(2)(C) 

and 1835 (a)(2)(A) of the Act, we are 

proposing to clarify that the face-to-face 

encounter requirement is applicable for 

certifications (not recertifications), 

rather than initial episodes. A 

certification (versus recertification) is 

considered to be any time that a new 

start of care OASIS is completed to 

initiate care. Because we are proposing 

to clarify that a certification is 

considered to be any time a that a new 

start of care OASIS is completed to 

initiate care, we would also revise Q&A 

#11 on the CMS Web site (http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/

Downloads/Home-Health-QuestionsAnswers.pdf) to reflect this proposed 

clarification. If a patient was transferred 

to the hospital and remained in the 

hospital after day 61 (or after the first 

day of the next certification period), 

once the patient returns home, a new 

start of care OASIS must be completed. 

Therefore, this new episode would not 

be considered continuous and a face-toface encounter needs to be documented 

as part of the certification of patient 

eligibility.6

C. Proposed Recalibration of the HH 

PPS Case-Mix Weights 

For CY 2012, we removed two 

hypertension codes from our case-mix 

system and recalibrated the case-mix 

weights in a budget neutral manner. 

When recalibrating the case-mix weights 

for the CY 2012 HH PPS final rule, we 

used CY 2005 data in the four-equation 

model used to determine the clinical 

and functional points for a home health 

episode and CY 2007 data in the 

payment regression model used to 

determine the case-mix weights. We 

estimated the coefficients for the 

variables in the four-equation model 

using CY 2005 data to maintain the 

same variables we used for CY 2008 

when we implemented the fourequation model, thus minimizing 

substantial changes. Due to a noticeable 

shift in the number of therapy visits 

provided as a result of the 2008 

refinements, at the time, we decided to 

use CY 2007 data in the payment 

regression. As part of the CY 2012 

recalibration, we lowered the high 

therapy weights and raised the low or 

no therapy weights to address 

MedPAC’s concerns that the HH PPS 

overvalues therapy episodes and 

undervalues non-therapy episodes 

(March 2011 MedPAC Report to the 

Congress: Medicare Payment Policy, p. 

176). These adjustments better aligned 

the case-mix weights with episode costs 

estimated from cost report data. The CY 

2012 recalibration, itself, was 

implemented in a budget neutral 

manner. However, we note that in the 

CY 2012 HH PPS final rule, we also 

finalized a 3.79 percent reduction to 

payments in CY 2012 and a 1.32 percent 

reduction for CY 2013 to account for the 

nominal case-mix growth identified 

through CY 2009. 

For CY 2014, as part of the Affordable 

Care Act mandated rebasing effort, we 

reset the case-mix weights, lowering the 

average case-mix weight to 1.0000. To 

lower the case-mix weights to 1.0000, 

each case-mix weight was decreased by 

the same factor (1.3464), thereby 

maintaining the same relative values 

between the weights. This resetting of 

the case-mix weights was done in a 

budget neutral manner, inflating the 

starting point for rebasing by the same 

factor that was used to decrease the 

weights. In the CY 2014 HH PPS final 

rule, we also finalized a reduction 

($80.95) to the national, standardized 

60-day episode payment amount each 

year from CY 2014 through CY 2017 to 

better align payments with costs (78 FR 

72293). 

For CY 2015, we propose to 

recalibrate the case-mix weights, 

adjusting the weights relative to one 

another using more current data and 

aligning payments with current 

utilization data in a budget neutral 

manner. We are also proposing to 

recalibrate the case-mix weights in 

subsequent payment updates based on 

the methodology finalized in the CY 

2012 HH PPS final rule (76 FR 68526) 

and the 2008 refinements (72 FR 25359– 

25392), with the proposed minor 

changes outlined below. We used 

preliminary CY 2013 home health 

claims data (as of December 31, 2013) to 

generate the proposed CY 2015 case-mix 

weights using the same methodology 

finalized in the CY 2012 HH PPS final 

rule, except where noted below. Similar 

to the CY 2012 recalibration, some 

exclusion criteria were applied to the 

CY 2013 home health claims data used 

to generate the proposed CY 2015 casemix weights. Specifically, we excluded 

Request for Anticipated Payment (RAP) 

claims, claims without a matched 

OASIS, claims where total minutes 

equal 0, claims where the payment 

amount equals 0, claims where paid 

days equal 0, claims where covered 

visits equal 0, and claims without a 

HIPPS code. In addition, the episodes 

used in the recalibration were normal 

episodes. PEP, LUPA, outlier, and 

capped outlier (that is, episodes that are 

paid as normal episodes, but would 

have been outliers had the HHA not 

reached the outlier cap) episodes were 

dropped from the data file.7

Similar to the CY 2012 recalibration, 

the first step in the proposed CY 2015 

recalibration was to re-estimate the fourequation model used to determine the 

clinical and functional points for an 

episode. The dependent variable for the 

CY 2015 recalibration is the same as the 

CY 2012 recalibration, wage-weighted 

minutes of care. The wage-weighted 

minutes of care are determined using 

the CY 2012 Bureau of Labor Statistics 

national hourly wage plus fringe rates 

for the six home health disciplines and 

the minutes per visit from the claim. 

The CY 2012 four-equation model 

contained the same variables and 

restrictions as the four-equation model 

used in the CY 2008 refinements 

(http://www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/Reports/

Downloads/Coleman_Final_April_

2008.pdf). The model was estimated 

using CY 2005 data, same data used in 

the CY 2008 refinements, thereby 

minimizing changes in the points for the 

CY 2012 four-equation model. For the 

CY 2015 four-equation model, we reexamined all of the four-equation or 

‘‘leg’’ variables for each of the 51 

grouper variables in the CY 2008 model. 

Therefore, a grouper variable that may 

have dropped out of the model in one 

of the four equations in CY 2008 may be 

in the CY 2015 four-equation model and 

vice versa. Furthermore, the specific 

therapy indicator variables that were in 

the CY 2012 four-equation model were 

dropped in the CY 2015 four-equation 

model so that the number of therapy 

visits provided had less of an impact on 

the process used to create the case-mix 

weights. 

The steps used to estimate the fourequation model 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 wagemstockstill on DSK4VPTVN1PROD with PROPOSALS2

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9Early episodes are defined as the 1st or 2nd 

episode in a sequence of adjacent covered episodes. 

Later episodes are defined as the 3rd episode and 

beyond in a sequence of adjacent covered episodes. 

Episodes are considered to be adjacent if they are 

separated by no more than a 60-day period between 

claims. 

10 In the CY 2008 rule, there was a further step 

taken to determine if the coefficients of a grouper 

variable are equal across all 4 legs. This step was 

not taken at this time. 

weighted minutes of care. Independent 

variables were indicators for which 

equation or ‘‘leg’’ the episode is in. The 

four legs of the model are leg 1: Early 

episodes 0–13 therapy visits, leg 2: Early 

episodes 14+ therapy visits, leg 3: Later 

episodes 0–13 therapy visits, and leg 4: 

Later episodes 14+ therapy visits.9 Also, 

independent variables for each of the 51 

grouper variables for each leg of the 

model are included in the model. 

(2) Once the four-equation model is 

estimated, we drop all grouper variables 

with a coefficient less than 5 from the 

model. We re-estimate the model and 

continue to drop variables and reestimate until there are no grouper 

variables with a coefficient of 5 or less. 

(3) Taking the final iteration of the 

model in the previous step, we drop all 

grouper variables with a p-value greater 

than 0.10. We then re-estimate the 

model. 

(4) Taking the model in the previous 

step, we begin to apply restrictions to 

certain coefficients. Within a grouper 

variable we first look across the 

coefficients for leg1 and leg3. We 

perform an equality test on those 

coefficients. If the coefficients are not 

significantly different from one another 

(using a p-value of 0.05), we set a 

restriction for that grouper variable such 

that the coefficients are equal across 

leg1 and leg3. We run these tests for all 

grouper variables for leg1 and leg3. We 

also run these tests for all grouper 

variables for leg2 and leg4.10 After all 

restrictions are set, we re-run the 

regression again taking those restrictions 

into account. 

(5) Taking in the model from step 4, 

we drop variables that have a coefficient 

less than 5 and re-estimate the model a 

final time. Using preliminary 2013 

claims data, there was only 1 grouper 

variable with a negative coefficient that 

was dropped from the model. 

The results from the final fourequation model are used to determine 

the clinical and functional points for an 

episode and place episodes in the 

different clinical and functional levels 

used to estimate the payment regression 

model. We take the coefficients from the 

four equation model, divide them by 10, 

and round to the nearest integer to 

determine the points associated with 

each variable. The points for each of the 

grouper variables for each leg of the 

model are shown in Table 8. The points 

for the clinical variables are added 

together to determine an episode’s 

clinical score. The points for the 

functional variables are added together 

to determine an episode’s functional 

score. 

TABLE 8—CASE-MIX ADJUSTMENT VARIABLES AND SCORES

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

Therapy visits ................................................................................... 0–13 14+ 0–13 14+ 

EQUATION: ...................................................................................... 1 2 3 4 

CLINICAL DIMENSION 

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

2 ........................ Primary or Other Diagnosis = Blood disorders ................................ .................... 6 .................... 3 

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

4 ........................ Primary Diagnosis = Diabetes ......................................................... .................... 8 .................... 8 

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

6 ........................ Primary or Other Diagnosis = Dysphagia ........................................

AND 

Primary or Other Diagnosis = Neuro 3—Stroke 

2 16 1 9 

7 ........................ Primary or Other Diagnosis = Dysphagia ........................................

AND 

M1030 (Therapy at home) = 3 (Enteral) 

2 7 .................... 7 

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

9 ........................ Primary or Other Diagnosis = Gastrointestinal disorders ................

AND 

M1630 (ostomy) = 1 or 2 

.................... 5 .................... ....................

10 ...................... Primary or Other Diagnosis = Gastrointestinal disorders ................

AND 

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

3—Stroke, OR Neuro 4—Multiple Sclerosis 

.................... .................... .................... ....................

11 ...................... Primary or Other Diagnosis = Heart Disease OR Hypertension ..... 1 .................... .................... ....................

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

13 ...................... Primary or Other Diagnosis = Neuro 1—Brain disorders and paralysis.

AND 

M1840 (Toilet transfer) = 2 or more 

.................... .................... .................... ....................

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

AND 

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

2 7 1 7 

15 ...................... Primary or Other Diagnosis = Neuro 3—Stroke .............................. 3 10 2 ....................

16 ...................... Primary or Other Diagnosis = Neuro 3—Stroke AND .....................

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

.................... 4 .................... 9 

17 ...................... Primary or Other Diagnosis = Neuro 3—Stroke ..............................

AND 

M1860 (Ambulation) = 4 or more 

.................... .................... .................... ....................

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TABLE 8—CASE-MIX ADJUSTMENT VARIABLES AND SCORES—Continued 

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 postoperative complications.4 20 8 20 

26 ...................... Other Diagnosis = Skin 1—Traumatic wounds, burns, post-operative complications.5 14 7 14 

27 ...................... Primary or Other Diagnosis = Skin 1—Traumatic wounds, burns, 

and post-operative complications OR Skin 2—Ulcers and other 

skin conditions.

AND 

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

4 .................... 1 ....................

28 ...................... Primary or Other Diagnosis = Skin 2—Ulcers and other skin conditions.2 17 8 17 

29 ...................... Primary or Other Diagnosis = Tracheostomy .................................. 4 16 4 16 

30 ...................... Primary or Other Diagnosis = Urostomy/Cystostomy ...................... .................... 18 .................... 14 

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

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

33 ...................... M1200 (Vision) = 1 or more ............................................................. .................... .................... .................... ....................

34 ...................... M1242 (Pain) = 3 or 4 ...................................................................... 2 .................... 1 ....................

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

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

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

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

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

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

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

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

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

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

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

FUNCTIONAL DIMENSION 

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

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

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

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

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

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

Source: CY 2013 home health claims data as of December 31, 2013 from the home health Standard Analytic File (SAF). We excluded LUPA 

episodes, outlier episodes, and episodes with PEP adjustments. 

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

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

diagnoses. 

In updating the four-equation model 

with 2013 data (the last update to the 

four-equation model used 2005 data), 

there were significant changes to the 

point values for the variables in the 

four-equation model. These reflect 

changes in the relationship between the 

grouper variables and resource use since 

2005. The CY 2015 four-equation model 

resulted in 121 point-giving 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 

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38380 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

11For Step 1, 55% of episodes were in the 

medium functional level (All with score 15). 

For Step 2.1, 60.9% of episodes were in the low 

functional level (Most with score 3, some with score 

0). 

For Step 2.2, 70.3% of episodes were in the low 

functional level (All with score 0). 

For Step 3, 52.3% of episodes were in the 

medium functional level (all with score 9). 

For Step 4, 41.6% of episodes were in the 

medium functional level (almost all with score 3). 

model due to the lack of additional 

resources associated with the variable. 

The points for 56 variables increased in 

the CY 2015 four-equation model and 

the points for 28 variables in decreased 

in the CY 2015 four-equation model. 

Since there were a number of 

significant changes to the point values 

associated with the four-equation 

model, we are proposing to redefine the 

clinical and functional thresholds so 

that they would be reflective of the new 

points associated with the CY 2015 fourequation model. Specifically, after 

estimating the points for each of the 

variables and summing the clinical and 

functional points for each episode, we 

looked at the distribution of the clinical 

score and functional score, breaking the 

episodes into different steps. The 

categorizations for the steps are as 

follows: 

• Step 1: First and second episodes, 

0–13 therapy visits. 

• Step 2.1: First and second episodes, 

14–19 therapy visits. 

• Step 2.2: Third episodes and 

beyond, 14–19 therapy visits. 

• Step 3: Third episodes and beyond, 

0–13 therapy visits. 

• Step 4: Episodes with 20+ therapy 

visits. 

Similar to the methodology used in 

the CY 2008 refinements, we then 

divide the distribution of the clinical 

score for episodes within a step such 

that a third of episodes are classified as 

low clinical score, a third of episodes 

are classified as medium clinical score, 

and a third of episodes are classified as 

high clinical score. The same approach 

is then done looking at the functional 

score. It was not always possible to 

evenly divide the episodes within each 

level, by step, into thirds due to many 

episodes being clustered around one 

particular score.11 Also, we looked at 

the average resource use associated with 

each clinical and functional score and 

used that to guide where we placed our 

thresholds. We tried to group scores 

with similar average resource use within 

the same level (even if it means that 

more or less than a third of episodes are 

placed within a level by step). The new 

thresholds based off of the CY 2015 

four-equation model points are shown 

in Table 9. 

TABLE 9—CY 2015 CLINICAL AND FUNCTIONAL THRESHOLDS

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

0 to 13 

therapy visits 

14 to 19 

therapy visits 

0 to 13 

therapy visits 

14 to 19 

therapy visits 

20+ therapy 

visits 

Grouping Step: 1 ................... 2 ................... 3 ................... 4 ................... 5 

Equation(s) used to calculate points: (see Table 8) 1 ................... 2 ................... 3 ................... 4 ................... (2&4) 

Dimension ............................... Severity Level.

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

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

C3 ........................................... 4+ ................. 8+ ................. 2+ ................. 13+ ............... 17+. 

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

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

F3 ........................................... 16+ ............... 13+ ............... 10+ ............... 8+ ................. 5+. 

Once the thresholds were determined 

and each episode was assigned a 

clinical and functional level, the 

payment regression was estimated with 

an episode’s wage-weighted minutes of 

care as the dependent variable. 

Independent variables in the model 

were indicators for the step of the 

episode as well for the clinical and 

functional levels within each step of the 

episode. Like the four-equation model, 

the payment regression model is also 

estimated with robust standard errors 

that are clustered at the beneficiary 

level. Table 10 shows the regression 

coefficients for the variables in the 

proposed payment regression model. 

The R-squared value for 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 

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12When computing the average, we compute a 

weighted average, assigning a value of one to each 

normal episode and a value equal to the episode 

length divided by 60 for PEPs. 

TABLE 10—PROPOSED PAYMENT REGRESSION MODEL—Continued 

Variable description 

Proposed CY 

2015 payment 

regression 

coefficients 

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. 

(1) We used the coefficients from the 

payment regression model to predict 

each episode’s wage-weighted minutes 

of care (resource use). We then divided 

these predicted values by the mean of 

the dependent variable (that is, the 

average wage-weighted minutes of care 

across all episodes used in the payment 

regression). This division constructs the 

weight for each episode, which is 

simply the ratio of the episode’s 

predicted wage-weighted minutes of 

care divided by the average wageweighted minutes of care in the sample. 

Each episode was then aggregated into 

one of the 153 home health resource 

groups (HHRGs) and the ‘‘raw’’ weight 

for each HHRG was calculated as the 

average of the episode weights within 

the HHRG. 

(2) In the next step of weight revision, 

the weights associated with 0 to 5 

therapy visits were increased by 3.75 

percent. Also, the weights associated 

with 14–15 therapy visits were 

decreased by 2.5 percent and the 

weights associated with 20+ therapy 

visits were decreased by 5 percent. 

These adjustments were made to 

discourage inappropriate use of therapy 

while addressing concerns that nontherapy services are undervalued. These 

adjustments to the case-mix weights are 

the same as the ones used in the CY 

2012 recalibration (76 FR 68557). 

(3) After the adjustments in step (2) 

were applied to the raw weights, the 

weights were further adjusted to create 

an increase in the payment weights for 

the therapy visit steps between the 

therapy thresholds. Weights with the 

same clinical severity level, functional 

severity level, and early/later episode 

status were grouped together. Then 

within those groups, the weights for 

each therapy step between thresholds 

were gradually increased. We did this 

by interpolating between the main 

thresholds on the model (from 0–5 to 

14–15 therapy visits, and from 14–15 to 

20+ therapy visits). We used a linear 

model to implement the interpolation so 

the payment weight increase for each 

step between the thresholds (such as the 

increase between 0–5 therapy visits and 

6 therapy visits and the increase 

between 6 therapy visits and 7–9 

therapy visits) was constant. This 

interpolation is the identical to the 

process finalized in the CY 2012 final 

rule (76 FR 68555). 

(4) The interpolated weights were 

then adjusted so that the average casemix 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 casemix 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 

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38382 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

TABLE 11—PROPOSED CY 2015 CASE-MIX PAYMENT WEIGHTS—Continued 

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

Clinical and 

functional levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

proposed casemix weights 

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 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

21233 ...................... 1st and 2nd Episodes, 18 to 19 Therapy Visits ........................................................ C2F3S3 1.8698 

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 

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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 38383 

TABLE 11—PROPOSED CY 2015 CASE-MIX PAYMENT WEIGHTS—Continued 

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

Clinical and 

functional levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

proposed casemix weights 

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

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

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

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

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

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

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

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

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

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

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

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

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

22321 ...................... 3rd+ Episodes, 14 to 15 Therapy Visits .................................................................... C3F2S1 1.5800 

22322 ...................... 3rd+ Episodes, 16 to 17 Therapy Visits .................................................................... C3F2S2 1.7973 

22323 ...................... 3rd+ Episodes, 18 to 19 Therapy Visits .................................................................... C3F2S3 2.0146 

22331 ...................... 3rd+ Episodes, 14 to 15 Therapy Visits .................................................................... C3F3S1 1.6908 

22332 ...................... 3rd+ Episodes, 16 to 17 Therapy Visits .................................................................... C3F3S2 1.8987 

22333 ...................... 3rd+ Episodes, 18 to 19 Therapy Visits .................................................................... C3F3S3 2.1065 

30111 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C1F1S1 0.4916 

30112 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C1F1S2 0.6424 

30113 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C1F1S3 0.7931 

30114 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C1F1S4 0.9439 

30115 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C1F1S5 1.0946 

30121 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C1F2S1 0.5721 

30122 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C1F2S2 0.7124 

30123 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C1F2S3 0.8527 

30124 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C1F2S4 0.9930 

30125 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C1F2S5 1.1333 

30131 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C1F3S1 0.6288 

30132 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C1F3S2 0.7799 

30133 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C1F3S3 0.9310 

30134 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C1F3S4 1.0821 

30135 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C1F3S5 1.2332 

30211 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C2F1S1 0.5085 

30212 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C2F1S2 0.6836 

30213 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C2F1S3 0.8586 

30214 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C2F1S4 1.0337 

30215 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C2F1S5 1.2088 

30221 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C2F2S1 0.5890 

30222 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C2F2S2 0.7536 

30223 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C2F2S3 0.9182 

30224 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C2F2S4 1.0828 

30225 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C2F2S5 1.2474 

30231 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C2F3S1 0.6457 

30232 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C2F3S2 0.8211 

30233 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C2F3S3 0.9965 

30234 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C2F3S4 1.1720 

30235 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C2F3S5 1.3474 

30311 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C3F1S1 0.6307 

30312 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C3F1S2 0.8149 

30313 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C3F1S3 0.9992 

30314 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C3F1S4 1.1834 

30315 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C3F1S5 1.3676 

30321 ...................... 3rd+ Episodes, 0 to 5 Therapy Visits ........................................................................ C3F2S1 0.7112 

30322 ...................... 3rd+ Episodes, 6 Therapy Visits ............................................................................... C3F2S2 0.8850 

30323 ...................... 3rd+ Episodes, 7 to 9 Therapy Visits ........................................................................ C3F2S3 1.0587 

30324 ...................... 3rd+ Episodes, 10 Therapy Visits ............................................................................. C3F2S4 1.2325 

30325 ...................... 3rd+ Episodes, 11 to 13 Therapy Visits .................................................................... C3F2S5 1.4063 

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 

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TABLE 11—PROPOSED CY 2015 CASE-MIX PAYMENT WEIGHTS—Continued 

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

Clinical and 

functional levels 

(1 = Low; 

2 = Medium; 

3= High) 

CY 2015 

proposed casemix weights 

40221 ...................... All Episodes, 20+ Therapy Visits .............................................................................. C2F2S1 1.9942 

40231 ...................... All Episodes, 20+ Therapy Visits .............................................................................. C2F3S1 2.0767 

40311 ...................... All Episodes, 20+ Therapy Visits .............................................................................. C3F1S1 2.1750 

40321 ...................... All Episodes, 20+ Therapy Visits .............................................................................. C3F2S1 2.2319 

40331 ...................... All Episodes, 20+ Therapy Visits .............................................................................. C3F3S1 2.3144 

To ensure the changes to the case-mix 

weights are implemented in a budget 

neutral manner, we propose to apply a 

case-mix budget neutrality factor to the 

CY 2015 national, standardized 60-day 

episode payment rate (see section 

III.D.4. of this proposed rule). The casemix budget neutrality factor is 

calculated as the ratio of total payments 

when CY 2015 case-mix weights are 

applied to CY 2013 utilization (claims) 

data to total payments when CY 2014 

case-mix weights are applied to CY 2013 

utilization data. This produces the 

proposed case-mix budget neutrality 

factor for CY 2015 of 1.0237. We note 

that the CY 2013 data used to develop 

the proposed case-mix weights is 

preliminary (CY 2013 claims data as of 

December 31, 2013) and we propose to 

update the case-mix weights with more 

complete CY 2013 data (as of June 30, 

2014) in the final rule. Therefore, the 

points associated with each of the 

grouper variables, the new clinical and 

functional thresholds, and the CY 2015 

case-mix weights may change between 

the CY 2015 HH PPS proposed and final 

rules. 

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

gives CMS the authority to implement 

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

that are not related to actual changes in 

patient characteristics over time). 

Previously, we accounted for nominal 

case-mix growth from 2000 to 2009 

through case-mix reductions 

implemented from 2008 through 2013 

(76 FR 68528–68543). In the CY 2013 

HH PPS proposed rule, we stated that 

we found that 15.97 percent of the total 

case-mix change was real from 2000 to 

2010 (77 FR 41553). In the CY 2014 HH 

PPS final rule, we used 2012 claims data 

to rebase payments (78 FR 72277). Since 

we were resetting the payment amounts 

with 2012 data, we did not take into 

account nominal case-mix growth from 

2009 through 2012. 

For this proposed rule, we examined 

case-mix growth from CY 2012 to CY 

2013 using CY 2012 and preliminary CY 

2013 claims data. In applying the 15.97 

percent estimate of real case-mix growth 

to the total estimated case-mix growth 

from CY 2012 to CY 2013 (2.37 percent), 

we estimate that a case-mix reduction of 

2.00 percent, to account for nominal 

case-mix growth, would be warranted. 

We considered adjusting the case-mix 

budget neutrality factor to take into 

account the 2.00 percent growth in 

nominal case-mix, which would result 

in a case-mix budget neutrality 

adjustment of 1.0037 rather than 1.0237. 

However, we are proposing to apply the 

full 1.0237 case-mix budget neutrality 

factor to the national, standardized 60- 

day episode payment rate. We will 

continue to monitor case-mix growth 

and may consider whether to propose 

nominal case-mix reductions in future 

rulemaking. 

D. Proposed CY 2015 Rate Update 

1. Proposed CY 2015 Home Health 

Market Basket Update 

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

amended by section 3401(e) of the 

Affordable Care Act, adds new clause 

(vi) which states, ‘‘After determining the 

home health market basket percentage 

increase . . . the Secretary shall reduce 

such percentage . . . for each of 2011, 

2012, and 2013, by 1 percentage point. 

The application of this clause may 

result in the home health market basket 

percentage increase under clause (iii) 

being less than 0.0 for a year, and may 

result in payment rates under the 

system under this subsection for a year 

being less than such payment rates for 

the preceding year.’’ Therefore, as 

mandated by the Affordable Care Act, 

for CYs 2011, 2012, and 2013, the HH 

market basket update was reduced by 1 

percentage point. 

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

requires that the standard prospective 

payment amounts for CY 2015 be 

increased by a factor equal to the 

applicable HH market basket update for 

those HHAs that submit quality data as 

required by the Secretary. The proposed 

HH PPS market basket update for CY 

2015 is 2.6 percent. This is based on 

Global Insight Inc.’s first quarter 2014 

forecast of the 2010-based HH market 

basket, with historical data through the 

fourth quarter of 2013. A detailed 

description of how we derive the HHA 

market basket is available in the CY 

2013 HH PPS final rule (77 FR 67080– 

67090). 

For CY 2015, section 3401(e) of the 

Affordable Care Act, requires that, in CY 

2015 (and in subsequent calendar 

years), the market basket percentage 

under the HHA prospective payment 

system as described in section 

1895(b)(3)(B) of the Act be annually 

adjusted by changes in economy-wide 

productivity. The statute defines the 

productivity adjustment, described in 

section 1886(b)(3)(B)(xi)(II) of the Act, to 

be equal to the 10-year moving average 

of change in annual economy-wide 

private nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, calendar 

year, cost reporting period, or other 

annual period) (the ‘‘MFP adjustment’’). 

The Bureau of Labor Statistics (BLS) is 

the agency that publishes the official 

measure of private nonfarm business 

MFP. Please see http://www.bls.gov/mfp 

to obtain the BLS historical published 

MFP data. We note that the proposed 

methodology for calculating and 

applying the MFP adjustment to the 

HHA payment update is similar to the 

methodology used in other Medicare 

provider payment systems as required 

by section 3401 of the Affordable Care 

Act. 

The projection of MFP is currently 

produced by IHS Global Insight, Inc.’s 

(IGI), an economic forecasting firm. To 

generate a forecast of MFP, IGI 

replicated the MFP measure calculated 

by the BLS using a series of proxy 

variables derived from IGI’s U.S. 

macroeconomic models. These models 

take into account a very broad range of 

factors that influence the total U.S. 

economy. IGI forecasts the underlying 

proxy components such as gross 

domestic product (GDP), capital, and 

labor inputs required to estimate MFP 

and then combines those projections 

according to the BLS methodology. In 

Table 12, we identify each of the major 

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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 38385 

MFP component series employed by the 

BLS to measure MFP. We also provide 

the corresponding concepts forecasted 

by IGI and determined to be the best 

available proxies for the BLS series. 

TABLE 12—MULTIFACTOR PRODUCTIVITY COMPONENT SERIES EMPLOYED BY THE BUREAU OF LABOR

STATISTICS AND IHS GLOBAL INSIGHT

BLS series IGI series 

Real value-added output.Non-housing nongovernment nonfarm real GDP. 

Private non-farm business sector labor 

input.

Hours of all persons 

in private non-farm 

establishments adjusted for labor 

composition. 

Aggregate capital inputs.Real effective capital 

stock used for full 

employment GDP. 

IGI found that the historical growth 

rates of the BLS components used to 

calculate MFP and the IGI components 

identified are consistent across all series 

and therefore suitable proxies for 

calculating MFP. For more information 

regarding the BLS method for estimating 

productivity, please see the following 

link: http://www.bls.gov/mfp/

mprtech.pdf. 

During the development of this 

proposed rule, the BLS published a 

historical time series of private nonfarm 

business MFP for 1987 through 2012. 

Using this historical MFP series and the 

IGI forecasted series, IGI has developed 

a forecast of MFP for 2013 through 2024, 

as described below. 

To create a forecast of the BLS’ MFP 

index, the forecasted annual growth 

rates of the ‘‘non-housing, 

nongovernment, non-farm, real GDP,’’ 

‘‘hours of all persons in private nonfarm 

establishments adjusted for labor 

composition,’’ and ‘‘real effective capital 

stock’’ series (ranging from 2013 to 

2024) are used to ‘‘grow’’ the levels of 

the ‘‘real value-added output,’’ ‘‘private 

non-farm business sector labor input,’’ 

and ‘‘aggregate capital input’’ series 

published by the BLS. Projections of the 

‘‘hours of all persons’’ measure are 

calculated using the difference between 

the projected growth rates of real output 

per hour and real GDP. This difference 

is then adjusted to account for changes 

in labor composition in the forecast 

interval. Using these three key concepts, 

MFP is derived by subtracting the 

contribution of labor and capital inputs 

from output growth. However, to 

estimate MFP, we need to understand 

the relative contributions of labor and 

capital to total output growth. 

Therefore, two additional measures are 

needed to operationalize the estimation 

of the IGI MFP projection: Labor 

compensation and capital income. The 

sum of labor compensation and capital 

income represents total income. The 

BLS calculates labor compensation and 

capital income (in current dollar terms) 

to derive the nominal values of labor 

and capital inputs. IGI uses the 

‘‘nongovernment total compensation’’ 

and ‘‘flow of capital services from the 

total private non-residential capital 

stock’’ series as proxies for the BLS’ 

income measures. These two proxy 

measures for income are divided by 

total income to obtain the shares of 

labor compensation and capital income 

to total income. To estimate labor’s 

contribution and capital’s contribution 

to the growth in total output, the growth 

rates of the proxy variables for labor and 

capital inputs are multiplied by their 

respective shares of total income. These 

contributions of labor and capital to 

output growth is subtracted from total 

output growth to calculate the ‘‘change 

in the growth rates of multifactor 

productivity:’’ 

MFP = Total output growth ¥ ((labor 

input growth * labor compensation 

share) + (capital input growth * 

capital income share)) 

The change in the growth rates (also 

referred to as the compound growth 

rates) of the IGI MFP are multiplied by 

100 to calculate the percent change in 

growth rates (the percent change in 

growth rates are published by the BLS 

for its historical MFP measure). Finally, 

the growth rates of the IGI MFP are 

converted to index levels to be 

consistent with the BLS’ methodology. 

For benchmarking purposes, the 

historical growth rates of IGI’s proxy 

variables were used to estimate a 

historical measure of MFP, which was 

compared to the historical MFP estimate 

published by the BLS. The comparison 

revealed that the growth rates of the 

components were consistent across all 

series, and therefore validated the use of 

the proxy variables in generating the IGI 

MFP projections. The resulting MFP 

index was then interpolated to a 

quarterly frequency using the Bassie 

method for temporal disaggregation. The 

Bassie technique utilizes an indicator 

(pattern) series for its calculations. IGI 

uses the index of output per hour 

(published by the BLS) as an indicator 

when interpolating the MFP index. 

As described previously, the proposed 

CY 2015 HHA market basket percentage 

update would be 2.6 percent. Section 

3401(e) of the Affordable Care Act 

amends section 1895(b)(3)(B) of the Act 

by adding a new clause, which requires 

that after establishing the percentage 

update for calendar year 2015 (and each 

subsequent year), ‘‘the Secretary shall 

reduce such percentage by the 

productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II)’’ (which we 

refer to as the multifactor productivity 

adjustment or MFP adjustment). 

To calculate the MFP-adjusted update 

for the HHA market basket, we propose 

that the MFP percentage adjustment be 

subtracted from the CY 2015 market 

basket update calculated using the CY 

2010-based HHA market basket. We 

propose that the end of the 10-year 

moving average of changes in the MFP 

should coincide with the end of the 

appropriate CY update period. Since the 

market basket update is reduced by the 

MFP adjustment to determine the 

annual update for the HH PPS, we 

believe it is appropriate for the data and 

time period associated with both 

components of the calculation (the 

market basket and the productivity 

adjustment) to end on December 15, 

2015, so that changes in market 

conditions are aligned. 

Therefore, for the CY 2015 update, we 

propose that the MFP adjustment be 

calculated as the 10-year moving 

average of changes in MFP for the 

period ending December 31, 2015. We 

propose to round the final annual 

adjustment to the one-tenth of one 

percentage point level up or down as 

applicable according to conventional 

rounding rules (that is, if the number we 

are rounding is followed by 5, 6, 7, 8, 

or 9, we will round the number up; if 

the number we are rounding is followed 

by 1, 2, 3, or 4, we will round the 

number down). 

The market basket percentage we are 

proposing for CY 2015 for the HHA 

market basket is based on the 1st quarter 

2014 forecast of the CY 2010-based HHA 

market basket update, which is 

estimated to be 2.6 percent. This market 

basket percentage would then be 

reduced by the MFP adjustment (the 10- 

year moving average of MFP for the 

period ending December 31, 2015) of 0.4 

percent, which is calculated as 

described above and based on IGI’s 1st 

quarter 2014 forecast. The resulting 

MFP-adjusted HHA market basket 

update is equal to 2.2 percent, or 2.6 

percent less 0.4 percent. We propose 

that if more recent data are subsequently 

available (for example, a more recent 

estimate of the market basket and MFP 

adjustment), we would use such data, if 

appropriate, to determine the CY 2015 

market basket update and MFP 

adjustment in the CY 2015 HHA PPS 

final rule. 

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38386 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

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

requires that the home health market 

basket percentage increase be decreased 

by 2 percentage points for those HHAs 

that do not submit quality data as 

required by the Secretary. For HHAs 

that do not submit the required quality 

data for CY 2015, the home health 

market basket update will be 0.2 percent 

(2.2 percent minus 2 percent). As noted 

previously, the home health market 

basket was rebased and revised in CY 

2013. A detailed description of how we 

derive the HHA market basket is 

available in the CY 2013 HH PPS final 

rule (77 FR 67080, 67090). 

2. Home Health Care Quality Reporting 

Program (HH QRP) 

a. General Considerations Used for 

Selection of Quality Measures for the 

HH QRP 

The successful development of the 

Home Health Quality Reporting Program 

(HH QRP) that promotes the delivery of 

high quality healthcare services is our 

paramount concern. We seek to adopt 

measures for the HH QRP that promote 

more efficient and safer care. Our 

measure selection activities for the HH 

QRP takes into consideration input we 

receive from the Measure Applications 

Partnership (MAP), convened by the 

National Quality Forum (NQF) as part of 

a pre-rulemaking process that we have 

established and are required to follow 

under section 1890A of the Act. The 

MAP is a public-private partnership 

comprised of multi-stakeholder groups 

convened for the primary purpose of 

providing input to CMS on the selection 

of certain categories of quality and 

efficiency measures, as required by 

section 1890A(a)(3) of the Act. By 

February 1st of each year, the NQF must 

provide that input to CMS. 

More details about the pre-rulemaking 

process can be found at http://

www.qualityforum.org/map. 

MAP reports to view and download 

are available at http://

www.qualityforum.org/Setting_

Priorities/Partnership/MAP_Final_

Reports.aspx. 

Our measure development and 

selection activities for the HH QRP take 

into account national priorities, such as 

those established by the National 

Priorities Partnership (http://

www.qualityforum.org/Setting_

Priorities/NPP/National_Priorities_

Partnership.aspx), the Department of 

Health & Human Services (HHS) 

Strategic Plan (http://www.hhs.gov/

secretary/about/priorities/

priorities.html, the National Quality 

Strategy (NQS) (http://www.ahrq.gov/

workingforquality/reports.htm), and the 

CMS Quality Strategy (http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/

CMS-Quality-Strategy.html). 

To the extent practicable, we have 

sought to adopt measures that have been 

endorsed by the national consensus 

organization under contract to endorse 

standardized healthcare quality 

measures pursuant to section 1890 of 

the Act, recommended by multistakeholder organizations, and 

developed with the input of patients, 

providers, purchasers/payers, and other 

stakeholders. At this time, the National 

Quality Forum (NQF) is the national 

consensus organization that is under 

contract with HHS to provide review 

and endorsement of quality measures. 

b. Background and Quality Reporting 

Requirements 

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

states that ‘‘each home health agency 

shall submit to the Secretary such data 

that the Secretary determines are 

appropriate for the measurement of 

health care quality. Such data shall be 

submitted in a form and manner, and at 

a time, specified by the Secretary for 

purposes of this clause.’’ 

In addition, section 1895(b)(3)(B)(v)(I) 

of the Act states that ‘‘for 2007 and each 

subsequent year, in the case of a home 

health agency that does not submit data 

to the Secretary in accordance with 

subclause (II) with respect to such a 

year, the home health market basket 

percentage increase applicable under 

such clause for such year shall be 

reduced by 2 percentage points.’’ This 

requirement has been codified in 

regulations at § 484.225(i). HHAs that 

meet the quality data reporting 

requirements are eligible for the full 

home health (HH) market basket 

percentage increase. HHAs that do not 

meet the reporting requirements are 

subject to a 2 percentage point reduction 

to the HH market basket increase. 

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

further states that ‘‘[t]he Secretary shall 

establish procedures for making data 

submitted under subclause (II) available 

to the public. Such procedures shall 

ensure that a home health agency has 

the opportunity to review the data that 

is to be made public with respect to the 

agency prior to such data being made 

public.’’ 

Medicare home health regulations, as 

codified at § 484.250(a), require HHAs 

to submit OASIS assessments and Home 

Health Care Consumer Assessment of 

Healthcare Providers and Systems 

Survey (HH CAHPS®) data to meet the 

quality reporting requirements of 

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

provide quality measure data to HHAs 

via the Certification and Survey 

Provider Enhanced Reports (CASPER 

reports) which are available on the CMS 

Health Care Quality Improvement 

System (QIES). A subset of the HH 

quality measures has been publicly 

reported on the Home Health Compare 

(HH Compare) Web site since 2003. The 

CY 2012 HH PPS final rule (76 FR 

68576), identifies the current HH QRP 

measures. The selected measures that 

are made available to the public can be 

viewed on the HH Compare Web site 

located at http://www.medicare.gov/

HHCompare/Home.asp. As stated in the 

CY 2012 and CY2013 HH PPS final rules 

(76 FR 68575 and 77 FR 67093, 

respectively), we finalized that we will 

also use measures derived from 

Medicare claims data to measure HH 

quality. 

In the CY 2014 HH PPS final rule, we 

finalized a proposal to add two claimsbased measures to the HH QRP, and also 

stated that we would begin reporting the 

data from these measures to HHAs 

beginning in CY 2014. These claims 

based measures are: (1) 

Rehospitalization during the first 30 

days of HH; and (2) Emergency 

Department Use without Hospital 

Readmission during the first 30 days of 

HH. Also, in this rule, we finalized our 

proposal to reduce the number of 

process measures reported on the 

CASPER reports by eliminating the 

stratification by episode length for 9 

process measures. While no timeframe 

was given for the removal of these 

measures, we have scheduled them for 

removal from the CASPER folders in 

October 2014. In addition, five short 

stay measures which had previously 

been reported on Home Health Compare 

were recently removed from public 

reporting and replaced with nonstratified ‘‘all episodes of care’’ versions 

of these measures. 

c. OASIS Data Submission and OASIS 

Data for Annual Payment Update 

(1) Statutory Authority 

The Home Health conditions of 

participation (CoPs) at § 484.55(d) 

require that the comprehensive 

assessment must be updated and revised 

(including the administration of the 

OASIS) no less frequently than: (1) The 

last 5 days of every 60 days beginning 

with the start of care date, unless there 

is a beneficiary elected transfer, 

significant change in condition, or 

discharge and return to the same HHA 

during the 60-day episode; (2) within 48 

hours of the patient’s return to the home 

from a hospital admission of 24 hours 

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

00460.asp. 

or more for any reason other than 

diagnostic tests; and (3) at discharge. 

It is important to note that to calculate 

quality measures from OASIS data, 

there must be a complete quality 

episode, which requires both a Start of 

Care (initial assessment) or Resumption 

of Care OASIS assessment and a 

Transfer or Discharge OASIS 

assessment. Failure to submit sufficient 

OASIS assessments to allow calculation 

of quality measures, including transfer 

and discharge assessments, is failure to 

comply with the CoPs. 

HHAs do not need to submit OASIS 

data for those patients who are excluded 

from the OASIS submission 

requirements. As described in the 

December 23, 2005 Medicare and 

Medicaid Programs: Reporting Outcome 

and Assessment Information Set Data as 

Part of the Conditions of Participation 

for Home Health Agencies final rule (70 

FR 76202), we define the exclusion as 

those patients: 

• Receiving only non-skilled services; 

• For whom neither Medicare nor 

Medicaid is paying for HH care (patients 

receiving care under a Medicare or 

Medicaid Managed Care Plan are not 

excluded from the OASIS reporting 

requirement); 

• Receiving pre- or post-partum 

services; or 

• Under the age of 18 years. 

As set forth in the CY 2008 HH PPS 

final rule (72 FR 49863), HHAs that 

become Medicare-certified on or after 

May 31 of the preceding year are not 

subject to the OASIS quality reporting 

requirement nor any payment penalty 

for quality reporting purposes for the 

following year. For example, HHAs 

certified on or after May 31, 2013 are 

not subject to the 2 percentage point 

reduction to their market basket update 

for CY 2014. These exclusions only 

affect quality reporting requirements 

and do not affect the HHA’s reporting 

responsibilities as announced in the 

December 23, 2005 final rule, ‘‘Medicare 

and Medicaid Programs; Reporting 

Outcome and Assessment Information 

Set Data as Part of the Conditions of 

Participation for Home Health 

Agencies’’ (70 FR 76202). 

(2) Home Health Quality Reporting 

Program Requirements for CY 2015 

Payment and Subsequent Years 

In the CY 2014 Home Health Final 

rule (78 FR 72297), we finalized a 

proposal to consider OASIS assessments 

submitted by HHAs to CMS in 

compliance with HH CoPs and 

Conditions for Payment for episodes 

beginning on or after July 1, 2012, and 

before July 1, 2013 as fulfilling one 

portion of the quality reporting 

requirement for CY 2014. In addition, 

we finalized a proposal to continue this 

pattern for each subsequent year beyond 

CY 2014, considering OASIS 

assessments submitted for episodes 

beginning on July 1st of the calendar 

year 2 years prior to the calendar year 

of the Annual Payment Update (APU) 

effective date and ending June 30th of 

the calendar year 1 year prior to the 

calendar year of the APU effective date 

as fulfilling the OASIS portion of the 

HH quality reporting requirement. 

(3) Establishing a ‘‘Pay-for-Reporting’’ 

Performance Requirement for 

Submission of OASIS Quality Data 

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

states that ‘‘for 2007 and each 

subsequent year, in the case of a home 

health agency that does not submit data 

to the Secretary in accordance with 

subclause (II) with respect to such a 

year, the home health market basket 

percentage increase applicable under 

such clause for such year shall be 

reduced by 2 percentage points.’’ This 

‘‘pay-for-reporting’’ requirement was 

implemented on January 1, 2007. 

However, to date, the quantity of OASIS 

assessments each HHA must submit to 

meet this requirement has never been 

proposed and finalized through 

rulemaking or through the subregulatory process. We believe that this 

matter should be addressed for several 

reasons. 

We believe that defining a more 

explicit performance requirement for 

the submission of OASIS data by HHAs 

would better meet section 5201(c)(2) of 

the Deficit Reduction Act of 2005 

(DRA), which requires that ‘‘each home 

health agency shall submit to the 

Secretary such data that the Secretary 

determines are appropriate for the 

measurement of health care quality. 

Such data shall be submitted in a form 

and manner, and at a time, specified by 

the Secretary for purposes of this 

clause.’’ 

In February 2012, the Department of 

Health & Human Services Office of the 

Inspector General (OIG) performed a 

study to: (1) Determine the extent to 

which home health agencies (HHAs) 

meet Federal reporting requirements for 

the Outcome and Assessment 

Information Set (OASIS) data; (2) to 

determine the extent to which states 

meet federal reporting requirements for 

OASIS data; and (3) to determine the 

extent to which the Centers for 

Medicare & Medicaid Services (CMS) 

oversees the accuracy and completeness 

of OASIS data submitted by HHAs. In a 

report entitled, ‘‘Limited Oversight of 

Home Health Agency OASIS Data,’’ 13

the OIG stated their finding that ‘‘CMS 

did not ensure the accuracy or 

completeness of OASIS data.’’ The OIG 

recommended that we ‘‘identify all 

HHAs that failed to submit OASIS data 

and apply the 2-percent payment 

reduction to them’’. We believe that 

establishing a performance requirement 

for submission of OASIS quality data 

would be responsive to the 

recommendations of the OIG. 

In response to these requirements and 

the OIG report, we directed one of our 

contractors (the University of Colorado, 

Anschutz Medical Campus) to design a 

pay-for-reporting performance system 

model that could accurately measure the 

level of an HHA’s submission of OASIS 

quality data. After review and analysis 

of several years of OASIS data, the 

researchers at the University of 

Colorado were able to develop a 

performance system which is driven by 

the principle that each HHA would be 

expected to submit a minimum set of 

two ‘‘matching’’ assessments for each 

patient admitted to their agency. These 

matching assessments together create 

what is considered a ‘‘quality episode of 

care’’, which would ideally consist of a 

Start of Care (SOC) or Resumption of 

Care (ROC) assessment and a matching 

End of Care (EOC) assessment. However, 

the researchers at the University of 

Colorado determined that there are 

several scenarios that could meet this 

‘‘matching assessment requirement’’ of 

the new pay-for-reporting performance 

requirement. These scenarios have been 

defined as ‘‘quality assessments’’, which 

are defined as assessments that create a 

quality episode of care during the 

reporting period or could create a 

quality episode if the reporting period 

were expanded to an earlier reporting 

period or into the next reporting period. 

Seven types of assessments submitted 

by an HHA fit this definition of a quality 

assessment. These are: 

• A Start of Care (SOC) or 

Resumption of Care (ROC) assessment 

that has a matching End of Care (EOC) 

assessment. EOC assessments are 

assessments that are conducted at 

transfer to an inpatient facility (with or 

without discharge), death, or discharge 

from home health care. These two 

assessments (the SOC or ROC 

assessment and the EOC assessment) 

create a regular quality episode of care 

and both count as quality assessments. 

• An SOC/ROC assessment that could 

begin an episode of care, but occurs in 

the last 60 days of the performance 

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14The term ‘‘reporting period’’ is defined as the 

submission of OASIS assessments for episodes 

between July 1 (of the calendar year two years prior 

to the calendar year of the APU effective date) 

through the following June 30th (of the calendar 

year one year prior to the calendar year of the APU 

effective date) each year. 

15For more information about the NQF 

Consensus Development Process, please visit the 

NQF Web site using the following link: http://

www.qualityforum.org/Measuring_Performance/

Consensus_Development_Process.aspx. 

period. This is labeled as a ‘‘Late SOC/ 

ROC’’ quality assessment. 

An EOC assessment that could end an 

episode of care that began in the 

previous reporting period, (that is, an 

EOC that occurs in the first 60 days of 

the performance period.) This is labeled 

as an ‘‘Early EOC’’ quality assessment. 

• An SOC/ROC assessment that is 

followed by one or more follow-up 

assessments, the last of which occurs in 

the last 60 days of the performance 

period. This is labeled as an ‘‘SOC/ROC 

Pseudo Episode’’ quality assessment. 

• An EOC assessment is preceded by 

one or more Follow-up assessments, the 

last of which occurs in the first 60 days 

of the performance period. This is 

labeled an ‘‘EOC Pseudo Episode’’ 

quality assessment. 

• An SOC/ROC assessment that is 

part of a known one-visit episode. This 

is labeled as a ‘‘One-visit episode’’ 

quality assessment. 

• SOC, ROC, and EOC assessments 

that do not meet any of these definitions 

are labeled as ‘‘Non-Quality’’ 

assessments. 

• Follow-up assessments (that is, 

where the M0100 Reason for 

Assessment = ‘04’ or ‘05’) are 

considered ‘‘Neutral’’ assessments and 

do not count toward or against the pay 

for reporting performance requirement. 

Compliance with this performance 

requirement can be measured through 

the use of an uncomplicated 

mathematical formula. This Pay for 

Reporting performance requirement 

metric has been titled as the ‘‘Quality 

Assessments Only’’ (QAO) formula 

because only those OASIS assessments 

that contribute, or could contribute, to 

creating a quality episode of care are 

included in the computation. The 

formula based on this definition is as 

follows: 

Our ultimate goal is to require all 

HHAs to achieve a Pay-for-Reporting 

performance requirement compliance 

rate of 90 percent or more, as calculated 

using the QAO metric illustrated above. 

However, we propose to implement this 

performance requirement in an 

incremental fashion over a 3 year 

period. We propose to require each 

HHA to reach a compliance rate of 70 

percent or better during the first 

reporting period 14 that the new Pay-forReporting performance requirement is 

implemented. We further propose to 

increase the Pay-for-Reporting 

performance requirement by 10 percent 

in the second reporting period, and then 

by an additional 10 percent in the third 

reporting period until a pay-forreporting performance requirement of 

90 percent is reached. 

To summarize, we propose to 

implement the pay-for- reporting 

performance requirement beginning 

with all episodes of care that occur on 

or after July 1, 2015, in accordance with 

the following schedule: 

• For episodes beginning on or after 

July 1st, 2015 and before June 30th, 

2016, HHAs must score at least 70 

percent on the QAO metric of pay-forreporting performance or be subject to a 

2 percentage point reduction to their 

market basket update for CY 2017. 

• For episodes beginning on or after 

July 1st, 2016 and before June 30th, 

2017, HHAs must score at least 80 

percent on the QAO metric of pay-forreporting performance or be subject to a 

2 percentage point reduction to their 

market basket update for CY 2018. 

• For episodes beginning on or after 

July 1st, 2017, and thereafter, and before 

June 30th, 2018 and thereafter, HHAs 

must score at least 90 percent on the 

QAO metric of pay-for-reporting 

performance or be subject to a 2 

percentage point reduction to their 

market basket update for CY 2019, and 

each subsequent year thereafter. 

We solicit public comment on our 

proposal to implement the Pay-forReporting performance requirement, as 

described previously, for the Home 

Health Quality Reporting Program. 

d. Updates to HH QRP Measures Which 

Are Made as a Result of Review by the 

NQF Process 

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

generally requires the Secretary to adopt 

measures that have been endorsed by 

the entity with a contract under section 

1890(a) of the Act. This contract is 

currently held by the NQF. The NQF is 

a voluntary consensus standard-setting 

organization with a diverse 

representation of consumer, purchaser, 

provider, academic, clinical, and other 

health care stakeholder organizations. 

The NQF was established to standardize 

health care quality measurement and 

reporting through its consensus 

development process.15

The NQF undertakes to: (1) Review 

new quality measures and national 

consensus standards for measuring and 

publicly reporting on performance; (2) 

provide for annual measure 

maintenance updates to be submitted by 

the measure steward for endorsed 

quality measures; (3) provide for 

measure maintenance endorsement on a 

3-year cycle; (4) conduct a required 

follow-up review of measures with time 

limited endorsement for consideration 

of full endorsement; and (5) conduct ad 

hoc reviews of endorsed quality 

measures, practices, consensus 

standards, or events when there is 

adequate justification for a review. In 

the normal course of measure 

maintenance, the NQF solicits 

information from measure stewards for 

annual reviews to review measures for 

continued endorsement in a specific 3- 

year cycle. In this measure maintenance 

process, the measure steward is 

responsible for updating and 

maintaining the currency and relevance 

of the measure and for confirming 

existing specifications to the NQF on an 

annual basis. As part of the ad hoc 

review process, the ad hoc review 

requester and the measure steward are 

responsible for submitting evidence for 

review by a NQF Technical Expert panel 

which, in turn, provides input to the 

Consensus Standards Approval 

Committee which then makes a decision 

on endorsement status and/or 

specification changes for the measure, 

practice, or event. 

Through the NQF’s measure 

maintenance process, the NQF endorsed 

measures are sometimes updated to 

incorporate changes that we believe do 

not substantially change the nature of 

the measure. With respect to what 

constitutes a substantive versus a nonsubstantive change, we expect to make 

this determination on a measure-bymeasure basis. Examples of such nonsubstantive changes might include 

updated diagnosis or procedure codes, 

medication updates for categories of 


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medications, broadening of age ranges, 

and changes to exclusions for a 

measure. We believe that nonsubstantive changes may include 

updates to measures based upon 

changes to guidelines upon which the 

measures are based. These types of 

maintenance changes are distinct from 

more substantive changes to measures 

that result in what can be considered 

new or different measures, and that they 

do not trigger the same agency 

obligations under the Administrative 

Procedure Act. 

We are proposing that, if the NQF 

updates an endorsed measure that we 

have adopted for the HH QRP in a 

manner that we consider to not 

substantially change the nature of the 

measure, we would use a sub-regulatory 

process to incorporate those updates to 

the measure specifications that apply to 

the program. Specifically, we would 

revise the information that is posted on 

the CMS Home Health Quality 

Initiatives Web site at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HomeHealthQualityInits/

HHQIQualityMeasures.html so that it 

clearly identifies the updates and 

provides links to where additional 

information on the updates can be 

found. In addition, we would refer 

HHAs to the NQF Web site for the most 

up-to date information about the quality 

measures (http:// 

www.qualityforum.org/). We would 

provide sufficient lead time for HHAs to 

implement the changes where changes 

to the data collection systems would be 

necessary. 

We would continue to use the 

rulemaking process to adopt changes to 

measures that we consider to 

substantially change the nature of the 

measure. Examples of changes that we 

might consider to be substantive would 

be those in which the changes are so 

significant that the measure is no longer 

the same measure, or when a standard 

of performance assessed by a measure 

becomes more stringent, such as 

changes in acceptable timing of 

medication, procedure/process, test 

administration, or expansion of the 

measure to a new setting. We believe 

that our proposal adequately balances 

our need to incorporate NQF updates to 

NQF endorsed measures used in the HH 

QRP in the most expeditious manner 

possible, while preserving the public’s 

ability to comment on updates to 

measures that so fundamentally change 

an endorsed measure that it is no longer 

the same measure that we originally 

adopted. 

We note that a similar policy was 

adopted for the Hospital IQR Program, 

the PPS-Exempt Cancer Hospital (PCH) 

Quality Reporting Program, the LongTerm Care Hospital Quality Reporting 

(LTCHQR) Program, the Inpatient 

Rehabilitation Facility Quality 

Reporting Program (IRF QRP) and the 

Inpatient Psychiatric Facility (IPF) 

Quality Reporting Program. 

We invite public comment on our 

proposal to adopt a policy in which 

NQF changes to a measure that are nonsubstantive in nature will be adopted 

using a sub-regulatory process and NQF 

changes that are substantive in nature 

will be adopted through the rulemaking 

process. 

e. Home Health Care CAHPS® Survey 

(HHCAHPS) 

In the CY 2014 HH PPS final rule (78 

FR 72294), we stated that the HH quality 

measures reporting requirements for 

Medicare-certified agencies includes the 

Home Health Care CAHPS® (HHCAHPS) 

Survey for the CY 2014 APU. We 

maintained the stated HHCAHPS data 

requirements for CY 2014 set out in 

previous rules, for the continuous 

monthly data collection and quarterly 

data submission of HHCAHPS data. 

(1) Background and Description of 

HHCAHPS 

As part of the HHS Transparency 

Initiative, we implemented a process to 

measure and publicly report patient 

experiences with home health care, 

using a survey developed by the Agency 

for Healthcare Research and Quality’s 

(AHRQ’s) Consumer Assessment of 

Healthcare Providers and Systems 

(CAHPS®) program and endorsed by the 

NQF in March 2009 (NQF Number 

0517). The HHCAHPS survey is part of 

a family of CAHPS® surveys that asks 

patients to report on and rate their 

experiences with health care. The Home 

Health Care CAHPS® (HHCAHPS) 

survey presents home health patients 

with a set of standardized questions 

about their home health care providers 

and about the quality of their home 

health care. 

Prior to this survey, there was no 

national standard for collecting 

information about patient experiences 

that will enable valid comparisons 

across all HHAs. The history and 

development process for HHCAHPS has 

been described in previous rules and is 

also available on the official HHCAHPS 

Web site at https://homehealthcahps.org 

and in the annually-updated HHCAHPS 

Protocols and Guidelines Manual, 

which is downloadable from https://

homehealthcahps.org. 

For public reporting purposes, we 

report five measures from the 

HHCAHPS Survey—three composite 

measures and two global ratings of care 

that are derived from the questions on 

the HHCAHPS survey. The publicly 

reported data are adjusted for 

differences in patient mix across HHAs. 

We update the HHCAHPS data on Home 

Health Compare on www.medicare.gov 

quarterly. Each HHCAHPS composite 

measure consists of four or more 

individual survey items regarding one of 

the following related topics: 

• Patient care (Q9, Q16, Q19, and 

Q24); 

• Communications between providers 

and patients (Q2, Q15, Q17, Q18, Q22, 

and Q23); and 

• Specific care issues on medications, 

home safety, and pain (Q3, Q4, Q5, Q10, 

Q12, Q13, and Q14). 

The two global ratings are the overall 

rating of care given by the HHA’s care 

providers (Q20), and the patient’s 

willingness to recommend the HHA to 

family and friends (Q25). 

The HHCAHPS survey is currently 

available in English, Spanish, Chinese, 

Russian, and Vietnamese. The OMB 

number on these surveys is the same 

(0938–1066). All of these surveys are on 

the Home Health Care CAHPS® Web 

site, https://homehealthcahps.org. We 

will continue to consider additional 

language translations of the HHCAHPS 

in response to the needs of the home 

health patient population. 

All of the requirements about home 

health patient eligibility for the 

HHCAHPS survey and conversely, 

which home health patients are 

ineligible for the HHCAHPS survey are 

delineated and detailed in the 

HHCAHPS Protocols and Guidelines 

Manual, which is downloadable at 

https://homehealthcahps.org. Home 

health patients are eligible for 

HHCAHPS if they received at least two 

skilled home health visits in the past 2 

months, which are paid for by Medicare 

or Medicaid. 

Home health patients are ineligible for 

inclusion in HHCAHPS surveys if one of 

these conditions pertains to them: 

• Are under the age of 18; 

• Are deceased prior to the date the 

sample is pulled; 

• Receive hospice care; 

• Receive routine maternity care only; 

• Are not considered survey eligible 

because the state in which the patient 

lives restricts release of patient 

information for a specific condition or 

illness that the patient has; or 

• No Publicity patients, defined as 

patients who on their own initiative at 

their first encounter with the HHAs 

make it very clear that no one outside 

of the agencies can be advised of their 

patient status, and no one outside of the 

HHAs can contact them for any reason. 

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We stated in previous rules that 

Medicare-certified HHAs are required to 

contract with an approved HHCAHPS 

survey vendor. This requirement 

continues, and Medicare-certified 

agencies also must provide on a 

monthly basis a list of their patients 

served to their respective HHCAHPS 

survey vendors. Agencies are not 

allowed to influence at all how their 

patients respond to the HHCAHPS 

survey. 

As previously required, HHCAHPS 

survey vendors are required to attend 

introductory and all update trainings 

conducted by CMS and the HHCAHPS 

Survey Coordination Team, as well as to 

pass a post-training certification test. 

We have approximately 30 approved 

HHCAHPS survey vendors. The list of 

approved HHCAHPS survey vendors is 

available at https://

homehealthcahps.org. 

(2) HHCAHPS Oversight Activities 

We stated in prior final rules that all 

approved HHCAHPS survey vendors are 

required to participate in HHCAHPS 

oversight activities to ensure 

compliance with HHCAHPS protocols, 

guidelines, and survey requirements. 

The purpose of the oversight activities 

is to ensure that approved HHCAHPS 

survey vendors follow the HHCAHPS 

Protocols and Guidelines Manual. As 

stated previously in the five prior final 

rules to this proposed rule, all 

HHCAHPS approved survey vendors 

must develop a Quality Assurance Plan 

(QAP) for survey administration in 

accordance with the HHCAHPS 

Protocols and Guidelines Manual. An 

HHCAHPS survey vendor’s first QAP 

must be submitted within 6 weeks of the 

data submission deadline date after the 

vendor’s first quarterly data submission. 

The QAP must be updated and 

submitted annually thereafter and at any 

time that changes occur in staff or 

vendor capabilities or systems. A model 

QAP is included in the HHCAHPS 

Protocols and Guidelines Manual. The 

QAP must include the following: 

• Organizational Background and 

Staff Experience; 

• Work Plan; 

• Sampling Plan; 

• Survey Implementation Plan; 

• Data Security, Confidentiality and 

Privacy Plan; and 

• Questionnaire Attachments 

As part of the oversight activities, the 

HHCAHPS Survey Coordination Team 

conducts on-site visits to all approved 

HHCAHPS survey vendors. The purpose 

of the site visits is to allow the 

HHCAHPS Coordination Team to 

observe the entire HHCAHPS Survey 

implementation process, from the 

sampling stage through file preparation 

and submission, as well as to assess data 

security and storage. The HHCAHPS 

Survey Coordination Team reviews the 

HHCAHPS survey vendor’s survey 

systems, and assesses administration 

protocols based on the HHCAHPS 

Protocols and Guidelines Manual posted 

at https://homehealthcahps.org. The 

systems and program site visit review 

includes, but is not limited to the 

following: 

• Survey management and data 

systems; 

• Printing and mailing materials and 

facilities; 

• Telephone call center facilities; 

• Data receipt, entry and storage 

facilities; and 

• Written documentation of survey 

processes. 

After the site visits, HHCAHPS survey 

vendors are given a defined time period 

in which to correct any identified issues 

and provide follow-up documentation 

of corrections for review. HHCAHPS 

survey vendors are subject to follow-up 

site visits on an as-needed basis. 

In the CY 2013 HH PPS final rule (77 

FR 67094, 67164), we codified the 

current guideline that all approved 

HHCAHPS survey vendors fully comply 

with all HHCAHPS oversight activities. 

We included this survey requirement at 

§ 484.250(c)(3). 

(3) HHCAHPS Requirements for the CY 

2015 APU 

In the CY 2014 HH PPS final rule (78 

FR 72294), we stated that for the CY 

2015 APU, we will require continued 

monthly HHCAHPS data collection and 

reporting for 4 quarters. The data 

collection period for CY 2015 APU 

includes the second quarter 2013 

through the first quarter 2014 (the 

months of April 2013 through March 

2014). Although these dates are past, we 

wished to state them in this proposed 

rule so that HHAs are again reminded of 

what months constituted the 

requirements for the CY 2015 APU. 

HHAs are required to submit their 

HHCAHPS data files to the HHCAHPS 

Data Center for the HHCAHPS data from 

the first quarter of 2014 data by 11:59 

p.m., e.d.t. on July 17, 2014. This 

deadline is firm; no exceptions are 

permitted. 

(4) HHCAHPS Requirements for the CY 

2016 APU 

For the CY 2016 APU, we require 

continued monthly HHCAHPS data 

collection and reporting for 4 quarters. 

The data collection period for the CY 

2016 APU includes the second quarter 

2014 through the first quarter 2015 (the 

months of April 2014 through March 

2015). HHAs will be required to submit 

their HHCAHPS data files to the 

HHCAHPS Data Center for the second 

quarter 2014 by 11:59 p.m., e.d.t. on 

October 16, 2014; for the third quarter 

2014 by 11:59 p.m., e.s.t. on January 15, 

2015; for the fourth quarter 2014 by 

11:59 p.m., e.d.t. on April 16, 2015; and 

for the first quarter 2015 by 11:59 p.m., 

e.d.t. on July 16, 2015. These deadlines 

will be firm; no exceptions will be 

permitted. 

We will exempt HHAs receiving 

Medicare certification after the period in 

which HHAs do their patient count 

(April 1, 2013 through March 31, 2014) 

on or after April 1, 2014, from the full 

HHCAHPS reporting requirement for the 

CY 2016 APU, because these HHAs will 

not have been Medicare-certified 

throughout the period of April 1, 2013, 

through March 31, 2014. These HHAs 

will not need to complete a HHCAHPS 

Participation Exemption Request form 

for the CY 2016 APU. 

We require that all HHAs that had 

fewer than 60 HHCAHPS-eligible 

unduplicated or unique patients in the 

period of April 1, 2013 through March 

31, 2014 are exempt from the HHCAHPS 

data collection and submission 

requirements for the CY 2016 APU, 

upon completion of the CY 2016 

HHCAHPS Participation Exemption 

Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or 

unique patients in the period of April 1, 

2013, through March 31, 2014, will be 

required to submit their patient counts 

on the HHCAHPS Participation 

Exemption Request form for the CY 

2016 APU posted on https://

homehealthcahps.org on April 1, 2014, 

by 11:59 p.m., e.s.t. by March 31, 2015. 

This deadline will be firm, as will be all 

of the quarterly data submission 

deadlines. 

(5) HHCAHPS Requirements for the CY 

2017 APU 

For the CY 2017 APU, we require 

continued monthly HHCAHPS data 

collection and reporting for 4 quarters. 

The data collection period for the CY 

2017 APU includes the second quarter 

2015 through the first quarter 2016 (the 

months of April 2015 through March 

2016). HHAs will be required to submit 

their HHCAHPS data files to the 

HHCAHPS Data Center for the second 

quarter 2015 by 11:59 p.m., e.d.t. on 

October 15, 2015; for the third quarter 

2015 by 11:59 p.m., e.s.t. on January 12, 

2016; for the fourth quarter 2015 by 

11:59 p.m., e.d.t. on April 21, 2016; and 

for the first quarter 2016 by 11:59 p.m., 

e.d.t. on July 21, 2016. These deadlines 

will be firm; no exceptions will be 

permitted. 

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We will exempt HHAs receiving 

Medicare certification after the period in 

which HHAs do their patient count 

(April 1, 2014 through March 31, 2015) 

on or after April 1, 2015, from the full 

HHCAHPS reporting requirement for the 

CY 2016 APU, because these HHAs will 

not have been Medicare-certified 

throughout the period of April 1, 2014, 

through March 31, 2015. These HHAs 

will not need to complete a HHCAHPS 

Participation Exemption Request form 

for the CY 2017 APU. 

We require that all HHAs that had 

fewer than 60 HHCAHPS-eligible 

unduplicated or unique patients in the 

period of April 1, 2014, through March 

31, 2015 are exempt from the HHCAHPS 

data collection and submission 

requirements for the CY 2017 APU, 

upon completion of the CY 2017 

HHCAHPS Participation Exemption 

Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or 

unique patients in the period of April 1, 

2014, through March 31, 2015, will be 

required to submit their patient counts 

on the HHCAHPS Participation 

Exemption Request form for the CY 

2017 APU posted on https://

homehealthcahps.org on April 1, 2015, 

by 11:59 p.m., e.s.t. by March 31, 2016. 

This deadline will be firm, as will be all 

of the quarterly data submission 

deadlines. 

(6) HHCAHPS Reconsiderations and 

Appeals Process 

HHAs should monitor their respective 

HHCAHPS survey vendors to ensure 

that vendors submit their HHCAHPS 

data on time, by accessing their 

HHCAHPS Data Submission Reports on 

https://homehealthcahps.org. This will 

help HHAs ensure that their data are 

submitted in the proper format for data 

processing to the HHCAHPS Data 

Center. 

We will continue HHCAHPS 

oversight activities as finalized in the 

CY 2014 rule. In the CY 2013 HH PPS 

final rule (77 FR 6704, 67164), we 

codified the current guideline that all 

approved HHCAHPS survey vendors 

must fully comply with all HHCAHPS 

oversight activities. We included this 

survey requirement at § 484.250(c)(3). 

We will continue the HHCAHPS 

reconsiderations and appeals process 

that we have finalized and that we have 

used for prior periods for the CY 2012, 

CY 2013, and CY 2014 APU 

determinations. We have described the 

HHCAHPS reconsiderations process 

requirements in the Technical Direction 

Letter that we send to the affected 

HHAs, on or about the first Friday in 

September. HHAs have 30 days from 

their receipt of the Technical Direction 

Letter informing them that they did not 

meet the HHCAHPS requirements for 

the CY period, to send all 

documentation that supports their 

requests for reconsideration to CMS. It 

is important that the affected HHAs 

send in comprehensive information in 

their reconsideration letter/package 

because we will not contact the affected 

HHAs to request additional information 

or to clarify incomplete or inconclusive 

information. If clear evidence to support 

a finding of compliance is not present, 

the 2 percent reduction in the APU will 

be upheld. If clear evidence of 

compliance is present, the 2 percent 

reduction for the APU will be reversed. 

We will notify affected HHAs by about 

mid-December. If we determine to 

uphold the 2 percent reduction, the 

HHA may further appeal the 2 percent 

reduction via the Provider 

Reimbursement Review Board (PRRB) 

appeals process. 

(7) Summary 

We are not proposing any changes to 

the participation requirements, or to the 

requirements pertaining to the 

implementation of the Home Health 

CAHPS® Survey (HHCAHPS). We again 

strongly encourage HHAs to learn about 

the survey and view the HHCAHPS 

Survey Web site at the official Web site 

for the HHCAHPS at https://

homehealthcahps.org. HHAs can also 

send an email to the HHCAHPS Survey 

Coordination Team at HHCAHPS@

rti.org, or telephone toll-free (1–866– 

354–0985) for more information about 

HHCAHPS. 

4. Home Health Wage Index 

a. Background 

Sections 1895(b)(4)(A)(ii) and (b)(4)(C) 

of the Act require the Secretary to 

provide appropriate adjustments to the 

proportion of the payment amount 

under the HH PPS that account for area 

wage differences, using adjustment 

factors that reflect the relative level of 

wages and wage-related costs applicable 

to the furnishing of HH services. Since 

the inception of the HH PPS, we have 

used inpatient hospital wage data in 

developing a wage index to be applied 

to HH payments. We propose to 

continue this practice for CY 2015, as 

we continue to believe that, in the 

absence of HH-specific wage data, using 

inpatient hospital wage data is 

appropriate and reasonable for the HH 

PPS. Specifically, we propose to 

continue to use the pre-floor, prereclassified hospital wage index as the 

wage adjustment to the labor portion of 

the HH PPS rates. For CY 2015, the 

updated wage data are for hospital cost 

reporting periods beginning on or after 

October 1, 2010 and before October 1, 

2011 (FY 2011 cost report data). 

We would apply the appropriate wage 

index value to the labor portion of the 

HH PPS rates based on the site of 

service for the beneficiary (defined by 

section 1861(m) of the Act as the 

beneficiary’s place of residence). 

Previously, we determined each HHA’s 

labor market area based on definitions 

of metropolitan statistical areas (MSAs) 

issued by the OMB. In the CY 2006 HH 

PPS final rule (70 FR 68132), we began 

adopting revised labor market area 

definitions as discussed in the OMB 

Bulletin No. 03–04 (June 6, 2003). This 

bulletin announced revised definitions 

for MSAs and the creation of 

micropolitan statistical areas and corebased statistical areas (CBSAs). The 

bulletin is available online at 

www.whitehouse.gov/omb/bulletins/

b03-04.html. In adopting the CBSA 

geographic designations, we provided a 

one-year transition in CY 2006 with a 

blended wage index for all sites of 

service. For CY 2006, the wage index for 

each geographic area consisted of a 

blend of 50 percent of the CY 2006 

MSA-based wage index and 50 percent 

of the CY 2006 CBSA-based wage index. 

We referred to the blended wage index 

as the CY 2006 HH PPS transition wage 

index. As discussed in the CY 2006 HH 

PPS final rule (70 FR 68132), since the 

expiration of this one-year transition on 

December 31, 2006, we have used the 

full CBSA-based wage index values. 

We propose to continue to use the 

same methodology discussed in the CY 

2007 HH PPS final rule (71 FR 65884) 

to address those geographic areas in 

which there are no inpatient hospitals, 

and thus, no hospital wage data on 

which to base the calculation of the CY 

2015 HH PPS wage index. For rural 

areas that do not have inpatient 

hospitals, we will use the average wage 

index from all contiguous CBSAs as a 

reasonable proxy. For CY 2015, there are 

no rural areas that do not have inpatient 

hospitals, and thus, this methodology 

would not be applied. For rural Puerto 

Rico, we do not apply this methodology 

due to the distinct economic 

circumstances that exist there (for 

example, due to the close proximity to 

one another of almost all of Puerto 

Rico’s various urban and non-urban 

areas, this methodology would produce 

a wage index for rural Puerto Rico that 

is higher than that in half of its urban 

areas). Instead, we would continue to 

use the most recent wage index 

previously available for that area. For 

urban areas without inpatient hospitals, 

we use the average wage index of all 

urban areas within the state as a 

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38392 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

reasonable proxy for the wage index for 

that CBSA. For CY 2015, the only urban 

area without inpatient hospital wage 

data is Hinesville, Georgia (CBSA 

25980). 

b. Update 

On February 28, 2013, OMB issued 

Bulletin No. 13–01, announcing 

revisions to the delineations of MSAs, 

Micropolitan Statistical Areas, and 

CBSAs, and guidance on uses of the 

delineation of these areas. This bulletin 

is available online at http://

www.whitehouse.gov/sites/default/files/

omb/bulletins/2013/b-13-01.pdf. This 

bulletin states that it ‘‘provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published on June 28, 

2010, in the Federal Register (75 FR 

37246–37252) and Census Bureau data.’’ 

While the revisions OMB published 

on February 28, 2013 are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for CY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that have become rural, rural counties 

that have become urban, and existing 

CBSAs that have been split apart. 

As discussed in the CY 2014 HH PPS 

final rule (78 FR 72302), the changes 

made by the bulletin and their 

ramifications required extensive review 

by CMS before using them for the HH 

PPS wage index. We have completed 

our assessment and in the FY 2015 IPPS 

proposed rule (79 FR 27978), we 

proposed to use the most recent labor 

market area delineations issued by OMB 

for payments for inpatient stays at 

general acute care and long-term care 

hospitals (LTCHs). In addition, in the 

FY 2015 Skilled Nursing Facility (SNF) 

PPS proposed rule (79 FR 25767), we 

proposed to use the new labor market 

delineations issued by OMB for 

payments for SNFs. We are proposing 

changes to the HH PPS wage index 

based on the newest OMB delineations, 

as described in OMB Bulletin No. 13– 

01. 

c. Proposed Implementation of New 

Labor Market Delineations 

We believe it is important for the HH 

PPS to use the latest OMB delineations 

available to maintain a more accurate 

and up-to-date payment system that 

reflects the reality of population shifts 

and labor market conditions. While 

CMS and other stakeholders have 

explored potential alternatives to the 

current CBSA-based labor market 

system (we refer readers to the CMS 

Web site at www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

AcuteInpatientPPS/Wage-IndexReform.html), no consensus has been 

achieved regarding how best to 

implement a replacement system. As 

discussed in the FY 2005 IPPS final rule 

(69 FR 49027), ‘‘While we recognize that 

MSAs are not designed specifically to 

define labor market areas, we believe 

they do represent a useful proxy for this 

purpose.’’ We further believe that using 

the most current OMB delineations 

would increase the integrity of the HH 

PPS wage index by creating a more 

accurate representation of geographic 

variation in wage levels. We have 

reviewed our findings and impacts 

relating to the new OMB delineations, 

and have concluded that there is no 

compelling reason to further delay 

implementation. 

We propose incorporating the new 

CBSA delineations into the CY 2015 HH 

PPS wage index in the same manner in 

which the CBSAs were first 

incorporated into the HH PPS wage 

index in CY 2006 (70 FR 68138). We 

propose to use a one-year blended wage 

index for CY 2015. We refer to this 

blended wage index as the CY 2015 HH 

PPS transition wage index. The 

transition wage index would consist of 

a 50/50 blend of the wage index values 

using OMB’s old area delineations and 

the wage index values using OMB’s new 

area delineations. That is, for each 

county, a blended wage index would be 

calculated equal to fifty percent of the 

CY 2015 wage index using the old labor 

market area delineation and fifty 

percent of the CY 2015 wage index 

using the new labor market area 

delineation (both using FY 2011 

hospital wage data). This ultimately 

results in an average of the two values. 

If we adopt the new OMB 

delineations, a total of 37 counties (and 

county equivalents) that are currently 

considered part of an urban CBSA 

would be considered rural beginning in 

CY 2015. Table 13 below lists the 37 

urban counties that would change to 

rural status. 

TABLE 13—COUNTIES THAT WOULD CHANGE TO RURAL STATUS

County State 

CBSA No. under 

CY 2014 HH 

PPS 

CBSA Name 

Greene County ......................................................................... IN 14020 Bloomington, IN. 

Anson County ........................................................................... NC 16740 Charlotte-Gastonia-Rock Hill, NC-SC. 

Franklin County ........................................................................ IN 17140 Cincinnati-Middletown, OH-KY-IN. 

Stewart County ......................................................................... TN 17300 Clarksville, TN-KY. 

Howard County ......................................................................... MO 17860 Columbia, MO. 

Delta County ............................................................................. TX 19124 Dallas-Fort Worth-Arlington, TX. 

Pittsylvania County ................................................................... VA 19260 Danville, VA. 

Danville City ............................................................................. VA 19260 Danville, VA. 

Preble County ........................................................................... OH 19380 Dayton, OH. 

Gibson County .......................................................................... IN 21780 Evansville, IN-KY. 

Webster County ........................................................................ KY 21780 Evansville, IN-KY. 

Franklin County ........................................................................ AR 22900 Fort Smith, AR-OK. 

Ionia County ............................................................................. MI 24340 Grand Rapids-Wyoming, MI. 

Newaygo County ...................................................................... MI 24340 Grand Rapids-Wyoming, MI. 

Greene County ......................................................................... NC 24780 Greenville, NC. 

Stone County ............................................................................ MS 25060 Gulfport-Biloxi, MS. 

Morgan County ......................................................................... WV 25180 Hagerstown-Martinsburg, MD-WV. 

San Jacinto County .................................................................. TX 26420 Houston-Sugar Land-Baytown, TX. 

Franklin County ........................................................................ KS 28140 Kansas City, MO-KS. 

Tipton County ........................................................................... IN 29020 Kokomo, IN. 

Nelson County .......................................................................... KY 31140 Louisville/Jefferson County, KY-IN. 

Geary County ........................................................................... KS 31740 Manhattan, KS. 

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TABLE 13—COUNTIES THAT WOULD CHANGE TO RURAL STATUS—Continued 

County State 

CBSA No. under 

CY 2014 HH 

PPS 

CBSA Name 

Washington County .................................................................. OH 37620 Parkersburg-Marietta-Vienna, WV-OH.

Pleasants County ..................................................................... WV 37620 Parkersburg-Marietta-Vienna, WV-OH. 

George County ......................................................................... MS 37700 Pascagoula, MS. 

Power County ........................................................................... ID 38540 Pocatello, ID. 

Cumberland County .................................................................. VA 40060 Richmond, VA. 

King and Queen County ........................................................... VA 40060 Richmond, VA. 

Louisa County .......................................................................... VA 40060 Richmond, VA. 

Washington County .................................................................. MO 41180 St. Louis, MO-IL. 

Summit County ......................................................................... UT 41620 Salt Lake City, UT. 

Erie County ............................................................................... OH 41780 Sandusky, OH. 

Franklin County ........................................................................ MA 44140 Springfield, MA. 

Ottawa County .......................................................................... OH 45780 Toledo, OH. 

Greene County ......................................................................... AL 46220 Tuscaloosa, AL. 

Calhoun County ........................................................................ TX 47020 Victoria, TX. 

Surry County ............................................................................ VA 47260 Virginia Beach-Norfolk-Newport News, VA-NC. 

If we finalize our proposal to 

implement the new OMB delineations, 

a total of 105 counties (and county 

equivalents) that are currently located in 

rural areas would be considered part of 

an urban CBSA beginning in CY 2015. 

Table 14 lists the 105 rural counties that 

would change to urban status. 

TABLE 14—COUNTIES THAT WOULD CHANGE TO URBAN STATUS

County State CBSA No. CBSA Name 

Utuado Municipio ...................................................................... PR 10380 Aguadilla-Isabela, PR. 

Linn County .............................................................................. OR 10540 Albany, OR. 

Oldham County ........................................................................ TX 11100 Amarillo, TX. 

Morgan County ......................................................................... GA 12060 Atlanta-Sandy Springs-Roswell, GA. 

Lincoln County .......................................................................... GA 12260 Augusta-Richmond County, GA-SC. 

Newton County ......................................................................... TX 13140 Beaumont-Port Arthur, TX. 

Fayette County ......................................................................... WV 13220 Beckley, WV. 

Raleigh County ......................................................................... WV 13220 Beckley, WV. 

Golden Valley County .............................................................. MT 13740 Billings, MT. 

Oliver County ............................................................................ ND 13900 Bismarck, ND. 

Sioux County ............................................................................ ND 13900 Bismarck, ND. 

Floyd County ............................................................................ VI 13980 Blacksburg-Christiansburg-Radford, VA. 

De Witt County ......................................................................... IL 14010 Bloomington, IL. 

Columbia County ...................................................................... PA 14100 Bloomsburg-Berwick, PA. 

Montour County ........................................................................ PA 14100 Bloomsburg-Berwick, PA. 

Allen County ............................................................................. KY 14540 Bowling Green, KY. 

Butler County ............................................................................ KY 14540 Bowling Green, KY. 

St. Mary’s County ..................................................................... MD 15680 California-Lexington Park, MD. 

Jackson County ........................................................................ IL 16060 Carbondale-Marion, IL. 

Williamson County .................................................................... IL 16060 Carbondale-Marion, IL. 

Franklin County ........................................................................ PA 16540 Chambersburg-Waynesboro, PA. 

Iredell County ........................................................................... NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lincoln County .......................................................................... NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Rowan County .......................................................................... NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Chester County ........................................................................ SC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lancaster County ..................................................................... SC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Buckingham County ................................................................. VA 16820 Charlottesville, VA. 

Union County ............................................................................ IN 17140 Cincinnati, OH-KY-IN. 

Hocking County ........................................................................ OH 18140 Columbus, OH. 

Perry County ............................................................................ OH 18140 Columbus, OH. 

Walton County .......................................................................... FL 18880 Crestview-Fort Walton Beach-Destin, FL. 

Hood County ............................................................................ TX 23104 Dallas-Fort Worth-Arlington, TX. 

Somervell County ..................................................................... TX 23104 Dallas-Fort Worth-Arlington, TX. 

Baldwin County ........................................................................ AL 19300 Daphne-Fairhope-Foley, AL. 

Monroe County ......................................................................... PA 20700 East Stroudsburg, PA. 

Hudspeth County ...................................................................... TX 21340 El Paso, TX. 

Adams County .......................................................................... PA 23900 Gettysburg, PA. 

Hall County ............................................................................... NE 24260 Grand Island, NE. 

Hamilton County ....................................................................... NE 24260 Grand Island, NE. 

Howard County ......................................................................... NE 24260 Grand Island, NE. 

Merrick County ......................................................................... NE 24260 Grand Island, NE. 

Montcalm County ..................................................................... MI 24340 Grand Rapids-Wyoming, MI. 

Josephine County ..................................................................... OR 24420 Grants Pass, OR. 

Tangipahoa Parish ................................................................... LA 25220 Hammond, LA. 

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TABLE 14—COUNTIES THAT WOULD CHANGE TO URBAN STATUS—Continued 

County State CBSA No. CBSA Name 

Beaufort County ....................................................................... SC 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Jasper County .......................................................................... SC 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Citrus County ............................................................................ FL 26140 Homosassa Springs, FL. 

Butte County ............................................................................. ID 26820 Idaho Falls, ID. 

Yazoo County ........................................................................... MS 27140 Jackson, MS. 

Crockett County ........................................................................ TN 27180 Jackson, TN. 

Kalawao County ....................................................................... HI 27980 Kahului-Wailuku-Lahaina, HI. 

Maui County ............................................................................. HI 27980 Kahului-Wailuku-Lahaina, HI. 

Campbell County ...................................................................... TN 28940 Knoxville, TN. 

Morgan County ......................................................................... TN 28940 Knoxville, TN. 

Roane County .......................................................................... TN 28940 Knoxville, TN. 

Acadia Parish ........................................................................... LA 29180 Lafayette, LA. 

Iberia Parish ............................................................................. LA 29180 Lafayette, LA. 

Vermilion Parish ....................................................................... LA 29180 Lafayette, LA. 

Cotton County .......................................................................... OK 30020 Lawton, OK. 

Scott County ............................................................................. IN 31140 Louisville/Jefferson County, KY-IN. 

Lynn County ............................................................................. TX 31180 Lubbock, TX. 

Green County ........................................................................... WI 31540 Madison, WI. 

Benton County .......................................................................... MS 32820 Memphis, TN-MS-AR. 

Midland County ........................................................................ MI 33220 Midland, MI. 

Martin County ........................................................................... TX 33260 Midland, TX. 

Le Sueur County ...................................................................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Mille Lacs County ..................................................................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Sibley County ........................................................................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Maury County ........................................................................... TN 34980 Nashville-Davidson-Murfreesboro-Franklin, TN. 

Craven County ......................................................................... NC 35100 New Bern, NC. 

Jones County ........................................................................... NC 35100 New Bern, NC. 

Pamlico County ........................................................................ NC 35100 New Bern, NC. 

St. James Parish ...................................................................... LA 35380 New Orleans-Metairie, LA. 

Box Elder County ..................................................................... UT 36260 Ogden-Clearfield, UT. 

Gulf County .............................................................................. FL 37460 Panama City, FL. 

Custer County .......................................................................... SD 39660 Rapid City, SD. 

Fillmore County ........................................................................ MN 40340 Rochester, MN. 

Yates County ............................................................................ NY 40380 Rochester, NY. 

Sussex County ......................................................................... DE 41540 Salisbury, MD-DE. 

Worcester County ..................................................................... MA 41540 Salisbury, MD-DE. 

Highlands County ..................................................................... FL 42700 Sebring, FL. 

Webster Parish ......................................................................... LA 43340 Shreveport-Bossier City, LA. 

Cochise County ........................................................................ AZ 43420 Sierra Vista-Douglas, AZ. 

Plymouth County ...................................................................... IA 43580 Sioux City, IA-NE-SD. 

Union County ............................................................................ SC 43900 Spartanburg, SC. 

Pend Oreille County ................................................................. WA 44060 Spokane-Spokane Valley, WA. 

Stevens County ........................................................................ WA 44060 Spokane-Spokane Valley, WA. 

Augusta County ........................................................................ VA 44420 Staunton-Waynesboro, VA. 

Staunton City ............................................................................ VA 44420 Staunton-Waynesboro, VA. 

Waynesboro City ...................................................................... VA 44420 Staunton-Waynesboro, VA. 

Little River County .................................................................... AR 45500 Texarkana, TX-AR. 

Sumter County ......................................................................... FL 45540 The Villages, FL. 

Pickens County ........................................................................ AL 46220 Tuscaloosa, AL. 

Gates County ........................................................................... NC 47260 Virginia Beach-Norfolk-Newport News, VA-NC. 

Falls County ............................................................................. TX 47380 Waco, TX. 

Columbia County ...................................................................... WA 47460 Walla Walla, WA. 

Walla Walla County .................................................................. WA 47460 Walla Walla, WA. 

Peach County ........................................................................... GA 47580 Warner Robins, GA. 

Pulaski County ......................................................................... GA 47580 Warner Robins, GA. 

Culpeper County ...................................................................... VA 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV. 

Rappahannock County ............................................................. VA 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV. 

Jefferson County ...................................................................... NY 48060 Watertown-Fort Drum, NY. 

Kingman County ....................................................................... KS 48620 Wichita, KS. 

Davidson County ...................................................................... NC 49180 Winston-Salem, NC. 

Windham County ...................................................................... CT 49340 Worcester, MA-CT. 

In addition to rural counties becoming 

urban and urban counties becoming 

rural, several urban counties would shift 

from one urban CBSA to another urban 

CBSA under our proposal to adopt the 

new OMB delineations. In other cases, 

applying the new OMB delineations 

would involve a change only in CBSA 

name or number, while the CBSA 

continues to encompass the same 

constituent counties. For example, 

CBSA 29140 (Lafayette, IN), would 

experience both a change to its number 

and its name, and would become CBSA 

29200 (Lafayette-West Lafayette, IN), 

while all of its three constituent 

counties would remain the same. We are 

not discussing these proposed changes 

in this section because they are 

inconsequential changes with respect to 

the HH PPS wage index. However, in 

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other cases, if we adopt the new OMB 

delineations, counties would shift 

between existing and new CBSAs, 

changing the constituent makeup of the 

CBSAs. 

In one type of change, an entire CBSA 

would be subsumed by another CBSA. 

For example, CBSA 37380 (Palm Coast, 

FL) currently is a single county (Flagler, 

FL) CBSA. Flagler County would be a 

part of CBSA 19660 (Deltona-Daytona 

Beach-Ormond Beach, FL) under the 

new OMB delineations. 

In another type of change, some 

CBSAs have counties that would split 

off to become part of or to form entirely 

new labor market areas. For example, 

CBSA 37964 (Philadelphia Metropolitan 

Division of MSA 37980) currently is 

comprised of five Pennsylvania counties 

(Bucks, Chester, Delaware, Montgomery, 

and Philadelphia). If we adopt the new 

OMB delineations, Montgomery, Bucks, 

and Chester counties would split off and 

form the new CBSA 33874 (Montgomery 

County-Bucks County-Chester County, 

PA Metropolitan Division of MSA 

37980), while Delaware and 

Philadelphia counties would remain in 

CBSA 37964. 

Finally, in some cases, a CBSA would 

lose counties to another existing CBSA 

if we adopt the new OMB delineations. 

For example, Lincoln County and 

Putnam County, WV would move from 

CBSA 16620 (Charleston, WV) to CBSA 

26580 (Huntington-Ashland, WV KY 

OH). CBSA 16620 would still exist in 

the new labor market delineations with 

fewer constituent counties. Table 15 

lists the urban counties that would 

move from one urban CBSA to another 

urban CBSA if we adopt the new OMB 

delineations. 

TABLE 15—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA 

Previous CBSA New CBSA County State 

11300 ................................................................................. 26900 Madison County ................................................................. IN 

11340 ................................................................................. 24860 Anderson County ............................................................... SC 

14060 ................................................................................. 14010 McLean County .................................................................. IL 

37764 ................................................................................. 15764 Essex County ..................................................................... MA 

16620 ................................................................................. 26580 Lincoln County ................................................................... WV 

16620 ................................................................................. 26580 Putnam County .................................................................. WV 

16974 ................................................................................. 20994 DeKalb County ................................................................... IL 

16974 ................................................................................. 20994 Kane County ...................................................................... IL 

21940 ................................................................................. 41980 Ceiba Municipio ................................................................. PR 

21940 ................................................................................. 41980 Fajardo 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 Gua ́nica Municipio ............................................................. PR 

49500 ................................................................................. 38660 Guayanilla Municipio .......................................................... PR 

49500 ................................................................................. 38660 Pen ̃uelas Municipio ............................................................ PR 

49500 ................................................................................. 38660 Yauco Municipio ................................................................. PR 

As discussed in the FY 2015 SNF PPS 

proposed rule (79 FR 25767), we 

proposed to adopt OMB’s new 

delineations in the SNF PPS in the same 

manner that we are proposing to adopt 

the new delineations in the HH PPS. 

The FY 2015 SNF PPS proposed rule 

includes extensive analysis of the 

application of OMB’s new delineations 

as well as other alternatives considered. 

For the reasons discussed above, and 

based on provider reaction during the 

CY 2006 rulemaking cycle to the 

proposed adoption of the new CBSA 

definitions, we are proposing to apply a 

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38396 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

one-year blended wage index in CY 

2015 for all geographic areas to assist 

providers in adapting to these proposed 

changes. This transition policy would 

be for a one-year period, going into 

effect January 1, 2015, and continuing 

through December 31, 2015. Thus, 

beginning January 1, 2016, the wage 

index for all HH PPS payments would 

be fully based on the new OMB 

delineations. We invite comments on 

our proposed transition methodology, as 

well as on the other transition options 

discussed above. 

The wage index Addendum provides 

a crosswalk between the CY 2015 wage 

index using the current OMB 

delineations in effect in CY 2014 and 

the CY 2015 wage index using the 

revised OMB delineations. Addendum 

A shows each state and county and its 

corresponding proposed transition wage 

index along with the previous CBSA 

number, the new CBSA number and the 

new CBSA name. Due to the calculation 

of the blended transition wage index, 

some CBSAs may have more than one 

transition wage index value associated 

with that CBSA. However, each county 

will have only one transition wage 

index. Therefore, for counties located in 

CBSAs that correspond to more than 

one transition wage index, a number 

other than the CBSA number would be 

used for claims submission for CY 2015 

only. These numbers are shown in the 

last column of Addendum A. The 

proposed CY 2015 transition wage index 

as set forth in Addendum A is available 

on the CMS Web site at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/

Home-Health-Prospective-PaymentSystem-Regulations-and-Notices.html. 

5. Proposed CY 2015 Annual Payment 

Update 

a. Background 

The Medicare HH PPS has been in 

effect since October 1, 2000. As set forth 

in the July 3, 2000 final rule (65 FR 

41128), the base unit of payment under 

the Medicare HH PPS is a national, 

standardized 60-day episode payment 

rate. As set forth in 42 CFR 484.220, we 

adjust the national, standardized 60-day 

episode payment rate by a case-mix 

relative weight and a wage index value 

based on the site of service for the 

beneficiary. 

To provide appropriate adjustments to 

the proportion of the payment amount 

under the HH PPS to account for area 

wage differences, we apply the 

appropriate wage index value to the 

labor portion of the HH PPS rates. The 

labor-related share of the case-mix 

adjusted 60-day episode rate will 

continue to be 78.535 percent and the 

non-labor-related share will continue to 

be 21.465 percent as set out in the CY 

2013 HH PPS final rule (77 FR 67068). 

The CY 2015 HH PPS rates would use 

the same case-mix methodology as set 

forth in the CY 2008 HH PPS final rule 

with comment period (72 FR 49762) and 

adjusted as described in section III.C. of 

this rule. The following are the steps we 

take to compute the case-mix and wageadjusted 60-day episode rate: 

(1) Multiply the national 60-day 

episode rate by the patient’s applicable 

case-mix weight. 

(2) Divide the case-mix adjusted 

amount into a labor (78.535 percent) 

and a non-labor portion (21.465 

percent). 

(3) Multiply the labor portion by the 

applicable wage index based on the site 

of service of the beneficiary. 

(4) Add the wage-adjusted portion to 

the non-labor portion, yielding the casemix and wage adjusted 60-day episode 

rate, subject to any additional applicable 

adjustments. 

In accordance with section 

1895(b)(3)(B) of the Act, this document 

constitutes the annual update of the HH 

PPS rates. Section 484.225 sets forth the 

specific annual percentage update 

methodology. In accordance with 

§ 484.225(i), for a HHA that does not 

submit HH quality data, as specified by 

the Secretary, the unadjusted national 

prospective 60-day episode rate is equal 

to the rate for the previous calendar year 

increased by the applicable HH market 

basket index amount minus two 

percentage points. Any reduction of the 

percentage change will apply only to the 

calendar year involved and will not be 

considered in computing the 

prospective payment amount for a 

subsequent calendar year. 

Medicare pays the national, 

standardized 60-day case-mix and wageadjusted episode payment on a split 

percentage payment approach. The split 

percentage payment approach includes 

an initial percentage payment and a 

final percentage payment as set forth in 

§ 484.205(b)(1) and § 484.205(b)(2). We 

may base the initial percentage payment 

on the submission of a request for 

anticipated payment (RAP) and the final 

percentage payment on the submission 

of the claim for the episode, as 

discussed in § 409.43. The claim for the 

episode that the HHA submits for the 

final percentage payment determines 

the total payment amount for the 

episode and whether we make an 

applicable adjustment to the 60-day 

case-mix and wage-adjusted episode 

payment. The end date of the 60-day 

episode as reported on the claim 

determines which calendar year rates 

Medicare will use to pay the claim. 

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

payment based on the information 

submitted on the claim to reflect the 

following: 

• A low-utilization payment 

adjustment (LUPA) is provided on a pervisit basis as set forth in § 484.205(c) 

and § 484.230. 

• A partial episode payment (PEP) 

adjustment as set forth in § 484.205(d) 

and § 484.235. 

• An outlier payment as set forth in 

§ 484.205(e) and § 484.240. 

b. Proposed CY 2015 National, 

Standardized 60-Day Episode Payment 

Rate 

Section 1895(3)(A)(i) of the Act 

required that the 60-day episode base 

rate and other applicable amounts be 

standardized in a manner that 

eliminates the effects of variations in 

relative case mix and area wage 

adjustments among different home 

health agencies in a budget neutral 

manner. To determine the proposed CY 

2015 national, standardized 60-day 

episode payment rate, we would apply 

a wage index standardization factor, a 

case-mix budget neutrality factor 

described in section III.C, the rebasing 

adjustment described in section II.C, 

and the MFP-adjusted home health 

market basket update discussed in 

section III.D.1 of this proposed rule. 

To calculate the wage index 

standardization factor, henceforth 

referred to as the wage index budget 

neutrality factor, we simulated total 

payments for non-LUPA episodes using 

the 2015 wage index and compared it to 

our simulation of total payments for 

non-LUPA episodes using the 2014 

wage index. By dividing the total 

payments for non-LUPA episodes using 

the 2015 wage index by the total 

payments for non-LUPA episodes using 

the 2014 wage index, we obtain a wage 

index budget neutrality factor of 1.0012. 

We would apply the wage index budget 

neutrality factor of 1.0012 to the CY 

2015 national, standardized 60-day 

episode rate. 

As discussed in section III.C of this 

proposed rule, to ensure the changes to 

the case-mix weights are implemented 

in a budget neutral manner, we would 

apply a case-mix weights budget 

neutrality factor to the CY 2015 

national, standardized 60-day episode 

payment rate. The case-mix weights 

budget neutrality factor is calculated as 

the ratio of total payments when CY 

2015 case-mix weights are applied to CY 

2013 utilization (claims) data to total 

payments when CY 2014 case-mix 

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weights are applied to CY 2013 

utilization data. The case-mix budget 

neutrality factor for CY 2015 would be 

1.0237 as proposed in section III.C of 

this proposed rule. 

Then, we would apply the ¥$80.95 

rebasing adjustment finalized in the CY 

2014 HH PPS final rule (78 FR 72256) 

and discussed in section II.C. Lastly, we 

would update the payment rates by the 

CY 2015 HH payment update percentage 

of 2.2 percent (MFP-adjusted home 

health market basket update) as 

described in section III.D.1 of this 

proposed rule. The proposed CY 2015 

national, standardized 60-day episode 

payment rate would be $2,922.76 as 

calculated in Table 16. 

TABLE 16—CY 2015 60-DAY NATIONAL, STANDARDIZED 60-DAY EPISODE PAYMENT AMOUNT

CY 2014 national, 

standardized 60-day 

episode payment 

Wage index budget 

neutrality factor 

Case-mix weights 

budget neutrality 

factor 

CY 2015 Rebasing 

adjustment 

CY 2015 HH payment 

update percentage 

Proposed CY 2015 

national, standardized 

60-day episode 

payment 

$2,869.27 × 1.0012 × 1.0237 ¥ $80.95 × 1.022 = $2,922.76 

The proposed CY 2015 national, 

standardized 60-day episode payment 

rate for an HHA that does not submit the 

required quality data is updated by the 

CY 2015 HH payment update percentage 

(2.2 percent) minus 2 percentage points 

and is shown in Table 17. 

TABLE 17—FOR HHAS THAT DO NOT SUBMIT THE QUALITY DATA—PROPOSED CY 2015 NATIONAL, STANDARDIZED 60- 

DAY EPISODE PAYMENT AMOUNT

CY 2014 National, 

standardized 60-day 

episode payment 

Wage index budget 

neutrality factor 

Case-mix weights 

budget neutrality 

factor 

CY 2015 Rebasing 

adjustment 

CY 2015 HH Payment 

update percentage 

minus 2 percentage 

points 

Proposed CY 2015 

national, standardized 

60-day episode 

payment 

$2,869.27 × 1.0012 × 1.0237 ¥ $80.95 × 1.002 = $2,865.57 

c. Proposed National Per-Visit Rates 

The national per-visit rates are used to 

pay LUPAs (episodes with four or fewer 

visits) and are also used to compute 

imputed costs in outlier calculations. 

The per-visit rates are paid by type of 

visit or HH discipline. The six HH 

disciplines are as follows: 

• Home health aide (HH aide); 

• Medical Social Services (MSS); 

• Occupational therapy (OT); 

• Physical therapy (PT); 

• Skilled nursing (SN); and 

• Speech-language pathology (SLP). 

To calculate the CY 2015 national pervisit rates, we start with the CY 2014 

national per-visit rates. We then apply 

a wage index budget neutrality factor to 

ensure budget neutrality for LUPA pervisit payments and increase each of the 

six per-visit rates by the maximum 

rebasing adjustments described in 

section II.C. of this rule. We calculate 

the wage index budget neutrality factor 

by simulating total payments for LUPA 

episodes using the 2015 wage index and 

comparing it to simulated total 

payments for LUPA episodes using the 

2014 wage index. By dividing the total 

payments for LUPA episodes using the 

2015 wage index by the total payments 

for LUPA episodes using the 2014 wage 

index, we obtain a wage index budget 

neutrality factor of 1.0000. We would 

apply the wage index budget neutrality 

factor of 1.0000 to the CY 2015 national 

per-visit rates. 

The LUPA per-visit rates are not 

calculated using case-mix weights. 

Therefore, there is no case-mix weights 

budget neutrality factor is needed to 

ensure budget neutrality for LUPA 

payments. Finally, the per-visit rates for 

each discipline are updated by the CY 

2015 HH payment update percentage of 

2.2 percent. The national per-visit rates 

are adjusted by the wage index based on 

the site of service of the beneficiary. The 

per-visit payments for LUPAs are 

separate from the LUPA add-on 

payment amount, which is paid for 

episodes that occur as the only episode 

or initial episode in a sequence of 

adjacent episodes. The proposed CY 

2015 national per-visit rates are shown 

in Tables 18 and 19. 

TABLE 18—PROPOSED CY 2015 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED

QUALITY DATA

HH Discipline type CY 2014 Per-visit 

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 × 1.0000 + $1.79 × 1.022 $57.88 

Medical Social Services ......................... $194.12 × 1.0000 + $6.34 × 1.022 $204.87 

Occupational Therapy ............................ $133.30 × 1.0000 + $4.35 × 1.022 $140.68 

Physical Therapy ................................... $132.40 × 1.0000 + $4.32 × 1.022 $139.73 

Skilled Nursing ....................................... $121.10 × 1.0000 + $3.96 × 1.022 $127.81 

Speech-Language Pathology ................ $143.88 × 1.0000 + 4.70 × 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 

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percentage points and is shown in Table 

19. 

TABLE 19—PROPOSED CY 2015 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE

REQUIRED QUALITY DATA

HH Discipline Type CY 2014 Per-visit 

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 × 1.0000 + $1.79 × 1.002 $56.74 

Medical Social Services ......................... $194.12 × 1.0000 + $6.34 × 1.002 $200.86 

Occupational Therapy ............................ $133.30 × 1.0000 + $4.35 × 1.002 $137.93 

Physical Therapy ................................... $132.40 × 1.0000 + $4.32 × 1.002 $136.99 

Skilled Nursing ....................................... $121.10 × 1.0000 + $3.96 × 1.002 $125.31 

Speech-Language Pathology ................ $143.88 × 1.0000 + 4.70 × 1.002 $148.88 

d. Low-Utilization Payment Adjustment 

(LUPA) Add-On Factors 

LUPA episodes that occur as the only 

episode or as an initial episode in a 

sequence of adjacent episodes are 

adjusted by applying an additional 

amount to the LUPA payment before 

adjusting for area wage differences. In 

the CY 2014 HH PPS final rule, we 

changed the methodology for 

calculating the LUPA add-on amount by 

finalizing the use of three LUPA add-on 

factors: 1.8451 for SN; 1.6700 for PT; 

and 1.6266 for SLP (78 FR 72306). We 

multiply the per-visit payment amount 

for the first SN, PT, or SLP visit in 

LUPA episodes that occur as the only 

episode or an initial episode in a 

sequence of adjacent episodes by the 

appropriate factor to determine the 

LUPA add-on payment amount. For 

example, for LUPA episodes that occur 

as the only episode or an initial episode 

in a sequence of adjacent episodes, if 

the first skilled visit is SN, the payment 

for that visit will be $235.82 (1.8451 

multiplied by $127.81). 

e. Proposed Non-Routine Medical 

Supply (NRS) Conversion Factor Update 

Payments for NRS are computed by 

multiplying the relative weight for a 

particular severity level by the NRS 

conversion factor. To determine the CY 

2015 NRS conversion factor, we start 

with the 2014 NRS conversion factor 

($53.65) and apply the ¥2.82 percent 

rebasing adjustment calculated in 

section II.C. of this rule (1 ¥ 0.0282 = 

0.9718). We then update the conversion 

factor by the CY 2015 HH payment 

update percentage (2.2 percent). We do 

not apply a standardization factor as the 

NRS payment amount calculated from 

the conversion factor is not wage or 

case-mix adjusted when the final claim 

payment amount is computed. The 

proposed NRS conversion factor for CY 

2015 is shown in Table 20. 

TABLE 20—PROPOSED CY 2015 NRS CONVERSION FACTOR FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

CY 2014 NRS conversion factor 

CY 2015 

Rebasing 

adjustment 

CY 2015 HH 

Payment 

update 

percentage 

Proposed CY 

2015 NRS 

conversion 

factor 

$53.65 .......................................................................................................................................... × 0.9718 × 1.022 = $53.28 

Using the proposed CY 2015 NRS 

conversion factor, the proposed 

payment amounts for the six severity 

levels are shown in Table 21. 

TABLE 21—PROPOSED CY 2015 NRS PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

Severity level Points (scoring) Relative weight 

Proposed CY 

2015 NRS 

payment amounts 

1 .............................................................................. 0 ............................................................................. 0.2698 $14.37 

2 .............................................................................. 1 to 14 .................................................................... 0.9742 51.91 

3 .............................................................................. 15 to 27 .................................................................. 2.6712 142.32 

4 .............................................................................. 28 to 48 .................................................................. 3.9686 211.45 

5 .............................................................................. 49 to 98 .................................................................. 6.1198 326.06 

6 .............................................................................. 99+ ......................................................................... 10.5254 560.79 

For HHAs that do not submit the 

required quality data, we again begin 

with the CY 2014 NRS conversion factor 

($53.65) and apply the ¥2.82 percent 

rebasing adjustment discussed in 

section II.C of this proposed rule (1¥ 

0.0282 = 0.9718). We then update the 

NRS conversion factor by the CY 2015 

HH payment update percentage (2.2 

percent) minus 2 percentage points. The 

proposed CY 2015 NRS conversion 

factor for HHAs that do not submit 

quality data is shown in Table 22. 

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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 ........................................................................................................................ × 0.9718 × 1.002 $52.24 

The proposed payment amounts for 

the various severity levels based on the 

updated conversion factor for HHAs that 

do not submit quality data are 

calculated in Table 23. 

TABLE 23—PROPOSED CY 2015 NRS PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY

DATA

Severity level Points (scoring) Relative weight 

Proposed CY 

2015 NRS 

payment amounts 

1 .............................................................................. 0 ............................................................................. 0.2698 $14.09 

2 .............................................................................. 1 to 14 .................................................................... 0.9742 50.89 

3 .............................................................................. 15 to 27 .................................................................. 2.6712 139.54 

4 .............................................................................. 28 to 48 .................................................................. 3.9686 207.32 

5 .............................................................................. 49 to 98 .................................................................. 6.1198 319.70 

6 .............................................................................. 99+ ......................................................................... 10.5254 549.85 

f. Rural Add-On 

Section 421(a) of the MMA required, 

for HH services furnished in a rural 

areas (as defined in section 

1886(d)(2)(D) of the Act), for episodes or 

visits ending on or after April 1, 2004, 

and before April 1, 2005, that the 

Secretary increase the payment amount 

that otherwise will have been made 

under section 1895 of the Act for the 

services by 5 percent. 

Section 5201 of the DRA amended 

section 421(a) of the MMA. The 

amended section 421(a) of the MMA 

required, for HH services furnished in a 

rural area (as defined in section 

1886(d)(2)(D) of the Act), on or after 

January 1, 2006 and before January 1, 

2007, that the Secretary increase the 

payment amount otherwise made under 

section 1895 of the Act for those 

services by 5 percent. 

Section 3131(c) of the Affordable Care 

Act amended section 421(a) of the MMA 

to provide an increase of 3 percent of 

the payment amount otherwise made 

under section 1895 of the Act for HH 

services furnished in a rural area (as 

defined in section 1886(d)(2)(D) of the 

Act), for episodes and visits ending on 

or after April 1, 2010, and before 

January 1, 2016. 

Section 421 of the MMA, as amended, 

waives budget neutrality related to this 

provision, as the statute specifically 

states that the Secretary shall not reduce 

the standard prospective payment 

amount (or amounts) under section 1895 

of the Act applicable to HH services 

furnished during a period to offset the 

increase in payments resulting in the 

application of this section of the statute. 

Refer to Tables 24 through 27 for the 

proposed payment rates for home health 

services provided in rural areas. 

TABLE 24—PROPOSED CY 2015 PAYMENT AMOUNTS FOR 60-DAY EPISODES FOR SERVICES PROVIDED IN A RURAL AREA

For HHAs that DO submit quality data For HHAs that DO NOT submit quality data 

CY 2015 national, standardized 60-day episode 

payment rate 

Multiply by 

the 3 

percent 

rural add-on 

Proposed CY 

2015 rural 

national, standardized 60-day episode payment rate 

CY 2015 national, 

standardized 60- 

day episode payment rate 

Multiply by 

the 3 

percent 

rural add-on 

Proposed CY 

2015 rural 

national, standardized 60-day episode payment rate 

$2,922.76 ................................................................... × 1.03 $3,010.44 $2,865.57 × 1.03 $2,951.54 

TABLE 25—PROPOSED CY 2015 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA

For HHAs that DO submit quality data For HHAs that DO NOT submit quality data 

HH discipline 

type 

CY 2015 per-visit 

rate 

Multiply by the 3 

percent rural 

add-on 

Proposed CY 2015 

rural per-visit rates 

CY 2015 per-visit 

rate 

Multiply by the 3 

percent rural 

add-on 

Proposed CY 2015 

rural per-visit rates 

HH Aide $57.88 × 1.03 $59.62 $56.74 × 1.03 $58.44 

MSS 204.87 × 1.03 211.02 200.86 × 1.03 206.89 

OT 140.68 × 1.03 144.90 137.93 × 1.03 142.07 

PT 139.73 × 1.03 143.92 136.99 × 1.03 141.10 

SN 127.81 × 1.03 131.64 125.31 × 1.03 129.07 

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TABLE 25—PROPOSED CY 2015 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA—Continued 

For HHAs that DO submit quality data For HHAs that DO NOT submit quality data 

HH discipline 

type 

CY 2015 per-visit 

rate 

Multiply by the 3 

percent rural 

add-on 

Proposed CY 2015 

rural per-visit rates 

CY 2015 per-visit 

rate 

Multiply by the 3 

percent rural 

add-on 

Proposed CY 2015 

rural per-visit rates 

SLP 151.85 × 1.03 156.41 148.88 × 1.03 153.35 

TABLE 26—PROPOSED CY 2015 NRS CONVERSION FACTOR FOR SERVICES PROVIDED IN RURAL AREAS

For HHAs that DO submit quality data For HHAs that DO NOT submit quality data 

CY 2015 conversion factor 

Multiply by the 

3 percent rural 

add-on 

Proposed CY 

2015 rural 

NRS conversion factor 

CY 2015 

conversion 

factor 

Multiply by the 

3 percent rural 

add-on 

Proposed CY 

2015 rural 

NRS conversion factor 

$53.28 .................................................................................. × 1.03 $54.88 $52.24 × 1.03 $53.81 

TABLE 27—PROPOSED CY 2015 NRS PAYMENT AMOUNTS FOR SERVICES PROVIDED IN RURAL AREAS

Severity level Points 

(scoring) 

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) 

Relative weight 

Proposed CY 2015 NRS 

payment amounts for 

rural areas 

Relative weight 

Proposed CY 2015 NRS 

payment amounts for 

rural areas 

1 .................................. 0 .................................. 0.2698 $14.81 0.2698 $14.52 

2 .................................. 1 to 14 ........................ 0.9742 53.46 0.9742 52.42 

3 .................................. 15 to 27 ...................... 2.6712 146.60 2.6712 143.74 

4 .................................. 28 to 48 ...................... 3.9686 217.80 3.9686 213.55 

5 .................................. 49 to 98 ...................... 6.1198 335.85 6.1198 329.31 

6 .................................. 99+ .............................. 10.5254 577.63 10.5254 566.37 

E. Payments for High-Cost Outliers 

Under the HH PPS 

1. Background 

Section 1895(b)(5) of the Act allows 

for the provision of an addition or 

adjustment to the national, standardized 

60-day case-mix and wage-adjusted 

episode payment amounts in the case of 

episodes that incur unusually high costs 

due to patient care needs. Prior to the 

enactment of the Affordable Care Act, 

section 1895(b)(5) of the Act stipulated 

that projected total outlier payments 

could not exceed 5 percent of total 

projected or estimated HH payments in 

a given year. In the Medicare Program; 

Prospective Payment System for Home 

Health Agencies final rule (65 FR 41188 

through 41190), we described the 

method for determining outlier 

payments. Under this system, outlier 

payments are made for episodes whose 

estimated costs exceed a threshold 

amount for each HH Resource Group 

(HHRG). The episode’s estimated cost is 

the sum of the national wage-adjusted 

per-visit payment amounts for all visits 

delivered during the episode. The 

outlier threshold for each case-mix 

group or PEP adjustment is defined as 

the 60-day episode payment or PEP 

adjustment for that group plus a fixeddollar loss (FDL) amount. The outlier 

payment is defined to be a proportion of 

the wage-adjusted estimated cost 

beyond the wage-adjusted threshold. 

The threshold amount is the sum of the 

wage and case-mix adjusted PPS 

episode amount and wage-adjusted FDL 

amount. The proportion of additional 

costs over the outlier threshold amount 

paid as outlier payments is referred to 

as the loss-sharing ratio. 

In the CY 2010 HH PPS final rule (74 

FR 58080 through 58087), we discussed 

excessive growth in outlier payments, 

primarily the result of unusually high 

outlier payments in a few areas of the 

country. Despite program integrity 

efforts associated with excessive outlier 

payments in targeted areas of the 

country, we discovered that outlier 

expenditures still exceeded the 5 

percent, target and, in the absence of 

corrective measures, would continue do 

to so. Consequently, we assessed the 

appropriateness of taking action to curb 

outlier abuse. To mitigate possible 

billing vulnerabilities associated with 

excessive outlier payments and adhere 

to our statutory limit on outlier 

payments, we adopted an outlier policy 

that included a 10 percent agency-level 

cap on outlier payments. This cap was 

implemented in concert with a reduced 

FDL ratio of 0.67. These policies 

resulted in a projected target outlier 

pool of approximately 2.5 percent. (The 

previous outlier pool was 5 percent of 

total HH expenditure). For CY 2010, we 

first returned 5 percent of these dollars 

back into the national, standardized 60- 

day episode rates, the national per-visit 

rates, the LUPA add-on payment 

amount, and the NRS conversion factor. 

Then, we reduced the CY 2010 rates by 

2.5 percent to account for the new 

outlier pool of 2.5 percent. This outlier 

policy was adopted for CY 2010 only. 

As we noted in the CY 2011 HH PPS 

final rule (75 FR 70397 through 70399), 

section 3131(b)(1) of the Affordable Care 

Act amended section 1895(b)(3)(C) of 

the Act. As amended, ‘‘Adjustment for 

outliers,’’ states that ‘‘The Secretary 

shall reduce the standard prospective 

payment amount (or amounts) under 

this paragraph applicable to HH services 

furnished during a period by such 

proportion as will result in an aggregate 

reduction in payments for the period 

equal to 5 percent of the total payments 

estimated to be made based on the 

prospective payment system under this 

subsection for the period.’’ In addition, 

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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 38401 

16Medicare Coverage Benefit Policy Manual (Pub. 

100–02), Section 40.1.2.4.B.2 ‘‘Insulin Injections’’. 

17Levinson, Daniel R. Management Implication 

Report 12–0011, Unnecessary Home Health Care for 

Diabetic Patients. 

18Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

section 3131(b)(2) of the Affordable Care 

Act amended section 1895(b)(5) of the 

Act by re-designating the existing 

language as section 1895(b)(5)(A) of the 

Act, and revising it to state that the 

Secretary, ‘‘subject to [a 10 percent 

program-specific outlier cap], may 

provide for an addition or adjustment to 

the payment amount otherwise made in 

the case of outliers because of unusual 

variations in the type or amount of 

medically necessary care. The total 

amount of the additional payments or 

payment adjustments made under this 

paragraph for a fiscal year or year may 

not exceed 2.5 percent of the total 

payments projected or estimated to be 

made based on the prospective payment 

system under this subsection in that 

year.’’ 

As such, beginning in CY 2011, our 

HH PPS outlier policy is that we reduce 

payment rates by 5 percent and target 

up to 2.5 percent of total estimated HH 

PPS payments to be paid as outliers. To 

do so, we first returned the 2.5 percent 

held for the target CY 2010 outlier pool 

to the national, standardized 60-day 

episode rates, the national per visit 

rates, the LUPA add-on payment 

amount, and the NRS conversion factor 

for CY 2010. We then reduced the rates 

by 5 percent as required by section 

1895(b)(3)(C) of the Act, as amended by 

section 3131(b)(1) of the Affordable Care 

Act. For CY 2011 and subsequent 

calendar years we target up to 2.5 

percent of estimated total payments to 

be paid as outlier payments, and apply 

a 10 percent agency-level outlier cap. 

2. Fixed Dollar Loss (FDL) Ratio and 

Loss-Sharing Ratio 

For a given level of outlier payments, 

there is a trade-off between the values 

selected for the FDL ratio and the losssharing ratio. A high FDL ratio reduces 

the number of episodes that can receive 

outlier payments, but makes it possible 

to select a higher loss-sharing ratio, and 

therefore, increase outlier payments for 

outlier episodes. Alternatively, a lower 

FDL ratio means that more episodes can 

qualify for outlier payments, but outlier 

payments per episode must then be 

lower. 

The FDL ratio and the loss-sharing 

ratio must be selected so that the 

estimated total outlier payments do not 

exceed the 2.5 percent aggregate level 

(as required by section 1895(b)(5)(A) of 

the Act). Historically, we have used a 

value of 0.80 for the loss-sharing ratio 

which, we believe, preserves incentives 

for agencies to attempt to provide care 

efficiently for outlier cases. With a losssharing ratio of 0.80, Medicare pays 80 

percent of the additional estimated costs 

above the outlier threshold amount. We 

are not proposing a change to the losssharing ratio in this proposed rule. 

In the CY 2011 HH PPS final rule (75 

FR 70398), in targeting total outlier 

payments as 2.5 percent of total HH PPS 

payments, we implemented an FDL 

ratio of 0.67, and we maintained that 

ratio in CY 2012. Simulations based on 

CY 2010 claims data completed for the 

CY 2013 HH PPS final rule showed that 

outlier payments were estimated to 

comprise approximately 2.18 percent of 

total HH PPS payments in CY 2013, and 

as such, we lowered the FDL ratio from 

0.67 to 0.45. We stated that lowering the 

FDL ratio to 0.45, while maintaining a 

loss-sharing ratio of 0.80, struck an 

effective balance of compensating for 

high-cost episodes while allowing more 

episodes to qualify as outlier payments 

(77 FR 67080). The national, 

standardized 60-day episode payment 

amount is multiplied by the FDL ratio. 

That amount is wage-adjusted to derive 

the wage-adjusted FDL amount, which 

is added to the case-mix and wageadjusted 60-day episode payment 

amount to determine the outlier 

threshold amount that costs have to 

exceed before Medicare will pay 80 

percent of the additional estimated 

costs. 

Based on simulations using 

preliminary CY 2013 claims data, the 

proposed CY 2015 payments rates in 

section III.D.4 of this proposed rule, and 

the FDL ratio of 0.45; we estimate that 

outlier payments would comprise 

approximately 2.26 percent of total HH 

PPS payments in CY 2015. Simulating 

payments using preliminary CY 2013 

claims data and the CY 2014 payment 

rates (78 FR 72304 through 72308), we 

estimate that outlier payments would 

comprise 2.01 percent of total payments. 

Given the proposed increases to the CY 

2015 national per-visit payment rates, 

our analysis estimates an additional 

0.25 percentage point increase in 

estimated outlier payments as a percent 

of total HH PPS payments each year that 

we phase-in the rebasing adjustments 

described in section II.C. We estimate 

that for CY 2016, estimated outlier 

payments as a percent of total HH PPS 

payments will increase to 2.51 percent. 

We note that these estimates do not take 

in to account any changes in utilization 

that may have occurred in CY 2014, and 

would continue to occur in CY 2015. 

Therefore, we are not proposing a 

change to the FDL ratio for CY 2015. In 

the final rule, we will update our 

estimate of outlier payments as a 

percent of total HH PPS payments using 

the most current and complete year of 

HH PPS data. We will continue to 

monitor the percent of total HH PPS 

payments paid as outlier payments to 

determine if future adjustments to either 

the FDL ratio or loss-sharing ratio are 

warranted. 

F. Medicare Coverage of Insulin 

Injections Under the HH PPS 

Home health policy regarding 

coverage of home health visits for the 

sole purpose of insulin injections is 

limited to patients that are physically or 

mentally unable to self-inject and there 

is no other person who is able and 

willing to inject the patient.16 However, 

the Office of Inspector General 

concluded in August 2013 that some 

previously covered home health visits 

for the sole purpose of insulin injections 

were unnecessary because the patient 

was physically and mentally able to 

self-inject.17 In addition, results from 

analysis in response to public comments 

on the CY 2014 HH PPS final rule found 

that episodes that qualify for outlier 

payments in excess of $10,000 had, on 

average, 160 skilled nursing visits in a 

60-day episode of care with 95 percent 

of the episodes listing a primary 

diagnosis of diabetes or long-term use of 

insulin (78 FR 72310). Therefore, we 

conducted a literature review regarding 

generally accepted clinical management 

practices for diabetic patients and 

conducted further analysis of home 

health claims data to investigate the 

extent to which episodes with visits 

likely for the sole purpose of insulin 

injections are in fact limited to patients 

that are physically or mentally unable to 

self-inject. 

As generally accepted by the medical 

community, older patients (age 65 and 

older) are more likely to have 

impairments in dexterity, cognition, 

vision, and hearing.18 While studies 

have shown that most elderly patients 

starting or continuing on insulin can 

inject themselves, these conditions may 

affect the elderly individual’s ability to 

self-inject insulin. It is clinically 

essential that there is careful assessment 

prior to the initiation of home care, and 

throughout the course of treatment, 

regarding the patient’s capacity for selfinjection. There are multiple reliable, 

and validated assessment tools that may 

be used to assess the elderly 

individual’s ability to self-inject. These 

tools assess the individual’s ability to 

perform activities of daily living (ADLs), 

as well as, cognitive, functional, and 

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19Hendra, T.J. Starting insulin therapy in elderly 

patients. (2012). Journal of the Royal Society of 

Medicine. 95(9), 453–455. 

20Sinclair AJ, Turnbull CJ, Croxson SCM. 

Document of care for older people with diabetes. 

Postgrad Med J 1996;72: 334–8. 

21Coscelli C, Lostia S, Lunetta M, Nosari I, 

Coronel GA. Safety, efficacy, acceptability of a prefilled insulin pen in diabetic patients over 60 years 

old. Diabetes Research and Clinical Practice. 

1995;38:173–7. [PubMed] 

22Flemming DR. Mightier than the syringe. Am 

J Nurs. 2000;100:44–8. [PubMed] 

23Wright, B., Bellone, J., McCoy, E. (2010). A 

review of insulin pen devices and use in elderly, 

diabetic population. Clinical Medicine Insights: 

Endocrinology and Diabetes. 3:53–63. Doi: 10.4137/ 

CMED.S5534. 

24Wright, B., Bellone, J., McCoy, E. (2010). A 

review of insulin pen devices and use in elderly, 

diabetic population. Clinical Medicine Insights: 

Endocrinology and Diabetes. 3:53–63. Doi: 10.4137/ 

CMED.S5534. 

25Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

26Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

27Wright, B., Bellone, J., McCoy, E. (2010). A 

review of insulin pen devices and use in elderly, 

diabetic population. Clinical Medicine Insights: 

Endocrinology and Diabetes. 3:53–63. Doi: 

10.4137/CMED.S5534 

28Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

29Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

30Hendra, 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. 

behavioral status.19 These assessment 

tools have also proved valid for judging 

patients’ ability to inject insulin 

independently and to recognize and 

deal with hypoglycemia.20

Another important consideration with 

regards to insulin administration in the 

elderly population is the possibility of 

dosing errors.21 Correct administration 

and accurate dosing is important in 

order to prevent serious complications, 

such as hypoglycemia and 

hyperglycemia. The traditional vial and 

syringe method of insulin 

administration involves several steps, 

including injecting air into the vial, 

drawing an amount out of the vial into 

a syringe with small measuring 

increments, and verifying the correct 

dose visually.22 In some cases, an 

insulin pen can be used as an 

alternative to the traditional vial and 

syringe method. 

Insulin pens are designed to facilitate 

easy self-administration, the possession 

of which would suggest the ability to 

self-inject. Additionally, insulin pens 

often come pre-filled with insulin or 

must be used with a pre-filled cartridge 

thus potentially negating the need for 

skilled nursing for the purpose of 

calculating and filling appropriate 

doses. It is recognized that visual 

impairment, joint immobility and/or 

pain, peripheral neuropathy, and 

cognitive issues may affect the ability of 

elderly patients to determine correct 

insulin dosing and injection. Our 

literature review indicates that insulin 

pen devices may be beneficial in terms 

of safety for elderly patients due to these 

visual or physical disabilities.23 To 

determine whether to use a traditional 

vial and syringe method of insulin 

administration versus an insulin pen, 

the physician must consider and 

understand the advantages these devices 

offer over traditional vials and syringes. 

These advantages include: 

• Convenience, as the insulin pen 

eliminates the need to draw up a dose; 

• Greater dose accuracy and 

reliability, especially for low doses 

which are often needed in the elderly; 

• Sensory and auditory feedback 

associated with the dial mechanism on 

many pens may also benefit those with 

visual impairments; 

• Pen devices are also more compact, 

portable and easier to grip, which may 

benefit those with impairments in 

manual dexterity; and 

• Less painful injections and overall 

ease of use.24

Although pen devices are often 

perceived to be more costly than vialed 

insulin, study results indicate that 

elderly diabetic patients are more likely 

to accept pen devices and adhere to 

therapy, which leads to better glycemic 

control that decreases long-term 

complications and associated healthcare 

costs.25 The significantly improved 

safety profiles of pen devices also avert 

costly episodes of hypoglycemia.26 It 

also should be noted that most 

insurance plans, including Medicare 

Part D plans, charge the patient the 

same amount for a month supply of 

insulin in the pen device as insulin in 

the vial.27 Furthermore, 

pharmacoeconomic data reveal cost 

benefits for using pens versus syringes 

due to improved treatment adherence 

and reduced health care utilization.28

Additionally, in some cases the 

individual with coverage for insulin 

pens may have one co-pay, resulting in 

getting more insulin than if purchasing 

a vial. And, there is less waste with 

pens because insulin vials should be 

discarded after 28 days after opening. 

However, there may be clinical reasons 

for the use of the traditional vial and 

insulin syringe as opposed to the 

insulin pen, including the fact that not 

all insulin preparations are available via 

insulin pen. In such circumstances, 

there are multiple assistive aids and 

devices to facilitate self-injection of 

insulin for those with cognitive or 

functional limitations. These include: 

nonvisual insulin measurement devices; 

syringe magnifiers; needle guides; 

prefilled insulin syringes; and vial 

stabilizers to help ensure accuracy and 

aid in insulin delivery.29 It is expected 

that providers will assess the needs, 

abilities, and preference of the patient 

requiring insulin to facilitate patient 

autonomy, efficiency, and safety in 

diabetes self-management, including the 

administration of insulin. 

Further research regarding selfinjection of insulin, whether via a vial 

and syringe method or insulin pen, 

shows that education for starting insulin 

and monitoring should be provided by 

a diabetes nurse specialist, and typically 

entails 5 to 10 face-to-face contacts 

either in the patient’s home or at the 

diabetes clinic; these are in addition to 

telephone contacts to further reinforce 

teaching and to answer patient 

questions.30 This type of assessment and 

education allows for patient autonomy 

and self-efficiency and is often a 

preferred mode for diabetes selfmanagement. 

In the CY 2014 HH PPS final rule (78 

FR 72256), we noted ‘‘The Office of 

Inspector General (OIG) released a 

‘‘Management Implications Report in 

August of 2013’’ that concluded there is 

a ‘‘systemic weakness that results in 

Medicare coverage of unnecessary home 

health care for diabetic patients’’. The 

OIG report noted that investigations 

show that the majority of beneficiaries 

involved in fraudulent schemes have a 

primary diagnosis of diabetes. The 

report noted that OIG Special Agents 

found falsified medical records 

documenting patients having hand 

tremors and poor vision preventing 

them from drawing insulin into a 

syringe, visually verifying the correct 

dosage, and injecting the insulin 

themselves, when the patients did not 

in fact suffer those symptoms. 

In light of the OIG report, we 

conducted analysis and performed 

simulations using CY 2012 claims data 

and described our findings in the CY 

2014 Home Health PPS Final Rule (78 

FR 72310). We found that nearly 44 

percent of the episodes that would 

qualify for outlier payments had a 

primary diagnosis of diabetes and 16 

percent of episodes that would quality 

for outlier payments had a primary 

diagnosis of ‘‘Diabetes mellitus without 

mention of complication, type II or 

unspecified type, not stated as 

uncontrolled.’’ Qualifying for outlier 

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31This 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. 

payments should indicate an increased 

resource and service need. However, 

uncomplicated and controlled diabetes 

typically would be viewed as stable 

without clinical complications and 

would not warrant increased resource 

and service needs nor would it appear 

to warrant outlier payments. Our 

simulations estimated that 

approximately 81 percent of outlier 

payments would be paid to proprietary 

HHAs and that approximately twothirds of outlier payments would be 

paid to HHAs located in Florida (27 

percent), Texas (24 percent) and 

California (15 percent). We also 

conducted additional analyses on 

episodes in our simulations that would 

have resulted in outlier payments of 

over $10,000. Of note, 95 percent of 

episodes that would have resulted in 

outlier payments of over $10,000 were 

for patients with a primary diagnosis of 

diabetes or long-term use of insulin, and 

most were concentrated in Florida, 

Texas, New York, California, and 

Oklahoma. On average, these outlier 

episodes had 160 skilled nursing visits 

in a 60-day episode of care.31

Based upon the initial data analysis 

described above and the information 

found in the literature review, we 

conducted further data analysis with 

more recent home health claims and 

OASIS data (CY 2012 and CY 2013) to 

expand our understanding of the 

diabetic patient in the home health 

setting. Specifically, we investigated the 

extent to which beneficiaries with a 

diabetes-related principal diagnosis 

received home health services likely for 

the primary purpose of insulin injection 

assistance and whether such services 

were warranted by other documented 

medical conditions. We also analyzed 

the magnitude of Medicare payments 

associated with home health services 

provided to this population of interest. 

The analysis was conducted by 

Acumen, LLC because of their capacity 

to provide real-time claims data analysis 

across all parts of the Medicare program 

(that is, Part A, Part B, and Part D). 

Our analysis began with identifying 

episodes for the home health diabetic 

population based on claims and OASIS 

assessments most likely to be associated 

with insulin injection assistance. We 

used the following criteria to identify 

the home health diabetic population of 

interest: (1) A diabetic condition listed 

as the principal/primary diagnosis on 

the home health claim; (2) Medicare 

Part A or Part B enrollment for at least 

three months prior to the episode and 

during the episode; and (3) episodes 

with at least 45 skilled visits. This 

threshold was determined based on the 

distribution in the average number and 

length of skilled nursing visits for 

episodes meeting criteria 1 and 2 above 

using CY 2013 home health claims data. 

The average number of skilled nursing 

visits for beneficiaries who receive at 

least one skilled nursing visit appeared 

to increase from 20 visits at the 90th 

percentile, to 50 visits at the 95th 

percentile. Additionally, the average 

length of a skilled nursing visit for 

episodes between the 90th and 95th 

percentiles was 37 minutes, less than 

half the length of visits for episode 

between the 75th and 90th percentiles. 

Approximately 49,100 episodes met 

the study population criteria described 

above, accounting for approximately 

$298 million in Medicare home health 

payments in CY 2013. Of the 49,100 

episodes of interest, 71 percent received 

outlier payments and, on average, there 

were 86 skilled nursing visits per 

episode. In addition, 12 percent of the 

episodes in the study population were 

for patients prescribed an insulin pen to 

self-inject and more than half of the 

episodes billed (27,439) were for claims 

that listed ICD–9–CM 2500x, ‘‘Diabetes 

Mellitus without mention of 

complication’’, as the principal 

diagnosis code. ICD–9–CM describes the 

code 250.0x as diabetes mellitus 

without mention of complications 

(complications can include hypo- or 

hyperglycemia, or manifestations 

classified as renal, ophthalmic, 

neurological, peripheral circulatory 

damage or neuropathy). Clinically, this 

code generally means that the diabetes 

is being well-controlled and there are no 

apparent complications or symptoms 

resulting from the diabetes. Diabetes 

that is controlled and without 

complications does not warrant 

intensive intervention or daily skilled 

nursing visits; rather, it warrants 

knowledge of the condition and routine 

monitoring. 

As discussed above in this section, 

the traditional vial and syringe method 

of insulin administration is one of two 

methods of insulin administration 

(excluding the use of insulin pumps). 

The alternative to the traditional vial 

and syringe method is the use of insulin 

pens. We believe that insulin pens are 

usually prescribed for those 

beneficiaries that are able to selfadminister the insulin via an insulin 

pen. Therefore, the possession of a 

prescribed insulin pen would suggest 

the ability to self-inject. Since insulin 

pens often come pre-filled with insulin 

or must be used with a pre-filled 

cartridge, we believe there would not be 

a need for skilled nursing for the 

purpose of insulin injection assistance. 

We expect providers to assess the needs, 

abilities, and preference of the patient 

requiring insulin to facilitate patient 

autonomy, efficiency, and safety in 

diabetes self-management, including the 

administration of insulin. As noted 

above, approximately 12 percent of the 

episodes in the study population with 

visits likely for the purpose of insulin 

injection assistance were for patients 

prescribed an insulin pen to self-inject, 

which does not conform to our current 

policy that home health visits for the 

sole purpose of insulin injection 

assistance is limited to patients that are 

physically or mentally unable to selfinject and there is no other person who 

is able and willing to inject the patient. 

Furthermore, we recognize that our 

current sub-regulatory guidance may not 

adequately address the method of 

delivery. We are considering additional 

guidance that may be necessary 

surrounding insulin injection assistance 

provided via a pen based upon our 

analyses described above. We have 

found that literature supports that 

insulin pens may reduce expenses for 

the patient in the form of co-pays and 

may increase patient adherence to their 

treatment plan. Therefore, we encourage 

physicians to consider the potential 

benefits derived in prescribing insulin 

pens, when clinically appropriate, given 

the patient’s condition. 

We also investigated whether 

secondary diagnosis codes listed on 

home health claims support that the 

patient, either for physical or mental 

reasons, cannot self-inject. Our 

contractor, Abt Associates, with review 

and clinical input from CMS clinical 

staff and experts, created a list of ICD– 

9–CM codes that indicate a patient has 

impairments in dexterity, cognition, 

vision, and/or hearing that may cause 

the patient to be unable to self-inject 

insulin. We found that 49 percent of 

home health episodes in our study 

population did not have a secondary 

diagnosis from that ICD–9–CM code list 

on the home health claim that 

supported that the patient was 

physically or mentally unable to selfinject. When examining only the initial 

home health episodes of our study 

population, we found that 67 percent of 

initial home health episodes with 

skilled nursing visits likely for insulin 

injections did not have a secondary 

diagnosis on the home health claim that 

supported that the patient was 

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inject. Using the same list of ICD–9–CM 

diagnosis codes, we examined both the 

secondary diagnoses on the home health 

claim and diagnoses on non-home 

health claims in the three months prior 

to starting home health care for initial 

home health episodes. We found that for 

initial home health episodes in our 

study population that the percentage of 

episodes that did not have a secondary 

diagnosis to support that the patient 

cannot self-inject would decrease from 

67 percent to 47 percent if the home 

health claim included diagnoses found 

in other claim types during the three 

months prior to entering home care. We 

do recognize that, in spite of all of the 

education, assistive devices and 

support, there may still be those who 

are unable to self-inject insulin and will 

require ongoing skilled nursing visits for 

insulin administration assistance. 

However, there is an expectation that 

the physician and the HHA would 

clearly document detailed clinical 

findings and rationale as to why an 

individual is unable to self-inject, 

including the reporting of an 

appropriate secondary condition that 

supports the inability of the patient to 

self-inject. 

As described above, a group of CMS 

clinicians and contractor clinicians 

developed a list of conditions that 

would support the need for ongoing 

home health skilled nursing visits for 

insulin injection assistance for instances 

where the patient is physically or 

mentally unable to self-inject and there 

is no able or willing caregiver to provide 

assistance. We expect the conditions 

included in Table 28 to be listed on the 

claim and OASIS to support the need 

for skilled nursing visits for insulin 

injection assistance. 

TABLE 28—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN

ICD–9–CM Code Description 

Amputation: 

V49.61 ........................................... Thumb Amputation Status. 

V49.63 ........................................... Hand Amputation Status. 

V49.64 ........................................... Wrist Amputation Status. 

V49.65 ........................................... Below elbow amputation status. 

V49.66 ........................................... Above elbow amputation status. 

V49.67 ........................................... Shoulder amputation status. 

885.0 .............................................. Traumatic amputation of thumb w/o mention of complication. 

885.1 .............................................. Traumatic amputation of thumb w/mention of complication. 

886.0 .............................................. Traumatic amputation of other fingers w/o mention of complication. 

886.1 .............................................. Traumatic amputation of other fingers w/mention of complication. 

887.0 .............................................. Traumatic amputation of arm and hand, unilateral, below elbow w/o mention of complication. 

887.1 .............................................. Traumatic amputation of arm and hand, unilateral, below elbow, complicated. 

887.2 .............................................. Traumatic amputation of arm and hand, unilateral, at or above elbow w/o mention of complication. 

887.3 .............................................. Traumatic amputation of arm and hand, unilateral, at or above elbow, complicated. 

887.4 .............................................. Traumatic amputation of arm and hand, unilateral, level not specified, w/o mention of complication. 

887.5 .............................................. Traumatic amputation of arm and hand, unilateral, level not specified, complicated. 

887.6 .............................................. Traumatic amputation of arm and hand, bilateral, any level, w/o mention of complication. 

887.7 .............................................. Traumatic amputation of arm and hand, bilateral, any level, complicated. 

Vision: 

362.01 ............................................ Background diabetic retinopathy. 

362.50 ............................................ Macular degeneration (senile) of retina unspecified. 

362.51 ............................................ Nonexudative senile macular degeneration of retina. 

362.52 ............................................ Exudative senile macular degeneration of retina. 

362.53 ............................................ Cystoid macular degeneration of retina. 

362.54 ............................................ Macular cyst hole or pseudohole of retina. 

362.55 ............................................ Toxic maculopathy of retina. 

362.56 ............................................ Macular puckering of retina. 

362.57 ............................................ Drusen (degenerative) of retina. 

366.00 ............................................ Nonsenile cataract unspecified. 

366.01 ............................................ Anterior subcapsular polar nonsenile cataract. 

366.02 ............................................ Posterior subcapsular polar nonsenile cataract. 

366.03 ............................................ Cortical lamellar or zonular nonsenile cataract. 

366.04 ............................................ Nuclear nonsenile cataract. 

366.09 ............................................ Other and combined forms of nonsenile cataract. 

366.10 ............................................ Senile cataract unspecified. 

366.11 ............................................ Pseudoexfoliation of lens capsule. 

366.12 ............................................ Incipient senile cataract. 

366.13 ............................................ Anterior subcapsular polar senile cataract. 

366.14 ............................................ Posterior subcapsular polar senile cataract. 

366.15 ............................................ Cortical senile cataract. 

366.16 ............................................ Senile nuclear sclerosis. 

366.17 ............................................ Total or mature cataract. 

366.18 ............................................ Hypermature cataract. 

366.19 ............................................ Other and combined forms of senile cataract. 

366.20 ............................................ Traumatic cataract unspecified. 

366.21 ............................................ Localized traumatic opacities. 

366.22 ............................................ Total traumatic cataract. 

366.23 ............................................ Partially resolved traumatic cataract. 

366.8 .............................................. Other cataract. 

366.9 .............................................. Unspecified cataract. 

366.41 ............................................ Diabetic cataract. 

366.42 ............................................ Tetanic cataract. 

366.43 ............................................ Myotonic cataract. 

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TABLE 28—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN—Continued 

ICD–9–CM Code Description 

366.44 ............................................ Cataract associated with other syndromes. 

366.45 ............................................ Toxic cataract. 

366.46 ............................................ Cataract associated with radiation and other physical influences. 

366.50 ............................................ After-cataract unspecified. 

369.00 ............................................ Impairment level not further specified. 

369.01 ............................................ Better eye: total vision impairment; lesser eye: total vision impairment. 

369.10 ............................................ Moderate or severe impairment, better eye, impairment level not further specified. 

369.11 ............................................ Better eye: severe vision impairment; lesser eye: blind not further specified. 

369.13 ............................................ Better eye: severe vision impairment; lesser eye: near-total vision impairment. 

369.14 ............................................ Better eye: severe vision impairment; lesser eye: profound vision impairment.

369.15 ............................................ Better eye: moderate vision impairment; lesser eye: blind not further specified. 

369.16 ............................................ Better eye: moderate vision impairment; lesser eye: total vision impairment. 

369.17 ............................................ Better eye: moderate vision impairment; lesser eye: near-total vision impairment. 

369.18 ............................................ Better eye: moderate vision impairment; lesser eye: profound vision impairment. 

369.20 ............................................ Moderate to severe impairment; Low vision both eyes not otherwise specified. 

369.21 ............................................ Better eye: severe vision impairment; lesser eye; impairment not further specified. 

369.22 ............................................ Better eye: severe vision impairment; lesser eye: severe vision impairment. 

369.23 ............................................ Better eye: moderate vision impairment; lesser eye: impairment not further specified. 

369.24 ............................................ Better eye: moderate vision impairment; lesser eye: severe vision impairment.

369.25 ............................................ Better eye: moderate vision impairment; lesser eye: moderate vision impairment. 

369.3 .............................................. Unqualified visual loss both eyes. 

369.4 .............................................. Legal blindness as defined in U.S.A.. 

377.75 ............................................ Cortical blindness. 

379.21 ............................................ Vitreous degeneration. 

379.23 ............................................ Vitreous hemorrhage. 

Cognitive/Behavioral: 

290.0 .............................................. Senile dementia uncomplicated. 

290.3 .............................................. Senile dementia with delirium. 

290.40 ............................................ Vascular dementia, uncomplicated. 

290.41 ............................................ Vascular dementia, with delirium. 

290.42 ............................................ Vascular dementia, with delusions. 

290.43 ............................................ Vascular dementia, with depressed mood. 

294.11 ............................................ Dementia in conditions classified elsewhere with behavioral disturbance. 

294.21 ............................................ Dementia, unspecified, with behavioral disturbance. 

300.29 ............................................ Other isolated or specific phobias. 

331.0 .............................................. Alzheimer’s disease. 

331.11 ............................................ Pick’s disease. 

331.19 ............................................ Other frontotemporal dementia. 

331.2 .............................................. Senile degeneration of brain. 

331.82 ............................................ Dementia with lewy bodies. 

Arthritis: 

715.11 ............................................ Osteoarthrosis localized primary involving shoulder region. 

715.21 ............................................ Osteoarthrosis localized secondary involving shoulder region. 

715.31 ............................................ Osteoarthrosis localized not specified whether primary or secondary involving shoulder region. 

715.91 ............................................ Osteoarthrosis unspecified whether generalized or localized involving shoulder region. 

715.12 ............................................ Osteoarthrosis localized primary involving upper arm. 

715.22 ............................................ Osteoarthrosis localized secondary involving upper arm. 

715.32 ............................................ Osteoarthrosis localized not specified whether primary or secondary involving upper arm. 

715.92 ............................................ Osteoarthrosis unspecified whether generalized or localized involving upper arm. 

715.13 ............................................ Osteoarthrosis localized primary involving forearm. 

715.23 ............................................ Osteoarthrosis localized secondary involving forearm. 

715.33 ............................................ Osteoarthrosis localized not specified whether primary or secondary involving forearm. 

715.93 ............................................ Osteoarthrosis unspecified whether generalized or localized involving forearm. 

715.04 ............................................ Osteoarthrosis generalized involving hand. 

715.14 ............................................ Osteoarthrosis localized primary involving hand. 

715.24 ............................................ Osteoarthrosis localized secondary involving hand. 

715.34 ............................................ Osteoarthrosis localized not specified whether primary or secondary involving hand. 

715.94 ............................................ Osteoarthrosis unspecified whether generalized or localized involving hand. 

716.51 ............................................ Unspecified polyarthropathy or polyarthritis involving shoulder region. 

716.52 ............................................ Unspecified polyarthropathy or polyarthritis involving upper arm. 

716.53 ............................................ Unspecified polyarthropathy or polyarthritis involving forearm. 

716.54 ............................................ Unspecified polyarthropathy or polyarthritis involving hand. 

716.61 ............................................ Unspecified monoarthritis involving shoulder region. 

716.62 ............................................ Unspecified monoarthritis involving upper arm. 

716.63 ............................................ Unspecified monoarthritis involving forearm. 

716.64 ............................................ Unspecified monoarthritis involving hand. 

716.81 ............................................ Other specified arthropathy involving shoulder region. 

716.82 ............................................ Other specified arthropathy involving upper arm. 

716.83 ............................................ Other specified arthropathy involving forearm. 

716.84 ............................................ Other specified arthropathy involving hand. 

716.91 ............................................ Unspecified arthropathy involving shoulder region. 

716.92 ............................................ Unspecified arthropathy involving upper arm. 

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TABLE 28—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN—Continued 

ICD–9–CM Code Description 

716.93 ............................................ Unspecified arthropathy involving forearm. 

716.94 ............................................ Unspecified arthropathy involving hand. 

716.01 ............................................ Kaschin-Beck disease shoulder region. 

716.02 ............................................ Kaschin-Beck disease upper arm. 

716.04 ............................................ Kaschin-Beck disease forearm. 

716.04 ............................................ Kaschin-beck disease involving hand. 

719.81 ............................................ Other specified disorders of joint of shoulder region. 

719.82 ............................................ Other specified disorders of upper arm joint. 

719.83 ............................................ Other specified disorders of joint, forearm. 

719.84 ............................................ Other specified disorders of joint, hand. 

718.41 ............................................ Contracture of joint of shoulder region. 

718.42 ............................................ Contracture of joint, upper arm. 

718.43 ............................................ Contracture of joint, forearm. 

718.44 ............................................ Contracture of hand joint. 

714.0 .............................................. Rheumatoid arthritis. 

Movement Disorders: 

332.0 .............................................. Paralysis agitans (Parkinson’s). 

332.1 .............................................. Secondary parkinsonism. 

333.1 .............................................. Essential and other specified forms of tremor. 

736.05 ............................................ Wrist drop (acquired). 

After Effects from Stroke/Other 

Disorders of the Central Nervous System/Intellectual Disabilities: 

438.21 ............................................ Hemiplegia affecting dominant side. 

438.22 ............................................ Hemiplegia affecting nondominant side. 

342.01 ............................................ Flaccid hemiplegia and hemiparesis affecting dominant side. 

342.02 ............................................ Flaccid hemiplegia and hemiparesis affecting nondominant side. 

342.11 ............................................ Spastic hemiplegia and hemiparesis affecting dominant side. 

342.12 ............................................ Spastic hemiplegia and hemiparesis affecting nondominant side. 

438.31 ............................................ Monoplegia of upper limb affecting dominant side. 

438.32 ............................................ Monoplegia of upper limb affecting nondominant side. 

343.3 .............................................. Congenital monoplegia. 

344.41 ............................................ Monoplegia of upper limb affecting dominant side. 

344.42 ............................................ Monoplegia of upper limb affecting nondominant side. 

344.81 ............................................ Locked-in state. 

344.00 ............................................ Quadriplegia unspecified. 

344.01 ............................................ Quadriplegia c1-c4 complete. 

344.02 ............................................ Quadriplegia c1-c4 incomplete. 

344.03 ............................................ Quadriplegia c5-c7 complete. 

344.04 ............................................ Quadriplegia c5-c7 incomplete. 

343.0 .............................................. Congenital diplegia. 

343.2 .............................................. Congenital quadriplegia. 

344.2 .............................................. Diplegia of upper limbs. 

318.0 .............................................. Moderate intellectual disabilities. 

318.1 .............................................. Severe intellectual disabilities. 

318.2 .............................................. Profound intellectual disabilities. 

Although we are not proposing any 

policy changes at this time, we are 

soliciting public comments on whether 

the conditions in Table 28 represent a 

comprehensive list of codes that 

appropriately indicate that a patient 

may not be able to self-inject and the 

use of insulin pens in home health. We 

plan to continue monitoring claims that 

are likely for the purpose of insulin 

injection assistance. Historical evidence 

in the medical record must support the 

clinical legitimacy of the secondary 

condition(s) and resulting disability that 

limit the beneficiary’s ability to selfinject. 

G. Implementation of the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM) 

On April 1, 2014, the Protecting 

Access to Medicare Act of 2014 (PAMA) 

(Pub. L. 113–93) was enacted. Section 

212 of the PAMA, titled ‘‘Delay in 

Transition from ICD–9 to ICD–10 Code 

Sets,’’ provides that ‘‘[t]he Secretary of 

Health and Human Services may not, 

prior to October 1, 2015, adopt ICD–10 

code sets as the standard for code sets 

under section 1173(c) of the Social 

Security Act (42 U.S.C. 1320d-2(c)) and 

§ 162.1002 of title 45, Code of Federal 

Regulations.’’ 

On May 1, 2014, the Secretary 

announced that HHS expects to issue an 

interim final rule that will require use 

of ICD–10 beginning October 1, 2015 

and continue to require use of ICD–9– 

CM through September 30, 2015. This 

announcement, which is available on 

the CMS Web site at http://cms.gov/

Medicare/Coding/ICD10/index.html, 

means that ICD–9–CM diagnosis codes 

will continue to be used for home health 

claims reporting until October 1, 2015, 

when ICD–10–CM is required. Diagnosis 

reporting on home health claims must 

adhere to ICD–9–CM coding 

conventions and guidelines regarding 

the selection of principal diagnosis and 

the reporting of additional diagnoses 

until that time. The current ICD–9–CM 

Coding Guidelines refer to the use of the 

International Classification of Diseases, 

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9th Revision, Clinical Modification 

(ICD–9–CM) and are available through 

the CMS Web site at: http://

www.cms.gov/Medicare/Coding/

ICD9ProviderDiagnosticCodes/

index.html or on the CDC’s Web site at 

http://www.cdc.gov/nchs/icd/

icd9cm.htm. We plan to disseminate 

this information through the HHA 

Center Web site, the Home Health, 

Hospice and DME Open Door Forum, 

and in the CY 2015 HH PPS final rule. 

H. Proposed Change to the Therapy 

Reassessment Timeframes 

As discussed in our CY 2011 HH PPS 

final rule (75 FR 70372), effective 

January 1, 2011, therapy reassessments 

must be performed on or ‘‘close to’’ the 

13th and 19th therapy visits and at least 

once every 30 days. A qualified 

therapist, of the corresponding 

discipline for the type of therapy being 

provided, must functionally reassess the 

patient using a method which would 

include objective measurement. The 

measurement results and corresponding 

effectiveness of the therapy, or lack 

thereof, must be documented in the 

clinical record. We anticipated that 

policy regarding therapy coverage and 

therapy reassessments would address 

payment vulnerabilities that have led to 

high use and sometimes overuse of 

therapy services. We also discussed our 

expectation that this policy change 

would ensure more qualified therapist 

involvement for beneficiaries receiving 

high amounts of therapy. In our CY 

2013 HH PPS final rule (77 FR 67068), 

effective January 1, 2013, we provided 

further clarifications regarding therapy 

coverage and therapy reassessments. 

Specifically, similar to the existing 

requirements for therapy reassessments 

when the patient resides in a rural area, 

we finalized changes to 

§ 409.44(c)(2)(i)(C)(2) and (D)(2) 

specifying that when multiple types of 

therapy are provided, each therapist 

must assess the patient after the 10th 

therapy visit but no later than the 13th 

therapy visit and after the 16th therapy 

visit but no later than the 19th therapy 

visit for the plan of care. In 

§ 409.44(c)(2)(i)(E)(1), we specified that 

when a therapy reassessment is missed, 

any visits for that discipline prior to the 

next reassessment are non-covered. 

Our analysis of data from CYs 2010 

through 2013 shows that the frequency 

of episodes with therapy visits reaching 

14 and 20 therapy visits did not change 

substantially as a result of the therapy 

reassessment policy implemented in CY 

2011 (see Table 29). The percentage of 

episodes with at least 14 covered 

therapy visits was 17.2 percent in CY 

2010 and decreased to 16.0 percent in 

CY 2011. In CY 2013 the percentage of 

episodes with at least 14 covered 

therapy visits increased to 16.3 percent. 

Likewise, the percentage of episodes 

with at least 20 covered therapy visits 

was 6.0 percent in CY 2010 and 

decreased to 5.4 percent in CY 2011. In 

CY 2013, the percentage of episodes 

with at least 20 covered therapy visits 

was 5.3 percent. We analyzed data for 

specific types of providers (for example, 

non-profit, for profit, freestanding, 

facility-based), and we found the similar 

trends in the number of episodes with 

at least 14 and 20 covered therapy visits. 

For example, for non-profit HHAs, the 

percentage of episodes with at least 14 

covered therapy visits decreased from 

11.8 percent in CY 2010 to 11.1 in CY 

2011 and episodes with at least 20 

covered therapy visits decreased from 

4.2 percent in CY 2010 to 3.9 percent in 

CY 2011. For proprietary HHAs, the 

percentage of episodes with at least 14 

covered therapy visits decreased from 

19.7 percent in CY 2010 to 18.2 percent 

in CY 2011 and episodes with at least 

20 covered therapy visits decreased 

from 6.8 percent in CY 2010 to 6.1 

percent in CY 2011. 

As we stated in section III.A of this 

proposed rule, in addition to the 

implementation of the therapy 

reassessment requirements in CY 2011, 

HHAs were also subject to the 

Affordable Care Act face-to-face 

encounter requirement, payments were 

reduced to account for increases 

nominal case-mix, and the Affordable 

Care Act mandated that the HH PPS 

payment rates be reduced by 5 percent 

to pay up to, but no more than 2.5 

percent of total HH PPS payments as 

outlier payments. The estimated net 

impact to HHAs for CY 2011 was a 

decrease in total HH PPS payments of 

4.78 percent. The independent effects of 

any one policy may be difficult to 

discern in years where multiple policy 

changes occur in any given year. We 

note that in our CY 2012 HH PPS final 

rule (76 FR 68526), we recalibrated and 

reduced the HH PPS case-mix weights 

for episodes reaching 14 and 20 therapy 

visits, thereby greatly diminishing the 

payment incentive for episodes at those 

therapy thresholds. 

TABLE 29—PERCENTAGE OF EPISODES WITH 14 AND 20 THERAPY VISITS, CY 2010 THROUGH 2013 

Calendar year 

Episodes with at 

least 1 covered 

therapy visit 

Episodes with at 

least 14 covered 

therapy visits 

Episodes with at 

least 20 covered 

therapy visits 

2010 ........................................................................................................................... 54.1% 17.2% 6.0% 

2011 ........................................................................................................................... 54.2% 16.0% 5.4% 

2012 ........................................................................................................................... 55.2% 15.6% 5.2% 

2013 ........................................................................................................................... 56.3% 16.3% 5.3% 

Source: CY 2010 claims from the Datalink file and CY 2011 through CY 2013 claims from the standard analytic file (SAF). 

Note(s): For CY 2010, we included all episodes that began on or after January 1, 2010 and ended on or before December 31, 2010 and we 

included a 20% sample of episodes that began in CY 2009 but ended in CY 2010. For CY 2011 and CY 2013, we included all episodes that 

ended on or before December 31 of that CY (including 100% of episodes that began in the previous CY, but ended in the current CY). 

Since the therapy reassessment 

requirements were implemented in CY 

2011, providers have expressed 

frustration regarding the timing of 

reassessments for multi-discipline 

therapy episodes. In multiple therapy 

episodes, therapists must communicate 

when a planned visit and/or 

reassessment is missed to accurately 

track and count visits. Otherwise, 

therapy reassessments may be in 

jeopardy of not being performed during 

the required timeframe increasing the 

risk of subsequent visits being noncovered. As stated above, our recent 

analysis of claims data from CY 2010 

through CY 2013 shows no significant 

change in the percentage of cases 

reaching the 14 therapy visit and 20 

therapy visit thresholds between CY 

2010 and CY 2011. Moreover, payment 

increases at the 14 therapy visit and 20 

therapy visit thresholds have been 

mitigated since the recalibration of the 

case-mix weights in CY 2012. Therefore, 

we propose to simplify § 409.44(c)(2) to 

require a qualified therapist (instead of 

an assistant) from each discipline to 

provide the needed therapy service and 

functionally reassess the patient in 

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accordance with § 409.44(c)(2)(i)(A) at 

least every 14 calendar days. 

The requirement to perform a therapy 

reassessment at least once every 14 

calendar days would apply to all 

episodes regardless of the number of 

therapy visits provided. All other 

requirements related to therapy 

reassessments would remain 

unchanged, such as a qualified therapist 

(instead of an assistant), from each 

therapy discipline provided, would still 

be required to provide the ordered 

therapy service and functionally 

reassess the patient using a method 

which would include objective 

measurements. The measurement 

results and corresponding effectiveness 

of the therapy, or lack thereof, would be 

documented in the clinical record. We 

believe that revising this requirement 

would make it easier and less 

burdensome for HHAs to track and to 

schedule therapy reassessments every 

14 calendar days as opposed to tracking 

and counting therapy visits, especially 

for multiple-discipline therapy 

episodes. We also believe that this 

proposal would reduce the risk of noncovered visits so that therapists could 

focus more on providing quality care for 

their patients, while still promoting 

therapist involvement and quality 

treatment for all beneficiaries, regardless 

of the level of therapy provided. 

We invite comment on this proposal 

and the associated change in the 

regulation at § 409.44 in section VI. of 

this proposed rule. 

I. HHA Value-Based Purchasing Model 

As we discussed previously in the FY 

2009 proposed rule for Skilled Nursing 

Facilities (73 FR 25918, 25932, May 7, 

2008), value-based purchasing (VBP) 

programs, in general, are intended to tie 

a provider’s payment to its performance 

in such a way as to reduce inappropriate 

or poorly furnished care and identify 

and reward those who furnish quality 

patient care. Section 3006(b)(1) of the 

Affordable Care Act directed the 

Secretary to develop a plan to 

implement a VBP program for home 

health agencies (HHAs) and to issue an 

associated Report to Congress (Report). 

The Secretary issued that Report, which 

is available online at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HomeHealthPPS/

downloads/stage-2-NPRM.PDF. 

The Report included a roadmap for 

HHA VBP implementation. The Report 

outlined the need to develop a HHA 

VBP program that aligns with other 

Medicare programs and coordinates 

incentives to improve quality. The 

Report indicated that a HHA VBP 

program should build on and refine 

existing quality measurement tools and 

processes. In addition, the Report 

indicated that one of the ways that such 

a program could link payment to quality 

would be to tie payments to overall 

quality performance. 

Section 402 of Public Law 92–603 

provided authority for the CMS to 

conduct the Home Health Pay-forPerformance (HHPFP) Demonstration 

that ran from 2008 to 2010. The results 

of that Demonstration found limited 

quality improvement in certain 

measures after comparing the quality of 

care furnished by Demonstration 

participants to the quality of care 

furnished by the control group. One 

important lesson learned from the 

HHPFP Demonstration was the need to 

link the home health agency’s quality 

improvement efforts and the incentives. 

HHAs in three of the four regions 

generated enough savings to have 

incentive payments in the first year of 

the Demonstration, but the size of 

payments were unknown until after the 

conclusion of the Demonstration. This 

time lag on paying incentive payments 

did not provide a sufficient incentive to 

HHAs to make investments necessary to 

improve quality. The Demonstration 

suggested that future models could 

benefit from ensuring that incentives are 

reliable enough, of sufficient magnitude, 

and paid in a timely fashion to 

encourage HHAs to be fully engaged in 

the quality of care initiative. The 

evaluation report is available online at 

https://www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/Reports/

Downloads/HHP4P_Demo_Eval_Final_

Vol1.pdf. 

We have already successfully 

implemented the Hospital Value-Based 

Purchasing (HVBP) program where 1.25 

percent of hospital payments in FY 2014 

are tied to the quality of care that the 

hospitals provide. This percentage 

amount will gradually increase to 2.0 

percent in FY 2017 and subsequent 

years. The President’s 2015 Budget 

proposes that value-based purchasing 

should be extended to additional 

providers including skilled nursing 

facilities, home health agencies, 

ambulatory surgical centers, and 

hospital outpatient departments. 

Therefore, we are now considering 

testing a HHA VBP model that builds on 

what we have learned from the HVBP 

program. The model also presents an 

opportunity to test whether larger 

incentives than what have been 

previously tested will lead to even 

greater improvement in the quality of 

care furnished to beneficiaries. The 

HHA VBP model that is being 

considered would offer both a greater 

potential reward for high performing 

HHAs as well as a greater potential 

downside risk for low performing 

HHAs. If implemented, the model 

would begin at the outset of CY 2016, 

and include an array of measures that 

can capture the multiple dimensions of 

care that HHAs furnish. Building upon 

the successes of other related programs, 

we are seeking to implement a model 

with greater upside benefit and 

downside risk to motivate HHAs to 

make the substantive investments 

necessary to improve the quality of care 

furnished by HHAs. 

As currently envisioned, the HHA 

VBP model would reduce or increase 

Medicare payments, in a 5–8 percent 

range, depending on the degree of 

quality performance in various 

measures to be selected. The model 

would apply to all HHAs in each of the 

projected five to eight states selected to 

participate in the model. The 

distribution of payments would be 

based on quality performance, as 

measured by both achievement and 

improvement across multiple quality 

measures. Some HHAs would receive 

higher payments than standard fee-forservice payments and some HHAs 

would receive lower payments, similar 

to the HVBP program. We believe the 

payment adjustment at risk would 

provide an incentive among all HHAs to 

provide significantly better quality 

through improved planning, 

coordination, and management of care. 

To be eligible for any incentive 

payments, HHAs would need to achieve 

a minimal threshold in quality 

performance with respect to the care 

that they furnish. The size of the award 

would be dependent on the level of 

quality furnished above the minimal 

threshold with the highest performance 

awards going to HHAs with the highest 

overall level of or improvement in 

quality. 

HHAs that meet or exceed the 

performance standards based on quality 

and efficiency metrics would be eligible 

to earn performance payments. The size 

of the performance payment would be 

dependent upon the provider’s 

performance relative to other HHAs 

within its participating state. HHAs that 

exceed the performance standards and 

demonstrate the greatest level of overall 

quality or quality improvement on the 

selected measures would have the 

opportunity to receive performance 

payment adjustments greater than the 

amount of the payment reduction, and 

would therefore see a net payment 

increase as a result of this model. Those 

HHAs that fail to meet the performance 

standard would receive lower payments 

than what would have been reimbursed 

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under the traditional FFS Medicare 

payment system, and would therefore 

see a net payment decrease to Medicare 

payments as a result of this model. We 

are proposing to use the waiver 

authority under section 1115A of the 

Act to waive the applicable Medicare 

payment provisions for HHAs in the 

selected states and apply a reduction or 

increase to current Medicare payments 

to these HHAs, which would be 

dependent on their performance. 

We are considering an HHA VBP 

model in which participation by all 

HHAs in five to eight selected states is 

mandatory. We believe requiring all 

HHAs in selected states to participate in 

the model will ensure that: (1) There is 

no selection bias, (2) participating HHAs 

are representative of HHAs nationally, 

and (3) there is sufficient participation 

to generate meaningful results. In our 

experience, providers are generally 

reluctant to participate voluntarily in 

models in which their Medicare 

payments are subject to reduction. In 

this proposed rule, we invite comments 

on the HHA VBP model outlined above, 

including elements of the model, size of 

the payment incentives and percentage 

of payments that would need to be 

placed at risk in order to spur HHAs to 

make the necessary investments to 

improve the quality of care for Medicare 

beneficiaries, the timing of the incentive 

payments, and how performance 

payments should be distributed. We 

also invite comments on the best 

approach for selecting states for 

participation in this model. Approaches 

could include: (1) Selecting states 

randomly, (2) selecting states based on 

quality, utilization, health IT, or 

efficiency metrics or a combination, or 

(3) other considerations. 

We note that if we decide to move 

forward with the implementation of this 

HHA VBP model in CY 2016, we intend 

to invite additional comments on a more 

detailed model proposal to be included 

in future rulemaking. 

J. Advancing Health Information 

Exchange 

HHS believes all patients, their 

families, and their healthcare providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, ‘‘Principles and Strategies for 

Accelerating Health Information 

Exchange.’’) The Department is 

committed to accelerating health 

information exchange (HIE) through the 

use of electronic health records (EHRs) 

and other types of health information 

technology (HIT) across the broader care 

continuum through a number of 

initiatives including: (1) Alignment of 

incentives and payment adjustments to 

encourage provider adoption and 

optimization of HIT and HIE services 

through Medicare and Medicaid 

payment policies, (2) adoption of 

common standards and certification 

requirements for interoperable HIT, (3) 

support for privacy and security of 

patient information across all HIEfocused initiatives, and (4) governance 

of health information networks. These 

initiatives are designed to encourage 

HIE among all health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

programs, and are designed to improve 

care delivery and coordination across 

the entire care continuum. To increase 

flexibility in the Office of the National 

Coordinator for Health Information 

Technology’s (ONC) regulatory 

certification structure and expand HIT 

certification, ONC has proposed a 

voluntary 2015 Edition EHR 

Certification rule to more easily 

accommodate HIT certification for 

technology used by other types of health 

care settings where individual or 

institutional health care providers are 

not typically eligible for incentive 

payments under the EHR Incentive 

Programs, such as long-term and postacute care and behavioral health settings 

(79 FR 10880). 

We believe that HIE and the use of 

certified EHRs by HHAs (and other 

providers ineligible for the Medicare 

and Medicaid EHR Incentive programs) 

can effectively and efficiently help 

providers improve internal care delivery 

practices, support management of 

patient care across the continuum, and 

enable the reporting of electronically 

specified clinical quality measures 

(eCQMs). More information on the 

identification of EHR certification 

criteria and development of standards 

applicable to HH can be found at: 

• http://healthit.gov/policyresearchers-implementers/standardsand-certification-regulations 

• http://www.healthit.gov/facas/

FACAS/health-it-policy-committee/

hitpc-workgroups/certificationadoption 

• http://wiki.siframework.org/

LCC+LTPAC+Care+Transition+SWG 

• http://wiki.siframework.org/

Longitudinal+Coordination+of+Care 

K. Proposed Revisions to the SpeechLanguage Pathologist Personnel 

Qualifications 

We propose to revise the personnel 

qualifications for speech-language 

pathologists (SLP) to more closely align 

the regulatory requirements with those 

set forth in section 1861(ll) of the Act. 

We propose to require that a qualified 

SLP be an individual who has a master’s 

or doctoral degree in speech-language 

pathology, and who is licensed as a 

speech-language pathologist by the State 

in which he or she furnishes such 

services. To the extent of our 

knowledge, all states license SLPs; 

therefore, all SLPs would be covered by 

this option. We believe that deferring to 

the states to establish specific SLP 

requirements would allow all 

appropriate SLPs to provide services to 

Medicare beneficiaries. Should a state 

choose to not offer licensure at some 

point in the future, we propose a 

second, more specific, option for 

qualification. In that circumstance, we 

would require that an SLP successfully 

complete 350 clock hours of supervised 

clinical practicum (or is in the process 

of accumulating such supervised 

clinical experience); perform not less 

than 9 months of supervised full-time 

speech-language pathology services after 

obtaining a master’s or doctoral degree 

in speech-language pathology or a 

related field; and successfully complete 

a national examination in speechlanguage pathology approved by the 

Secretary. These specific requirements 

are set forth in the Act, and we believe 

that they are appropriate for inclusion 

in the regulations as well. 

We invite comments on this technical 

correction and associated change in the 

regulations at § 484.4 in section VI. 

L. Proposed Technical Regulations Text 

Changes 

We propose to make technical 

corrections in § 424.22(b)(1) to better 

align the recertification requirements 

with the Medicare Conditions of 

Participation (CoPs) for home health 

services. Specifically, we propose that 

§ 424.22(b)(1) would specify that 

recertification is required at least every 

60 days when there is a need for 

continuous home health care after an 

initial 60-day episode to coincide with 

the CoP requirements in § 484.55(d)(1), 

which require the HHA to update the 

comprehensive assessment in the last 5 

days of every 60-day episode of care. As 

stated in § 484.55, the comprehensive 

assessment must identify the patient’s 

continuing need for home care and meet 

the patient’s medical, nursing, 

rehabilitative, social, and discharge 

planning needs. We also propose to 

specify in § 424.22(b)(1) that 

recertification is required at least every 

60 days unless there is a beneficiary 

elected transfer or a discharge with 

goals met and return to the same HHA 

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32http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/OASIS/

downloads/OASISConsiderationsforPPS.pdf. 

during the 60-day episode. The word 

‘‘unless’’ was inadvertently left out of 

the payment regulations text. Inserting 

‘‘unless’’ into § 424.22(b) (1) realigns the 

recertification requirements with the 

CoPs at § 484.55(d)(1). 

As outlined in the ‘‘Medicare 

Program; Prospective Payment System 

for Home Health Agencies’’ final rule 

published on July 3, 2000 (65 FR 41188 

through 41190), a partial episode 

payment (PEP) adjustment applies to 

two intervening events: (1) Where the 

beneficiary elects a transfer to another 

HHA during a 60-day episode or the 

patient; or (2) a discharge and return to 

the same HHA during the 60-day 

episode when a beneficiary reached the 

treatment goals in the plan of care. To 

discharge with goals met, the plan of 

care must be terminated with no 

anticipated need for additional home 

health services for the balance of the 60- 

day period. A PEP adjustment 

proportionally adjusts the national, 

standardized 60-day episode payment 

amount to reflect the length of time the 

beneficiary remained under the agency’s 

care before the intervening event. 

We propose to revise § 424.22(b)(1)(ii) 

to clarify that if a beneficiary is 

discharged with goals met and/or no 

expectation of a return to home health 

care and returns to the same HHA 

during the 60-day episode a new start of 

care would be initiated (rather than an 

update to the comprehensive 

assessment) and thus the second 

episode would be considered a 

certification, not a recertification,32 and 

would be subject to § 424.22(a)(1). 

We also propose to make a technical 

correction in § 484.250(a)(1) to remove 

the ‘‘-C’’ after ‘‘OASIS’’ in 

§ 484.250(a)(1), so that the regulation 

refers generically to the version of 

OASIS currently approved by the 

Secretary, and to align this section with 

the payment regulations at § 484.210(e). 

Specifically, an HHA must submit to 

CMS the OASIS data described at 

§ 484.55(b)(1) and (d)(1) for CMS to 

administer the payment rate 

methodologies described in § 484.215, 

§ 484.230, and § 484.235 and to meet the 

quality reporting requirements of 

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

We invite comments on these 

technical corrections and associated 

changes in the regulations at § 424.22 

and § 484.250 in section VI. 

M. Survey and Enforcement 

Requirements for Home Health Agencies 

1. Statutory Background and Authority 

Section 4023 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87) 

(Pub. L 100–203, enacted on December 

22, 1987) added subsections 1891(e) and 

(f) to the Act, which expanded the 

Secretary’s options to enforce federal 

requirements for home health agencies 

(HHAs or the agency). Sections 

1861(e)(1) and (2) of the Act provide 

that if CMS determines that an HHA is 

not in compliance with the Medicare 

home health Conditions of Participation 

and the deficiencies involved either do 

or do not immediately jeopardize the 

health and safety of the individuals to 

whom the agency furnishes items and 

services, then we may terminate the 

provider agreement, impose an 

alternative sanction(s), or both. Section 

1891(f)(1)(B) of the Act authorizes the 

Secretary to develop and implement 

appropriate procedures for appealing 

determinations relating to the 

imposition of alternative sanctions. 

In the November 8, 2012 Federal 

Register (77 FR 67068), we published in 

the ‘‘Alternative Sanctions for Home 

Health Agencies With Deficiencies’’ 

final rule (part 488, subpart J), as well 

as made corresponding revisions to 

sections § 489.53 and § 498.3. This 

subpart J added the rules for 

enforcement actions for HHAs including 

alternative sanctions. Section 488.810(g) 

provides that 42 CFR part 498 applies 

when an HHA requests a hearing on a 

determination of noncompliance that 

leads to the imposition of a sanction, 

including termination. Section 

488.845(b) describes the ranges of CMPs 

that may be imposed for all conditionlevel findings: upper range ($8,500 to 

$10,000); middle range ($1,500 to 

$8,500); lower range ($500 to $4,000), as 

well as CMPs imposed per instance of 

noncompliance ($1,000 to $10,000). 

Section 488.845(c)(2) addresses the 

appeals procedures when CMPs are 

imposed, including the need for any 

appeal request to meet the requirements 

of § 498.40 and the option for waiver of 

a hearing. 

2. Reviewability Pursuant to Appeals 

We propose to amend § 488.845 by 

adding a new paragraph (h) which 

would explain the reviewability of a 

CMP that is imposed on a HHA for 

noncompliance with federal 

participation requirements. The new 

language will provide that when 

administrative law judges, state hearing 

officers (or higher administrative review 

authorities) find that the basis for 

imposing a civil money penalty exists, 

as specified in § 488.485, he or she may 

not set a penalty of zero or reduce a 

penalty to zero; review the exercise of 

discretion by CMS or the state to impose 

a civil money penalty; or, in reviewing 

the amount of the penalty, consider any 

factors other than those specified in 

§ 488.485(b)(1)(i) through (b)(1)(iv). That 

is, when the administrative law judge or 

state hearing officer (or higher 

administrative authority) finds 

noncompliance supporting the 

imposition of the CMP, he or she must 

retain some amount of penalty 

consistent with the ranges of penalty 

amounts established in § 488.845(b). 

The proposed language for HHA reviews 

is similar to the current § 488.438(e) 

governing the scope of review for civil 

money penalties imposed against skilled 

nursing facilities, and is also consistent 

with section 1128A(d) of the Act which 

requires that specific factors be 

considered in determining the amount 

of any penalty. 

3. Technical Adjustment 

We are also proposing to amend 

§ 498.3, Scope and Applicability, by 

revising paragraph (b)(13) to include 

specific cross reference to proposed 

§ 488.845(h) and to revise the reference 

to section § 488.740 which was a 

typographical error and replace it with 

section § 488.820 which is the actual 

section that lists the sanctions available 

to be imposed against an HHA. We are 

also amending § 498.3(b)(14)(i) to 

include cross reference to proposed 

§ 488.845(h) which establishes the scope 

of CMP review for HHAs. Finally, we 

are proposing to amend § 498.60 to 

include specific references to HHAs and 

proposed § 488.845(h). 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

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affected public, including automated 

collection techniques. 

We are soliciting public comment the 

information collection requirement 

(ICR) related to the proposed changes to 

the home health face-to-face encounter 

requirements in section III.B and the 

proposed change to the therapy 

reassessment timeframes in section 

III.H. These proposed changes are 

associated with ICR approved under 

OMB control number as 0938–1083. 

A. Proposed Changes to the Face-toFace Encounter Requirements 

The following assumptions were used 

in estimating the burden for the 

proposed changes to the home health 

face-to-face requirements: 

TABLE 30—HOME HEALTH FACE-TO-FACE ENCOUNTER BURDEN ESTIMATE ASSUMPTIONS

Number of Medicare-billing HHAs, from CY 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 × 1.30) 

Hourly rate of an administrator (General and Operations Managers, 11–1021) ...................................................... $64.65 ($49.73 × 1.30) 

Hourly rate of Family and General Practitioners (29–1062) ..................................................................................... $112.91 ($86.85 × 1.30) 

Note: CY = Calendar Year 

All salary information is from the 

Bureau of Labor Statistics (BLS) Web 

site at http://www.bls.gov/oes/current/

naics4_621600.htm and includes a 

fringe benefits package worth 30 percent 

of the base salary. The mean hourly 

wage rates are based on May 2013 BLS 

data for each discipline, for those 

providing ‘‘home health care services.’’ 

1. Proposed Changes to the Face-to-Face 

Encounter Narrative Requirement 

Sections 1814(a)(2)(C) and 1835 

(a)(2)(A) of the Act, as amended by 

section 6407 of the Affordable Care Act 

require that, as a condition for payment, 

prior to certifying a patient’s eligibility 

for the Medicare home health benefit 

the physician must document that the 

physician himself or herself or an 

allowed nonphysician practitioner 

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

the patient. Section 424.22(a)(1)(v) 

currently requires that the face-to-face 

encounter be related to the primary 

reason the patient requires home health 

services and occur no more than 90 days 

prior to the home health start of care 

date or within 30 days after the start of 

the home health care. In addition, as 

part of the certification of eligibility, the 

certifying physician must document the 

date of the encounter and include an 

explanation (narrative) of why the 

clinical findings of such encounter 

support that the patient is homebound, 

as defined in section 1835(a) of the Act, 

and in need of either intermittent 

skilled nursing services or therapy 

services, as defined in § 409.42(c). 

To simplify the face-to-face encounter 

regulations, reduce burden for HHAs 

and physicians, and to mitigate 

instances where physicians and HHAs 

unintentionally fail to comply with 

certification requirements, we propose 

to eliminate the narrative requirement at 

§ 424.22(a)(1)(v). The certifying 

physician will still be required to certify 

that a face-to-face patient encounter, 

which is related to the primary reason 

the patient requires home health 

services, occurred no more than 90 days 

prior to the home health start of care 

date or within 30 days of the start of the 

home health care and was performed by 

a physician or allowed non-physician 

practitioner as defined in 

§ 424.22(a)(1)(v)(A), and to document 

the date of the encounter as part of the 

certification of eligibility. 

In eliminating the face-to-face 

encounter narrative requirement, we 

assume that there will be a one-time 

burden for the HHA to modify the 

certification form, which the HHA 

provides to the certifying physician. The 

revised certification form must allow 

the certifying physician to certify that a 

face-to-face patient encounter, which is 

related to the primary reason the patient 

requires home health services, occurred 

no more than 90 days prior to the home 

health start of care date or within 30 

days of the start of the home health care 

and was performed by a physician or 

allowed NPP as defined in 

§ 424.22(a)(1)(v)(A). In addition, the 

certification form must allow the 

certifying physician to document the 

date that the face-to-face encounter 

occurred. 

We estimate that it would take a home 

health clerical staff person 15 minutes 

(15/60 = 0.25 hours) to modify the 

certification form, and the HHA 

administrator 15 minutes (15/60 = 0.25 

hours) to review the revised form. The 

clerical time plus administrator time 

equals a one-time burden of 30 minutes 

or (30/60) = 0.50 hours per HHA. For all 

11,521 HHAs, the total time required 

would be (0.50 × 11,521) = 5,761 hours. 

At $20.54 per hour for an office 

employee, the cost per HHA would be 

(0.25 × $20.54) = $5.14. At $64.65 per 

hour for the administrator’s time, the 

cost per HHA would be (0.25 × $64.65) 

= $16.16. Therefore, the total one-time 

cost per HHA would be $21.30, and the 

total one-time cost for all HHAs would 

be ($21.30 × 11,521) = $245,397. 

In the CY 2011 HH PPS final rule (75 

FR 70455), we estimated that the 

certifying physician’s burden for 

composing the face-to-face encounter 

narrative, which includes how the 

clinical findings of the encounter 

support eligibility (writing, typing, or 

dictating the face-to-face encounter 

narrative) signing, and dating the 

patient’s face-to-face encounter, was 5 

minutes for each certification (5/60 = 

0.0833 hours). Because it has been our 

longstanding manual policy that 

physicians sign and date certifications 

and recertifications, there is no 

additional burden to physicians for 

signing and dating the face-to-face 

encounter documentation. We estimate 

that there would be 3,096,680 initial 

home health episodes in a year based on 

2012 claims data from the home health 

Datalink file. As such, the estimated 

burden for the certifying physician to 

write the face-to-face encounter 

narrative would have been 0.0833 hours 

per certification (5/60 = 0.0833 hours) or 

257,953 hours total (0.0833 hours × 

3,096,680 initial home health episodes). 

The estimated cost for the certifying 

physician to write the face-to-face 

encounter narrative would have been 

$9.41 per certification (0.0833 × 

$112.91) or $29,139,759 total ($9.41 × 

3,096,680) for CY 2015. 

Although we are proposing to 

eliminate the narrative, the certifying 

physician will still be required to 

document the date of the face-to-face 

encounter as part of the certification of 

eligibility. We estimate that it would 

take no more than 1 minute for the 

certifying physician to document the 

date that the face-to-face encounter 

occurred (1/60 = 0.0166 hours). The 

estimated burden for the certifying 

physician to continue to document the 

date of the face-to-face encounter would 

be 0.0166 hours per certification or 

51,405 hours total (0.0166 hours × 

3,096,680 initial home health episodes). 

The estimated cost for the certifying 

physician to continue to document the 

date of the face-to-face encounter would 

be $1.87 per certification (0.0166 × 

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$112.91) or $5,790,792 total ($1.87 × 

3,096,680) for CY 2015. Therefore, in 

eliminating the face-to-face encounter 

narrative requirement, as proposed in 

section III.B. of this proposed rule, we 

estimate that burden and costs will be 

reduced for certifying physicians by 

206,548 hours (257,953 ¥ 51,405) and 

$23,348,967 ($29,139,759 ¥ 

$5,790,792), respectively for CY 2015. 

2. Proposed Clarification on When 

Documentation of a Face-to-Face 

Encounter is Required 

To determine when documentation of 

a patient’s face-to-face encounter is 

required under sections 1814(a)(2)(C) 

and 1835 (a)(2)(A) of the Act, we are 

proposing to clarify that the face-to-face 

encounter requirement is applicable for 

certifications (not recertifications), 

rather than initial episodes. A 

certification (versus recertification) is 

generally considered to be any time that 

a new start of care OASIS is completed 

to initiate care. We estimate that of the 

6,562,856 episodes in the CY 2012 home 

health Datalink file, 3,096,680 start of 

care assessments were performed on 

initial home health episodes. If this 

proposal is implemented, an additional 

830,287 episodes would require 

documentation of a face-to-face 

encounter for subsequent episodes that 

were initiated with a new start of care 

OASIS assessment. We estimate that it 

would take no more than 1 minute for 

the certifying physician to document the 

date that the face-to-face encounter 

occurred (1/60 = 0.0166 hours). The 

estimated burden for the certifying 

physician to document the date of the 

face-to-face encounter for each 

certification (any time a new start of 

care OASIS is completed to initiate care) 

would be 0.0166 hours or 13,783 total 

hours (0.0166 hours × 830,287 

additional home health episodes). The 

estimated cost for the certifying 

physician to document the date of the 

face-to-face encounter for each 

additional home health episode would 

be $1.87 per certification (0.0166 × 

$112.91) or $1,552,637 total ($1.87 × 

830,287) for CY 2015. 

TABLE 31—ESTIMATED ONE-TIME FORM REVISION BURDEN FOR HHAS

OMB No. Requirement HHAs Responses Hr. 

burden 

Total 

time Total dollars 

0938–1083 ................. § 424.22(a)(1)(v) 11,521 1 0.5 hour ...................... 5,761 hours ................ $245,397 

TABLE 32—ESTIMATED BURDEN REDUCTION FOR CERTIFYING PHYSICIANS

[No Longer Drafting a Face-to-Face Encounter Narrative] 

OMB No. Requirement Certifications Responses Hr. 

burden 

Total 

time Total dollars 

0938–1083 ................. § 424.22(a)(1)(v) 3,096,680 1 (0.0667) hour .............. (206,548) hours .......... ($23,348,967) 

TABLE 33—ESTIMATED BURDEN FOR CERTIFYING PHYSICIANS

[Documenting the Date of the Face-to-Face Encounter for Additional Certifications] 

OMB No. Requirement Certifications Responses Hr. 

burden 

Total 

time Total dollars 

0938–1083 ................. § 424.22(a)(1)(v) 830,287 1 0.0166 hour ................ 13,783 hours .............. $1,552,637 

In summary, all of the proposed 

changes to the face-to-face encounter 

requirements in section III.B of this 

proposed rule, including changes to 

§ 424.22(a)(1)(v), will result in an 

estimated net reduction in burden for 

certifying physicians of 192,765 hours 

or $21,796,330 (see Tables 32 and 33). 

The proposed changes to the face-to-face 

encounter requirements at 

§ 424.22(a)(1)(v) will result in a onetime burden for HHAs to revise the 

certification form of 5,761 hours or 

$245,397 (Table 31). 

B. Proposed Change to the Therapy 

Reassessment Timeframes 

Currently, section 409.44(c) requires 

that patient’s function must be initially 

assessed and periodically reassessed by 

a qualified therapist, of the 

corresponding discipline for the type of 

therapy being provided, using a method 

which would include objective 

measurement. If more than one 

discipline of therapy is being provided, 

a qualified therapist from each of the 

disciplines must perform the assessment 

and periodic reassessments. The 

measurement results and corresponding 

effectiveness of the therapy, or lack 

thereof, must be documented in the 

clinical record. At least every 30 days a 

qualified therapist (instead of an 

assistant) must provide the needed 

therapy service and functionally 

reassess the patient. If a patient is 

expected to require 13 and/or 19 

therapy visits, a qualified therapist 

(instead of an assistant) must provide all 

of the therapy services on the 13th visit 

and/or 19th therapy visit and 

functionally reassess the patient in 

accordance with § 409.44(c)(2)(i)(A). 

When the patient resides in a rural area 

or if the patient is receiving multiple 

types of therapy, a therapist from each 

discipline (not an assistant) must assess 

the patient after the 10th therapy visit 

but no later than the 13th therapy visit 

and after the 16th therapy visit but no 

later than the 19th therapy visit for the 

plan of care. In instances where the 

frequency of a particular discipline, as 

ordered by a physician, does not make 

it feasible for the reassessment to occur 

during the specified timeframes without 

providing an extra unnecessary visit or 

delaying a visit, then it is acceptable for 

the qualified therapist from that 

discipline to provide all of the therapy 

and functionally reassess the patient 

during the visit associated with that 

discipline that is scheduled to occur 

closest to the 14th and/or 20th 

Medicare-covered therapy visit, but no 

later than the 13th and/or 19th 

Medicare-covered therapy visit. When a 

therapy reassessment is missed, any 

visits for that discipline prior to the next 

reassessment are non-covered. 

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To lessen the burden on HHAs of 

counting visits and to reduce the risk of 

noncovered visits so that therapists can 

focus more on providing quality care for 

their patients, we propose to simplify 

§ 409.44(c) to require that therapy 

reassessments must be performed at 

least once every 14 calendar days. The 

requirement to perform a therapy 

reassessment at least once every 14 

calendar days would apply to all 

episodes regardless of the number of 

therapy visits provided. All other 

requirements related to therapy 

reassessments would remain 

unchanged. A qualified therapist 

(instead of an assistant), from each 

therapy discipline provided, must 

provide the ordered therapy service and 

functionally reassess the patient using a 

method which would include objective 

measurement. The measurement results 

and corresponding effectiveness of the 

therapy, or lack thereof, must be 

documented in the clinical record. 

In the CY 2011 HH PPS final rule we 

stated that the therapy reassessment 

requirements in § 409.44(c) are already 

part of the home health CoPs, as well as 

from accepted standards of clinical 

practice, and therefore, we believe that 

these requirements do not create any 

additional burden on HHAs (75 FR 

70454). As stated in the CY 2011 HH 

PPS final rule, longstanding CoP policy 

at § 484.55 requires HHAs to document 

progress toward goals and the 

regulations at § 409.44(c)(2)(i) already 

mandate that for therapy services to be 

covered in the home health setting, the 

services must be considered under 

accepted practice to be a specific, safe, 

and effective treatment for the 

beneficiary’s condition. The functional 

assessment does not require a special 

visit to the patient, but is conducted as 

part of a regularly scheduled therapy 

visit. Functional assessments are 

necessary to demonstrate progress (or 

the lack thereof) toward therapy goals, 

and are already part of accepted 

standards of clinical practice, which 

include assessing a patient’s function on 

an ongoing basis as part of each visit. 

The CY 2011 HH PPS final rule goes on 

to state that both the functional 

assessment and its accompanying 

documentation are already part of 

existing HHA practices and accepted 

standards of clinical practice. Therefore, 

we continue to believe that changing the 

required reassessment timeframes from 

every 30 days and prior to the 14th and 

20th visits to every 14 calendar days 

does not place any new documentation 

requirements on HHAs. 

We are revising the currently 

approved PRA package (OMB# 0938– 

1083) to describe these changes to the 

regulatory text. 

C. Submission of PRA-Related 

Comments 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments electronically as specified in 

the ADDRESSES section of this proposed 

rule. 

PRA-specific comments must be 

received on/by August 6, 2014. 

V. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VI. Regulatory Impact Analysis 

A. Introduction 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Act, section 

202 of the Unfunded Mandates Reform 

Act of 1995 (UMRA, March 22, 1995; 

Pub. L. 104–4), Executive Order 13132 

on Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This 

proposed rule has been designated as 

economically significant under section 

3(f)(1) of Executive Order 12866, since 

the aggregate transfer impacts in 

calendar year 2015 will exceed the $100 

million threshold. The net transfer 

impacts are estimated to be ¥$58 

million. Furthermore, we estimate a net 

reduction of $21.55 million in calendar 

year 2015 burden costs related to the 

certification requirements for home 

health agencies and associated 

physicians. Lastly, this proposed rule is 

a major rule under the Congressional 

Review Act and as a result, we have 

prepared a regulatory impact analysis 

(RIA) that, to the best of our ability, 

presents the costs and benefits of the 

rulemaking. In accordance with the 

provisions of Executive Order 12866, 

this regulation was reviewed by the 

Office of Management and Budget. 

B. Statement of Need 

Section 1895(b)(1) of the Act requires 

the Secretary to establish a HH PPS for 

all costs of HH services paid under 

Medicare. In addition, section 

1895(b)(3)(A) of the Act requires (1) the 

computation of a standard prospective 

payment amount include all costs for 

HH services covered and paid for on a 

reasonable cost basis and that such 

amounts be initially based on the most 

recent audited cost report data available 

to the Secretary, and (2) the 

standardized prospective payment 

amount be adjusted to account for the 

effects of case-mix and wage levels 

among HHAs. Section 1895(b)(3)(B) of 

the Act addresses the annual update to 

the standard prospective payment 

amounts by the HH applicable 

percentage increase. Section 1895(b)(4) 

of the Act governs the payment 

computation. Sections 1895(b)(4)(A)(i) 

and (b)(4)(A)(ii) of the Act require the 

standard prospective payment amount 

to be adjusted for case-mix and 

geographic differences in wage levels. 

Section 1895(b)(4)(B) of the Act requires 

the establishment of appropriate casemix adjustment factors for significant 

variation in costs among different units 

of services. Lastly, section 1895(b)(4)(C) 

of the Act requires the establishment of 

wage adjustment factors that reflect the 

relative level of wages, and wage-related 

costs applicable to HH services 

furnished in a geographic area 

compared to the applicable national 

average level. 

Section 1895(b)(5) of the Act gives the 

Secretary the option to make changes to 

the payment amount otherwise paid in 

the case of outliers because of unusual 

variations in the type or amount of 

medically necessary care. Section 

1895(b)(3)(B)(v) of the Act requires 

HHAs to submit data for purposes of 

measuring health care quality, and links 

the quality data submission to the 

annual applicable percentage increase. 

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

requires that HH services furnished in a 

rural area for episodes and visits ending 

on or after April 1, 2010, and before 

January 1, 2016, receive an increase of 

3 percent the payment amount 

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38414 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

otherwise made under section 1895 of 

the Act. 

Section 3131(a) of the Affordable Care 

Act mandates that starting in CY 2014, 

the Secretary must apply an adjustment 

to the national, standardized 60-day 

episode payment rate and other 

amounts applicable under section 

1895(b)(3)(A)(i)(III) of the Act to reflect 

factors such as changes in the number 

of visits in an episode, the mix of 

services in an episode, the level of 

intensity of services in an episode, the 

average cost of providing care per 

episode, and other relevant factors. In 

addition, section 3131(a) of the 

Affordable Care Act mandates that 

rebasing must be phased-in over a 

4-year period in equal increments, not 

to exceed 3.5 percent of the amount (or 

amounts) as of the date of enactment 

(2010) under section 1895(b)(3)(A)(i)(III) 

of the Act, and be fully implemented in 

CY 2017. 

C. Overall Impact 

The update set forth in this rule 

applies to Medicare payments under HH 

PPS in CY 2015. Accordingly, the 

following analysis describes the impact 

in CY 2015 only. We estimate that the 

net impact of the proposals in this rule 

is approximately $58 million in 

decreased payments to HHAs in CY 

2015. We applied a wage index budget 

neutrality factor and a case-mix weights 

budget neutrality factor to the rates as 

discussed in section III.D.4. of this 

proposed rule; therefore, the estimated 

impact of the 2015 wage index proposed 

in section III.D.3. of this proposed rule 

and the recalibration of the case-mix 

weights for 2015 proposed in section 

III.C. of this proposed rule is zero. The 

¥$58 million impact reflects the 

distributional effects of the 2.2 percent 

HH payment update percentage ($427 

million increase) and the effects of the 

second year of the four-year phase-in of 

the rebasing adjustments to the national, 

standardized 60-day episode payment 

amount, the national per-visit payment 

rates, and the NRS conversion factor for 

an impact of ¥2.5 percent ($485 million 

decrease). The $58 million in decreased 

payments is reflected in the last column 

of the first row in Table 34 as a 0.3 

percent decrease in expenditures when 

comparing CY 2014 payments to 

estimated CY 2015 payments. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of less than $7.0 million to $35.5 

million in any one year. For the 

purposes of the RFA, we estimate that 

almost all HHAs are small entities as 

that term is used in the RFA. 

Individuals and states are not included 

in the definition of a small entity. The 

economic impact assessment is based on 

estimated Medicare payments 

(revenues) and HHS’s practice in 

interpreting the RFA is to consider 

effects economically ‘‘significant’’ only 

if greater than 5 percent of providers 

reach a threshold of 3 to 5 percent or 

more of total revenue or total costs. The 

majority of HHAs’ visits are Medicarepaid visits and therefore the majority of 

HHAs’ revenue consists of Medicare 

payments. Based on our analysis, we 

conclude that the policies proposed in 

this rule will not result in an estimated 

total impact of 3 to 5 percent or more 

on Medicare revenue for greater than 5 

percent of HHAs. Therefore, the 

Secretary has determined that this 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. Further detail 

is presented in Table 34, by HHA type 

and location. 

Executive Order 13563 specifies, to 

the extent practicable, agencies should 

assess the costs of cumulative 

regulations. However, given potential 

utilization pattern changes, wage index 

changes, changes to the market basket 

forecasts, and unknowns regarding 

future policy changes, we believe it is 

neither practicable nor appropriate to 

forecast the cumulative impact of the 

rebasing adjustments on Medicare 

payments to HHAs for future years at 

this time. Changes to the Medicare 

program may continue to be made as a 

result of the Affordable Care Act, or new 

statutory provisions. Although these 

changes may not be specific to the HH 

PPS, the nature of the Medicare program 

is such that the changes may interact, 

and the complexity of the interaction of 

these changes would make it difficult to 

predict accurately the full scope of the 

impact upon HHAs for future years 

beyond CY 2015. We note that the 

rebasing adjustments to the national, 

standardized 60-day episode payment 

rate and the national per-visit rates are 

capped at the statutory limit of 3.5 

percent of the CY 2010 amounts (as 

described in the preamble in section 

II.C. of this proposed rule) for each year, 

2014 through 2017. The NRS rebasing 

adjustment will be ¥2.82 percent in 

each year, 2014 through 2017. 

In addition, section 1102(b) of the Act 

requires us to prepare a RIA if a rule 

may have a significant impact on the 

operations of a substantial number of 

small rural hospitals. This analysis must 

conform to the provisions of section 603 

of RFA. For purposes of section 1102(b) 

of the Act, we define a small rural 

hospital as a hospital that is located 

outside of a metropolitan statistical area 

and has fewer than 100 beds. This 

proposed rule applies to HHAs. 

Therefore, the Secretary has determined 

that this rule will not have a significant 

economic impact on the operations of 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any one year of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2014, that 

threshold is approximately $141 

million. This proposed rule is not 

anticipated to have an effect on state, 

local, or tribal governments in the 

aggregate, or by the private sector, of 

$141 million or more in CY 2015. 

D. Detailed Economic Analysis 

This proposed rule sets forth updates 

for CY 2015 to the HH PPS rates 

contained in the CY 2014 HH PPS final 

rule (78 FR 72304 through 72308). The 

impact analysis of this proposed rule 

presents the estimated expenditure 

effects of policy changes proposed in 

this rule. We use the latest data and best 

analysis available, but we do not make 

adjustments for future changes in such 

variables as number of visits or casemix. 

This analysis incorporates the latest 

estimates of growth in service use and 

payments under the Medicare HH 

benefit, primarily on preliminary 

Medicare claims from 2013. We note 

that certain events may combine to limit 

the scope or accuracy of our impact 

analysis, because such an analysis is 

future-oriented and, thus, susceptible to 

errors resulting from other changes in 

the impact time period assessed. Some 

examples of such possible events are 

newly-legislated general Medicare 

program funding changes made by the 

Congress, or changes specifically related 

to HHAs. In addition, changes to the 

Medicare program may continue to be 

made as a result of the Affordable Care 

Act, or new statutory provisions. 

Although these changes may not be 

specific to the HH PPS, the nature of the 

Medicare program is such that the 

changes may interact, and the 

complexity of the interaction of these 

changes could make it difficult to 

predict accurately the full scope of the 

impact upon HHAs. 

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Table 34 represents how HHA 

revenues are likely to be affected by the 

policy changes proposed in this rule. 

For this analysis, we used an analytic 

file with linked CY 2013 HH claims data 

(as of December 31, 2013) for dates of 

service that ended on or before 

December 31, 2013, and OASIS 

assessments. The first column of Table 

34 classifies HHAs according to a 

number of characteristics including 

provider type, geographic region, and 

urban and rural locations. The third 

column shows the payment effects of 

proposed CY 2015 wage index. The 

fourth column shows the payment 

effects of the proposed CY 2015 casemix weights. The fifth column shows 

the effects of the rebasing adjustments to 

the national, standardized 60-day 

episode payment rate, the national pervisit payment rates, and NRS conversion 

factor. The sixth column shows the 

effects of the CY 2015 home health 

payment update percentage (the home 

health market basket update adjusted for 

multifactor productivity as discussed in 

section III.D.1. of this proposed rule). 

The last column shows the payment 

effects of all the proposed policies. 

Overall, HHAs are anticipated to 

experience a 0.3 percent decrease in 

payment in CY 2015, with freestanding 

HHAs anticipated to experience a 0.3 

percent decrease in payments while 

facility-based HHAs and non-profit 

HHAs are anticipated to experience a 

0.4 percent and a 0.6 percent increase in 

payments, respectively. Governmentowned HHAs are anticipated to 

experience a 0.3 percent decrease in 

payments and proprietary HHAs are 

anticipated to experience a 0.6 percent 

decrease in payments. Rural HHAs are 

anticipated to experience a decrease in 

payments of 0.5 percent with rural 

freestanding government-owned HHAs 

and rural facility-based proprietary 

HHAs both estimated to experience a 

¥1.1 percent decrease in payments. In 

contrast, rural facility-based non-profit 

HHAs are estimated to experience a 0.5 

percent increase in payments. Urban 

HHAs are anticipated to experience a 

decrease in payments of 0.2 percent. 

Urban freestanding proprietary HHAs 

estimated to experience a 0.5 percent 

decrease in payments, whereas urban 

freestanding and facility-based nonprofit HHAs are estimated to experience 

a 0.6 percent increase in payments for 

CY 2015. The overall impact in the 

South is estimated to be a 0.9 percent 

decrease in payments whereas the 

overall impact in the North is estimated 

to be a 1.1 percent increase in payments. 

The West South Central census region is 

estimated to receive a 2.4 percent 

decrease in payments for CY 2015; 

however, in contrast, the New England 

census region is estimated to receive a 

1.5 percent increase in payments for CY 

2015. Finally, HHAs with less than 100 

first episodes are anticipated to 

experience a 0.6 percent decrease in 

payments compared to a 0.00 percent 

decrease in payments in CY 2015 for 

HHAs with 1,000 or more first episodes. 

A substantial amount of the variation in 

the estimated impacts of the proposals 

in this proposed rule in different areas 

of the country can be attributed to 

variations in the CY 2015 wage index 

used to adjust payments under the HH 

PPS and to the effects of the 

recalibration of the case-mix weights. 

Instances where the impact, due to the 

rebasing adjustments, is less than others 

can be attributed to differences in the 

incidence of outlier payments and 

LUPA episodes, which are paid using 

the national per-visit payment rates that 

are subject to payment increases due to 

the rebasing adjustments. We note that 

some individual HHAs within the same 

group may experience different impacts 

on payments than others due to the 

distributional impact of the CY 2015 

wage index, the extent to which HHAs 

had episodes in case-mix groups where 

the case-mix weight decreased for CY 

2015 relative to CY 2014, and the degree 

of Medicare utilization. 

For CY 2015, the average impact for 

all HHAs due to the effects of rebasing 

is an estimated 2.5 percent decrease in 

payments. The overall impact for all 

HHAs as a result of this proposed rule 

is a decrease of approximately 0.3 

percent in estimated total payments 

from CY 2014 to CY 2015. 

TABLE 34—ESTIMATED HOME HEALTH AGENCY IMPACTS BY FACILITY TYPE AND AREA OF THE COUNTRY, CY 2015 

Number of 

agencies 

Proposed 

CY 2015 

wage 

index 1

(percent) 

CY 2015 

case-mix 

weights 2

(percent) 

Rebasing 3

(percent) 

CY 2015 

HH payment 

update percentage 4

(percent) 

Impact of all 

CY 2015 

policies 

(percent) 

All Agencies ..................................................................... 11,521 0.0 0.0 ¥2.5 2.2 ¥0.3 

Facility Type and Control: 

Free-Standing/Other Vol/NP ..................................... 1,031 0.4 0.3 ¥2.3 2.2 0.6 

Free-Standing/Other 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 

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TABLE 34—ESTIMATED HOME HEALTH AGENCY IMPACTS BY FACILITY TYPE AND AREA OF THE COUNTRY, CY 2015— 

Continued 

Number of 

agencies 

Proposed 

CY 2015 

wage 

index 1

(percent) 

CY 2015 

case-mix 

weights 2

(percent) 

Rebasing 3

(percent) 

CY 2015 

HH payment 

update percentage 4

(percent) 

Impact of all 

CY 2015 

policies 

(percent) 

Facility-Based Proprietary ......................................... 82 ¥0.5 0.7 ¥2.4 2.2 0.0 

Facility-Based Government ...................................... 96 ¥0.2 0.3 ¥2.5 2.2 ¥0.2 

Facility Location: Urban or Rural: .................................... .................... .................... .................... .................... .................... 0.0 

Rural ......................................................................... 1,117 0.1 ¥0.3 ¥2.4 2.2 ¥0.5 

Urban ........................................................................ 10,404 ¥0.0 0.0 ¥2.5 2.2 ¥0.2 

Facility Location: Region of the Country: 

North ......................................................................... 857 0.7 0.4 ¥2.2 2.2 1.1 

Midwest ..................................................................... 3,095 ¥0.1 0.5 ¥2.5 2.2 0.1 

South ......................................................................... 5,613 ¥0.3 ¥0.4 ¥2.5 2.2 ¥0.9 

West .......................................................................... 1,916 0.3 0.2 ¥2.4 2.2 0.3 

Other ......................................................................... 40 0.2 ¥0.4 ¥2.5 2.2 ¥0.5 

Facility Location: Region of the Country (Census Region): 

New England ............................................................ 336 1.1 0.5 ¥2.3 2.2 1.5 

Mid Atlantic ............................................................... 521 0.4 0.4 ¥2.2 2.2 0.8 

East North Central .................................................... 2,358 ¥0.1 0.4 ¥2.5 2.2 ¥0.1 

West North Central ................................................... 737 0.2 0.9 ¥2.5 2.2 0.8 

South Atlantic ............................................................ 2,028 ¥0.3 1.1 ¥2.5 2.2 0.5 

East South Central ................................................... 438 ¥0.7 ¥0.3 ¥2.6 2.2 ¥1.4 

West South Central .................................................. 3,147 ¥0.2 ¥2.0 ¥2.5 2.2 ¥2.4 

Mountain ................................................................... 679 ¥0.1 0.9 ¥2.4 2.2 0.7 

Pacific ....................................................................... 1,237 0.5 ¥0.1 ¥2.4 2.2 0.1 

Facility Size (Number of 1st Episodes): 

<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. 1The impact of the proposed CY 2015 home health wage index reflects the transition to new CBSA designations as outlined in section III.D.3 

of this proposed rule offset by the wage index budget neutrality factor described in section III.D.4 of this proposed rule. 2The impact of the proposed CY 2015 home health case-mix weights reflects the recalibration of the case-mix weights as outlined in section 

III.C of this proposed rule offset by the case-mix weights budget neutrality factor described in section III.D.4 of this proposed rule. 3The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate (¥2.75 percent after 

the CY 2014 payment rate was adjusted for the wage index and case-mix weight budget neutrality factors), the national per-visit rates (+3.26 

percent), and the NRS conversion factor (¥2.82%). The estimated impact of the NRS conversion factor rebasing adjustment is an overall ¥0.01 

percent decrease in estimated payments to HHAs. The overall impact of all the rebasing adjustments finalized in the CY 2014 HH PPS proposed 

rule and implemented for CY 2015 are lower than the overall impact in the CY 2014 due to an increase in estimated outlier payments. As the national per-visit rates increase and the national, standardized 60-day episode rate decreases more episodes qualify for outlier payments. In addition, we decreased the fixed-dollar loss (FDL) ratio from 0.67 to 0.45 effective CY 2013 in order to qualify more episodes as outliers and we use 

CY 2013 utilization in simulating impacts for the CY 2015 HH PPS proposed rule. 4The CY 2015 home health payment update percentage reflects the home health market basket update of 2.6 percent, reduced by a 0.4 percentage point multifactor productivity (MFP) adjustment as required under section 1895(b)(3)(B)(vi)(I) of the Act, as described in section III.D.1 of 

this proposed rule. 

REGION KEY: 

New England = Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic = Pennsylvania, New Jersey, 

New York; South Atlantic = Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; 

East North Central = Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central = Alabama, Kentucky, Mississippi, Tennessee; West North 

Central = Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central = Arkansas, Louisiana, Oklahoma, 

Texas; Mountain = Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific = Alaska, California, Hawaii, Oregon, 

Washington; Outlying = Guam, Puerto Rico, Virgin Islands. 

E. Alternatives Considered 

In recalibrating the HH PPS case-mix 

weights for CY 2015, as proposed in 

section III.C. of this proposed rule, we 

considered adjusting the payment rates 

in section III.D.4 to make the 

recalibration budget neutral only with 

regards to our estimate of real case-mix 

growth between CY 2012 and the CY 

2013. Section 1895(b)(3)(B)(iv) of the 

Act gives CMS the authority to 

implement payment reductions for 

nominal case-mix growth—changes in 

case-mix that are unrelated to actual 

changes in patient health status. If we 

were to implement the recalibration of 

the case-mix weights outlined in section 

III.C in a budget neutral manner only 

with regards to our estimate of real casemix growth between CY 2012 and CY 

2013, we estimate that the aggregate 

impact would be a net decrease of $410 

million in payments to HHAs, resulting 

from a $485 million decrease due to the 

second year of the Affordable Care Act 

mandated rebasing adjustments, a $427 

million increase due to the home health 

payment update percentage, and a $350 

million decrease (¥1.8 percent) due to 

only making the case-mix weights 

recalibration budget neutral with 

regards to our estimate of real increases 

in patient severity. However, instead of 

implementing a case-mix budget 

neutrality factor that only reflects our 

estimate of real increases in patient 

severity; we plan to recalibrate the casemix weights in a fully budget-neutral 

manner and continue to monitor casemstockstill on DSK4VPTVN1PROD with PROPOSALS2

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mix growth (both real and nominal casemix growth) as more data become 

available. 

With regard to the proposal discussed 

in section III.D.3 of this proposed rule 

related to our adoption of the revised 

OMB delineations for purposes of 

calculating the wage index, we believe 

implementing the new OMB 

delineations would result in wage index 

values being more representative of the 

actual costs of labor in a given area. We 

considered having no transition period 

and fully implementing the proposed 

new OMB delineations beginning in CY 

2015. This would mean that we would 

adopt the revised OMB delineations on 

January 1, 2015. However, 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 shortterm instability and negative impact on 

certain HHAs, and to provide time for 

HHAs to adjust to their new labor 

market area delineations. In determining 

an appropriate transition methodology, 

consistent with the objectives set forth 

in the FY 2006 SNF PPS final rule (70 

FR 45041), we first considered 

transitioning the wage index to the 

revised OMB delineations over a 

number of years in order minimize the 

impact of the proposed wage index 

changes in a given year. However, we 

also believe this must be balanced 

against the need to ensure the most 

accurate payments possible, which 

argues for a faster transition to the 

revised OMB delineations. We believe 

that using the most current OMB 

delineations would increase the 

integrity of the HH PPS wage index by 

creating a more accurate representation 

of geographic variation in wage levels. 

As such, we believe that utilizing a oneyear (rather than a multiple year) 

transition with a blended wage index in 

CY 2015 would strike the best balance. 

Second, we considered what type of 

blend would be appropriate for 

purposes of the transition wage index. 

We are proposing that HHAs would 

receive a one-year blended wage index 

using 50 percent of their CY 2015 wage 

index based on the proposed new OMB 

delineations and 50 percent of their CY 

2015 wage index based on the FY 2014 

OMB delineations. We believe that a 50/ 

50 blend would best mitigate the 

negative payment impacts associated 

with the implementation of the 

proposed new OMB delineations. While 

we considered alternatives to the 50/50 

blend, we believe this type of split 

balances the increases and decreases in 

wage index values associated with this 

proposal, as well as provides a readily 

understandable calculation for HHAs. 

Next, we considered whether or not 

the blended wage index should be used 

for all HHAs or for only a subset of 

HHAs, such as those HHAs that would 

experience a decrease in their respective 

wage index values due to 

implementation of the revised OMB 

delineations. As required in section 

1895(b)(3) of the Act, the wage index 

adjustment must be implemented in a 

budget-neutral manner. As such, if we 

were to apply the transition policy only 

to those HHAs that would experience a 

decrease in their respective wage index 

values due to implementation of the 

revised OMB delineations, the wage 

index budget neutrality factor, 

discussed in section III.D.4, would 

result in reduced base rates for all HHAs 

as compared to the budget neutrality 

factor that results from applying the 

blended wage index to all HHAs. 

For the reasons discussed above, we 

believe that our proposal to use a oneyear transition with a blended wage 

index in CY 2015 appropriately 

balances the interests of all HHAs and 

would best achieve our objective of 

providing relief to negatively impacted 

HHAs. 

Section 3131(a) of the Affordable Care 

Act mandates that starting in CY 2014, 

the Secretary must apply an adjustment 

to the national, standardized 60-day 

episode payment rate and other 

amounts applicable under section 

1895(b)(3)(A)(i)(III) of the Act to reflect 

factors such as changes in the number 

of visits in an episode, the mix of 

services in an episode, the level of 

intensity of services in an episode, the 

average cost of providing care per 

episode, and other relevant factors. In 

addition, section 3131(a) of the 

Affordable Care Act mandates that 

rebasing must be phased-in over a 4- 

year period in equal increments, not to 

exceed 3.5 percent of the amount (or 

amounts) as of the date of enactment 

(2010) under section 1895(b)(3)(A)(i)(III) 

of the Act, and be fully implemented in 

CY 2017. Therefore, in the CY 2014 HH 

PPS final rule (78 FR 77256), we 

finalized rebasing adjustments to the 

national, standardized 60-day episode 

payment amount, the national per-visit 

rates and the NRS conversion factor. As 

we noted in the CY 2014 HH PPS final 

rule, because section 3131(a) of the 

Affordable Care Act requires a four year 

phase-in of rebasing, in equal 

increments, to start in CY 2014 and be 

fully implemented in CY 2017, we do 

not have the discretion to delay, change, 

or eliminate the rebasing adjustments 

once we have determined that rebasing 

is necessary (78 FR 72283). 

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

requires that the standard prospective 

payment amounts for CY 2015 be 

increased by a factor equal to the 

applicable HH market basket update for 

those HHAs that submit quality data as 

required by the Secretary. For CY 2015, 

section 3401(e) of the Affordable Care 

Act, requires that, in CY 2015 (and in 

subsequent calendar years), the market 

basket update under the HHA 

prospective payment system, as 

described in section 1895(b)(3)(B) of the 

Act, be annually adjusted by changes in 

economy-wide productivity. Beginning 

in CY 2015, section 1895(b)(3)(B)(vi)(I) 

of the Act, as amended by section 

3401(e) of the Affordable Care Act, 

requires the application of the 

productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II) of the Act to 

the HHA PPS for CY 2015 and each 

subsequent CY. The ¥0.4 percentage 

point productivity adjustment to the 

proposed CY 2015 home health market 

basket update (2.6 percent), is discussed 

in the preamble of this rule and is not 

discretionary as it is a requirement in 

section 1895(b)(3)(B)(vi)(I) of the Act (as 

amended by the Affordable Care Act). 

We invite comments on the 

alternatives discussed in this analysis. 

F. Accounting Statement and Table 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars_

a004_a-4), in Table 35, we have 

prepared an accounting statement 

showing the classification of the 

transfers and costs associated with the 

provisions of this proposed rule. Table 

35 provides our best estimate of the 

decrease in Medicare payments under 

the HH PPS as a result of the changes 

presented in this proposed rule. Table 

35 also reflects the estimated change in 

costs and burden for certifying 

physicians and HHAs as a result of the 

proposed changes to the face-to-face 

encounter requirements in section III.B. 

We estimate a net reduction in burden 

for certifying physicians of 192,765 

hours or $21,796,330 (see section IV of 

this proposed rule). In addition, Table 

35 reflects our estimate of a one-time 

burden for HHAs to revise the 

certification form of 5,761 hours or 

$245,397 as described in section IV. of 

this proposed rule. 

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38418 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

TABLE 35—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS, FROM THE CYS 2014 TO

2015 * 

Category Transfers 

Annualized Monetized Transfers ............................................................................................................................... ¥$58 million. 

From Whom to Whom? ............................................................................................................................................. Federal Government to HHAs. 

Category Costs 

Annualized Monetized Net Reduction in Burden for Physicians Certifying Patient Eligibility for Home Health 

Services & HHAs for Certification Form Revision.

¥$21.55 million. 

* The estimates reflect 2014 dollars. 

G. Conclusion 

In conclusion, we estimate that the 

net impact of the proposals in this rule 

is a decrease in Medicare payments to 

HHAs of $58 million for CY 2015. The 

$58 million decrease in estimated 

payments for CY 2015 reflects the 

distributional effects of the 2.2 percent 

CY 2015 HH payment update percentage 

($427 million increase) and the second 

year of the 4-year phase-in of the 

rebasing adjustments required by 

section 3131(a) of the Affordable Care 

Act ($485 million decrease). Also, 

starting in CY 2015, certifying 

physicians are estimated to incur a net 

reduction in burden costs of 

$21,796,330 and HHAs are expected to 

incur a one-time increase in burden 

costs to revise the certification form of 

$245,397 as a result of the proposal to 

eliminate the face-to-face encounter 

narrative requirement. This analysis, 

together with the remainder of this 

preamble, provides an initial Regulatory 

Flexibility Analysis. 

VII. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a final rule that 

imposes substantial direct requirement 

costs on state and local governments, 

preempts state law, or otherwise has 

Federalism implications. We have 

reviewed this proposed rule under the 

threshold criteria of Executive Order 

13132, Federalism, and have 

determined that it will not have 

substantial direct effects on the rights, 

roles, and responsibilities of states, local 

or tribal governments. 

List of Subjects 

42 CFR Part 409 

Health facilities, Medicare. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

and Reporting and recordkeeping 

requirements. 

42 CFR Part 484 

Health facilities, Health professions, 

Medicare, and Reporting and 

recordkeeping requirements. 

42 CFR Part 488 

Administrative practice and 

procedure, Health facilities, Medicare, 

and Reporting and recordkeeping 

requirements. 

42 CFR Part 498 

Health facilities, Medicare, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 409—HOSPITAL INSURANCE 

BENEFITS 

■ 1. The authority citation for part 409 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 2. Section 409.44 is amended by— 

■ A. Removing ‘‘intermediary’s’’ from 

paragraph (a) and adding ‘‘Medicare 

Administrative Contractor’s’’ in its 

place. 

■ B. Removing ‘‘30’’ from paragraph 

(c)(2)(i)(B) adding ‘‘14 calendar’’ in its 

place each time it appears. 

■ C. Removing paragraphs (c)(2)(i)(C) 

and (D). 

■ D. Redesignating paragraphs 

(c)(2)(i)(E) through (H) as paragraphs 

(c)(2)(i)(C) through (F). 

■ E. Removing ‘‘(c)(2)(i)(A), (B), (C), and 

(D) of this section,’’ from newly 

redesignated paragraph (c)(2)(i)(C) 

introductory text and adding 

‘‘(c)(2)(i)(A) and (B) of this section,’’ in 

its place. 

■ F. Removing ‘‘(c)(2)(i)(E)(2) and 

(c)(2)(i)(E)(3) of this section are met,’’ 

from newly redesignated paragraph 

(c)(2)(i)(C)(1) and adding ‘‘(c)(2)(i)(C)(2) 

and (c)(2)(i)(C)(3) of this section are 

met,’’ in its place. 

■ G. Removing ‘‘§ 409.44(c)(2)(i)(H) of 

this section.’’ from newly redesignated 

paragraph (c)(2)(i)(C)(3) and adding 

‘‘§ 409.44(c)(2)(i)(F) of this section.’’ in 

its place. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 3. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 4. Section 424.22 is amended by— 

■ A. Revising paragraphs (a) and (b) and 

adding new paragraph (c). 

■ B. Removing ‘‘(d)(i)’’ from paragraph 

(d)(2) and adding ‘‘(d)(1)’’ in its place. 

The revisions read as follows: 

§ 424.22 Requirements for home health 

services. 

* * * * * 

(a) Certification—(1) Content of 

certification. As a condition for payment 

of home health services under Medicare 

Part A or Medicare Part B, a physician 

must certify the patient’s eligibility for 

the home health benefit, as outlined in 

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

Act, as follows in paragraphs (a)(1)(i) 

through (v) of this section. The patient’s 

medical record, as specified in 

paragraph (c) of this section, must 

support the certification of eligibility as 

outlined in paragraph (a)(1)(i) through 

(v) of this section. 

(i) The individual needs or needed 

intermittent skilled nursing care, or 

physical therapy or speech-language 

pathology services as defined in 

§ 409.42(c) of this chapter. If a patient’s 

underlying condition or complication 

requires a registered nurse to ensure that 

essential non-skilled care is achieving 

its purpose, and necessitates a registered 

nurse be involved in the development, 

management, and evaluation of a 

patient’s care plan, the physician will 

include a brief narrative describing the 

clinical justification of this need. If the 

narrative is part of the certification 

form, then the narrative must be located 

immediately prior to the physician’s 

signature. If the narrative exists as an 

addendum to the certification form, in 

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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 38419 

addition to the physician’s signature on 

the certification form, the physician 

must sign immediately following the 

narrative in the addendum. 

(ii) Home health services are or were 

required because the individual is or 

was confined to the home, as defined in 

sections 1835(a) and 1814(a) of the Act, 

except when receiving outpatient 

services. 

(iii) A plan for furnishing the services 

has been established and will be or was 

periodically reviewed by a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine, and who is not 

precluded from performing this function 

under paragraph (d) of this section. (A 

doctor of podiatric medicine may 

perform only plan of treatment 

functions that are consistent with the 

functions he or she is authorized to 

perform under State law.) 

(iv) The services will be or were 

furnished while the individual was 

under the care of a physician who is a 

doctor of medicine, osteopathy, or 

podiatric medicine. 

(v) A face-to-face patient encounter, 

which is related to the primary reason 

the patient requires home health 

services, occurred no more than 90 days 

prior to the home health start of care 

date or within 30 days of the start of the 

home health care and was performed by 

a physician or allowed non-physician 

practitioner as defined in paragraph 

(a)(1)(v)(A) of this section. The 

certifying physician must also 

document the date of the encounter as 

part of the certification. 

(A) The face-to-face encounter must 

be performed by one of the following: 

(1) The certifying physician himself or 

herself. 

(2) A physician, with privileges, who 

cared for the patient in an acute or postacute care facility from which the 

patient was directly admitted to home 

health. 

(3) A nurse practitioner or a clinical 

nurse specialist (as those terms are 

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

Act) who is working in accordance with 

State law and in collaboration with the 

certifying physician or in collaboration 

with an acute or post-acute care 

physician with privileges who cared for 

the patient in the acute or post-acute 

care facility from which the patient was 

directly admitted to home health. 

(4) A certified nurse midwife (as 

defined in section 1861(gg) of the Act) 

as authorized by State law, under the 

supervision of the certifying physician 

or under the supervision of an acute or 

post-acute care physician with 

privileges who cared for the patient in 

the acute or post-acute care facility from 

which the patient was directly admitted 

to home health. 

(5) A physician assistant (as defined 

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

the supervision of the certifying 

physician or under the supervision of an 

acute or post-acute care physician with 

privileges who cared for the patient in 

the acute or post-acute care facility from 

which the patient was directly admitted 

to home health. 

(B) The face-to-face patient encounter 

may occur through telehealth, in 

compliance with Section 1834(m) of the 

Act and subject to the list of payable 

Medicare telehealth services established 

by the applicable physician fee schedule 

regulation. 

(1) Timing and signature. The 

certification of need for home health 

services must be obtained at the time 

the plan of care is established or as soon 

thereafter as possible and must be 

signed and dated by the physician who 

establishes the plan. 

(2) [Reserved] 

(b) Recertification—(1) Timing and 

signature of recertification. 

Recertification is required at least every 

60 days when there is a need for 

continuous home health care after an 

initial 60-day episode. Recertification 

should occur at the time the plan of care 

is reviewed, and must be signed and 

dated by the physician who reviews the 

plan of care. Recertification is required 

at least every 60 days unless there is a— 

(i) Beneficiary elected transfer; or 

(ii) Discharge with goals met and/or 

no expectation of a return to home 

health care. 

(2) Content and basis of 

recertification. The recertification 

statement must indicate the continuing 

need for services and estimate how 

much longer the services will be 

required. Need for occupational therapy 

may be the basis for continuing services 

that were initiated because the 

individual needed skilled nursing care 

or physical therapy or speech therapy. 

If a patient’s underlying condition or 

complication requires a registered nurse 

to ensure that essential non-skilled care 

is achieving its purpose, and 

necessitates a registered nurse be 

involved in the development, 

management, and evaluation of a 

patient’s care plan, the physician will 

include a brief narrative describing the 

clinical justification of this need. If the 

narrative is part of the recertification 

form, then the narrative must be located 

immediately prior to the physician’s 

signature. If the narrative exists as an 

addendum to the recertification form, in 

addition to the physician’s signature on 

the recertification form, the physician 

must sign immediately following the 

narrative in the addendum. 

(c) Determining patient eligibility for 

Medicare home health services. In 

determining whether a patient is or was 

eligible to receive services under the 

Medicare home health benefit at the 

start of home health care, only the 

medical record for the patient from the 

certifying physician or the acute/postacute care facility (if the patient in that 

setting was directly admitted to home 

health) used to support the physician’s 

certification of patient eligibility, as 

described in paragraphs (a)(1) and (b) of 

this section, will be reviewed. If the 

patient’s medical record used in 

certifying eligibility is not sufficient to 

demonstrate that the patient is or was 

eligible to receive services under the 

Medicare home health benefit, payment 

will not be rendered for home health 

services provided. 

* * * * * 

PART 484—HOME HEALTH SERVICES 

■ 5. The authority citation for part 484 

continues to read as follows: 

Authority: Secs 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395(hh)) unless otherwise indicated. 

■ 6. Section 484.4 is amended by 

revising the definition of ‘‘speechlanguage pathologist’’ to read as follows: 

§ 484.4 Personnel qualifications. 

* * * * * 

Speech-language pathologist. A 

person who has a master’s or doctoral 

degree in speech-language pathology, 

and who meets either of the following 

requirements: 

(a) Is licensed as a speech-language 

pathologist by the State in which the 

individual furnishes such services; or 

(b) In the case of an individual who 

furnishes services in a State which does 

not license speech-language 

pathologists: 

(1) Has successfully completed 350 

clock hours of supervised clinical 

practicum (or is in the process of 

accumulating such supervised clinical 

experience); 

(2) Performed not less than 9 months 

of supervised full-time speech-language 

pathology services after obtaining a 

master’s or doctoral degree in speechlanguage 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) * * * 

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38420 Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Proposed Rules 

(1) The OASIS data described at 

§ 484.55(b)(1) and (d)(1) of this part for 

CMS to administer the payment rate 

methodologies described in §§ 484.215, 

484.230, and 484.235 of this subpart, 

and to meet the quality reporting 

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

of the Act. 

* * * * * 

PART 488—SURVEY, CERTIFICATION, 

AND ENFORCEMENT PROCEDURES 

■ 8. The authority citation for part 488 

continues to read as follows: 

Authority: Secs. 1102, 1128I and 1871 of 

the Social Security Act, unless otherwise 

noted (42 U.S.C. 1302, 1320a–7j, and 

1395hh); Pub. L. 110–149, 121 Stat. 1819. 

■ 9. Section 488.845 is amended by 

adding paragraph (h) to read as follows: 

§ 488.845 Civil money penalties. 

* * * * * 

(h) Review of the penalty. When an 

administrative law judge or state 

hearing officer (or higher administrative 

review authority) finds that the basis for 

imposing a civil monetary penalty 

exists, as specified in this part, the 

administrative law judge, State hearing 

officer (or higher administrative review 

authority) may not— 

(1) Set a penalty of zero or reduce a 

penalty to zero; 

(2) Review the exercise of discretion 

by CMS to impose a civil monetary 

penalty; and 

(3) Consider any factors in reviewing 

the amount of the penalty other than 

those specified in paragraph (b) of this 

section. 

PART 498—APPEALS PROCEDURES 

FOR DETERMINATIONS THAT AFFECT 

PARTICIPATION IN THE MEDICARE 

PROGRAM AND FOR 

DETERMINATIONS THAT AFFECT THE 

PARTCIPATION OF ICFS/IID AND 

CERTAIN NFS IN THE MEDICAID 

PROGRAM 

■ 10. The authority citation for part 498 

continues to read as follows: 

Authority: Secs. 1102, 1128I and 1871 of 

the Social Security Act (42 U.S.C. 1302, 

1320a–7j, and 1395hh). 

■ 11. Section 498.3 is amended by 

revising paragraphs (b)(13) and (b)(14)(i) 

to read as follows: 

§ 498.3 Scope and applicability. 

* * * * * 

(b) * * * 

(13) Except as provided at paragraph 

(d)(12) of this section for SNFs, NFs and 

HHAs, the finding of noncompliance 

leading to the imposition of 

enforcement actions specified in 

§ 488.406 or § 488.820 of this chapter, 

but not the determination as to which 

sanction was imposed. The scope of 

review on the imposition if a civil 

money penalty is specified in 

§ 488.438(e) and § 488.845(h) of this 

chapter. 

(14) * * * 

(i) The range of civil money penalty 

amounts that CMS could collect (for 

SNFs or NFs, the scope of review during 

a hearing on the imposition of a civil 

money penalty is set forth in 

§ 488.438(e) of this chapter and for 

HHAs, the scope of review during a 

hearing on the imposition of a civil 

money penalty is set forth in 

§ 488.845(h) of this chapter); or 

* * * * * 

■ 12. Section 498.60 is amended by 

revising paragraphs (c)(1) and (c)(2) to 

read as follows: 

§ 498.60 Conduct of hearing. 

* * * * * 

(c) * * * 

(1) The scope of review is as specified 

in § 488.438(e) and § 488.845(h) of this 

chapter; and 

(2) CMS’ determination as to the level 

of noncompliance of a SNF, NF or HHA 

must be upheld unless it is clearly 

erroneous. 

Dated: June 16, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: June 19, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–15736 Filed 7–1–14; 4:15 pm] 

BILLING CODE 4120–01–P 

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