66032 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

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

[CMS–1611–F] 

RIN 0938–AS14 

Medicare and Medicaid Programs; 

CY 2015 Home Health Prospective 

Payment System Rate Update; Home 

Health Quality Reporting 

Requirements; and Survey and 

Enforcement Requirements for Home 

Health Agencies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates Home 

Health Prospective Payment System 

(HH PPS) rates, including the national, 

standardized 60-day episode payment 

rates, the national per-visit rates, and 

the non-routine medical supply (NRS) 

conversion factor under the Medicare 

prospective payment system for home 

health agencies (HHAs), effective for 

episodes ending on or after January 1, 

2015. As required by the Affordable 

Care Act, this rule implements the 

second year of the four-year phase-in of 

the rebasing adjustments to the HH PPS 

payment rates. This rule provides 

information on our efforts to monitor 

the potential impacts of the rebasing 

adjustments and the Affordable Care Act 

mandated face-to-face encounter 

requirement. This rule also implements: 

Changes to simplify the face-to-face 

encounter regulatory requirements; 

changes to the HH PPS case-mix 

weights; changes to the home health 

quality reporting program requirements; 

changes to simplify the therapy 

reassessment timeframes; a revision to 

the Speech-Language Pathology (SLP) 

personnel qualifications; minor 

technical regulations text changes; and 

limitations on the reviewability of the 

civil monetary penalty provisions. 

Finally, this rule also discusses 

Medicare coverage of insulin injections 

under the HH PPS, the delay in the 

implementation of the International 

Classification of Diseases, Tenth 

Revision, Clinical Modification (ICD– 

10–CM), and a HH value-based 

purchasing (HH VBP) model. 

DATES: Effective Date: These regulations 

are effective on January 1, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Hillary Loeffler, (410) 786–0456, for 

general information about the HH PPS. 

Joan Proctor, (410) 786–0949, for 

information about the HH PPS Grouper, 

ICD–9–CM coding, and ICD–10–CM 

Conversion. 

Kristine Leddy, (410) 786–8953, for 

information about rebasing and the HH 

PPS case-mix weights. 

Hudson Osgood, (410) 786–7897, for 

information about the HH market 

basket. 

Alan Levitt, MD, (410) 786–6892, for 

information about the HH quality 

reporting program. 

Lori Teichman, (410) 786–6684, for 

information about HHCAHPS. 

Peggye Wilkerson, (410) 786–4857, for 

information about survey and 

enforcement requirements for HHAs. 

Robert Flemming, (410) 786–4830, for 

information about the HH VBP model. 

Danielle Shearer, (410) 786–6617, for 

information about SLP personnel 

qualifications. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs and Benefits 

II. Background 

A. Statutory Background 

B. System for Payment of Home Health 

Services 

C. Updates to the HH PPS 

III. Provisions of the Proposed Rule and 

Responses to Comments 

A. Monitoring for Potential Impacts— 

Affordable Care Act Rebasing 

Adjustments and the Face-to-Face 

Encounter Requirement 

1. Affordable Care Act Rebasing 

Adjustments 

2. Affordable Care Act Face-to-Face 

Encounter Requirement 

B. Changes to the Face-to-Face Encounter 

Documentation Requirements 

1. Background on Statutory and Regulatory 

Requirements 

2. Changes to the Face-to-Face Encounter 

Narrative Requirement and NonCoverage of Associated Physician 

Certification/Re-Certification Claims 

3. Clarification on When Documentation of 

a Face-to-Face Encounter is Required 

C. Recalibration of the HH PPS Case-Mix 

Weights 

D. CY 2015 Home Health Rate Update 

1. CY 2015 Home Health Market Basket 

Update 

2. Home Health Care Quality Reporting 

Program (HH QRP) 

a. General Considerations Used for 

Selection of Quality Measures for the HH 

QRP 

b. Background and Quality Reporting 

Requirements 

c. OASIS Data Submission and OASIS Data 

for Annual Payment Update 

d. Updates to HH QRP Measures After NQF 

Review 

e. Home Health Care CAHPS Survey 

(HHCAHPS) 

3. CY 2015 Home Health Wage Index 

a. Background 

b. Update 

c. Implementation of New Labor Market 

Delineations 

4. CY 2015 Annual Payment Update 

a. Background 

b. CY 2015 National, Standardized 60-Day 

Episode Payment Rate 

c. CY 2015 National Per-Visit Rates 

d. Low-Utilization Payment Adjustment 

(LUPA) Add-On Factors 

e. CY 2015 Nonroutine Medical Supply 

Conversion Factor and Relative Weights 

f. Rural Add-On 

E. Payments for High-Cost Outliers under 

the HH PPS 

1. Background 

2. Fixed Dollar Loss (FDL) Ratio and 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. Change to the Therapy Reassessment 

Timeframes 

I. HH Value-Based Purchasing (HH VBP) 

Model 

J. Advancing Health Information Exchange 

K. Revisions to the Speech-Language 

Pathologist Personnel Qualifications 

L. Technical Regulations Text Changes 

M. Survey and Enforcement Requirements 

for Home Health Agencies 

1. Statutory Background and Authority 

2. Reviewability Pursuant to Appeals 

3. Technical Adjustment 

IV. Collection of Information Requirements 

V. Regulatory Impact Analysis 

VI. Federalism Analysis 

Regulations Text 

Acronyms 

In addition, because of the many 

terms to which we refer by abbreviation 

in this final rule, we are listing these 

abbreviations and their corresponding 

terms in alphabetical order below: 

ACH LOS Acute Care Hospital Length of 

Stay 

ADL Activities of Daily Living 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Pub. L. 106–113 

CAD Coronary Artery Disease 

CAH Critical Access Hospital 

CBSA Core-Based Statistical Area 

CASPER Certification and Survey Provider 

Enhanced Reports 

CHF Congestive Heart Failure 

CMI Case-Mix Index 

CMN Certificate of Medical Necessity 

CMP Civil Money Penalty 

CMS Centers for Medicare & Medicaid 

Services 

CoPs Conditions of Participation 

COPD Chronic Obstructive Pulmonary 

Disease 

CPI Center for Program Integrity 

CVD Cardiovascular Disease 

CY Calendar Year 


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DM Diabetes Mellitus 

DME Durable Medical Equipment 

DMEPOS Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

DIF DME Information Form 

DRA Deficit Reduction Act of 2005, Pub. L. 

109–171, enacted February 8, 2006 

FDL Fixed Dollar Loss 

FI Fiscal Intermediaries 

FR Federal Register 

FY Fiscal Year 

HAVEN Home Assessment Validation and 

Entry System 

HCC Hierarchical Condition Categories 

HCPCS Healthcare Common Procedure 

Coding System 

HCIS Health Care Information System 

HH Home Health 

HHA Home Health Agency 

HHCAHPS Home Health Care Consumer 

Assessment of Healthcare Providers and 

Systems Survey 

HH PPS Home Health Prospective Payment 

System 

HHRG Home Health Resource Group 

HIPPS Health Insurance Prospective 

Payment System 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

IH Inpatient Hospitalization 

IRF Inpatient Rehabilitation Facility 

IT Information Technology 

LTCH Long-Term Care Hospital 

LUPA Low-Utilization Payment Adjustment 

MEPS Medical Expenditures Panel Survey 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

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

8, 2003 

MSA Metropolitan Statistical Area 

MSS Medical Social Services 

NQF National Quality Forum 

NRS Non-Routine Supplies 

OASIS Outcome and Assessment 

Information Set 

OBRA Omnibus Budget Reconciliation Act 

of 1987, Pub. L. 100–2–3, enacted 

December 22, 1987 

OCESAA Omnibus Consolidated and 

Emergency Supplemental Appropriations 

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

1998 

OES Occupational Employment Statistics 

OIG Office of Inspector General 

OT Occupational Therapy 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health IT 

MFP Multifactor productivity 

PAMA Protecting Access to Medicare Act of 

2014 

PAC–PRD Post-Acute Care Payment Reform 

Demonstration 

PEP Partial Episode Payment Adjustment 

PT Physical Therapy 

QAO Quality Assessments Only 

QAP Quality Assurance Plan 

PRRB Provider Reimbursement Review 

Board 

RAP Request for Anticipated Payment 

RF Renal Failure 

RFA Regulatory Flexibility Act, Pub. L. 

96—354 

RHHIs Regional Home Health 

Intermediaries 

RIA Regulatory Impact Analysis 

SAF Standard Analytic File 

SLP Speech-Language Pathology 

SN Skilled Nursing 

SNF Skilled Nursing Facility 

SOC Start of Care 

UMRA Unfunded Mandates Reform Act of 

1995. 

I. Executive Summary 

A. Purpose 

This rule updates the payment rates 

for HHAs for calendar year (CY) 2015, 

as required under section 1895(b) of the 

Social Security Act (the Act). This will 

reflect the second year of the four-year 

phase-in of the rebasing adjustments to 

the national, standardized 60-day 

episode payment rate, the national pervisit rates, and the NRS conversion 

factor finalized in the CY 2014 HH PPS 

final rule (78 FR 72256), required under 

section 3131(a) of the Patient Protection 

and Affordable Care Act of 2010 (Pub. 

L. 111–148), as amended by the Health 

Care and Education Reconciliation Act 

of 2010 (Pub. L. 111–152) (collectively 

referred to as the ‘‘Affordable Care 

Act’’). Updates to payment rates under 

the HH PPS will also include a change 

in the home health wage index to 

incorporate the new Office of 

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

and updates to the payment rates by the 

home health payment update percentage 

reflective of the productivity adjustment 

mandated by 3401(e) of the Affordable 

Care Act. 

This final rule also discusses: Our 

efforts to monitor the potential impacts 

of the Affordable Care Act mandated 

rebasing adjustments and the face-toface encounter requirement (sections 

3131(a) and 6407, respectively, of the 

Affordable Care Act); coverage of 

insulin injections under the HH PPS; 

and the delay in the implementation of 

the International Classification of 

Diseases, 10th Edition, Clinical 

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

recent Congressional action (section 212 

of the Protecting Access to Medicare 

Act, Public Law 113–93 (‘‘PAMA’’)). 

This final rule also: Simplifies the 

regulations at § 424.22(a)(1)(v) that 

govern the face-to-face encounter 

requirement mandated by section 6407 

of the Affordable Care Act; recalibrates 

the HH PPS case-mix weights under 

section 1895(b)(4)(A)(i) and (b)(4)(B) of 

the Act; makes changes to the home 

health quality reporting program 

requirements under section 

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

the therapy reassessment timeframes 

specified in regulation at 

§ 409.44(c)(2)(C) and (D); revises the 

personnel qualifications for SpeechLanguage Pathology (SLP) at § 484.4; 

and makes minor technical changes to 

the regulations text at § 424.22(b)(1) and 

§ 484.250(a)(1). This final rule will also 

place limitations on the reviewability of 

CMS’s decision to impose a civil 

monetary penalty for noncompliance 

with Federal participation requirements. 

Finally, this rule discusses comments 

received on the HH Value-Based 

Purchasing (VBP) model. 

B. Summary of the Major Provisions 

As required by section 3131(a) of the 

Affordable Care Act and finalized in the 

CY 2014 HH final rule, ‘‘Medicare and 

Medicaid Programs; Home Health 

Prospective Payment System Rate 

Update for CY 2014, Home Health 

Quality Reporting Requirements, and 

Cost Allocation of Home Health Survey 

Expenses’’ (78 FR 77256, December 2, 

2013), we are implementing the second 

year of the four-year phase-in of the 

rebasing adjustments to the national, 

standardized 60-day episode payment 

amount, the national per-visit rates and 

the NRS conversion factor in section 

III.D.4. The rebasing adjustments for CY 

2015 will reduce the national, 

standardized 60-day episode payment 

amount by $80.95, increase the national 

per-visit payment amounts by 3.5 

percent of the national per-visit 

payment amounts in CY 2010 with the 

increases ranging from $1.79 for home 

health aide services to $6.34 for medical 

social services as described in section 

II.C, and reduce the NRS conversion 

factor by 2.82 percent. 

This final rule also discusses our 

efforts to monitor the potential impacts 

of the rebasing adjustments and the 

Affordable Care Act mandated face-toface encounter requirement in sections 

III.A. Section III B implements changes 

to the face-to-face encounter narrative 

requirement by eliminating the narrative 

as part of the certification of eligibility 

and by outlining procedures for 

obtaining documentation from the 

certifying physician and/or the acute/

post-acute care facility that: (1) Establish 

that the patient was eligible for the 

home health benefit; and (2) 

demonstrate that the face-to-face 

encounter was related to the primary 

reason the patient requires home health 

services, occurred within the required 

timeframe, and was performed either by 

the certifying physician, an acute/postacute care physician that cared for the 

patient in that setting, or allowed nonphysician practitioner (NPP). In 

addition, associated physician claims 

for certification/re-certification of 

eligibility (patient not present) will not 


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66034 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

be eligible to be paid when a patient 

does not meet home health eligibility 

criteria. We will also clarify that the 

face-to-face encounter requirement is 

applicable for all episodes initiated with 

the completion of a Start-of-Care OASIS 

assessment, which we consider 

certifications, not re-certifications. In 

section III.C of the final rule, we are 

recalibrating the HH PPS case-mix 

weights, using the most current cost and 

utilization data available, in a budget 

neutral manner. In section III.D.1 of this 

final rule, we are updating the payment 

rates under the HH PPS by the home 

health payment update percentage of 2.1 

percent (using the 2010-based Home 

Health Agency (HHA) market basket 

update of 2.6 percent, minus 0.5 

percentage point for productivity as 

required by section 1895(b)(3)(B)(vi)(I) 

of the Act. In section III.D.3 of this final 

rule, we are updating the home health 

wage index using a 50/50 blend of the 

existing core-based statistical area 

(CBSA) designations and the new CBSA 

designations set out in a February 28, 

2013, Office of Management and Budget 

(OMB) bulletin. 

This final rule also implements 

changes to the home health quality 

reporting program in section III.D.2, 

including the establishment of a 

minimum threshold for submission of 

OASIS assessments for purposes of 

quality reporting compliance, the 

establishment of a policy for the 

adoption of changes to measures that 

occur in-between rulemaking cycles as a 

result of the NQF process, and 

submission dates for the HHCAHPS 

Survey moving forward through CY 

2017. In section III.E of this final rule, 

we discuss our rationale for maintaining 

the existing fixed-dollar loss (FDL) and 

loss-sharing ratios used in calculating 

high-cost outlier payments under the 

HH PPS. In section III.F, we discuss our 

recent analysis of home health claims 

identified with skilled nursing visits 

that appear to have been for the sole 

purpose of insulin injection assistance, 

without any secondary diagnoses 

indicating that the patient was 

physically or mentally unable to selfinject. We discuss, in section III.G of 

this final rule, the delay in the 

implementation of ICD–10–CM as a 

result of section 212 of PAMA. In 

section III.H of this final rule, we 

discuss our finalizing of a change in the 

therapy reassessment regulations by 

requiring that therapy reassessments are 

to occur at least every 30 calendar days. 

In section III.I of this final rule, we 

discuss a HH VBP model. In section III.J 

we discuss our revision to the personnel 

qualifications for SLP. In section III.K 

we discuss minor technical regulations 

text changes. In section III.L we discuss 

our revision to the civil monetary 

provisions, which place limitations on 

the reviewability of the civil monetary 

penalty imposed on a HHA for 

noncompliance with federal 

participation requirements. 

C. Summary of Costs and Transfers 

TABLE 1—SUMMARY OF COSTS AND TRANSFERS

Provision Description Costs Transfers 

CY 2015 HH PPS Payment 

Rate 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 final rule is an estimated $60 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 

PPS for all costs of HH services paid 

under Medicare. 

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

requires the following: (1) The 

computation of a standard prospective 

payment amount include all costs for 

HH services covered and paid for on a 

reasonable cost basis and that such 

amounts be initially based on the most 

recent audited cost report data available 

to the Secretary; and (2) the 

standardized prospective payment 

amount be adjusted to account for the 

effects of case-mix and wage levels 

among HHAs. 

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

addresses the annual update to the 

standard prospective payment amounts 

by the HH applicable percentage 

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

governs the payment computation. 

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

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

standard prospective payment amount 

to be adjusted for case-mix and 

geographic differences in wage levels, 

respectively. Section 1895(b)(4)(B) of 

the Act requires the establishment of an 

appropriate case-mix change adjustment 

factor for significant variation in costs 

among different units of services. 

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

Act requires the establishment of wage 

adjustment factors that reflect the 

relative level of wages, and wage-related 

costs applicable to HH services 

furnished in a geographic area 

compared to the applicable national 

average level. Under section 

1895(b)(4)(C) of the Act, the 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 for the year. 

The provision also made permanent a 

10 percent agency-level outlier payment 

cap. 

In accordance with the statute, as 

amended by the BBA, we published a 

final rule in the July 3, 2000 Federal 

Register (65 FR 41128) to implement the 

HH PPS legislation. The July 2000 final 

rule established requirements for the 

new HH PPS for HH services as required 

by section 4603 of the BBA, as 

subsequently amended by section 5101 

of the Omnibus Consolidated and 

Emergency Supplemental 

Appropriations Act (OCESAA) for Fiscal 

Year 1999, (Pub. L. 105–277, enacted 

October 21, 1998); and by sections 302, 

305, and 306 of the Medicare, Medicaid, 

and SCHIP Balanced Budget Refinement 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66035 

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

enacted November 29, 1999). The 

requirements include the 

implementation of a HH PPS for HH 

services, consolidated billing 

requirements, and a number of other 

related changes. The HH PPS described 

in that rule replaced the retrospective 

reasonable cost-based system that was 

used by Medicare for the payment of HH 

services under Part A and Part B. For a 

complete and full description of the HH 

PPS as required by the BBA, see the July 

2000 HH PPS final rule (65 FR 41128 

through 41214). 

Section 5201(c) of the Deficit 

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

109–171, enacted February 8, 2006) 

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

the Act, requiring HHAs to submit data 

for purposes of measuring health care 

quality, and links the quality data 

submission to the annual applicable 

percentage increase. This data 

submission requirement is applicable 

for CY 2007 and each subsequent year. 

If a HHA does not submit quality data, 

the HH market basket percentage 

increase is reduced by 2 percentage 

points. In the November 9, 2006 Federal 

Register (71 FR 65884, 65935), we 

published a final rule to implement the 

pay-for-reporting requirement of the 

DRA, which was codified at 

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

the statute. The pay-for-reporting 

requirement was implemented on 

January 1, 2007. 

The Affordable Care Act made 

additional changes to the HH PPS; 

section 3131(c) of the Affordable Care 

Act amended section 421(a) of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173, enacted 

on December 8, 2003) as amended by 

section 5201(b) of the DRA. The 

amended section 421(a) of the MMA 

now requires, for HH services furnished 

in a rural area (as defined in section 

1886(d)(2)(D) of the Act) with respect to 

episodes and visits ending on or after 

April 1, 2010, and before January 1, 

2016, that the Secretary increase, by 3 

percent, the payment amount otherwise 

made under section 1895 of the Act. 

B. System for Payment of Home Health 

Services 

Generally, Medicare makes payment 

under the HH PPS on the basis of a 

national standardized 60-day episode 

payment rate that is adjusted for the 

applicable case-mix and wage index. 

The national standardized 60-day 

episode rate includes the six HH 

disciplines (skilled nursing, HH aide, 

physical therapy, speech-language 

pathology, occupational therapy, and 

medical social services). Payment for 

non-routine supplies (NRS) is no longer 

part of the national standardized 60-day 

episode rate and is computed by 

multiplying the relative weight for a 

particular NRS severity level by the NRS 

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

Payment for durable medical equipment 

covered under the HH benefit is made 

outside the HH PPS payment system. To 

adjust for case-mix, the HH PPS uses a 

153-category case-mix classification 

system to assign patients to a home 

health resource group (HHRG). The 

clinical severity level, functional 

severity level, and service utilization are 

computed from responses to selected 

data elements in the OASIS assessment 

instrument and are used to place the 

patient in a particular HHRG. Each 

HHRG has an associated case-mix 

weight which is used in calculating the 

payment for an episode. 

For episodes with four or fewer visits, 

Medicare pays national per-visit rates 

based on the discipline(s) providing the 

services. An episode consisting of four 

or fewer visits within a 60-day period 

receives what is referred to as a 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 

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 will be 2.18 percent. Although 

we considered proposing a 2.18 percent 

reduction to account for the remaining 

increase in measured nominal case-mix, 

we finalized the 1.32 percent payment 

reduction to the national, standardized 

60-day episode rates in the CY 2012 HH 

PPS final rule (76 FR 68532). 


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66036 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

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 and 

Responses to Comments 

We received approximately 337 

timely responses from the public, many 

of which contained multiple comments 

on the CY 2015 HH PPS proposed rule 

(79 FR 38366). Many of the comments 

were identical, but submitted by 

multiple commenters. We received 

comments from various trade 

associations, HHAs, individual 

registered nurses, physicians, clinicians, 

therapists, therapy assistants, health 

care industry organizations, and health 

care consulting firms. The following 

sections, arranged by subject area, 

include a summary of the public 

comments received, and our responses. 

A. Monitoring for Potential Impacts— 

Affordable Care Act Rebasing 

Adjustments and the Face-to-Face 

Encounter Requirement 

1. Affordable Care Act Rebasing 

Adjustments 

As we stated in the CY 2015 HH PPS 

proposed rule (79 FR 38370), we do not 

have a sufficient amount of CY 2014 

home health claims data to analyze as 

part of our effort in monitoring the 

potential impacts of the rebasing 

adjustments finalized in the CY 2014 

HH PPS final rule (78 FR 72293). 

However, we analyzed 2012 home 

health agency cost report data to 

determine whether the average cost per 

episode was higher using 2012 cost 

report data compared to the 2011 cost 

report data used in calculating the 

rebasing adjustments. Specifically, we 

re-estimated the cost of a 60-day episode 

using 2012 cost report and 2012 claims 

data, rather than using 2011 cost report 

and 2012 claims data. To determine the 

2012 average cost per visit per 

discipline, we applied the same 

trimming methodology outlined in the 

CY 2014 HH PPS proposed rule (78 FR 

40284) and weighted the costs per visit 

from the 2012 cost reports by size, 

facility type, and urban/rural location so 

the costs per visit were nationally 

representative. The 2012 average 

number of visits was taken from 2012 

claims data. We estimate the cost of a 

60-day episode to be $2,413.82 using 

2012 cost report data (Table 3). 

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

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 current claims data for CY 

2013 (as of June 30, 2014), we reexamined the 2012 visit distribution 

and re-calculated the 2013 estimated 

cost per episode using the updated 2013 

visit profile. We estimate the 2013 60- 

day episode cost to be $2,485.24 (Table 

4). 


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1The 2012 estimated cost per episode cited is 

based on FY 2012 cost report data and CY 2012 

claims data (as of June 30, 2013) and the 2013 

estimated cost per episode is based on FY 2012 cost 

report data and CY 2013 claims data (as of June 30, 

2014). 

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 9.28 1.023 $1,238 .80 

Home Health Aide ....................................................................................... 61 .62 2.41 1.023 151 .92 

Physical Therapy ......................................................................................... 160 .03 5.03 1.023 823 .46 

Occupational Therapy .................................................................................. 157 .78 1.22 1.023 196 .92 

Speech-Language Pathology ...................................................................... 172 .08 0.25 1.023 44 .01 

Medical Social Services ............................................................................... 210 .36 0.14 1.023 30 .13 

Total ...................................................................................................... 2,485 .24 

Source: FY 2012 Medicare cost report data and 2013 Medicare claims data from the standard analytic file (as of June 30, 2014) for episodes 

(excluding low-utilization payment adjusted episodes and partial-episode-payment adjusted episodes) ending on or before December 31, 2013 for 

which we could link an OASIS assessment. 

In the CY 2014 HH PPS final rule (78 

FR 72277), using 2011 cost report data, 

we estimated the 2012 60-day episode 

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

0.9981 * 1.024) and the 2013 60-day 

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

* 0.9981 * 1.024 * 1.023). Using 2012 

cost report data, the 2012 and 2013 

estimated cost per episode ($2,413.82 

and $2,485.24, respectively) are lower 

than the episode costs we estimated 

using 2011 cost report data for the CY 

2014 HH PPS final rule.1

In the CY 2014 HH PPS final rule, we 

stated that our analysis of 2011 cost 

report data and 2012 claims data 

indicated a need for a ¥3.45 percent 

rebasing adjustment to the national, 

standardized 60-day episode payment 

rate each year for four years. However, 

as specified by statute, the rebasing 

adjustment is limited to 3.5 percent of 

the CY 2010 national, standardized 60- 

day episode payment rate of $2,312.94 

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

given that a ¥3.45 percent adjustment 

for CY 2014 through CY 2017 will result 

in larger dollar amount reductions than 

the maximum dollar amount allowed 

under section 3131(a) of the Affordable 

Care Act of $80.95, we are limited to 

implementing a reduction of $80.95 

(approximately 2.8 percent for CY 2014) 

to the national, standardized 60-day 

episode payment amount each year for 

CY 2014 through CY 2017. Our latest 

analysis of 2012 cost report and 2013 

claims data suggests that an even larger 

reduction (¥4.21 percent) than the 

reduction described in the CY 2014 final 

rule (¥3.45 percent) will be needed in 

order to align payments to costs. We 

stated in the CY 2015 HH PPS proposed 

rule that we would continue to monitor 

potential impacts of rebasing as more 

data become available (79 FR 38371). 

Although we finalized the rebasing 

adjustments in the CY 2014 HH PPS 

final rule and did not propose any 

changes to those adjustments, we 

received a number of comments on the 

rebasing and on our analysis of 2012 

cost report data in the CY 2015 HH PPS 

proposed rule. Those comments and our 

responses are summarized below. 

Comment: Commenters urged CMS to 

postpone or stop the implementation of 

the rebasing reductions. Commenters 

expressed concerns with the rebasing 

methodology, impact analysis, and 

process outlined in the CY 2014 HH PPS 

proposed and final rules and stated that 

a more comprehensive study is needed 

to evaluate the rebasing reductions. 

Some commenters also stated that the 

findings on the study on access to care 

mandated by section 3131(d) of the 

Affordable Care Act were not fully 

considered prior to the implementation 

or rebasing and urged CMS to take into 

account these findings and reconsider 

the rebasing adjustments. 

Response: We thank the commenters 

for their comments. We did not propose 

changes to the rebasing adjustments for 

CY 2014 through CY 2017 finalized in 

the CY 2014 HH PPS final rule. The 

comments received regarding the 

rebasing adjustments were nearly 

identical to the comments submitted 

during the comment period for the CY 

2014 HH PPS proposed rule. Therefore, 

we encourage commenters to review our 

responses to the comments we received 

on the rebasing adjustments in the CY 

2014 HH PPS final rule (78 FR 72282– 

72294). 

Comment: Several commenters were 

concerned with the impact of the 

rebasing adjustments and urged CMS to 

monitor the impact of the reductions 

and provided suggestions for the impact 

and monitoring analyses. 

Response: As we noted in the CY 

2015 HH PPS proposed rule, sufficient 

claims data for CY 2014 is not available 

for analysis. We plan to provide an 

update on our monitoring efforts once 

sufficient CY 2014 claims data become 

available. In their public comments on 

the CY 2015 HH PPS proposed rule, 

MedPAC stated that given the 12 

percent or higher margins for for-profit 

and non-profit agencies in 2012, they do 

not expect the reductions to materially 

affect the operations of most agencies 

and recommended to Congress that 

rebasing be implemented in a shorter 

period, that the annual payment update 

be eliminated, and that such changes to 

statute would help bring payments 

closer to costs than the current approach 

to rebasing. MedPAC is required to 

conduct a study and submit a report on 

the impact of the rebasing adjustments 

on access to care, quality outcomes, the 

number of home health agencies, and 

rural agencies, urban agencies, for-profit 

agencies and non-profit agencies to be 

submitted no later than January 1, 2015. 

Comment: A commenter stated that 

CMS did not indicate in the CY 2015 

HH PPS proposed rule how many 2012 

cost reports were audited and how 

many were trimmed out (excluded) from 

the analysis. The commenter requested 

that CMS include this information in 

the final rule for the sake of 

transparency. 

Response: None of the 2012 cost 

reports were audited. Of the 10,485 cost 

reports in the sample, which contained 

10,310 unique provider numbers, 6,135 

cost reports were used in the results 

presented in the CY 2015 HH PPS 

proposed rule (79 FR 38370–38371). We 

used same trimming and weighting 

methodology described in the CY 2014 

HH PPS proposed rule (78 FR 40284– 

40286). 

Comment: Commenters expressed 

concern with the reduction to the NRS 

conversion factor. The commenter was 

concerned that reductions to payments 

for NRS may impact patients with 

wounds and requested that CMS reVerDate Sep<11>2014 20:03 Nov 05, 2014 Jkt 235001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\06NOR2.SGM 06NOR2

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evaluate the utilization of and charges 

associated with surgical dressings 

compared to other supplies in the NRS 

group and suggested CMS consider a 

separate conversion factor for surgical 

dressings. Another commenter stated 

that it is difficult to determine whether 

actual hospital-based HHA NRS costs 

had been included into the total cost of 

services measured. The commenter 

stated that there is a flaw in the 

hospital-based cost report where the 

NRS cost data does not flow to the total 

cost. The commenter recommended that 

CMS review the hospital based cost 

reports for this problem and fix the NRS 

adjustment equitably if that flaw exists. 

Response: We researched whether 

hospital-based HHA costs for NRS were 

included in our rebasing calculations in 

the CY 2014 HH PPS proposed and final 

rules. We noted in the CY 2014 HH PPS 

final rule that NRS costs for hospitalbased HHAs are to be reported on CMS 

form 2552–10, worksheet H, line 12 (78 

FR 72291). This data flows to worksheet 

H3, part 1, line 15. However, line 15, 

columns 6 through 11 are shaded out 

and not currently populated. We are in 

the process of ‘‘un-shading’’ those 

columns for future data collection. Of 

the over 11,000 HHAs included in the 

Regulatory Impact Analysis in section 

V., less than 10 percent are facilitybased HHAs. We believe that using NRS 

cost data solely from freestanding 

HHAs, given the unavailability of the 

hospital-based HHA NRS cost data for 

FY 2011, is appropriate. We examined 

cost report data for both freestanding 

and hospital-based HHAs (using 

instances where the hospital-based HHA 

submitted cost report data using the 

older version of the Medicare hospital 

cost report (CMS form 2552–96) that 

allows columns 6 through 11 on line 15 

on worksheet H6 part 1to be populated). 

We found that the average NRS cost per 

visit varies substantially from year-toyear, with the five-year average NRS 

cost per visit at $2.27. 

Once the hospital-based cost report 

data becomes available, we will analyze 

those costs and take them into 

consideration as we work to address any 

findings from the home health study 

required by section 3131(d) of the 

Affordable Care Act, monitor the 

potential impact of the rebasing 

adjustments and other recent payment 

changes, and develop payment options 

to ensure ongoing access to care for 

vulnerable populations. The work may 

include potential revisions to the NRS 

and case-mix weights methodology to 

better reflect costs of treating Medicare 

beneficiaries. 

Comment: Commenters urged CMS to 

use the authority granted under section 

1871 of the Social Security Act to 

modify the rebasing adjustments 

finalized in the CY 2014 HH PPS final 

rule. The commenter stated that CMS 

has authority to modify final regulations 

if CMS finds that notice and public 

procedure thereon are impracticable, 

unnecessary, or contrary to the public 

interest. Commenters urged CMS to 

modify payment rates in order to secure 

seniors’ access to home health care, 

ensure high quality of care, and preserve 

jobs. Another commenter stated that 

section 1895 of the Social Security Act 

allows CMS to implement a less 

aggressive approach to rebasing. 

Response: Section 1871(b)(2)(C) of the 

Act cross-references section 553(b)(3)(B) 

of the Administrative Procedure Act. 

Both the Social Security Act and the 

Administrative Procedure Act permit us 

to waive the requirements of notice and 

a period for comment if, among other 

things, the Secretary determines that 

notice and comment are impracticable, 

unnecessary, or contrary to the public 

interest. Normally, we only waive notice 

and comment when we believe there are 

unusual circumstances that would 

warrant expedited implementation of a 

rule, or when the rule changes are 

technical and/or involve no exercise of 

discretion on the part of the Secretary. 

In the context of this notice-andcomment rulemaking, it appears that the 

commenter is requesting that we adjust 

our rebasing rates without having 

previously announced our intention to 

do so. We do not believe that 

circumstances have changed in a way 

that would require an immediate change 

to our rebasing rate; and even if 

circumstances changed, we do not 

believe that changing the rate without a 

period for notice and comment would 

be in the public interest. We also note 

that calculation of the rates pursuant to 

the rebasing provision at section 

1895(b)(3)(A)(iii) of the Act took place 

after a period of notice and comment in 

the CY 2014 HH PPS rule (see 78 FR 

72278 through 72281). Section 1895 of 

the Act states that we must phase in any 

adjustment over a four-year period in 

equal increments, not to exceed 3.5 

percent of the amount (or amounts) as 

of the date of enactment of the 

Affordable Care Act, and fully 

implement the rebasing adjustments by 

CY 2017. We do not have the authority 

to implement rebasing in another 

manner. Therefore, we will move 

forward with the rebasing reductions 

finalized in the CY 2014 HH PPS final 

rule. 

2. Affordable Care Act Face-to-Face 

Encounter Requirement 

Effective January 1, 2011, section 

6407 the Affordable Care Act requires 

that, as a condition for payment, prior 

to certifying a patient’s eligibility for the 

Medicare home health benefit, the 

physician must document that the 

physician himself or herself, or an 

allowed non-physician practitioner 

(NPP), as described below, had a 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 

information provided by the HHAs 

when making eligibility determinations 

and other decisions about patient care. 

In the CY 2011 HH PPS final rule, in 

which we implemented the face-to-face 

encounter provision of the Affordable 

Care Act, some commenters expressed 

concern that this requirement would 

diminish access to home health services 

(75 FR 70427). We examined home 

health claims data from before 

implementation of the face-to-face 

encounter requirement (CY 2010), the 

year of implementation (CY 2011), and 

the years following implementation (CY 

2012 and CY 2013), to determine 

whether there were indications of access 

issues as a result of this requirement. 

Nationally, utilization (as measured by 

the number of episodes) held relatively 

constant over the first year of 

implementation (comparing CY 2010 

and CY 2011) (see Table 5 below). 

Between CY 2010 and CY 2013, there 

was a 1.8 percent decrease in number of 

episodes, however, there was a 1.5 

percent increase in the number of home 

health users (beneficiaries with at least 

one home health episode). Also, the 

number of HHAs providing at least one 

home health episode increased steadily 

from CY 2010 through CY 2013 with an 


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aggregate increase of 8.9 percent (see 

Table 5 below). 

Home health users as a percentage of 

Part A and/or Part B fee-for-service 

(FFS) beneficiaries decreased slightly 

from 9.3 percent in CY 2010 to 9.0 

percent in CY 2013. The number of 

episodes per Part A and/or Part B FFS 

beneficiaries decreased slightly between 

CY 2010 and CY 2013, with 0.19 (or 19 

episodes per 100 Medicare Part A and/ 

or Part B FFS beneficiaries) in CY 2010 

and 0.17 (or 17 episodes per 100 

Medicare Part A and/or Part B FFS 

beneficiaries) in CY 2013. We note these 

observed decreases between CY 2010 to 

CY 2013, for the most part, are likely the 

result of an increase in FFS enrollment 

between CY 2010 and CY 2013 of 4.6 

percent. Newly eligible Medicare 

beneficiaries are typically not of the age 

where home health services are needed 

and therefore, without any changes in 

utilization, we will expect home health 

users and the number of episodes per 

Part A and/or B FFS beneficiaries to 

decrease with an increase in the number 

of newly enrolled FFS beneficiaries. 

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

2010 2011 2012 2013 

Number of episodes ........................................................................................ 6,833,669 6,821,459 6,727,875 6,708,923 

Beneficiaries receiving at least 1 episode (Home Health Users) .................... 3,431,696 3,449,231 3,446,122 3,484,579 

Part A and/or B FFS beneficiaries .................................................................. 36,818,078 37,686,526 38,224,640 38,505,609 

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

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

HHAs providing at least 1 episode .................................................................. 10,916 11,446 11,746 11,889 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014 and August 19, 

2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage. 

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

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

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

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

Although home health utilization at 

the national level decreased slightly 

from CY 2010 and CY 2013, the 

decrease in utilization did not occur in 

all states. For example, California, New 

Jersey and Virginia experienced an 

increase in the number of episodes from 

CY 2010 to CY 2013. Also, the number 

of episodes per Part A and/or Part B FFS 

beneficiaries for these states increased 

or remained roughly the same between 

CY 2010 through CY 2013 (see Table 6). 

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

BETWEEN CY 2010 AND CY 2011 

Year AL CA MA NJ VA 

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

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

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

2013 148,972 508,838 186,871 143,674 160,105 

Beneficiaries Receiving at Least 1 Episode (Home Health 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 

2013 71,703 294,150 110,573 97,385 94,393 

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

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

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

2013 739,868 3,444,078 976,814 1,245,275 1,119,886 

Episodes per Part A and/or Part B FFS 

beneficiaries ......................................... 2010 0.22 0.13 0.21 0.12 0.14 

2011 0.21 0.14 0.20 0.12 0.14 

2012 0.21 0.14 0.19 0.12 0.14 

2013 0.20 0.15 0.19 0.12 0.14 

Home Health Users as a Percentage of 

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

2011 9.83% 8.20% 11.51% 7.91% 8.22% 

2012 9.71% 8.27% 11.15% 7.83% 8.27% 

2013 9.69% 8.54% 11.32% 7.82% 8.43% 

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

2011 150 1,013 150 48 209 

2012 148 1,073 160 47 219 

2013 150 1,157 165 46 224 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014 and August 19, 

2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage. 


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

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

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

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

The states with the highest utilization 

of Medicare home health (as measured 

by the number of episodes per Part A 

and/or Part B FFS beneficiaries) are 

Texas, Florida, Oklahoma, Mississippi, 

and Louisiana (Table 7 and Figure 1 

below). In aggregate, for CY 2010 

through CY 2013 the number of 

episodes for these states decreased by 

8.0 percent; however, even with this 

decrease from CY 2010 through CY 

2013, the five states listed in Table 7 

continue to be among the states with the 

highest utilization of Medicare home 

health nationally (see Figure 1). If we 

were to exclude the five states listed in 

Table 7 from the national figures in 

Table 5, home health users 

(beneficiaries with at least one home 

health episode) as a percentage of Part 

A and/or Part B fee-for-service (FFS) 

beneficiaries would decrease from to 9.0 

percent to 8.1 percent for CY 2013 and 

the number of episodes per Part A and/ 

or Part B FFS beneficiaries would 

decrease from 0.17 (or 17 episodes per 

100 Medicare Part A and/or Part B FFS 

beneficiaries) to 0.14 (or 14 episodes per 

100 Medicare Part A and/or Part B FFS 

beneficiaries) for CY 2013. 

Texas, accounting for roughly 17 

percent of HHA episodes in 2010, 

experienced a 12 percent decrease in the 

number of episodes and a 9 percent 

decrease in the number of home health 

users between CY 2010 and CY 2013 

(see Table 7 below). We also note that 

Texas is one of the states that has areas 

with suspect billing practices. A 

temporary moratoria on enrollment of 

new HHAs, effective July 30, 2013, were 

put in place for Miami, FL and Chicago, 

IL. In January of 2014, CMS announced 

new temporary moratoria on enrollment 

of new HHAs in four additional areas 

—Fort Lauderdale, FL; Detroit, MI; 

Dallas, TX; and Houston, TX. If we were 

to exclude Texas from the national 

average (see Table 5 above), there would 

be a 0.13 percent increase in number of 

episodes between CY 2010 and CY 2013 

rather than a 1.8 percent decrease as 

observed at the national level. The 

number of home health users would 

increase 2.8 percent compared to the 

national average with an increase of 1.5 

percent. 

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

PART A AND/OR PART B FFS BENEFICIARIES, CY 2010 THROUGH CY 2013 

Year TX FL OK MS LA 

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

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

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

2013 995,555 689,269 196,713 143,428 215,590 

Beneficiaries Receiving at Least 1 Episode (Home Health 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 

2013 333,396 357,099 66,502 55,453 73,888 

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

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

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

2013 2,535,611 2,454,216 568,815 483,439 574,654 

Episodes per Part A and/or Part B FFS 

beneficiaries ......................................... 2010 0.45 0.28 0.39 0.33 0.47 

2011 0.43 0.29 0.37 0.32 0.44 

2012 0.40 0.28 0.35 0.31 0.40 

2013 0.39 0.28 0.35 0.30 0.38 

Home Health Users as a Percentage of 

Part A and/or Part 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% 

2013 13.15% 14.55% 11.69% 11.47% 12.86% 

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

2011 2,472 1,426 252 51 216 

2012 2,549 1,430 254 48 213 

2013 2,600 1,357 262 48 210 

Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)—Accessed on May 14, 2014 and August 19, 

2014. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage. 

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

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

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

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


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66041 

For CY 2011, in addition to the 

implementation of the Affordable Care 

Act face-to-face encounter requirement, 

HHAs were also subject to new therapy 

reassessment requirements, payments 

were reduced to account for increases in 

nominal case-mix, and the Affordable 

Care Act mandated that the HH PPS 

payment rates be reduced by 5 percent 

to pay up to, but no more than 2.5 

percent of total HH PPS payments as 

outlier payments. The estimated net 

impact to HHAs for CY 2011 was a 

decrease in total HH PPS payments of 

4.78 percent. Therefore, any changes in 

utilization between CY 2010 and CY 

2011 cannot be solely attributable to the 

implementation of the face-to-face 

encounter requirement. For CY 2012 we 

recalibrated the case-mix weights, 

including the removal of two 

hypertension codes from scoring points 

in the HH PPS Grouper and lowering 

the case-mix weights for high therapy 

cases estimated net impact to HHAs, 

and reduced HH PPS rates in CY 2012 

by 3.79 percent to account for additional 

growth in aggregate case-mix that was 

unrelated to changes in patients’ health 

status. The estimated net impact to 

HHAs for CY 2012 was a decrease in 

total HH PPS payments of 2.31 percent. 

Again, any changes in utilization 

between CY 2011 and CY 2012 cannot 

be solely attributable to the 

implementation of the face-to-face 

encounter requirement. Given that a 

decrease in the number of episodes from 

CY 2010 to CY 2013 occurred in states 

that have the highest home health 

utilization (number of episodes per Part 

A and/or Part B FFS beneficiaries) and 

not all states experienced declines in 

episode volume during that time period, 

we believe that the implementation of 

the face-to-face encounter requirement 

could be considered a contributing 

factor. We will continue to monitor for 

potential impacts due to the 

implementation of the face-to-face 

encounter requirements and other 

policy changes in the future. 

Independent effects of any one policy 

may be difficult to discern in years 

where multiple policy changes occur in 

any given year. 

B. Changes to the Face-to-Face 

Encounter Requirements 

1. Background on Statutory and 

Regulatory Requirements 

As a condition for payment, section 

6407 of the Affordable Care Act requires 

that, prior to certifying a patient’s 

eligibility for the Medicare home health 

benefit, the physician must document 

that the physician himself or herself or 

an allowed non-physician practitioner 

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

the patient. Specifically, sections 

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

Act, as amended by the Affordable Care 

Act, state that, in addition to the 

certifying physician, a nurse 

practitioner or clinical nurse specialist, 

as those terms are defined in section 

1861(aa)(5) of the Act, working in 

collaboration with the physician in 

accordance with state law, or a certified 

nurse-midwife (as defined in section 

1861(gg) of the Act) as authorized by 

state law, or a physician assistant (as 

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

Act) under the supervision of the 


tkelley on DSK3SPTVN1PROD with RULES2ER06NO14.000</GPH>
66042 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

2The physician cannot have a financial 

relationship as defined in § 411.354 of the chapter, 

with that HHA, unless the physician’s relationship 

meets one of the exceptions in section 1877 of the 

Act, which sets forth general exceptions to the 

referral prohibition related to both ownership/

investment and compensation; exceptions to the 

referral prohibition related to ownership or 

investment interests; and exceptions to the referral 

prohibition related to compensation arrangements. 

3Skilled 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)). 

physician may perform the face-to-face 

encounter. 

The goal of the Affordable Care Act 

provision is to achieve greater physician 

accountability in certifying a patient’s 

eligibility and in establishing a patient’s 

plan of care. We believe this goal is 

better achieved if the face-to-face 

encounter occurs close to the start of 

home health care, increasing the 

likelihood that the clinical conditions 

exhibited by the patient during the 

encounter are related to the primary 

reason the patient needs home health 

care. The certifying physician is 

responsible for determining whether the 

patient meets the eligibility criteria (that 

is, homebound status and need for 

skilled services) and for understanding 

the current clinical needs of the patient 

such that the physician can establish an 

effective plan of care. As such, CMS 

regulations at § 424.22(a)(1)(v) require 

that the face-to-face encounter be related 

to the primary reason the patient 

requires home health services and occur 

no more than 90 days prior to the home 

health start of care date or within 30 

days of the start of the home health care. 

In addition, current regulations require 

that, as part of the certification of 

eligibility, the certifying physician must 

document the date of the encounter and 

include an explanation (narrative) of 

why the clinical findings of such 

encounter support that the patient is 

homebound, as defined in sections 

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

need of either intermittent skilled 

nursing services, physical therapy, or 

speech-language pathology services, as 

defined in § 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).2

• Home health services will be or 

were furnished while the individual is 

or was under the care of a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine. 

• A face-to-face patient encounter 

occurred no more than 90 days prior to 

the home health start of care date or 

within 30 days of the start of the home 

health care and was related to the 

primary reason the patient requires 

home health services. This also includes 

documenting the date of the encounter 

and including an explanation of why 

the clinical findings of such encounter 

support that the patient is homebound 

(as defined in sections 1835(a) and 

1814(a) of the Act) and in need of either 

intermittent skilled nursing services or 

therapy services as defined in 

§ 409.42(c). The documentation must be 

clearly titled and dated and the 

documentation must be signed by the 

certifying physician. 

CMS regulations at § 424.22(a)(1)(i) 

also require that, for instances where the 

physician orders skilled nursing visits 

for management and evaluation of the 

patient’s care plan,3 the physician must 

include a brief narrative that describes 

the clinical justification of this need and 

the narrative must be located 

immediately before the physician’s 

signature. If the narrative exists as an 

addendum to the certification form, in 

addition to the physician’s signature on 

the certification form, the physician 

must sign immediately after the 

narrative in the addendum. 

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, physical therapy, 

or speech–language pathology services. 

Again, for instances where the 

physician ordering skilled nursing visits 

for management and evaluation of the 

patient’s care plan, the physician must 

include a brief narrative that describes 

the clinical justification of this need and 

the narrative must be located 

immediately before the physician’s 

signature. If the narrative exists as an 

addendum to the recertification form, in 

addition to the physician’s signature on 

the recertification form, the physician 

must sign immediately after the 

narrative in the addendum. 

In the CY 2012 HH PPS final rule (76 

FR 68597), we stated that, in addition to 

the certifying physician and allowed 

NPPs (as defined by the Act and 

discussed above), the physician who 

cared for the patient in an acute or 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, could 

communicate the clinical findings that 

supported the patient’s needs for skilled 

care and homebound status to the acute/ 

post-acute care physician. In turn, the 

acute/post-acute care physician would 

communicate the clinical findings that 

supported the patient’s needs for skilled 

care and homebound status from the 

encounter performed by the NPP to the 

certifying physician to document. Policy 

always permitted such NPPs in the 

acute/post-acute care setting from which 

the patient is directly admitted to home 

health care to perform the face-to-face 

encounter and communicate directly 

with the certifying physician the 

clinical findings from the encounter and 

how such findings support that the 

patient was homebound and needed 

skilled services (77 FR 67106). 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66043 

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

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

April, 23, 2014 at: http://www.hhs.gov/afr/2013- 

hhs-agency-financial-report.pdf. 

5U.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. 

6The 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. 

2. Changes to the Face-to-Face 

Encounter Narrative Requirement and 

Non-Coverage of Associated Physician 

Certification/Re-Certification Claims 

Each year, the CMS’ Office of 

Financial Management (OFM), under 

the Comprehensive Error Rate Testing 

(CERT) program, calculates the 

Medicare Fee-for-Service (FFS) 

improper payment rate. For the FY 2013 

report period (reflecting claims 

processed between July 2011 and June 

2012), the national Medicare FFS 

improper payment rate was calculated 

to be 10.1 percent.4 For that same report 

period, the improper payment rate for 

home health services was 17.3 percent, 

representing a projected improper 

payment amount of approximately $3 

billion.5 The improper payments 

identified by the CERT program 

represent instances in which a health 

care provider fails to comply with the 

Medicare coverage and billing 

requirements and are not necessarily a 

result of fraudulent activity.6

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. 

While we do not agree that the 

narrative requirement goes beyond 

Congressional intent, we agree that there 

should be sufficient evidence in the 

patient’s medical record to demonstrate 

that the patient meets the Medicare 

home health eligibility criteria. 

Therefore, in an effort to simplify the 

face-to-face encounter regulations, 

reduce burden for HHAs and 

physicians, and to mitigate instances 

where physicians and HHAs 

unintentionally fail to comply with 

certification requirements, we proposed 

that: 

(1) The narrative requirement in 

regulation at § 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 would 

still be required to include a brief 

narrative that describes the clinical 

justification of this need as part of the 

certification/re-certification of eligibility 

as outlined in § 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. We note that this requirement 

predates the Affordable Care Act, and is 

a long-established policy of CMS. 

(2) In determining whether the patient 

is or was eligible to receive services 

under the Medicare home health benefit 

at the start of care, we proposed to 

review only the medical record for the 

patient from the certifying physician or 

the acute/post-acute care facility (if the 

patient in that setting was directly 

admitted to home health) used to 

support the physician’s certification of 

patient eligibility, as described in 

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

If the patient’s medical record, used by 

the physician in certifying eligibility, 

was not sufficient to demonstrate that 

the patient was eligible to receive 

services under the Medicare home 

health benefit, payment would not be 

rendered for home health services 

provided. 

(3) Physician claims for certification/ 

recertification of eligibility for home 

health services (G0180 and G0179, 

respectively) would not be covered if 

the HHA claim itself was non-covered 

because the certification/recertification 

of eligibility was not complete or 

because there was insufficient 

documentation to support that the 

patient was eligible for the Medicare 

home health benefit. However, rather 

than specify this in our regulations, this 

proposal would be implemented 

through future sub-regulatory guidance. 

We believed that these proposals were 

responsive to home health industry 

concerns regarding the face-to-face 

encounter requirements articulated 

above. We invited comment on these 

proposals and the associated change in 

the regulations text at § 424.22 the CY 

2015 HH PPS proposed rule (79 FR 

38376). 

The following is a summary of the 

comments we received regarding (1) the 

proposed elimination of the face-to-face 

encounter narrative requirement as part 

of the certification of eligibility; and (2) 

the proposal to review only the medical 

record for the patient from the certifying 

physician or the acute/post-acute care 

facility (if the patient in that setting was 

directly admitted to home health), used 

to support the physician’s certification 

of patient eligibility, in determining 

whether the patient is or was eligible to 

receive services under the Medicare 

home health benefit at the start of care. 

Comment: A few commenters urged 

CMS to remove the face-to-face 

requirement entirely. Commenters went 

on to note that since the intent of the 

face-to-face encounter is to combat 

fraud, CMS should be able to determine 

which HHAs are providing care by 

fraudulent means and should 

investigate those HHAs. 


tkelley on DSK3SPTVN1PROD with RULES2
66044 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

Response: As we note above, as a 

condition for payment, section 6407 of 

the Affordable Care Act requires that, 

prior to certifying a patient’s eligibility 

for the Medicare home health benefit, 

the physician must document that the 

physician himself or herself or an 

allowed NPP had a face-to-face 

encounter with the patient. As such, we 

do not have the legal authority to 

eliminate the face-to-face encounter 

requirement. We also note above that 

the goal of this provision was to achieve 

greater physician accountability in 

certifying a patient’s eligibility, 

increasing communication between the 

physician and home health agency to 

improve patient care, and in 

establishing a patient’s plan of care. 

CMS’s Center for Program Integrity (CPI) 

is currently engaged in a variety of 

activities aimed at reducing fraud and 

abuse. Such activities include provider/ 

contractor audits, policy reviews, and 

the identification and monitoring of 

program vulnerabilities. CPI is actively 

collaborating with the U.S. Department 

of Justice, the Department of Health & 

Human Services’ Office of Inspector 

General, state law enforcement agencies, 

other federal entities, and other CMS 

component(s) for the purposes of 

detecting, deterring, monitoring and 

combating fraud and abuse, as well as 

taking action against those that commit 

or participate in fraudulent or other 

unlawful activities. 

Comment: Several commenters stated 

that CMS overstepped its statutory 

authority by requiring the face-to-face 

encounter narrative as part of the 

certification of patient eligibility for the 

home health benefit. 

Response: We disagree with the 

commenters. We believe that our policy 

is consistent with the text, structure, 

and purpose of the statute. As a 

condition for payment, section 6407 of 

the Affordable Care Act requires that, 

prior to certifying a patient’s eligibility 

for the Medicare home health benefit, 

the physician must ‘‘document’’ that the 

physician himself or herself or an 

allowed NPP had a face-to-face 

encounter with the patient. The 

statutory text does not specify what the 

statutory term ‘‘document’’ means and 

we believe it is reasonable to interpret 

the requirement to ‘‘document’’ the faceto-face encounter as requiring the 

certifying physician to explain why the 

Medicare beneficiary is homebound and 

in need of skilled home health services. 

This interpretation is supported by the 

structure and purpose of the statute. 

Medicare payment for home health 

services is intended for individuals who 

are confined to the home and need 

skilled home health services. The faceto-face requirement and the 

documentation requirement help ensure 

that individuals do not receive home 

health services unnecessarily and that 

Medicare makes payment appropriately 

(that is, when the patient is homebound 

and needs skilled home health services). 

Nothing in the text of the statute 

indicates that the current required 

explanation is outside the scope of the 

Secretary’s legal authority. In addition, 

this is similar to the long-standing 

Medicare policy for skilled nursing 

visits for management and evaluation of 

the patient’s care plan (where 

underlying conditions or complications 

require that only a registered nurse can 

ensure that essential unskilled care is 

achieving its purpose), which was 

previously accepted by the home health 

community. 

Comment: Nearly all commenters 

were supportive of the proposal to 

eliminate the face-to-face encounter 

narrative as part of the certification of 

eligibility and urged CMS to finalize the 

proposal. Commenters cited challenges 

in getting certifying physicians, whom 

the HHA has no control over, to 

document the narrative sufficiently. 

Other commenters noted that policies 

surrounding the narrative requirement 

contained confusing nuances and 

reviews of narrative sufficiency were too 

subjective. Some commenters noted 

instances where medical necessity and 

patient eligibility for the Medicare home 

health benefit were clearly 

demonstrated in the medical record; 

however, the entire claim was denied 

because the certifying physician’s 

narrative was deemed insufficient. 

In contrast, in its comments, MedPAC 

stated that the narrative should continue 

to be a requirement as part of the 

certification of eligibility for Medicare 

home health services. MedPAC stated 

that eliminating the narrative increases 

the risk of unnecessary or unauthorized 

home health care services. MedPAC 

suggested that CMS keep the current 

narrative requirement in effect for at 

least another year while it considers 

other potential improvements. Another 

commenter also disagreed with the 

proposed elimination of the face-to-face 

encounter narrative as part of the 

certification of eligibility stating that the 

elimination of the narrative may 

increase confusion about the Medicare 

home health eligibility requirements. 

Response: We thank the vast majority 

of the commenters for their support of 

this proposal. As explained in the 

proposed rule, we proposed to eliminate 

the narrative requirement in an effort to 

simplify the face-to-face encounter 

regulations, reduce burden for HHAs 

and physicians, and to mitigate 

instances where physicians and HHAs 

unintentionally fail to comply with 

certification requirements. We believe 

that the current narrative requirement 

can be useful for HHAs and medical 

review auditors, and is a permissible 

interpretation of section 6407 of the 

Affordable Care Act. However, as the 

proposed rule reflects, we acknowledge 

the concerns expressed by stakeholders 

regarding application of the narrative 

requirement. Balancing the 

considerations raised by stakeholders 

and commenters in light of our 

experience, we are finalizing our 

proposal to eliminate the narrative 

requirement. We will continue to 

evaluate whether further policy changes 

are warranted in the future. 

Comment: A few commenters asked 

that CMS affirm that a narrative for 

instances where the physician is 

ordering skilled nursing for 

management and evaluation of the 

patient’s care plan (that is, instances 

where the patient’s underlying 

conditions or complications require that 

only a registered nurse can ensure that 

essential unskilled care is achieving its 

purpose) should be a rare occurrence 

and asked how physicians and HHAs 

should identify cases that would require 

a narrative. Some commenters requested 

that CMS affirm in the final rule that 

while CMS proposed to eliminate the 

face-to-face encounter narrative, a 

narrative will still be required for 

instances where the physician is 

ordering skilled nursing visits for the 

management and evaluation of the 

patient’s care plan. Several commenters 

recommended that CMS eliminate all 

narrative requirements for home health 

for consistency and to promote a better 

understanding of the certification/recertification requirements by 

physicians. 

Response: Instances where a 

physician is ordering skilled nursing for 

the management and evaluation of the 

patient’s care plan (when the patient’s 

underlying conditions and/or 

complications require a registered nurse 

to ensure that non-skilled care is 

achieving its purpose), should be rare 

and therefore a narrative that explains 

the need for such services as part of the 

certification/re-certification of patient 

eligibility for the Medicare home health 

benefit should also be rare. Analysis of 

CY 2012 home health claims data 

showed that only 1.5 percent of all 

home health visits were for management 

& evaluation of the patient’s care plan 

(see Table 8 below). 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66045 

7Medicare Benefit Policy Manual, (CMS Pub. 

100–02), Ch. 7, sec. 40.1.2.2. Available at: https:// 

www.cms.gov/Regulations-and-Guidance/

Guidance/Manuals/Downloads/bp102c07.pdf. 

8Medicare Financial Management Manual, (CMS 

Pub. 100–06), Ch. 3, sec. 90.1(E). Available at: 

http://www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/downloads/fin106c03.pdf 

TABLE 8—PERCENTAGE OF HOME

HEALTH VISITS BY HCPCS CODE, 

CY 2012 

Type of visit Percent 

of total 

G0154—Direct skilled services 

provided by a RN/LPN .......... 67.6 

G0162—Skilled services by a 

RN for management and 

evaluation of the plan of care 

(the patient’s underlying conditions or complications requires an RN to ensure that 

essential non-skilled care 

achieves its purpose) ............ 1.5 

G0163—Skilled services of a 

RN/LPN for the observation 

and assessment of the patient’s condition (the change 

in the patient’s condition requires skilled nursing personnel to identify and evaluate the patient’s need for 

possible modification of treatment) ..................................... 10.5 

G0164—Skilled services of a 

RN/LPN, in the training and/

or education of a patient or 

family member ...................... 20.4 

Source: CY 2012 Medicare claims data for 

episodes ending on or before December 31, 

2012 (as of June 30, 2013) for which we had 

a linked OASIS assessment. 

Note(s): RN = Registered Nurse, LPN = Licensed Practical Nurse. 

We note that section 40.1.2.2 in 

Chapter 7 of the Medicare Benefits 

Policy Manual provides information on 

how to identify whether the patient is 

receiving skilled nursing services for 

management and evaluation of the 

patient’s care plan. Skilled nursing 

services in such instances can be 

‘‘reasonable and necessary where 

underlying conditions or complications 

require that only a registered nurse can 

ensure that essential unskilled care is 

achieving its purpose. For skilled 

nursing care to be reasonable and 

necessary for management and 

evaluation of the patient’s plan of care, 

the complexity of the necessary 

unskilled services that are a necessary 

part of the medical treatment must 

require the involvement of skilled 

nursing personnel to promote the 

patient’s recovery and medical safety in 

view of the patient’s overall 

condition.’’ 7 Section 40.1.2.2 also 

provides several examples in which 

skilled nursing services for management 

and evaluation of the patient’s care plan 

could be considered reasonable and 

necessary. 

As indicated above in Table 8, 

instances where the physician is 

ordering skilled nursing visits for 

management and evaluation of the 

patient’s care plan should be infrequent. 

Because the purpose of these visits 

require a skilled nurse to ensure that 

unskilled care is achieving its purpose, 

we believe that it is still appropriate for 

the physician to include a brief 

narrative that describes the clinical 

justification of this need as part of the 

certification/re-certification of eligibility 

as outlined in § 424.22(a)(1)(i) and 

§ 424.22(b)(2). 

Comment: Several commenters stated 

that CMS should halt current medical 

review activities with regard to the faceto-face encounter narrative and reopen 

any past denials that were made based 

on an insufficient face-to-face encounter 

narrative by making the implementation 

of the elimination of the face-to-face 

encounter narrative retroactive. 

Response: The changes finalized in 

CY 2015 HH PPS final rule will become 

effective for episodes that begin on or 

after January 1, 2015. Although we are 

eliminating the narrative requirement 

prospectively, the narrative requirement 

continues to apply to services furnished 

during episodes that begin before 

January 1, 2015. 

Comment: One commenter stated that 

for claims currently undergoing 

retrospective review, CMS should find 

HHAs ‘‘without fault’’ under 42 U.S.C. 

1395gg and section 1870 of the Act in 

receiving payments where the physician 

has provided the narrative, although 

perhaps not sufficient, in addition to 

meeting all other certification 

requirements. In finding the HHAs 

‘‘without fault’’ CMS would simply be 

acknowledging that the nature of the 

earlier face-to-face guidance could lead 

to a provider acting in good faith in 

submitting a claim that might not meet 

the documentation standards. One 

commenter stated that CMS should 

issue clarifying guidance, to be applied 

to claims currently being reviewed, that 

explains what constitutes a compliant or 

sufficient narrative. 

Response: Providers are required to 

submit documentation adequate to 

justify payment under Medicare. Where 

we deny a claim due to insufficient 

documentation of the face-to-face 

encounter, we are also inherently 

determining that the provider is not 

without fault because the provider has 

not met its burden to submit 

documentation adequate to justify 

payment. The Medicare Financial 

Management Manual addresses the 

‘‘without fault’’ clause of section 1395gg 

of the Act and states that a provider is 

not without fault if it fails to provide the 

documentation necessary to determine 

that the billed-for services are covered.8

We believe that we have provided 

sufficient education and guidance to 

providers on the requirements for 

sufficiently documenting the face-toface encounter as part of the 

certification of eligibility. 

CMS has issued several educational 

articles and a set of Q&As to help aide 

physicians and HHAs in complying 

with the face-to-face encounter narrative 

requirement. The most recent article 

issued—MLN Matters® SE1405: 

Documentation Requirements for Home 

Health Prospective Payment System 

(HH PPS) Face-to-Face Encounter— 

explains what constitutes a sufficient 

face-to-face encounter narrative and 

includes several examples. Other 

articles and a set of Q&As on the faceto-face encounter requirement and 

physician certification of eligibility can 

be found on the Home Health Agency 

(HHA) center Web page at: http:// 

www.cms.gov/Center/Provider-Type/ 

Home-Health-Agency-HHA-Center.html 

under ‘‘spotlights’’. 

Comment: Several commenters stated 

that CMS should educate its contractors 

to ensure that there are consistent and 

standardized audit practices. Other 

commenters stated that if CMS reviews 

the certifying physician’s and/or 

facility’s medical record for the patient, 

CMS should adequately prepare 

physicians to implement this new 

policy by educating physicians on the 

requirements for home health eligibility, 

how to sufficiently document patient 

eligibility, and the Medicare definition 

of confined to the home. 

Response: We use several methods to 

ensure consistency in medical reviews, 

including contractor oversight and the 

use of inter-rater reliability to ensure 

that all reviewers are interpreting the 

policy the same. We offer a range of 

educational resources through online 

manuals and Web site postings for 

HHAs and physicians who order these 

services. When appropriate, we also 

provide direct guidance and education 

to Medicare providers and suppliers. 

We encourage HHAs to work with their 

designated MAC to address any issues 

that arise in the claims payment 

process. We agree with commenters 

who suggested that we educate 

physicians regarding any policy changes 

finalized in this final rule and provide 

general education to physicians on 

certifying beneficiaries for Medicare 

home health services. We will do so via, 


tkelley on DSK3SPTVN1PROD with RULES2
66046 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

9Medicare Program Integrity Manual (CMS Pub. 

100–08) Ch.5, sec. 5.7. Available at: https:// 

www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/Downloads/pim83c05.pdf. 

for example, open door forums, email 

listserv announcements, and MedLearn 

articles. 

Comment: A few commenters stated 

that the certifying physician would not 

have, nor should be required to have, 

sufficient documentation within his/her 

medical record for the patient to support 

his/her certification that the patient is 

eligible for the Medicare home health 

benefit. Several commenters stated that 

HHAs should not be liable for 

documentation errors made by 

physicians, whom they have little direct 

control over and some commenters 

stated that it is neither reasonable for 

the HHA to obtain all the 

documentation needed from the 

certifying physician and/or the acute/ 

post-acute care facility that may have 

been used to certify patient eligibility 

and/or lead to the referral for home care. 

A few commenters stated that CMS’ 

proposals to base reimbursement of one 

provider on documentation maintained 

by another, separate provider is 

unprecedented. Several commenters 

stated that if CMS begins reviewing the 

certifying physician’s records for the 

patient, physician’s will cease to refer 

patients to home health out of fear of 

patient record audits and frustration 

with administrative burden. 

Response: In accordance with the 

statutory language at sections 1814(a)(2) 

and 1835(a)(2) of the Act, physicians are 

required to have, and thus be able to 

provide, material that appropriately 

supports their certification and 

recertification of Medicare home health 

beneficiaries, as provided by 

regulations. When we proposed to 

require a face-to-face encounter 

narrative, comments, which were 

summarized and addressed in the CY 

2011 HH PPS final rule (75 FR 70431), 

communicated to CMS that ‘‘the HHA 

has no control over the quality of the 

physician’s documentation and no 

method to enforce proper physician 

documentation’’. We stated in our 

response that: 

‘‘it is important to reiterate that to be 

eligible for Medicare’s [home health] benefit, 

the patient must be under the care of a 

physician, and it is ultimately the 

responsibility of the HHA that this criterion 

is met. We have always held the HHA 

responsible for ensuring that there is a 

physician-signed plan of care, physiciansigned orders, and a physician-signed 

certification. Therefore, we will also hold the 

agencies responsible for the certifying 

physician’s encounter documentation. By 

statute, this documentation is a requirement 

for payment just as a physician-signed 

certification of eligibility is a requirement for 

payment’’ (75 FR 70430). 

We also stated in the CY 2011 HH PPS 

final rule that: ‘‘we would expect that a 

physician who performs a medically 

necessary physician service, which also 

satisfies the face-to-face encounter 

requirement, would maintain medical 

record documentation concerning the 

encounter, and the clinical findings 

associated with that encounter would be 

consistent with the physician’s 

certification documentation’’ (75 FR 

70431). While we stated that the HHA 

was ‘‘held harmless’’ if the certification 

of eligibility, including the face-to-face 

encounter narrative, was sufficient, we 

noted that the certifying physician was 

still expected to fulfill his or her 

responsibility for ensuring appropriate 

medical record documentation 

associated with the certification and/or 

encounter and any associated Medicare 

billing (75 FR 70431). Since we 

proposed to eliminate the face-to-face 

encounter narrative, with respect to 

which commenters were 

overwhelmingly supportive, the only 

other source that would substantiate the 

certification of eligibility is the 

certifying physician’s and/or the acute/ 

post-acute care facility’s medical record 

for the patient. 

We do not agree that requiring 

documentation from the certifying 

physician’s and/or acute/post-acute care 

facility’s medical record for the patient 

to substantiate the certification of 

eligibility is unprecedented. For any 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) item to be covered by 

Medicare: 

‘‘the patient’s medical record must contain 

sufficient documentation of the patient’s 

medical condition to substantiate the 

necessity for the type and quantity of items 

ordered and for the frequency of use or 

replacement (if applicable).... However, 

neither a physician’s order nor a certificate 

of medical necessity (CMN) nor a DME 

information form (DIF) nor a supplier 

prepared statement nor a physician 

attestation by itself provides sufficient 

documentation of medical necessity, even 

though it is signed by the treating physician 

or supplier. There must be information in the 

patient’s medical record that supports the 

medical necessity for the item and 

substantiates the answers on the CMN (if 

applicable) or DIF (if applicable) or 

information on a supplier prepared statement 

or physician attestation (if applicable).’’ 9

The analysis in section III.A in this 

final rule shows that since the 

implementation of the face-to-face 

encounter requirement there has been 

little change in home health utilization. 

As such, we would not expect the 

elimination of the narrative and the 

review of documentation from the 

certifying physician’s and/or post-acute/ 

acute care facility’s medical record for 

the patient to have a substantial impact 

on utilization for those beneficiaries 

who are truly eligible to receive services 

under the Medicare home health 

benefit. We will continue to monitor for 

potential impacts due to the face-to-face 

encounter requirements and other 

policy changes in the future. 

Comment: Commenters were 

generally opposed to using only the 

certifying physician’s and/or acute/postacute care facility’s medical record for 

the patient to determine initial patient 

eligibility for the home health benefit. 

Commenters generally went on to state 

that all medical necessity and eligibility 

determinations should be based on 

whether the full patient record, 

regardless of who holds it, establishes 

that the patient is homebound and in 

need of skilled care. Other commenters 

suggested that CMS adopt a policy that 

allows the certifying physician 

documentation that supports the 

certification of eligibility for home 

health services to be maintained in the 

medical record of the HHA or allow 

information from the HHA to be 

incorporated into the certifying 

physician’s medical record for the 

patient. One commenter noted that 

when MAC and RAC reviews are 

conducted, it can be years after the 

service was actually provided and it 

could be difficult to obtain information 

from the facility/certifying physician 

years later as the medical record for the 

patient may have been moved off-site 

for storage. 

Response: In accordance with the 

statutory language at sections 1814(a)(2) 

and 1835(a)(2) of the Act, a physician is 

required to certify and re-certify the 

patient’s eligibility for the home health 

benefit. This is also a condition for 

Medicare payment per the regulations at 

§ 424.22. Without a valid certification/

re-certification of eligibility, there can 

be no payment made to the HHA. 

Section 1833(e) of the Act further states 

that: ‘‘No payment shall be made to any 

provider of services or other person 

under this part unless there has been 

furnished such information as may be 

necessary in order to determine the 

amounts due such provider or other 

person under this part for the period 

with respect to which the amounts are 

being paid or for any prior period.’’ 

Similarly, section 1815(a) of the Act 

states that: ‘‘. . . no such payments 

shall be made to any provider unless it 

has furnished such information as the 

Secretary may request in order to 

determine the amounts due such 

provider under this part for the period 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66047 

10Medicare General Information, Entitlement, 

and Eligibility Manual (CMS Pub. 100–01) Ch. 4, 

sec. 30.1. Available at: https://www.cms.gov/

Regulations-and-Guidance/Guidance/Manuals/

Downloads/ge101c04.pdf. 

with respect to which the amounts are 

being paid or any prior period.’’ Since 

the certification/re-certification of 

eligibility is a requirement for payment 

and a physician, independent from the 

HHA as outlined in § 424.22(d), must 

complete the certification/ 

re-certification of eligibility, only the 

certifying physician’s and/or the acute/ 

post-acute care facility’s medical record 

for the patient that was used as the basis 

for the certification of eligibility can 

demonstrate whether the certification/

re-certification of eligibility is valid. 

We agree with the suggestions made 

by the commenters that the certifying 

physician and/or acute/post-acute care 

facility should provide the 

documentation that substantiates the 

patient’s eligibility to the HHA upon 

request. The HHA must provide the 

documentation from the certifying 

physician and/or acute/post-acute care 

facility that substantiates the patient’s 

eligibility for the Medicare home health 

benefit to CMS and/or its contractors 

upon request. We also agree with 

commenters that it would be 

permissible for the HHA to 

communicate with and provide 

information to the certifying physician 

about the patient’s homebound status 

and need for skilled care and for the 

certifying physician to incorporate this 

information into his or her medical 

record for the patient. However, the 

certifying physician must review and 

sign off on anything incorporated into 

his or her medical record for the patient 

that is used to support his/her 

certification/re-certification of patient 

eligibility for the home health benefit. In 

addition, any information from the HHA 

(including the comprehensive 

assessment) that is incorporated into the 

certifying physician’s and/or the acute/ 

post-acute care facility’s medical record 

for the patient (if the patient was 

directly admitted to home health) and 

used to support the certification of 

patient eligibility for the home health 

benefit, must corroborate the certifying 

physician’s and/or the acute/post-acute 

care facility’s own documentation/

medical record entries, including the 

diagnoses and the patient’s condition 

reported on the comprehensive 

assessment. 

Comment: Commenters questioned 

how the process of reviewing the 

certifying physician and/or acute/postacute care facility medical record for the 

patient would be operationalized. 

Specifically, commenters asked if 

medical review auditors would contact 

the certifying physician and/or acute/

post-acute care facility directly to obtain 

records for review and if HHAs would 

be penalized if certifying physician and/ 

or acute/post-acute care facility patient 

records are not readily available for 

review. Some commenters questioned 

whether medical record reviews would 

happen upon request, such as a MAC or 

RAC additional documentation request, 

or if the HHA would be responsible for 

obtaining the supporting documentation 

from the certifying physician and/or 

acute/post-acute care facility and, if so, 

whether the documentation should be 

obtained upon referral. A few 

commenters stated that if HHAs are 

responsible for securing supporting 

documentation, it could lead to delays 

in accepting patients, which in turn 

could lead to issues in complying with 

other regulations, such as the timeframe 

required for completing the initial 

assessment. 

Response: After reviewing all of the 

public comments received, we believe 

that the best process is for the certifying 

physician and/or the acute/post-acute 

care facility (if the patient in that setting 

was directly admitted to home health) to 

provide the documentation used as the 

basis for the certification of home health 

eligibility, upon request, to the home 

health agency, review entities, and/or 

CMS. The HHA will obtain the 

documentation from the certifying 

physician and/or acute/post-acute care 

facility that substantiates the 

certification of patient eligibility for its 

own medical record for the patient and 

must be able to provide it to CMS and 

its review entities upon request. If the 

documentation used as the basis for the 

certification of eligibility is not 

sufficient to demonstrate that the 

patient is or was eligible to receive 

services under the Medicare home 

health benefit, payment will not be 

rendered for home health services 

provided. Obtaining documentation 

from the certifying physician and/or 

acute/post-acute care facility should not 

lead to delays in accepting patients. We 

require certifications to be obtained at 

the time the plan of care is established 

or as soon thereafter as possible.10 This 

allows flexibility for HHAs to develop 

the plan of care in consultation with the 

physician, if needed. 

The plan of care requirements in the 

Medicare Conditions of Participation 

(CoPs) at § 484.18(a) states that the plan 

of care developed in consultation with 

the agency staff covers all pertinent 

diagnoses, including mental status, 

types of services and equipment 

required, frequency of visits, prognosis, 

rehabilitation potential, functional 

limitations, activities permitted, 

nutritional requirements, medications 

and treatments, any safety measures to 

protect against injury, instructions for 

timely discharge or referral, and any 

other appropriate items. If a physician 

refers a patient under a plan of care that 

cannot be completed until after an 

evaluation visit, the physician is 

consulted to approve additions or 

modifications to the original plan. 

Orders for therapy services include the 

specific procedures and modalities to be 

used and the amount, frequency, and 

duration. The therapist and other 

agency personnel participate in 

developing the plan of care. 

The Medicare CoPs, at § 484.55(a), 

require the completion of an initial 

assessment within 48 hours of referral, 

or within 48 hours of the patient’s 

return home, or on the physicianordered start of care date. The initial 

assessment visit must be done to 

determine the immediate care and 

support needs of the patient and to 

determine eligibility for the Medicare 

home health benefit, including 

homebound status. The Medicare CoPs, 

at § 484.55(b), require a comprehensive 

assessment to be completed in a timely 

manner, consistent with the patient’s 

immediate needs, but no later than 

5 calendar days after the start of care, 

and for eligibility for the Medicare home 

health benefit to be determined, 

including homebound status. We would 

expect that the findings from initial 

assessment and/or comprehensive 

assessment of the patient would be 

communicated to the certifying 

physician. The certifying physician can 

incorporate this information into his/her 

medical record for the patient and use 

it to develop the plan of care and to 

support his/her certification of patient 

eligibility. The certifying physician 

must review and sign off on anything 

incorporated it into his or her medical 

record for the patient that is used to 

substantiate the certification/ 

re-certification of patient eligibility for 

the home health benefit. 

Also, per the regulations at 

§ 424.22(a)(1)(v), the face-to-face 

encounter itself, can occur up to 30 days 

after the start of care. As such, there 

may be instances where the certification 

of patient eligibility and associated 

supporting documentation may not be 

available until after the patient has been 

accepted by the HHA and services have 

commenced. As noted above, the 

certification must be obtained at the 

time the plan of care is established or as 

soon thereafter as possible. Therefore, it 

is not acceptable for HHAs to wait until 

the end of the 60-day episode of care to 

obtain a completed certification of 


tkelley on DSK3SPTVN1PROD with RULES2
66048 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

11Medicare Financial Management Manual, (CMS 

Pub. 100–06), Ch. 3, sec. 90.1(E). Available at: 

http://www.cms.gov/Regulations-and-Guidance/

Guidance/Manuals/downloads/fin106c03.pdf 

patient eligibility and supporting 

documentation from the certifying 

physician and/or the acute/post-acute 

care facility (if the patient was directly 

admitted to home health). 

Comment: Commenters stated that 

most of the issues with the face-to-face 

encounter narrative stemmed from a 

misunderstanding by providers and 

physicians on what is considered a 

sufficient narrative. Therefore, if the 

certifying physician’s and/or acute/postacute care facility’s medical record for 

the patient is reviewed to determine 

initial patient eligibility for the home 

health benefit, then CMS should define 

what it would consider sufficient 

documentation to substantiate the 

certification of eligibility. Some 

commenters stated that it is impossible 

for the HHA to ensure that the 

documentation in the certifying 

physician and/or acute/post-acute care 

facility medical record for the patient is 

sufficiently detailed to support the 

certification of patient eligibility. A few 

commenters stated that some physicians 

are reluctant or resistant to providing 

additional documentation or changing 

previous practices in order to comply 

with new requirements. 

Response: HHAs should obtain as 

much documentation from the certifying 

physician’s medical records and/or the 

acute/post-acute care facility’s medical 

records (if the patient was directly 

admitted to home health) as they deem 

necessary to assure themselves that the 

Medicare home health patient eligibility 

criteria have been met. As previously 

noted, we have issued several 

educational articles and a set of Q&As 

to help aide physicians and HHAs in 

complying with the face-to-face 

encounter narrative requirement and 

similarly could be used as a guide on 

what would be considered adequate 

documentation in the certifying 

physician’s and/or acute/post-acute care 

facility’s medical record for the patient 

to substantiate eligibility for the 

Medicare home health benefit. The most 

recent article issued—MLN Matters®

SE1405: Documentation Requirements 

for Home Health Prospective Payment 

System (HH PPS) Face-to-Face 

Encounter—explains what constitutes a 

sufficient face-to-face encounter 

narrative and includes several 

examples. Other articles, including 

SE1405, and a set of Q&As on the faceto-face encounter requirement and 

physician certification of eligibility can 

be found on the Home Health Agency 

(HHA) center Web page at: http://

www.cms.gov/Center/Provider-Type/

Home-Health-Agency-HHA-Center.html 

under ‘‘spotlights’’. 

The Medicare Financial Management 

Manual requires providers to provide 

the documentation necessary to 

determine that the billed-for services are 

covered.11 Home health services cannot 

be covered without a valid patient 

certification/re-certification of 

eligibility, in accordance with our 

regulations at § 424.22. The certifying 

physician and/or the acute/post-acute 

care facility medical record for the 

patient must contain information that 

justifies the referral for Medicare home 

health services, including the need for 

the skilled services initially ordered and 

the patient’s homebound status. This 

information can be found most often in 

clinical and progress notes and 

discharge summaries. In addition, the 

certifying physician’s and/or acute/postacute care facility’s medical record for 

the patient must contain the actual 

clinical note for the face-to-face 

encounter visit that demonstrates that 

the visit occurred within the required 

timeframe, was related to the primary 

reason the patient requires home health 

services, and was performed by either: 

(1) The certifying physician; (2) a 

physician, with privileges, who cared 

for the patient in an acute or post-acute 

care facility from which the patient was 

directly admitted to home health; or (3) 

an allowed NPP as set out in 

§ 424.22(a)(1)(v)(A). 

It is permissible for the HHA to 

communicate with and provide 

information to the certifying physician 

about the patient’s homebound status 

and need for skilled care and for the 

certifying physician to incorporate this 

information into his or her medical 

record for the patient. The certifying 

physician must review and sign off on 

anything incorporated it into his or her 

medical record for the patient that is 

used to support his/her certification/recertification of patient eligibility for the 

home health benefit. In addition, any 

information from the HHA (including 

the comprehensive assessment) that is 

incorporated into the certifying 

physician’s and/or the acute/post-acute 

care facility’s medical record for the 

patient (if the patient was directly 

admitted to home health) and used to 

support the certification of patient 

eligibility for the home health benefit, 

must corroborate the certifying 

physician’s and/or the acute/post-acute 

care facility’s own documentation/

medical record entries, including the 

diagnoses and the patient’s condition 

reported on the comprehensive 

assessment. With respect to DMEPOS, it 

has been our longstanding policy that 

records from suppliers or healthcare 

professionals with a financial interest in 

the claim outcome are not considered 

sufficient by themselves for the purpose 

of determining that a DMEPOS item is 

reasonable and necessary. We believe 

the same safeguards are necessary for 

home health patient eligibility 

determinations and consistent with the 

statutory intent in sections 1814(a), 

1835(a) and 1877 of the Act, which 

require a physician, who does not have 

financial relationship with the HHA, to 

certify the patient’s eligibility for home 

health services. 

We want to remind certifying 

physicians and acute/post-acute care 

facilities of their responsibility to 

provide the medical record 

documentation that supports the 

certification of patient eligibility for the 

Medicare home health benefit. 

Certifying physicians who show 

patterns of non-compliance with this 

requirement, including those physicians 

whose records are inadequate or 

incomplete for this purpose, may be 

subject to increased reviews, such as 

through provider-specific probe 

reviews. 

Comment: A few commenters 

questioned whether a certification 

statement will still be required, if the 

certification statement can be added to 

the plan of care, and what exactly 

constitutes a sufficient certification of 

eligibility. One commenter 

recommended that CMS consider a 

signed and dated order for home health 

services for an eligible patient by an 

eligible practitioner as satisfying the 

certification requirements. 

Response: As a reminder, the statute 

at sections 1814(a)(2)(C) and 

1835(a)(2)(A) outlines the certification 

and re-certification requirements for 

Medicare home health services. These 

requirements are also reflected in 

regulations at § 424.22(a) and (b). A 

physician will still be required to certify 

patient eligibility for the Medicare home 

health benefit. Specifically for a 

certification of eligibility to be 

sufficient, a physician must certify that: 

• The individual needs or needed 

intermittent skilled nursing care, 

physical therapy, and/or 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 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66049 

12The physician cannot have a financial 

relationship as defined in § 411.354 of the chapter, 

with that HHA, unless the physician’s relationship 

meets one of the exceptions in section 1877 of the 

Act, which sets forth general exceptions to the 

referral prohibition related to both ownership/

investment and compensation. 

13Skilled 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)). 

periodically reviewed by a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine (a doctor of 

podiatric medicine may perform only 

plan of treatment functions that are 

consistent with the functions he or she 

is authorized to perform under state 

law).12

• Home health services will be or 

were furnished while the individual is 

or was under the care of a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine. 

• A face-to-face patient encounter 

occurred no more than 90 days prior to 

the home health start of care date or 

within 30 days of the start of the home 

health care, was related to the primary 

reason the patient requires home health 

services, and was performed by the 

certifying physician, a physician, with 

privileges, who cared for the patient in 

an acute or post-acute care facility from 

which the patient was directly admitted 

to home health, or an allowed NPP 

defined in § 424.22(a)(1)(v). The 

certifying physician must also 

document the date of the encounter as 

part of the certification. 

For instances where the physician 

orders skilled nursing visits for 

management and evaluation of the 

patient’s care plan,13 the certifying 

physician must include a brief narrative 

that describes the clinical justification 

of this need and the narrative must be 

located immediately before the 

physician’s signature. If the narrative 

exists as an addendum to the 

certification form, in addition to the 

physician’s signature on the 

certification form, the physician must 

sign immediately after the narrative in 

the addendum. 

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, physical therapy, 

or speech–language pathology services. 

Again, for instances where the 

physician ordering skilled nursing visits 

for management and evaluation of the 

patient’s care plan, the physician must 

include a brief narrative that describes 

the clinical justification of this need and 

the narrative must be located 

immediately before the physician’s 

signature. If the narrative exists as an 

addendum to the recertification form, in 

addition to the physician’s signature on 

the recertification form, the physician 

must sign immediately after the 

narrative in the addendum. 

Comment: One commenter strongly 

believed that allowing a face-to-face 

encounter to occur up to 90 days prior 

to the start of home health care was not 

appropriate, stating that if a physician 

saw the patient 90 days ago and did not 

order home health care at that time, 

then it is unclear why is home health 

being ordered at a later date. Several 

commenters recommended that CMS 

eliminate the face-to-face encounter 

requirement altogether for instances 

where the patient was admitted directly 

from an acute/post-acute care facility 

since the patient would have seen a 

physician. 

Response: We did not propose to alter 

the timeframes during which a face-toface encounter can occur nor did we 

propose to eliminate the face-to-face 

requirement for instances where the 

patient was admitted directly from an 

acute/post-acute care facility. We refer 

the commenters to the CY 2011 HH PPS 

final rule (75 FR 70428–70429), where 

we outlined our rationale on why the 

face-to-face encounter timeframe of up 

to 90 days prior and no more than 30 

days after the start of home health care 

was finalized. We believe that sections 

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

Act do not provide the Secretary with 

the authority to eliminate the face-toface encounter requirement altogether 

for instances where the patient was 

admitted directly from an acute/postacute care facility. However, since we 

are finalizing the elimination of the 

face-to-face narrative requirement as 

part of the certification of eligibility for 

home health services, and, as 

commenters’ noted, an encounter with a 

physician would have certainly 

occurred when a patient is admitted 

directly from an acute/post-acute care 

facility, documenting the date of the 

face-to-face encounter should not be 

burdensome. Although a home health 

patient would have seen a physician if 

they were admitted directly from an 

acute/post-acute care facility, the 

certification of eligibility still requires 

that the encounter be related to the 

primary reason for home health care. 

Therefore, we believe that 

documentation of a face-to-face 

encounter as part of the certification of 

eligibility should still be required for 

patients admitted into home health care 

directly from an acute/post-acute care 

facility. 

Comment: Several commenters, 

including MedPAC, asked that CMS 

develop a standardized form for use in 

certifying patient eligibility for the 

home health benefit and/or making 

referrals to home health. MedPAC noted 

that CMS concurred with three 

recommendations in a recent audit by 

the Office of Inspector General (OIG), 

including the consideration of a 

standardized form for the face-to-face 

encounter narrative to simplify 

compliance. Other commenters asked 

that CMS consider requiring the use of 

CMS–485 form again. 

Response: We do not believe that a 

standard certification/recertification of 

eligibility form is necessary given the 

elimination of the face-to-face narrative. 

The regulations at 42 CFR 424.22 clearly 

articulate what elements need to be 

contained in a certification/recertification form created by an HHA. 

We are pursuing development of an 

electronic clinical template that would 

allow electronic health records vendors, 

in all 50 states, to assist physicians in 

thoroughly documenting patient 

eligibility for the Medicare home health 

benefit. In order to facilitate adoption of 

suggested clinical elements by the 

provider community, we are currently 

collaborating with the Office of the 

National Coordinator for Health IT 

(ONC) and the electronic Determination 

of Coverage (eDoC) workgroup in 

developing the interoperability 

standards necessary for an electronic 

clinical template. We do not believe that 

we should require the use of the old 

CMS–485 form. The CMS–485 form was 

discontinued over a decade ago to 

provide HHAs with more plan of care 

flexibility. We encourage HHAs and 

physicians to work together in 

developing formats for the home health 

plan of care that best meets their needs. 


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66050 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

Comment: We received several 

comments advocating for us to allow 

other types of clinicians to certify 

eligibility and order home health 

services, such as physician assistants, 

nurse practitioners, and advancedpractice registered nurses. 

Response: These comments are 

outside the scope of this rule. We 

remind the commenters that the statute 

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

require a physician to certify patient 

eligibility for the Medicare home health 

benefit. We do not have the authority to 

allow for someone other than a Doctor 

of Medicine, Osteopathy or Podiatry to 

certify patient eligibility for the 

Medicare home health benefit. A change 

to the statute would require an act of the 

Congress. 

Comment: Some commenters 

recommended statutory changes. 

Response: We remind commenters 

that only the Congress (not CMS) has 

the authority to make statutory changes. 

Final Decision: We are finalizing our 

proposal to eliminate the face-to-face 

encounter narrative as part of the 

certification of patient eligibility for the 

Medicare home health benefit, effective 

for episodes beginning on or after 

January 1, 2015. The certifying 

physician will still be required to certify 

that a face-to-face patient encounter, 

which is related to the primary reason 

the patient requires home health 

services, occurred no more than 90 days 

prior to the home health start of care 

date or within 30 days of the start of the 

home health care and was performed by 

a physician or allowed non-physician 

practitioner as defined in 

§ 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). 

In determining whether the patient is 

or was eligible to receive services under 

the Medicare home health benefit at the 

start of care, we will require 

documentation in the certifying 

physician’s medical records and/or the 

acute/post-acute care facility’s medical 

records (if the patient was directly 

admitted to home health) to be used as 

the basis for certification of home health 

eligibility. We will require the 

documentation to be provided upon 

request to the home health agency, 

review entities, and/or CMS. Criteria for 

patient eligibility are described at 

§ 424.22(a)(1) and § 424.22(b). HHAs 

should obtain as much documentation 

from the certifying physician’s medical 

records and/or the acute/post-acute care 

facility’s medical records (if the patient 

was directly admitted to home health) 

as they deem necessary to assure 

themselves that the Medicare home 

health patient eligibility criteria have 

been met and must be able to provide 

it to CMS and its review entities upon 

request. If the documentation used as 

the basis for the certification of 

eligibility is not sufficient to 

demonstrate that the patient is or was 

eligible to receive services under the 

Medicare home health benefit, payment 

will not be rendered for home health 

services provided. 

Again, we want to remind certifying 

physicians and acute/post-acute care 

facilities of their responsibility to 

provide the medical record 

documentation that supports the 

certification of patient eligibility for the 

Medicare home health benefit. 

Certifying physicians who show 

patterns of non-compliance with this 

requirement, including those physicians 

whose records are inadequate or 

incomplete for this purpose, may be 

subject to increased reviews, such as 

through provider-specific probe 

reviews. 

The following is a summary of the 

comments we received regarding the 

proposal to non-cover physician claims 

for certification/re-certification of 

patient eligibility for Medicare home 

health services when the HHA claim 

itself was non-covered because the 

certification/recertification of eligibility 

was not complete or because there was 

insufficient documentation to support 

that the patient was eligible for the 

Medicare home health benefit. 

Comments: A few commenters 

appreciated the proposal to non-cover 

physician claims for certification/recertification of patient eligibility for 

Medicare-covered home health services 

when the HHA claim itself was noncovered because the certification/

recertification of eligibility was not 

complete or because there was 

insufficient documentation to support 

that the patient was eligible for the 

Medicare home health benefit. 

Commenters who supported this 

proposal thanked CMS for linking 

physician billing to HHA billing as a 

first step in encouraging more physician 

accountability. 

Response: We thank the commenters 

for their support. We agree that this is 

an important first step in reminding 

physicians that coordination and 

collaboration between the physician and 

the HHA is essential in providing 

quality patient care. Coordination and 

collaboration should include sharing 

pertinent patient information with one 

another, especially with regard to the 

patient’s skilled needs and homebound 

status. Both entities—the physician who 

is ultimately responsible for the patient 

while he/she is receiving home health 

services and the HHA providing such 

services—should be held accountable 

and compensated for their services 

when appropriate. 

Comment: Most commenters generally 

disagreed with the proposal to noncover physician claims for certification/ 

re-certification of patient eligibility for 

Medicare home health services when 

the HHA claim itself was non-covered 

because the certification/recertification 

of eligibility was not complete or 

because there was insufficient 

documentation to support that the 

patient was eligible for the Medicare 

home health benefit. One commenter 

questioned how CMS will identify ‘‘Part 

B claims for certification/recertification’’ and stated that the face-toface encounter visit could occur during 

one of several Evaluation & Management 

(E&M) visits. Several commenters stated 

that while they support encouraging 

physicians to engage in the planning 

and oversight of home health services, 

they are concerned that some 

physicians, with limited understanding 

of the regulations, may be reluctant to 

refer to home health because of 

concerns about denials of 

reimbursement. Other commenters 

stated that physician claims for 

certification/recertification should not 

be denied because physicians are ‘‘in 

good faith’’ certifying the patient’s 

eligibility for the home health benefit 

and billing for certification/

recertification also includes activities 

performed to ensure the initial 

implementation of the plan of care. A 

few commenters suggested that, at a 

minimum, finalizing this proposal 

should be delayed until it can be 

proposed as part of the annual changes 

to the physician fee schedule. 

Response: Physician certification or 

re-certification claims are Part B 

physician claims paid for under the 

Physician Fee Schedule. These claims 

are claims billed using HCPCS code 

G0180 (certification) or G0179 (recertification). These claims are not 

Evaluation and Management claims and 

are billed when the patient is not 

present. The descriptions of these two 

codes indicate that they are used to bill 

for certification or re-certification of 

patient eligibility ‘‘for Medicare-covered 

home health services under a home 

health plan of care (patient not present), 

including contacts with home health 


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14http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/OASIS/

downloads/OASISConsiderationsforPPS.pdf 

15We note that for instances where the patient 

was hospitalized and then returns to home health 

during the last 5 days of an episode of care, the 

requirement to complete a resumption of care 

OASIS could overlap with the time period requiring 

completion of a recertification/follow-up OASIS. In 

these instances, only the resumption of care OASIS 

is necessary and the subsequent episode of care 

would still be considered ‘‘continuous’’ and thus 

require a re-certification of patient eligibility. If the 

patient receives a re-certification assessment during 

days 56–60, is hospitalized, and returns home on 

day 61 following, if the HHRG remains the same 

then the second episode of care would be 

considered continuous and thus be considered a recertification. However, if the HHRG is different, this 

would result in a new Start of Care (SOC) OASIS 

and thus be considered a new certification. 

agency and review of reports of patient 

status required by physicians to affirm 

the initial implementation of the plan of 

care that meets patient’s needs, per 

certification period.’’ As underlined 

above, we note that these codes are for 

physician certification or re-certification 

for Medicare-covered home health 

services. If there are no Medicarecovered home health services, these 

codes should not be billed or paid. As 

such, if the HHA claim is denied, the 

corresponding physician claim should 

not be covered because there is no 

longer a corresponding claim for 

Medicare-covered home health services. 

Physicians still have the option of 

billing Part B for E&M visits provided, 

transition care management, and other 

services as long as they follow the 

required billing instructions. We believe 

that including this proposal in the CY 

2015 HH PPS proposal rule is sufficient 

and there is no need to re-propose this 

policy in next year’s Physician Fee 

Schedule proposed rule. We received 

over 300 comments on the CY 2015 HH 

PPS proposed rule, many of which were 

from physician associations, such as the 

American College of Physicians, 

American Academy of Home Care 

Medicine, American Medical 

Association, and the Society of Hospital 

Medicine, among others. 

Comment: Commenters stated that 

non-coverage of physician claims for 

certification/re-certification when the 

HHA claim itself was non-covered 

would most likely not result in a change 

in physician practices/behaviors due to 

the small payment amounts for such 

claims. HHAs will still encounter issues 

with obtaining the necessary 

certification/re-recertification and 

supporting documentation form the 

certifying physician. 

Response: While the non-coverage of 

physician claims for certification/recertification of patient eligibility for 

Medicare-covered home health services 

following the denial of a HHA claim 

may not serve as a sufficient incentive 

for encouraging certifying physicians to 

work collaboratively with HHAs and to 

provide the necessary documentation to 

substantiate the certification of 

eligibility, certifying physicians who 

show patterns of non-compliance with 

providing sufficient documentation, 

including those physicians whose 

records are inadequate or incomplete for 

this purpose, may be subject to 

increased reviews, such as through 

provider-specific probe reviews. Claims 

subject to increased review may include 

services unrelated to the home health 

claim being reviewed or the beneficiary 

who was referred for home health 

services. 

Final Decision: We are finalizing this 

proposal as proposed. Physician claims 

for certification/recertification of 

eligibility for home health services 

(G0180 and G0179, respectively) will 

not be covered if the HHA claim itself 

was non-covered because the 

certification/recertification of eligibility 

was not complete or because there was 

insufficient documentation to support 

that the patient was eligible for the 

Medicare home health benefit. This 

proposal will be implemented through 

future sub-regulatory guidance. 

3. Proposed Clarification on When 

Documentation of a Face-to-Face 

Encounter Is Required 

In the CY 2011 HH PPS final rule (75 

FR 70372), in response to a commenter 

who asked whether the face-to-face 

encounter is required only for the first 

episode, we stated that the Congress 

enacted the face-to-face encounter 

requirement to apply to the physician’s 

certification, not recertifications. In 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 will be considered a 

certification, not a recertification, 

because the HHA will be required to 

complete a new Start of Care (SOC) 

OASIS to initiate care. However, for 

payment purposes, the second episode 

is considered a subsequent episode, 

because there was no gap of 60 days or 

more between the first and second 

episodes of care. Therefore, in order to 

determine when documentation of a 

patient’s face-to-face encounter is 

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

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

proposed to clarify that the face-to-face 

encounter requirement is applicable for 

certifications (not recertifications), 

rather than initial episodes. A 

certification (versus recertification) is 

considered to be any time that a new 

SOC OASIS is completed to initiate 

care. Because we proposed to clarify 

that a certification is considered to be 

any time that a new SOC OASIS is 

completed to initiate care, we will also 

revise Q&A #11 on the CMS Web site 

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

Medicare-Fee-for-Service-Payment/

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

reflect this proposed clarification. If a 

patient was transferred to the hospital 

and remained in the hospital after day 

61 (or after the first day of the next 

certification period), once the patient 

returns home, a new SOC OASIS must 

be completed. Therefore, this new 

episode will not be considered 

continuous and a face-to-face encounter 

needs to be documented as part of the 

certification of patient eligibility.14

Comment: One commenter stated that 

they were confused by the proposal and 

were seeking clarification as to whether 

CMS was proposing to require 

documentation of a face-to-face 

encounter for all certification episodes, 

initial and re-certifications. 

Response: We are not requiring 

documentation of a face-to-face 

encounter for all certification periods. 

Documentation of a face-to-face 

encounter is only required for 

certifications and not re-certifications. 

As previously noted, a certification 

(versus recertification) is considered to 

be any time that a new SOC OASIS is 

completed to initiate care. A 

recertification is any second or later 

episode of continuous home health care 

(where a recertification/follow-up 

OASIS is completed).15

Comment: A few commenters were 

supportive of the proposed clarification 

on when documentation of a face-to-face 

encounter is required. One commenter 

stated that their agency has been 

obtaining these since the inception of 

the face-to-face requirement and that the 


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66052 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

proposed clarification would not 

present a change. The commenter goes 

on to state that the proposed 

clarification helps to ensure that the 

patient continues to have real oversight 

from the community physician that is 

overseeing the patient’s care. 

Response: We thank the commenters 

for their support of the proposed 

clarification. We have heard, 

anecdotally, from several HHAs that 

they are already in compliance with this 

proposed clarification and, as such, this 

clarification will pose no additional 

burden for those HHAs. We agree that 

equating a certification with any time a 

SOC OASIS is completed to initiate care 

will further encourage physician 

accountability in certifying a patient’s 

eligibility for the Medicare home health 

benefit and in establishing and 

overseeing the patient’s plan of care. 

Comment: Several other commenters 

focused their comments solely on 

instances where a patient was 

discharged and then readmitted during 

the same 60-day episode of care. 

Commenters stated that CMS should not 

finalize its proposal as these episodes 

are currently subject to partial episode 

payment (PEP) adjustments and that the 

PEP adjustment is an appropriate 

safeguard to prevent inappropriate 

utilization. A few commenters asked 

CMS to clarify whether instances where 

the patient is returning to home health 

post-discharge with care initiated with a 

new SOC OASIS, but during (what 

would have been) the same 60-day 

episode of care, would require 

documentation of a new physician faceto-face encounter. A few commenters 

expressed concerns with the current 

PEP policy and stated that some HHAs 

are not discharging patients that have 

finished their course of treatment so that 

those episodes will not become PEPs if 

the patient is discharged and returns to 

home care within (what would have 

been) the 60-day episode of care. 

Response: A Partial Episode Payment 

(PEP) is applied to home health 

episodes that either end in discharge 

and are then followed by readmission to 

the same home health agency (HHA) 

within (what would have been) the 

original 60-day episode, or result in a 

transfer to a HHA that is different than 

the HHA that provided the initial home 

health episode. The purpose of this 

clarification is to ensure that HHAs 

understand when they must document 

that a face-to-face encounter occurred. 

For instances where a patient was 

discharged and then readmitted during 

(what would have been) the same 60- 

day episode of care, the second episode 

would be considered a certification as it 

would be initiated with a SOC OASIS 

and would require documentation of a 

face-to-face encounter. Depending on 

when the face-to-face encounter 

occurred, the face-to-face encounter 

from the PEP episode could be used for 

the new certification as long as it was 

performed within the required 

timeframe and is still related to the 

primary reason the patient requires 

home health services. The average 

number of days between a PEP episode 

and a subsequent episode of care was 

17.5 days, with the 25th percentile at 5 

days and the 75th percentile at 24 days 

in CY 2012 and approximately 60 

percent of the time there was a 

hospitalization between a PEP episode 

and the subsequent episode of care. For 

those instances where the patient was 

hospitalized between the PEP episode 

and the subsequent episode of care, the 

patient would have seen a physician, so 

documenting the face-to-face encounter 

as part of the certification of eligibility 

for the subsequent episode of care 

should be easily accomplished. 

PEP episodes are paid a rate which is 

proportional to the days of service 

provided during the episode. In CY 

2012 only 2.2 percent of episodes were 

PEP episodes. Table 9 below compares 

the number of days in between the last 

visit and the ‘‘through’’ date on the 

claim for PEPs and Non-PEP episodes. 

The distribution below for non-PEP 

episodes does not indicate that there is 

a wide-spread issue with HHAs refusing 

to discharge patients that have 

otherwise met all goals long before the 

end of the 60-day episode in hopes of 

avoiding PEPs. However, we will 

continue to monitor PEP episodes and 

will consider whether a refinement to 

the PEP policy is necessary in the 

future. 

TABLE 9—DISTRIBUTION OF DAYS BETWEEN THE LAST EPISODE VISIT AND

EPISODE THROUGH DATE FOR NONPEP EPISODES (N = 3,796,143) 

AND PEP EPISODES (8,105) AT

LEAST 55 DAYS IN LENGTH, CY 

2012 

Distribution point Non-PEP 

episodes 

PEP 

Episodes 

10th Percentile .. 1.0 1.0 

25th Percentile .. 1.0 1.0 

50th Percentile 

(Median) ........ 2.0 1.0 

Mean Average .. 4.7 6.9 

75th Percentile .. 4.0 7.0 

90th Percentile .. 7.0 24.0 

99th Percentile .. 52.0 51.0 

Source: Abt Associates analysis of 100% 

CY 2012 Medicare Home Health claims data. 

Comment: One commenter asked that 

CMS confirm that over 800,000 episodes 

fit into a category of admissions shortly 

following discharges with goals met 

because that number seemed high. 

Response: In the CY 2015 HH PPS 

proposed rule we noted, in the 

Collection of Information section, that: 

‘‘we estimate that of the 6,562,856 

episodes in the CY 2012 home health 

Datalink file, 3,096,680 SOC 

assessments were performed on initial 

home health episodes. If this proposal is 

implemented, an additional 830,287 

episodes would require documentation 

of a face-to-face encounter for 

subsequent episodes that were initiated 

with a new SOC OASIS assessment’’ (79 

FR 38412). This includes instances 

where patients finished a 60-day 

episode of care, were discharged, and 

then were re-admitted before 60 days 

lapsed without having home health 

care. In addition, this estimate 

represents a ‘‘worst-case’’ scenario as it 

does not account for instances where 

HHAs already consider anytime a new 

SOC OASIS is completed as a 

certification and are thus already in 

compliance. Home Health Compare, via 

Medicare.gov, reports national and 

state-level data on how often home 

health patients had to be admitted to the 

hospital and how often patients 

receiving home health care needed 

urgent, unplanned care in the ER 

without being admitted. Nationally, for 

CY 2013, 12 percent of home health 

patients receiving home health care 

needed urgent, unplanned care in the 

emergency room and 16 percent of 

home health patients had to be admitted 

to the hospital. Subsequent episodes 

initiated with a SOC OASIS represent 

12.7 percent of all home health episodes 

in the CY 2012 Datalink file. Most 

commenters focused on instances where 

the initial episode of care was a PEP 

(that is, the patient transferred to 

another HHA or was discharged before 

the end of a 60-day episode and then readmitted during what would have been 

the same 60-day episode of care), which 

were only 2.2 percent of episodes in CY 

2012. 

This clarification was intended to 

mostly respond to instances of patients 

being discharged after the end of a 60- 

day episode of care and then readmitted without a 60-day gap in care 

before the start of the next episode. For 

claims processing purposes (to 

categorize episodes into ‘‘early’’ versus 

‘‘late’’ for case-mix adjustment), these 

episodes are considered subsequent 

episodes rather than initial episodes of 

care. Sub-regulatory guidance (face-toface encounter Q&As on the CMS Web 

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


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66053 

Medicare-Fee-for-Service-Payment/

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

that face-to-face encounter requirement 

applies to ‘‘initial episodes’’. We 

received several questions from the 

MACs and providers asking whether the 

face-to-face encounter was required for 

instances where the patient was 

discharged at the end of a 60-day 

episode of care and then re-admitted, 

sometimes up to 50 days later and for 

reasons completely unrelated to the 

previous episode of care. This prompted 

us to propose a clarification in the CY 

2015 HH PPS proposed rule that would 

make it clear that documentation of a 

face-to-face encounter is required for 

each certification and a certification is 

any time a SOC OASIS is completed to 

initiate care. 

Comment: One commenter stated that 

while it is understandable to categorize 

the completion of a SOC OASIS as a 

certification, thus requiring 

documentation of a face-to-face 

encounter, concerns exist that this will 

increase burden without any direct 

benefit. Several commenters stated that 

for subsequent episodes initiated with a 

SOC OASIS, a certification (which 

requires documentation of a face-to-face 

encounter) versus a recertification 

should be differentiated based on 

whether the reason for home care 

changed. Several commenters stated 

that a new face-to-face encounter should 

only be required when the second 

admission to home health services is for 

a wholly different reason than presented 

in the original admission. One 

commenter stated that a subsequent 

episode should only be considered a 

certification (which requires 

documentation of a face-to-face 

encounter) when a new physician is the 

certifying physician or if a new home 

health agency is providing the care. 

Response: If the patient is 

hospitalized during a 60-day episode of 

care and is expected to return to home 

health during the same 60-day episode 

of care, the HHA has the option to 

complete a transfer OASIS without 

discharging the patient. If the patient 

returns to home heath during that same 

60-day home health episode, a 

resumption of care OASIS would be 

completed upon return, and depending 

on when the patient returned to home 

health, a re-certification/follow-up 

OASIS would be completed during the 

last 5 days of the episode. The 

subsequent episode would be 

considered continuous for recertification purposes and 

documentation of a face-to-face 

encounter would not be required. More 

often than not, the primary reason for 

home care is changing between episodes 

of care when the subsequent episode of 

care is initiated with a SOC OASIS, 

regardless of whether the patient 

remains with the same HHA or is 

receiving care from another HHA. As 

such, we are clarifying that 

documentation that face-to-face 

encounter occurred is required for every 

certification and that a certification 

(versus recertification) is considered to 

be any time that a new SOC OASIS is 

completed to initiate care. 

When comparing the primary reason 

for home health care (the primary 

diagnosis (item M1020) on the OASIS) 

at the ICD–9–CM three-digit category 

level, subsequent episodes initiated 

with a SOC OASIS had a different 

primary diagnosis (primary reason for 

home care) than the previous episode of 

care approximately 73 percent of the 

time. The subsequent episode’s primary 

diagnosis was different from the 

previous episodes’ primary diagnosis 

approximately 70 percent of the time 

when the subsequent episode of care 

was with the same HHA, and 80 percent 

of the time when the subsequent 

episode of care with a different HHA. 

Just examining the subsequent episodes 

of care that follow a PEP, we found that 

subsequent episodes of care initiated 

with a SOC OASIS had a different 

primary diagnosis than the previous 

episode of care approximately 72 

percent of the time. The subsequent 

episode’s primary diagnosis was 

different from the previous PEP 

episodes’ primary diagnosis 

approximately 66 percent of the time 

when the subsequent episode of care 

was with the same HHA, and 76 percent 

of the time when the subsequent 

episode of care with a different HHA. 

As we noted above, for CY 2012, 

approximately 60 percent of the time 

there was a hospitalization between a 

PEP episode and the subsequent episode 

of care. Therefore, we determined 

whether there was an intervening 

hospitalization between the PEP episode 

and the episode that follows (observed 

in the 60 days prior to the subsequent 

episode’s start) and if so, whether there 

were differences in the clinical and 

functional levels between the PEP 

episode and the subsequent episode of 

care (Table 10 and Table 11 below). 

Overall, clinical levels only matched in 

53 percent of instances. Functional 

levels matched in 63 percent of 

instances. Clinical levels are higher in 

24 percent of the episodes that follow 

PEP episodes and lower in 22 percent of 

episodes. Functional levels are higher in 

approximately 20 percent of episodes 

that follow PEP episodes and lower in 

17 percent of episodes. 

TABLE 10—CROSS-TABULATION OF CLINICAL LEVEL BETWEEN A PARTIAL EPISODE PAYMENT (PEP) EPISODE AND

EPISODES THAT FOLLOW BY INTERVENING HOSPITALIZATION PRESENCE, CY 2012 

No intervening hospitalization 

[Total episodes = 81,719] 

Intervening hospitalization 

[Total episodes = 30,416] 

Low Medium High Low Medium High 

Low ................................................................................... 12.3% 7.1% 5.4% 9.2% 6.9% 5.1% 

Medium ............................................................................ 7.8% 12.2% 11.4% 6.7% 12.8% 12.7% 

High .................................................................................. 4.8% 9.8% 29.1% 4.1% 10.8% 31.7% 

Source: Abt Associates analysis of 100% Medicare Home Health claims, CY 2012. 

Note(s): Low = Clinical level 1; Medium = Clinical level 2; High = Clinical level 3 as described in section III.C of this rule.

TABLE 11—CROSS-TABULATION OF FUNCTIONAL LEVEL BETWEEN A PARTIAL EPISODE PAYMENT (PEP) EPISODE AND

EPISODES THAT FOLLOW BY INTERVENING HOSPITALIZATION PRESENCE, CY 2012 

No intervening hospitalization 

[Total episodes = 81,719] 

Intervening hospitalization 

[Total episodes = 30,416] 

Low Medium High Low Medium High 

Low ................................................................................... 6.6% 7.8% 1.4% 6.4% 8.4% 1.4% 


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16At a later point, when normalizing the weights, 

PEP episodes are included in the analysis. 

17Note, for the last recalibration (CY 2012 

recalibration), only a 20 percent sample of data was 

used. 

18Note, wage information for sub-disciplines is 

also used (e.g., RNs versus RNs and LPNs 

combined). 

TABLE 11—CROSS-TABULATION OF FUNCTIONAL LEVEL BETWEEN A PARTIAL EPISODE PAYMENT (PEP) EPISODE AND

EPISODES THAT FOLLOW BY INTERVENING HOSPITALIZATION PRESENCE, CY 2012—Continued 

No intervening hospitalization 

[Total episodes = 81,719] 

Intervening hospitalization 

[Total episodes = 30,416] 

Low Medium High Low Medium High 

Medium ............................................................................ 6.9% 38.6% 10.3% 8.3% 40.6% 10.4% 

High .................................................................................. 1.1% 8.5% 18.8% 1.0% 8.1% 15.3% 

Source: Abt Associates analysis of 100% Medicare Home Health claims, CY 2012. 

Note(s): Low = Functional level 1; Medium = Functional level 2; High = Functional level 3 as described in section III.C of this rule. 

Final Decision: In order to determine 

when documentation of a patient’s faceto-face encounter is required under 

sections 1814(a)(2)(C) and 1835 (a)(2)(A) 

of the Act, we are clarifying that the 

face-to-face encounter requirement is 

applicable for certifications (not 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. 

C. Recalibration of the HH PPS CaseMix Weights 

As stated in the CY 2015 proposed 

rule, for CY 2012, we removed two 

hypertension codes from our case-mix 

system and recalibrated the case-mix 

weights in a budget neutral manner. 

When recalibrating the case-mix weights 

for the CY 2012 HH PPS final rule, we 

used CY 2005 data in the four-equation 

model used to determine the clinical 

and functional points for a home health 

episode and CY 2007 data in the 

payment regression model used to 

determine the case-mix weights. We 

estimated the coefficients for the 

variables in the four-equation model 

using CY 2005 data to maintain the 

same variables we used for CY 2008 

when we implemented the 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 noted that in the 

CY 2012 HH PPS final rule, we also 

finalized a 3.79 percent reduction to 

payments in CY 2012 and a 1.32 percent 

reduction for CY 2013 to account for the 

nominal case-mix growth identified 

through CY 2009. 

For CY 2014, as part of the rebasing 

effort mandated by the Affordable Care 

Act, we reset the case-mix weights, 

lowering the average case-mix weight to 

1.0000. To lower the case-mix weights 

to 1.0000, each case-mix weight was 

decreased by the same factor (1.3464), 

thereby maintaining the same relative 

values between the weights. This 

‘‘resetting’’ of the case-mix weights was 

done in a budget neutral manner, 

inflating the national, standardized 60- 

day episode rate as the starting point for 

rebasing by the same factor (1.3464) that 

was used to decrease the weights. In the 

CY 2014 HH PPS final rule, we also 

finalized reductions ($80.95) to the 

national, standardized 60-day episode 

payment amount each year from CY 

2014 through CY 2017 to better align 

payments with costs (78 FR 72293), as 

required by the Affordable Care Act. 

For CY 2015, we proposed to 

recalibrate the case-mix weights, 

adjusting the weights relative to one 

another, using more current data and 

aligning payments with current 

utilization data in a budget neutral 

manner. We also proposed to recalibrate 

the case-mix weights annually in 

subsequent payment updates based on 

the methodology finalized in the 2008 

refinements (72 FR 25359–25392) and 

the CY 2012 HH PPS final rule (76 FR 

68526), with minor changes as 

described below. To generate the CY 

2015 case-mix weights, we used CY 

2013 home health claims data (as of 

June 30, 2014) and used the same 

methodology finalized in the CY 2012 

HH PPS final rule, except where noted 

below. Similar to the CY 2012 

recalibration, some exclusion criteria 

were applied to the CY 2013 home 

health claims data used to generate the 

CY 2015 case-mix weights. Specifically, 

we excluded Request for Anticipated 

Payment (RAP) claims, claims without a 

matched OASIS, claims where total 

minutes equal 0, claims where the 

payment amount equals 0, claims where 

paid days equal 0, claims where covered 

visits equal 0, and claims without a 

HIPPS code. In addition, the episodes 

used in the recalibration were normal 

episodes. PEP, LUPA, outlier, and 

capped outlier (that is, episodes that are 

paid as normal episodes, but would 

have been outliers had the HHA not 

reached the outlier cap) episodes were 

dropped from the data file.16 We note 

that for the CY 2015 recalibration, a 100 

percent sample of CY 2013 claims data 

as of June 30, 2014 with linked OASIS 

data was used.17

Similar to the CY 2012 recalibration, 

the first step in the 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.18

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 CY 2012 model was 

estimated using CY 2005 data, same 

data used in the CY 2008 refinements, 

thereby minimizing changes in the 

points for the CY 2012 four-equation 

model. For the CY 2015 four-equation 

model, we re-examined all of the fourequation 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 


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19All 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. 

20Early 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. 

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

taken to determine if the coefficients of a grouper 

variable are equal across all 4 legs. This step was 

not taken at this time. 

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: 19

(1) We estimated a regression model 

where the dependent variable is wageweighted 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.20Also, 

independent variables for each of the 51 

grouper variables for each leg of the 

model are included. 

(2) Once the four-equation model is 

estimated, we drop all grouper variables 

with a coefficient less than 5. We reestimate the model and continue to drop 

variables and re-estimate until there are 

no grouper variables with a coefficient 

of 5 or less. 

(3) Taking the final iteration of the 

model in the previous step, we drop all 

grouper variables with a p-value greater 

than 0.10. We then re-estimate the 

model. 

(4) Taking the model in the previous 

step, we begin to apply restrictions to 

certain coefficients. Within a grouper 

variable we first look across the 

coefficients for leg1 and leg3. We 

performed an equality test on those 

coefficients. If the coefficients are not 

significantly different from one another 

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

restriction for that grouper variable such 

that the coefficients are equal across 

leg1 and leg3. We run these tests for all 

grouper variables for leg1 and leg3. We 

also run these tests for all grouper 

variables for leg2 and leg4.21 After all 

restrictions are set, we re-run the 

regression again taking those restrictions 

into account. 

(5) Taking the model from step 4, we 

drop variables that have a coefficient 

less than 5 and re-estimate the model a 

final time. Using complete 2013 claims 

data as of June 30, 2014, there were no 

grouper variables with a negative 

coefficient at this step. 

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. 

We take the coefficients from the four 

equation model, divide them by 10, and 

round to the nearest integer to 

determine the points associated with 

each variable. The points for each of the 

grouper variables for each leg of the 

model, updated with complete CY 2013 

data as of June 30, 2014, are shown in 

Table 12. The points for the clinical 

variables are added together to 

determine an episode’s clinical score. 

The points for the functional variables 

are added together to determine an 

episode’s functional score. 


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TABLE 12: Case-Mix Adjustment Variables and Scores 

1 1 

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

2 2 

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

EQUATION: I 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 8 8 neoplasms 

4 Primary Diagnosis = Diabetes 8 7 

5 Other Diagnosis = Diabetes 1 

Primary or Other Diagnosis = Dysphagia 

6 AND 2 16 1 9 

Primary or Other Diagnosis = Neuro 3 - Stroke 

Primary or Other Diagnosis = Dysphagia 

7 AND 2 7 7 

M1030 (Therapy at home)= 3 (Enteral) 

8 Primary or Other Diagnosis = Gastrointestinal disorders 

Primary or Other Diagnosis = Gastrointestinal disorders 

9 AND 6 

M1630(ostomy)= 1 or2 

Primary or Other Diagnosis = Gastrointestinal disorders 

AND 

10 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 1 Hypertension 

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

Primary or Other Diagnosis = Neuro 1 - Brain disorders 

13 and paralysis 

AND 

M1840 (Toilet transfer)= 2 or more 
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1 1 

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

2 2 

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

EQUATION: 1 2 3 4 

Primary or Other Diagnosis = Neuro 1 - Brain disorders 

and paralysis OR Neuro 2- Peripheral neurological 

14 disorders 2 7 1 7 AND 

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

3 

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

Primary or Other Diagnosis = Neuro 3 - Stroke AND 

16 M1810 or M1820 (Dressing upper or lower body)= 1, 2, or 4 8 

3 

Primary or Other Diagnosis = Neuro 3 - Stroke 

17 AND 

M1860 (Ambulation) = 4 or more 

Primary or Other Diagnosis = Neuro 4 - Multiple Sclerosis 

AND AT LEAST ONE OF THE FOLLOWING: 

M1830 (Bathing)= 2 or more 

OR 

18 M1840 (Toilet transfer)= 2 or more 3 8 7 13 

OR 

M1850 (Transferring)= 2 or more 

OR 

M1860 (Ambulation) = 4 or more 

Primary or Other Diagnosis = Ortho 1 - Leg Disorders or 

Gait Disorders 

19 AND 8 1 8 4 

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

4 

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

Other orthopedic disorders 

20 AND 4 3 2 

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

(Parenteral) 

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 
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1 1 

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

2 2 

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

EQUATION: I 2 3 4 

24 Primary or Other Diagnosis = Pulmonary disorders AND 

M1860 (Ambulation) = 1 or more 

25 Primary Diagnosis = Skin 1 -Traumatic wounds, bums, and 4 21 8 19 post-operative complications 

26 Other Diagnosis = Skin 1 - Traumatic wounds, bums, post- 6 15 7 15 operative complications 

Primary or Other Diagnosis = Skin 1 -Traumatic wounds, 

bums, and post-operative complications OR Skin 2 -

27 Ulcers and other skin conditions 4 1 AND 

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

(Parenteral) 

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

29 Primary or Other Diagnosis = Tracheostomy 4 19 4 11 

30 Primary or Other Diagnosis = Urostomy/Cystostomy 19 14 

31 M1030 (Therapy at home)= 1 (IV/Infusion) or 2 18 6 18 (Parenteral) 

32 M1030 (Therapy at home)= 3 (Enteral) 15 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 5 4 13 

36 M1324 (Most problematic pressure ulcer stage)= 1 or 2 3 19 7 16 

37 M1324 (Most problematic pressure ulcer stage)= 3 or 4 8 33 12 26 

38 M1334 (Stasis ulcer status)= 2 4 13 8 22 

39 M1334 (Stasis ulcer status)= 3 7 18 10 18 

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

41 M1342 (Surgical wound status)= 3 6 5 11 

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

43 M1620 (Bowel Incontinence)= 2 to 5 4 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 2 2 3 

47 M1830 (Bathing)= 2 or more 6 3 5 
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22For Step 1, 55% of episodes were in the 

medium functional level (All with score 15). 

For Step 2.1, 60.7% of episodes were in the low 

functional level (Most with score 3, some with score 

0). 

For Step 2.2, 58.3% of episodes were in the low 

functional level (All with score 0). 

For Step 3, 52.1% of episodes were in the 

medium functional level (all with score 10). 

For Step 4, 41.7% of episodes were in the 

medium functional level (almost all with score 3). 

In updating the four-equation model 

with 2013 data (the last update to the 

four-equation model used 2005 data), 

there were a number of changes to the 

point values for the variables in the 

four-equation model. These changes 

reflect the change in the relationship 

between the grouper variables and 

resource use since 2005. The CY 2015 

four-equation model resulted in 124 

point-giving variables being used in the 

model (as compared to the 164 variables 

for the 2012 recalibration). There were 

21 variables that were added to the 

model and 63 variables that were 

dropped from the model due to the 

absence of additional resources 

associated with the variable. The points 

for 57 variables increased in the CY 

2015 four-equation model and the 

points for 25 variables in decreased in 

the CY 2015 four-equation model. There 

were 17 variables with the same point 

values. 

Since there were a number of changes 

to the point values associated with the 

four-equation model, we are redefining 

the clinical and functional thresholds so 

that they would be reflective of the new 

points associated with the CY 2015 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 

step into thirds due to many episodes 

being clustered around one particular 

score.22 Also, we looked at the average 

resource use associated with each 

clinical and functional score and used 

that to guide where we placed our 

thresholds. We tried to group scores 

with similar average resource use within 

the same level (even if it meant that 

more or less than a third of episodes 

were placed within a level). The new 

thresholds, based off of the CY 2015 

four-equation model, points are shown 

in Table 13. 


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Once the thresholds were determined 

and each episode was assigned a 

clinical and functional level, the 

payment regression was estimated with 

an episode’s wage-weighted minutes of 

care as the dependent variable. 

Independent variables in the model 

were indicators for the step of the 

episode as well as the clinical and 

functional levels within each step of the 

episode. Like the four-equation model, 

the payment regression model is also 

estimated with robust standard errors 

that are clustered at the beneficiary 

level. Table 14 shows the regression 

coefficients for the variables in the 

payment regression model updated with 

complete CY 2013 data. The R-squared 

value for the payment regression model 

is 0.4680 (an increase from 0.3769 for 

the CY 2012 recalibration). 

TABLE 14—PAYMENT REGRESSION MODEL

Variable description 

New payment 

regression 

coefficients 

Step 1, Clinical Score Medium ............................................................................................................................................................ $24.36 

Step 1, Clinical Score High ................................................................................................................................................................. 61.06 

Step 1, Functional Score Medium ....................................................................................................................................................... 81.65 

Step 1, Functional Score High ............................................................................................................................................................ 121.95 

Step 2.1, Clinical Score Medium ......................................................................................................................................................... 56.47 

Step 2.1, Clinical Score High .............................................................................................................................................................. 177.00 

Step 2.1, Functional Score Medium .................................................................................................................................................... 26.09 

Step 2.1, Functional Score High ......................................................................................................................................................... 91.13 

Step 2.2, Clinical Score Medium ......................................................................................................................................................... 91.83 

Step 2.2, Clinical Score High .............................................................................................................................................................. 206.75 

Step 2.2, Functional Score Medium .................................................................................................................................................... 6.22 

Step 2.2, Functional Score High ......................................................................................................................................................... 88.98 

Step 3, Clinical Score Medium ............................................................................................................................................................ 11.00 

Step 3, Clinical Score High ................................................................................................................................................................. 89.06 

Step 3, Functional Score Medium ....................................................................................................................................................... 50.88 

Step 3, Functional Score High ............................................................................................................................................................ 86.69 

Step 4, Clinical Score Medium ............................................................................................................................................................ 74.96 

Step 4, Clinical Score High ................................................................................................................................................................. 241.95 

Step 4, Functional Score Medium ....................................................................................................................................................... 35.12 

Step 4, Functional Score High ............................................................................................................................................................ 91.41 

Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits .................................................................................................................. 447.08 

Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits .............................................................................................................................. 456.36 

Step 3, 3rd+ Episodes, 0–13 Therapy Visits ...................................................................................................................................... ¥65.98 

Step 4, All Episodes, 20+ Therapy Visits ............................................................................................................................................ 872.95 

Intercept ............................................................................................................................................................................................... 378.43 

Source: CY 2013 Medicare claims data for episodes ending on or before December 31, 2013 (as of June 30, 2014) for which we had a linked

OASIS assessment. 

The method used to derive the CY 

2015 case-mix weights from the 

payment regression model coefficients 

is the same as the method used to derive 

the CY 2012 case-mix weights. This 

method is described below. 

(1) We used the coefficients from the 

payment regression model to predict 

each episode’s wage-weighted minutes 

of care (resource use). We then divided 

these predicted values by the mean of 

the dependent variable (that is, the 


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23When 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. 

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) The weights associated with 0 to 

5 therapy visits were then increased by 

3.75 percent, the weights associated 

with 14–15 therapy visits were 

decreased by 2.5 percent, and the 

weights associated with 20+ therapy 

visits were decreased by 5 percent. 

These adjustments to the case-mix 

weights are the same as the ones used 

in the CY 2012 recalibration (76 FR 

68557) and were done to address 

MedPAC’s concerns that the HH PPS 

overvalues therapy episodes and 

undervalues non-therapy episodes 

(March 2011 MedPAC Report to the 

Congress: Medicare Payment Policy, p. 

176). These adjustments better aligned 

the case-mix weights with episode costs 

estimated from cost report data. 

(3) After the adjustments in step (2) 

were applied to the raw weights, the 

weights were further adjusted to create 

an increase in the payment weights for 

the therapy visit steps between the 

therapy thresholds. Weights with the 

same clinical severity level, functional 

severity level, and early/later episode 

status were grouped together. Then 

within those groups, the weights for 

each therapy step between thresholds 

were gradually increased. We did this 

by interpolating between the main 

thresholds on the model (from 0–5 to 

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

20+ therapy visits). We used a linear 

model to implement the interpolation so 

the payment weight increase for each 

step between the thresholds (such as the 

increase between 0–5 therapy visits and 

6 therapy visits and the increase 

between 6 therapy visits and 7–9 

therapy visits) was constant. This 

interpolation is the identical to the 

process finalized in the CY 2012 final 

rule (76 FR 68555). 

(4) The interpolated weights were 

then adjusted so that the average casemix for the weights was equal to 1.23

This last step creates the final CY 2015 

case-mix weights shown in Table 15. 


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TABLE 15 : CY 2015 C ase-M" IX P aymen tW. e121 ht s 

Clinical and CY 

Functional 2015 

Payment Step (Episode and/or Therapy Visit Ranges) Levels Final 

Group (1 =Low; Case2=Medium; mix 

3= High) Weights 

10111 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F1S1 0.5985 

10112 1st and 2nd Episodes, 6 Therapy Visits C1F1S2 0.7242 

10113 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F1S3 0.8499 

10114 1st and 2nd Episodes, 10 Therapy Visits C1F1S4 0.9756 

10115 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F1S5 1.1013 

10121 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F2S1 0.7277 

10122 1st and 2nd Episodes, 6 Therapy Visits C1F2S2 0.8353 

10123 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F2S3 0.9429 

10124 1st and 2nd Episodes, 10 Therapy Visits C1F2S4 1.0505 

10125 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F2S5 1.1581 

10131 1st and 2nd Episodes, 0 to 5 Therapy Visits C1F3S1 0.7914 

10132 1st and 2nd Episodes, 6 Therapy Visits C1F3S2 0.9056 

10133 1st and 2nd Episodes, 7 to 9 Therapy Visits C1F3S3 1.0198 

10134 1st and 2nd Episodes, 10 Therapy Visits C1F3S4 1.1340 

10135 1st and 2nd Episodes, 11 to 13 Therapy Visits C1F3S5 1.2482 

10211 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F1S1 0.6370 

10212 1st and 2nd Episodes, 6 Therapy Visits C2F1S2 0.7718 

10213 1st and 2nd Episodes, 7 to 9 Therapy Visits C2FlS3 0.9066 

10214 1st and 2nd Episodes, 10 Therapy Visits C2FlS4 1.0413 

10215 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F1S5 1.1761 

10221 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F2S1 0.7662 

10222 1st and 2nd Episodes, 6 Therapy Visits C2F2S2 0.8829 

10223 1st and 2nd Episodes, 7 to 9 Therapy Visits C2F2S3 0.9996 

10224 1st and 2nd Episodes, 10 Therapy Visits C2F2S4 1.1163 

10225 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F2S5 1.2330 

10231 1st and 2nd Episodes, 0 to 5 Therapy Visits C2F3S1 0.8299 

10232 1st and 2nd Episodes, 6 Therapy Visits C2F3S2 0.9532 

10233 1st and 2nd Episodes, 7 to 9 Therapy Visits C2F3S3 1.0765 

10234 1st and 2nd Episodes, 10 Therapy Visits C2F3S4 1.1998 

10235 1st and 2nd Episodes, 11 to 13 Therapy Visits C2F3S5 1.3230 

10311 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F1S1 0.6951 

10312 1st and 2nd Episodes, 6 Therapy Visits C3F1S2 0.8541 

10313 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F1S3 1.0131 

10314 1st and 2nd Episodes, 10 Therapy Visits C3F1S4 1.1720 

10315 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F1S5 1.3310 

10321 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F2S1 0.8242 

10322 1st and 2nd Episodes, 6 Therapy Visits C3F2S2 0.9651 
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66063 


tkelley on DSK3SPTVN1PROD with RULES2ER06NO14.007</GPH>

Clinical and CY 

Functional 2015 

Payment Step (Episode and/or Therapy Visit Ranges) Levels Final 

Group (1 =Low; Case2=Medium; mix 

3= High) Weights 

10323 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F2S3 1.1061 

10324 1st and 2nd Episodes, 10 Therapy Visits C3F2S4 1.2470 

10325 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F2S5 1.3879 

10331 1st and 2nd Episodes, 0 to 5 Therapy Visits C3F3S1 0.8880 

10332 1st and 2nd Episodes, 6 Therapy Visits C3F3S2 1.0355 

10333 1st and 2nd Episodes, 7 to 9 Therapy Visits C3F3S3 1.1830 

10334 1st and 2nd Episodes, 10 Therapy Visits C3F3S4 1.3305 

10335 1st and 2nd Episodes, 11 to 13 Therapy Visits C3F3S5 1.4780 

21111 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F1S1 1.2270 

21112 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F1S2 1.4220 

21113 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F1S3 1.6171 

21121 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F2S1 1.2657 

21122 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F2S2 1.4649 

21123 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F2S3 1.6640 

21131 1st and 2nd Episodes, 14 to 15 Therapy Visits C1F3S1 1.3624 

21132 1st and 2nd Episodes, 16 to 17 Therapy Visits C1F3S2 1.5565 

21133 1st and 2nd Episodes, 18 to 19 Therapy Visits C1F3S3 1.7506 

21211 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F1S1 1.3109 

21212 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F1S2 1.5142 

21213 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F1S3 1.7175 

21221 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F2S1 1.3497 

21222 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F2S2 1.5570 

21223 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F2S3 1.7643 

21231 1st and 2nd Episodes, 14 to 15 Therapy Visits C2F3S1 1.4463 

21232 1st and 2nd Episodes, 16 to 17 Therapy Visits C2F3S2 1.6486 

21233 1st and 2nd Episodes, 18 to 19 Therapy Visits C2F3S3 1.8509 

21311 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F1S1 1.4900 

21312 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F1S2 1.7142 

21313 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F1S3 1.9384 

21321 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F2S1 1.5288 

21322 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F2S2 1.7570 

21323 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F2S3 1.9853 

21331 1st and 2nd Episodes, 14 to 15 Therapy Visits C3F3S1 1.6255 

21332 1st and 2nd Episodes, 16 to 17 Therapy Visits C3F3S2 1.8487 

21333 1st and 2nd Episodes, 18 to 19 Therapy Visits C3F3S3 2.0718 

22111 3rd+ Episodes, 14 to 15 Therapy Visits C1F1S1 1.2407 

22112 3rd+ Episodes, 16 to 17 Therapy Visits C1F1S2 1.4312 

22113 3rd+ Episodes, 18 to 19 Therapy Visits C1F1S3 1.6217 
66064 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 


tkelley on DSK3SPTVN1PROD with RULES2ER06NO14.008</GPH>

Clinical and CY 

Functional 2015 

Payment Step (Episode and/or Therapy Visit Ranges) Levels Final 

Group (1 =Low; Case2=Medium; mix 

3= High) Weights 

22121 3rd+ Episodes, 14 to 15 Therapy Visits C1F2S1 1.2500 

22122 3rd+ Episodes, 16 to 17 Therapy Visits C1F2S2 1.4544 

22123 3rd+ Episodes, 18 to 19 Therapy Visits C1F2S3 1.6587 

22131 3rd+ Episodes, 14 to 15 Therapy Visits C1F3S1 1.3730 

22132 3rd+ Episodes, 16 to 17 Therapy Visits C1F3S2 1.5635 

22133 3rd+ Episodes, 18 to 19 Therapy Visits C1F3S3 1.7541 

22211 3rd+ Episodes, 14 to 15 Therapy Visits C2F1S1 1.3772 

22212 3rd+ Episodes, 16 to 17 Therapy Visits C2F1S2 1.5584 

22213 3rd+ Episodes, 18 to 19 Therapy Visits C2F1S3 1.7396 

22221 3rd+ Episodes, 14 to 15 Therapy Visits C2F2S1 1.3865 

22222 3rd+ Episodes, 16 to 17 Therapy Visits C2F2S2 1.5815 

22223 3rd+ Episodes, 18 to 19 Therapy Visits C2F2S3 1.7766 

22231 3rd+ Episodes, 14 to 15 Therapy Visits C2F3S1 1.5095 

22232 3rd+ Episodes, 16 to 17 Therapy Visits C2F3S2 1.6907 

22233 3rd+ Episodes, 18 to 19 Therapy Visits C2F3S3 1.8720 

22311 3rd+ Episodes, 14 to 15 Therapy Visits C3F1S1 1.5480 

22312 3rd+ Episodes, 16 to 17 Therapy Visits C3F1S2 1.7529 

22313 3rd+ Episodes, 18 to 19 Therapy Visits C3F1S3 1.9578 

22321 3rd+ Episodes, 14 to 15 Therapy Visits C3F2S1 1.5573 

22322 3rd+ Episodes, 16 to 17 Therapy Visits C3F2S2 1.7760 

22323 3rd+ Episodes, 18 to 19 Therapy Visits C3F2S3 1.9948 

22331 3rd+ Episodes, 14 to 15 Therapy Visits C3F3S1 1.6803 

22332 3rd+ Episodes, 16 to 17 Therapy Visits C3F3S2 1.8852 

22333 3rd+ Episodes, 18 to 19 Therapy Visits C3F3S3 2.0901 

30111 3rd+ Episodes, 0 to 5 Therapy Visits C1F1S1 0.4942 

30112 3rd+ Episodes, 6 Therapy Visits C1F1S2 0.6435 

30113 3rd+ Episodes, 7 to 9 Therapy Visits C1F1S3 0.7928 

30114 3rd+ Episodes, 10 Therapy Visits C1F1S4 0.9421 

30115 3rd+ Episodes, 11 to 13 Therapy Visits C1F1S5 1.0914 

30121 3rd+ Episodes, 0 to 5 Therapy Visits C1F2S1 0.5746 

30122 3rd+ Episodes, 6 Therapy Visits C1F2S2 0.7097 

30123 3rd+ Episodes, 7 to 9 Therapy Visits C1F2S3 0.8448 

30124 3rd+ Episodes, 10 Therapy Visits C1F2S4 0.9798 

30125 3rd+ Episodes, 11 to 13 Therapy Visits C1F2S5 1.1149 

30131 3rd+ Episodes, 0 to 5 Therapy Visits C1F3S1 0.6313 

30132 3rd+ Episodes, 6 Therapy Visits C1F3S2 0.7796 

30133 3rd+ Episodes, 7 to 9 Therapy Visits C1F3S3 0.9280 

30134 3rd+ Episodes, 10 Therapy Visits C1F3S4 1.0763 
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66065 


tkelley on DSK3SPTVN1PROD with RULES2ER06NO14.009</GPH>

Clinical and CY 

Functional 2015 

Payment Step (Episode and/or Therapy Visit Ranges) Levels Final 

Group (1 =Low; Case2=Medium; mix 

3= High) Weights 

30135 3rd+ Episodes, 11 to 13 Therapy Visits C1F3S5 1.2246 

30211 3rd+ Episodes, 0 to 5 Therapy Visits C2F1S1 0.5116 

30212 3rd+ Episodes, 6 Therapy Visits C2F1S2 0.6847 

30213 3rd+ Episodes, 7 to 9 Therapy Visits C2F1S3 0.8578 

30214 3rd+ Episodes, 10 Therapy Visits C2F1S4 1.0310 

30215 3rd+ Episodes, 11 to 13 Therapy Visits C2F1S5 1.2041 

30221 3rd+ Episodes, 0 to 5 Therapy Visits C2F2S1 0.5920 

30222 3rd+ Episodes, 6 Therapy Visits C2F2S2 0.7509 

30223 3rd+ Episodes, 7 to 9 Therapy Visits C2F2S3 0.9098 

30224 3rd+ Episodes, 10 Therapy Visits C2F2S4 1.0687 

30225 3rd+ Episodes, 11 to 13 Therapy Visits C2F2S5 1.2276 

30231 3rd+ Episodes, 0 to 5 Therapy Visits C2F3S1 0.6487 

30232 3rd+ Episodes, 6 Therapy Visits C2F3S2 0.8208 

30233 3rd+ Episodes, 7 to 9 Therapy Visits C2F3S3 0.9930 

30234 3rd+ Episodes, 10 Therapy Visits C2F3S4 1.1652 

30235 3rd+ Episodes, 11 to 13 Therapy Visits C2F3S5 1.3373 

30311 3rd+ Episodes, 0 to 5 Therapy Visits C3F1S1 0.6350 

30312 3rd+ Episodes, 6 Therapy Visits C3F1S2 0.8176 

30313 3rd+ Episodes, 7 to 9 Therapy Visits C3F1S3 1.0002 

30314 3rd+ Episodes, 10 Therapy Visits C3F1S4 1.1828 

30315 3rd+ Episodes, 11 to 13 Therapy Visits C3F1S5 1.3654 

30321 3rd+ Episodes, 0 to 5 Therapy Visits C3F2S1 0.7155 

30322 3rd+ Episodes, 6 Therapy Visits C3F2S2 0.8839 

30323 3rd+ Episodes, 7 to 9 Therapy Visits C3F2S3 1.0522 

30324 3rd+ Episodes, 10 Therapy Visits C3F2S4 1.2206 

30325 3rd+ Episodes, 11 to 13 Therapy Visits C3F2S5 1.3889 

30331 3rd+ Episodes, 0 to 5 Therapy Visits C3F3S1 0.7721 

30332 3rd+ Episodes, 6 Therapy Visits C3F3S2 0.9538 

30333 3rd+ Episodes, 7 to 9 Therapy Visits C3F3S3 1.1354 

30334 3rd+ Episodes, 10 Therapy Visits C3F3S4 1.3170 

30335 3rd+ Episodes, 11 to 13 Therapy Visits C3F3S5 1.4987 

40111 All Episodes, 20+ Therapy Visits C1F1S1 1.8122 

40121 All Episodes, 20+ Therapy Visits C1F2S1 1.8631 

40131 All Episodes, 20+ Therapy Visits C1F3S1 1.9446 

40211 All Episodes, 20+ Therapy Visits C2F1S1 1.9208 

40221 All Episodes, 20+ Therapy Visits C2F2S1 1.9717 

40231 All Episodes, 20+ Therapy Visits C2F3S1 2.0532 

40311 All Episodes, 20+ Therapy Visits C3F1S1 2.1626 
66066 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

To ensure the changes to the case-mix 

weights are implemented in a budget 

neutral manner, we proposed to apply a 

case-mix budget neutrality factor to the 

CY 2015 national, standardized 60-day 

episode payment rate (see section 

III.D.4. of this final rule). The case-mix 

budget neutrality factor is calculated as 

the ratio of total payments when CY 

2015 case-mix weights are applied to CY 

2013 utilization (claims) data to total 

payments when CY 2014 case-mix 

weights are applied to CY 2013 

utilization data. This produces a final 

case-mix budget neutrality factor for CY 

2015 of 1.0366, based on CY 2013 

claims data as of June 30, 2014. The 

case-mix budget neutrality factor 

(1.0366) also takes into account the regrouping of episodes according to the 

point values from the four-equation 

model and new clinical and functional 

thresholds described in section III.C, 

which contributes 0.0090 to the casemix budget neutrality factor. 

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

gives us 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 any additional nominal casemix growth. For the proposed rule, we 

examined case-mix growth from CY 

2012 to CY 2013 using CY 2012 and 

preliminary CY 2013 claims data. For 

this final rule, in updating our analysis 

with CY 2013 claims data as of June 30, 

2014, we estimate that case-mix 

increased by 2.76 percent between CY 

2012 and CY 2013. In applying the 

15.97 percent estimate of real case-mix 

growth to the total estimated case-mix 

growth from CY 2012 to CY 2013 (2.76 

percent), we estimate that 2.32 percent 

(2.76–(2.76 * 0.1597)) of the case-mix 

growth is nominal (that is, case-mix 

growth that is unrelated to changes in 

patient acuity). 

We estimate that the case-mix budget 

neutrality factor of 1.0366 would have 

to be reduced to 1.0134 to account for 

nominal case-mix growth 

((1.0366¥0.0276) + (0.0276*0.1597) = 

1.0134). While we considered adjusting 

the case-mix budget neutrality factor to 

take into account the growth in nominal 

case-mix (2.32 percent), which would 

result in a case-mix budget neutrality 

adjustment of 1.0134 rather than 1.0366, 

we will apply the full 1.0366 case-mix 

budget neutrality factor to the national, 

standardized 60-day episode payment 

rate. We will continue to monitor casemix growth and may consider whether 

to propose nominal case-mix reductions 

in future rulemaking. 

The following is a summary of the 

comments and our responses to 

comments on the CY 2015 proposed 

case-mix weights and methodology: 

Comment: Commenters stated that 

CMS has not provided complete 

technical information on the nature and 

basis for the revisions to the case-mix 

weights and variables in the model and 

therefore, the recalibration of the 

weights cannot be sufficiently 

evaluated. Commenters stated that 

unlike previous recalibrations, CMS has 

not provided the technical report on the 

proposed recalibration of the weights 

and that CMS did not publish the data 

or the analysis used to support its 

conclusions. Commenters stated that a 

full technical report on the methodology 

and regression analysis would be 

valuable in understanding the reliability 

and validity of the recalibration and 

would allow stakeholders to conduct 

their own evaluations as well. A 

commenter recommended that CMS 

make all technical reports and analyses 

regarding the recalibration of the casemix weights publicly available 

immediately in order to permit 

stakeholders to review the significant 

changes described in the proposed rule. 

Response: As stated in the CY 2015 

proposed rule, the methodology used to 

recalibrate the weights is identical to the 

methodology used in the CY 2012 

recalibration except for the minor 

exceptions noted in the proposed rule. 

We encourage commenters to refer to 

the CY 2012 proposed and final rule and 

the CY 2012 technical report on our 

home page at http://www.cms.gov/

Center/Provider-Type/Home-HealthAgency-HHA-Center.html for additional 

information about the recalibration 

methodology. 

Comment: Commenters stated that the 

recalibration of the high volume therapy 

episodes will lead to financial 

incentives to increase therapy visits 

even though CMS has indicated that 

therapy visit volume should have less 

impact on the weights. They stated that 

the changes to the proposed case-mix 

weights contradict what was said 

previously regarding undervalue of 

clinical elements and over-value of the 

therapy component. Commenters 

presented their analyses comparing the 

CY 2014 weights to the CY 2015 weights 

and payments associated with each of 

the HHRGs. Commenters stated that 

under the CY 2015 proposed case-mix 

weights, a majority of the HHRGs with 

low therapy visits will have losses and 

a large number of the high therapy 

groups and all of the 20+ therapy 

episodes will receive substantial 

increases to their weights. Commenters 

stated that these results seem to 

contradict the adjustment discussion in 

the CY 2015 proposed rule. 

Response: We note that the CY 2015 

recalibration is based on 2013 claims 

data, which is six to eight years more 

current than the claims data used in the 

CY 2012 recalibration. The 2013 data 

also reflects the 2008 refinements to the 

HH PPS, which included the change 

from one therapy threshold to multiple 

therapy thresholds and the change from 

80 HHRGs to 153 HHRGs. Given the 

time difference in the data used for the 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66067 

two recalibrations, one would expect 

differences in the resulting case-mix 

weights. However, comparing the CY 

2015 proposed case-mix weights to the 

CY 2014 final weights; we observed that 

over 60% of normal episodes would 

have a case-mix weight change of 5 

percent or less. Furthermore, few 

episodes have an increase in their casemix weight that exceeds 5 percent (14.2 

percent) and very few episodes have an 

increase in their case-mix weight that 

exceeds 10 percent (0.4 percent). 

The changes in case-mix weights can 

be mostly attributed to shifts in 

utilization patterns between 2005/2007 

and 2013. Over that six to eight year 

time period, we find a notable shift 

across all therapy groups away from the 

use of home health aides and a shift to 

either more nursing or more therapy 

care (see Tables 16 and 17 below). 

While some of the low therapy groups 

did add more skilled nursing visits, 

most of the therapy groups added more 

occupational therapy (OT) and speechlanguage pathology (SLP), which have 

substantially higher Bureau of Labor 

Statistics (BLS) average hourly wage 

values compared to skilled nursing 

($39/hr for skilled nursing versus $55 

for OT and $60 for SLP). 

TABLE 16—SUMMARY STATISTICS—EPISODES FROM 2013 

[Only normal episodes] 

Therapy group 

Number 

of 

episodes 

Nursing Aides PT OT SLP MSS All 

therapy 

All 

visits 

0–5 ........................................... 2,951,379 8.9 2.1 0.6 0.1 0.0 0.1 0.7 11.8 

6 ............................................... 224,325 6.0 1.3 5.2 0.6 0.1 0.1 6.0 13.3 

7–9 ........................................... 664,911 6.5 1.5 6.9 0.9 0.2 0.2 7.9 16.0 

10 ............................................. 184,871 6.8 1.7 8.5 1.3 0.2 0.2 10.0 18.6 

11–13 ....................................... 532,875 7.1 2.0 10.0 1.7 0.3 0.2 12.0 21.2 

14–15 ....................................... 249,627 7.3 2.4 11.6 2.4 0.4 0.2 14.5 24.3 

16–17 ....................................... 267,500 6.5 2.5 13.5 2.5 0.4 0.2 16.4 25.6 

18–19 ....................................... 173,769 7.0 2.6 13.8 4.0 0.6 0.2 18.4 28.2 

20+ ........................................... 328,295 8.1 3.5 14.9 7.9 1.9 0.3 24.8 36.6 

Total .................................. 5,577,552 7.9 2.1 5.1 1.2 0.2 0.1 6.5 16.7 

Source: Data on episodes with a through date in 2013 using complete CY 2013 claims data as of June 30, 2014. 

TABLE 17—SUMMARY STATISTICS—EPISODES FROM 2007 (FILE USED IN CY 2012 RECALIBRATION) 

[Only normal episodes] 

Therapy group 

Number 

of 

episodes 

Nursing Aides PT OT SLP MSS All 

therapy 

All 

visits 

Average number of visits for 

Normal episodes with a 

through date in 2007 

0–5 ........................................... 520,639 9.3 3.6 0.6 0.1 0.0 0.1 0.7 13.7 

6 ............................................... 28,349 5.5 1.7 5.3 0.6 0.1 0.2 6.0 13.4 

7–9 ........................................... 59,156 5.9 2.1 6.9 0.9 0.1 0.2 7.9 16.1 

10 ............................................. 47,798 7.2 2.8 8.9 1.0 0.1 0.2 10.0 20.1 

11–13 ....................................... 107,970 7.2 3.5 10.5 1.2 0.1 0.2 11.9 22.7 

14–15 ....................................... 38,188 7.3 4.0 12.1 2.1 0.3 0.2 14.5 25.9 

16–17 ....................................... 29,322 7.2 4.4 13.6 2.5 0.4 0.2 16.5 28.4 

18–19 ....................................... 17,679 7.4 4.4 14.4 3.5 0.5 0.2 18.4 30.5 

20+ ........................................... 39,395 7.4 5.2 16.3 7.1 1.5 0.3 24.9 37.9 

Total .................................. 888,496 8.3 3.5 4.7 0.9 0.1 0.1 5.7 17.7 

Source: Data on episodes ending in 2007 using a 20% sample of 2007 data from the home health Datalink file. 

In addition, while the average number 

of total visits per episode has decreased 

overall, it decreased disproportionately 

more for the no/low therapy group 

(which constitute over 50 percent of all 

episodes) compared to the remaining 

groups (see Table 18 below). These 

utilization changes result in changes to 

the weights observed by the 

commenters, specifically, the decreases 

in the case-mix weights for the low or 

no therapy groups and increases in the 

case-mix weights for the high therapy 

groups. 

TABLE 18—PERCENT CHANGE IN THE

AVERAGE NUMBER OF VISITS BY

THERAPY GROUP, 2007 AND 2013 

Therapy group 

Percent 

change in 

visits 

from 2007 

to 2013 

0–5 ............................................ ¥13.92 

6 ................................................ 0.18 

7–9 ............................................ 0.32 

10 .............................................. ¥7.38 

11–13 ........................................ ¥6.63 

14–15 ........................................ ¥6.14 

16–17 ........................................ ¥9.89 

TABLE 18—PERCENT CHANGE IN THE

AVERAGE NUMBER OF VISITS BY

THERAPY GROUP, 2007 AND 2013— 

Continued 

Therapy group 

Percent 

change in 

visits 

from 2007 

to 2013 

18–19 ........................................ ¥7.73 

20+ ............................................ ¥3.46 

We would like to clarify that the 

adjustments applied to the case-mix 

weights are not in addition to the 


tkelley on DSK3SPTVN1PROD with RULES2
66068 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

adjustments applied in 2012, but rather 

are the same adjustments as the ones 

applied to the 2012 data. In other words, 

the 3.75 percent increases to the weights 

associated with 0 to 5 therapy visits, the 

2.5 percent decreases to the weights 

associated with 14–19 therapy visits, 

and 5 percent decreases to the weights 

associated with 20+ therapy visits are 

applied to the raw weights resulting 

from 2013 claims data. We did not take 

the CY 2012 case-mix weights and 

further adjust them. Therefore, one 

should not expect to see higher weights 

for low or no therapy episodes and 

lower weights for high therapy episodes 

when comparing the CY 2015 proposed 

case-mix weights to the CY 2014 

weights, which have the same relative 

values as the 2012 case-mix weights. 

We note that by removing the therapy 

indicator variables from the four 

equation model and moving away from 

the use of therapy visits in the model 

that the case-mix weights for high 

therapy groups were lower than what 

they would have been if the therapy 

indicator variables were included in the 

model. We also note that the final casemix weights for the highest therapy 

HHRGs (those groups of episodes with 

20 or more therapy visits) slightly 

decreased when comparing the CY 2015 

final case-mix weights, based on 

complete CY 2013 data as of June 30, 

2014, to the CY 2015 proposed case-mix 

weights, based on preliminary CY 2013 

data as of December 31, 2013. 

Comment: One commenter was 

supportive of the recalibration proposal 

and agreed that the proposed 

recalibration strikes an appropriate 

balance between discouraging 

inappropriate use of therapy while 

addressing concerns that non-therapy 

services are undervalued. 

Response: We thank the commenter 

for their support. 

Comment: A commenter stated that 

the increase in therapy visits was due to 

therapists providing clinically necessary 

skilled care, not due to manipulating the 

therapy reimbursement process. 

Another commenter questioned whether 

CMS utilized multiple years of OASIS 

data to consider the change in 

functional status of those patients who 

receive low numbers of therapy visits 

versus those receiving 20 or more 

therapy visits and if the change noted at 

both ends of the spectrum of therapy 

utilization are appropriately reflected in 

the recalibration effort. Another 

commenter stated that CMS’ proposed 

changes do not appear to be based on 

any reasoned consideration of why the 

visit time data is the way it is. 

Response: The case-mix weights are 

driven by the 2013 claims data with the 

same adjustments finalized in CY 2012 

to better align payment for high and no/ 

low therapy episodes with cost. The 

proposed recalibration of the case-mix 

weights used the methodology proposed 

and finalized in CY 2012, with a few 

noted differences outlined above and in 

the CY 2015 HH PPS proposed rule. We 

did not set the weights based on what 

levels of services we thought were 

appropriate. Any changes in the casemix weights for CY 2015 are driven by 

utilization patterns observed in CY 2013 

claims data. 

Comment: A commenter stated that 

the case-mix weights appear to decrease 

payments for third or later episodes of 

care. The commenter stated that many 

home health providers serve patients 

with multiple chronic conditions and 

that the patients often have significant 

medical issues. The commenter stated 

that reducing payments for such 

episodes of care will likely have an 

impact on how home health providers 

will treat patients with chronic 

conditions. The commenter asked for 

more clarifications regarding what 

practice or utilization changes we are 

trying to achieve and if we could 

explain if there are particular types of 

patients we believe should not be 

receiving third episodes of home health 

care and/or if there are certain patients 

who should receive a different approach 

to care that would be less costly than 

the care delivered at present. 

Response: We reiterate that CY 2015 

the case-mix weights are reflective of 

the utilization patterns observed in the 

CY 2013 claims data. We have not 

manipulated the case-mix weights to 

encourage certain patterns of care for 

the third or later episodes. The case-mix 

weights are driven by the mix of 

services provided, the costs of services 

provided as determined by the BLS 

hourly rates, the length of the visits, and 

the number of visits provided. Any 

decreases in the case-mix weights for 

third or later episodes of care reflect less 

average resources associated with those 

episodes using 2013 claims data than 

the average resources associated with 

third and later episodes using 2007 data, 

which was the data used in the 2012 

recalibration. 

We note that when comparing the 

visit distribution in 2013 versus 2007 

for third and later episodes, we observe 

large decreases in the total visit count in 

2013 versus 2007 for these episodes (see 

Table 19 and Table 20). As shown in 

Table 21, the number of total visits for 

the third and later episodes, on average, 

decreased significantly, ranging from 

¥8.30 percent to ¥19.01 percent, for 

the various therapy groups. The 

decreases in the case-mix weights for 

third or later episode episodes for CY 

2015 versus CY 2014 may be due to the 

decrease in total visits for these 

episodes between 2007 and 2013. 

TABLE 19—AVERAGE NUMBER OF VISITS FOR THIRD AND LATER EPISODES OF CARE (NOT INCLUDING 20+ THERAPY VISIT

EPISODES WHICH MAY BE EARLY OR LATE), CY 2013 

Therapy group Number of 

episodes Nursing Aides PT OT SLP MSS All therapy 

All 

visits 

0–5 ........................................... 1,424,148 9.2 3.2 0.2 0.0 0.0 0.1 0.3 12.7 

6 ............................................... 38,406 7.8 2.6 4.9 0.8 0.2 0.1 6.0 16.5 

7–9 ........................................... 125,743 8.2 2.9 6.7 1.0 0.3 0.1 7.9 19.1 

10 ............................................. 37,482 8.4 2.9 8.5 1.2 0.3 0.1 10.0 21.4 

11–13 ....................................... 120,115 8.4 3.2 10.2 1.5 0.3 0.1 12.0 23.7 

14–15 ....................................... 68,540 8.3 3.5 12.1 1.9 0.5 0.1 14.5 26.3 

16–17 ....................................... 77,730 7.2 3.6 13.9 2.0 0.4 0.1 16.4 27.3 

18–19 ....................................... 41,557 7.6 3.6 14.2 3.5 0.6 0.1 18.3 29.7 

Total .................................. 1,933,721 8.9 3.2 2.8 0.5 0.1 0.1 3.3 15.5 

Source: Data on normal episodes of care with a through date in 2013 using complete CY 2013 claims data as of June 30, 2014. 


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TABLE 20—AVERAGE NUMBER OF VISITS FOR THIRD AND LATER EPISODES OF CARE (NOT INCLUDING 20+ THERAPY VISIT

EPISODES WHICH MAY BE EARLY OR LATE), CY 2007 

Therapy group Number of 

episodes Nursing Aides PT OT SLP MSS All therapy 

All 

visits 

0–5 ........................................... 227,934 9.6 5.9 0.2 0.0 0.0 0.1 0.2 15.7 

6 ............................................... 3,068 7.7 4.1 5.0 0.8 0.2 0.1 6.0 18.0 

7–9 ........................................... 7,458 8.1 4.6 6.7 1.1 0.2 0.2 8.0 20.8 

10 ............................................. 9,510 9.0 5.2 8.7 1.1 0.2 0.1 10.0 24.3 

11–13 ....................................... 21,620 9.0 5.8 10.4 1.3 0.2 0.1 11.9 26.8 

14–15 ....................................... 7,736 8.6 6.4 12.4 1.8 0.3 0.1 14.5 29.6 

16–17 ....................................... 6,481 8.2 7.0 14.1 1.9 0.4 0.1 16.5 31.8 

18–19 ....................................... 2,982 8.8 6.7 14.9 3.0 0.5 0.2 18.4 34.0 

Total .................................. 292,873 9.4 5.9 2.6 0.4 0.1 0.1 3.1 18.4 

Source: Data on normal episodes of care ending in 2007 using a 20% sample of 2007 data from the home health Datalink file. 

TABLE 21—PERCENT CHANGE IN THE

AVERAGE NUMBER OF VISITS BY

THERAPY GROUP FOR THIRD AND

LATER EPISODES OF CARE, 2007 

AND 2013 

Therapy group 

Percent 

change 

in visits 

from 2007 

to 2013 

0–5 ............................................ ¥19.01 

6 ................................................ ¥8.38 

7–9 ............................................ ¥8.30 

10 .............................................. ¥11.75 

11–13 ........................................ ¥11.44 

14–15 ........................................ ¥11.28 

16–17 ........................................ ¥14.18 

18–19 ........................................ ¥12.72 

Comment: A commenter stated that 

the points for the case-mix variables 

seem to be decreasing for the low 

therapy episodes and increasing for the 

high therapy episodes, motivating 

agencies to provide more therapy visits 

to boost reimbursement. The commenter 

stated that the data used to determine 

the case-mix points was swayed by the 

payment system which rewards high 

therapy utilization. Other commenters 

stated that many diagnosis codes are 

losing case-mix points and that there 

doesn’t seem to be a reason behind the 

loss of points. Another commenter 

implied that there doesn’t seem to be a 

balance in the shift in points and was 

concerned with the impact of the 

scoring variables being eliminated and 

others decreasing or increasing points. 

Another commenter stated that there is 

not sufficient detail to explain the 

Agency’s rationale for the large scale 

changes to the case-mix point values in 

the proposed rule and questioned what 

message CMS is sending to agencies 

based on the changes to the case-mix 

variable table. The commenter stated 

that there is no longer an emphasis on 

diabetes, heart failure, COPD, or 

depression, but that there seems to be an 

emphasis on orthopedic and 

neurological diagnoses, particularly 

when 14 or more therapy visits are 

ordered. A commenter stated that the 

change in the case-mix points sends a 

message that there is little or no benefit 

to home health agencies in caring for 

chronically ill patients with common 

medical diagnoses unless those patients 

are receiving 14 or more therapy visits 

and urged CMS to reconsider adoption 

and implementation of the proposed 

case-mix point tables and new 

thresholds until CMS has sought more 

input from clinicians and agencies and 

has re-evaluated the messages the new 

case-mix table will send to the home 

health community. 

Response: We reiterate that the points 

for the case-mix variables are driven by 

the utilization patterns observed in the 

CY 2013 claims data. The changes to the 

weights are not surprising given the 

different data used for the CY 2012 

recalibration versus the data used for 

the CY 2015 recalibration. We used 

2005 data to estimate the four equation 

model for the CY 2012 recalibration and 

we used 2013 data to estimate the four 

equation model for the CY 2015 

recalibration. (The 2012 payment 

regression was based on a 2007 sample 

that was assigned to severity levels 

based on the point values from a 4- 

equation model using 2005 data that 

eliminated certain hypertension codes). 

The different point estimates across the 

two models indicate that the case-mix 

variables have a different relationship to 

resource use in 2013 compared to 2005. 

A decrease in the number of points (for 

2013 compared to 2005) for a variable 

means that the variable is associated 

with less resource use on average in 

2013 compared to 2005. An increase in 

the number of points for a variable 

means that the variable is associated 

with more resource use on average in 

2013 compared to 2005. Certain 

variables did drop out of the 4-equation 

model in in the CY 2015 recalibration 

versus the CY 2012 recalibration. For 

many of those variables, the CY 2012 

recalibration estimated only a small 

number of points associated with the 

variables and therefore those variables 

were already on the verge of being 

dropped from the model in CY 2012. 

While some variables did drop out of 

the model, the potential change in 

points associated with those variables 

was not very large, so that individually 

those variables had minimal impact on 

episodes’ resource use. Some of the 

variables that dropped out of the model 

experienced increases in the number of 

episodes with the variable reported on 

OASIS between 2005 and 2013. The 

increase in episodes reporting a 

particular variable may have decreased 

the difference in resources for episodes 

that coded the variable versus those that 

did not and, therefore, may have caused 

the variable to become insignificant or 

to have minimal impact on resource 

costs, leading to its elimination from the 

model. 

When evaluating the points associated 

with each leg of the model, it is 

important to examine the thresholds for 

each leg. For example, the clinical 

thresholds described in the proposed 

rule have fewer points associated with 

them for the 0 to 13 therapy visit 

episodes. Therefore, while there may be 

fewer points associated with some of the 

variables within the 0 to 13 therapy visit 

legs, there is also a lower threshold for 

the clinical levels. In order to determine 

the thresholds, we put episodes into five 

groups (early episodes, 0 to 13 therapy 

visits, early episodes, 14–19 therapy 

visits, late episodes, 0 to 13 therapy 

visits, late episodes, 14–19 therapy 

visits, and 20+ therapy visit episodes) 

for both the clinical and the functional 

dimensions. We then attempt to divide 

the episodes within each group into 

thirds in order to set the thresholds. 

Therefore, regardless of the points, on 

average, the most resource-intensive 

episodes will be placed in the highest 

clinical or functional level. It is also 


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worth noting that, with the CY 2015 

recalibration, additional variables 

received points in the estimation of the 

4-equation model that did not receive 

points in the CY 2012 recalibration. 

Again, the outcomes of the models are 

guided by the data and reflect recent 

(2013) utilization patterns. This 

approach increases payments for the 

HHRGs where resources are being 

provided where they were not 

previously and decreases payment for 

the HHRGs where resources are not 

being provided where they were 

previously. The intent is to create 

payments that more accurately reflect 

the costs that agencies incur. 

Comment: A commenter also stated 

that this is the third year in a row that 

the HH PPS has had different case-mix 

weights and that this may be an 

indicator of uncertainty by CMS. 

Another commenter stated that the 

recalibration of the weights is being 

recommended after having just recently 

been changed the prior year and that 

there is no consistency in the change. 

Response: We would like to clarify 

that fundamentally we have not 

changed the weights since CY 2012. We 

previously recalibrated the case-mix 

weights in 2012 and did not change the 

weights in CY 2013. For CY 2014, while 

we lowered the case-mix weights to an 

average case-mix weight of 1.0000, we 

did not adjust the weights relative to 

one another. We instead decreased each 

case-mix weight by the same factor 

(1.3464). In the CY 2015 proposed rule, 

we proposed to recalibrate the case-mix 

weights with more current data, 

adjusting the weights relative to one 

another. To the greatest extent possible, 

we are attempting to use recent data to 

calibrate the payment models to ensure 

payments accurately reflect current 

resource use in home health episodes. 

Comment: A commenter found the 

data CMS is basing its proposals on to 

be puzzling and mentioned that the 

payment system does not allow for 

reporting of time devoted to patient care 

that is not visit time. The commenter 

stated that dementia and brain disorders 

involve significant time outside of the 

visit. 

Response: Section 1861(m) of the Act 

defines home health services as ‘‘items 

and services furnished to an individual 

[. . .] provided on a visiting basis in a 

place of residence used as such 

individual’s home . . .’’ (emphasis 

added). Under certain circumstances, 

services may be provided via a 

telecommunications system, but these 

services do not substitute for in-person 

home health services and are not 

considered a home health visit for 

purposes of home health eligibility or 

payment (see section 1895(e)(1) of the 

Act). In addition, the commenter 

provided no supporting data explaining 

why home health services for patients 

suffering from dementia and brain 

disorders would require reimbursement 

exceeding the typical case management/ 

care coordination functions that are 

inherent in managing patients in the 

home. We also note that while the casemix recalibration does not include time 

outside of the visit, the base rate should 

capture other expenses related to patient 

care, such as travel costs, etc. An 

assumption since the original 

development of the HH PPS, supported 

by internal studies of cost report data, 

has been that visit time is approximately 

proportional to the total cost of caring 

for a patient during an episode. 

Comment: Commenters expressed 

concerns with the effects the 

recalibrated weights will have when 

coupled with the rebasing reductions. A 

commenter stated that the combination 

of the recalibrated case-mix weights and 

the change in base rate brings about the 

equivalent of about a three point 

reduction in payments. A commenter 

stated that it makes sense to update 

case-mix points when statistical 

analyses warrant it but that it seems that 

most adjustments in recent years were 

done to reduce payments to home 

health agencies. A commenter stated 

that the changes in the case-mix points 

and thresholds for scoring the episode 

constitute a further reduction in 

payment beyond the required reduction 

and recalibration of the case-mix 

weights for CY 2015. 

Response: The CY 2015 case-mix 

recalibration is done in a budget neutral 

manner. While we recalibrated the CY 

2015 case-mix weights to an average 

case-mix weight of 1.00, we also 

proposed an increase to the base rate of 

2.37 percent in order to ensure that 

there are no changes in aggregate 

payments due to the recalibration. The 

weights are only changing relative to 

one another and do not result in an 

overall reduction in HH PPS payments 

due to the recalibration of the case-mix 

weights. 

Comment: A commenter stated that 

case-mix weights are continuing to be 

recalibrated to 1.000 but that many 

payments to home health do not result 

in the episodic payment including 

Partial Episode Payments, payments for 

low utilization payment adjustment 

episodes, outliers, and others. 

Response: We believe the commenter 

is implying that the case-mix 

recalibration is not budget neutral given 

that LUPA, outlier episodes, etc. are not 

included in the case-mix weight 

recalibration. We note the LUPA 

episodes are paid on a per-visit basis 

and are not paid using the case-mix 

weights. Therefore, they were not 

included when performing the 

recalibration. We note that all episodes, 

including partial episode payment 

episodes and outlier episodes, are 

included when calculating the budget 

neutrality factor in order to ensure that 

total payments would be the same when 

comparing the CY 2015 weights to the 

CY 2014 weights. However, outliers are 

not included in the data when doing the 

case-mix recalibration because outlier 

episodes contain utilization patterns 

that are atypical. The outliers’ 

utilization presumably reflects 

unusually high patient need for services 

that is not easily predictable in 

statistical data. In addition, due to the 

concentration of outlier episodes in 

suspect billing areas, we question some 

of the utilization data for outlier 

episodes. We would also like to note 

that outlier episodes receive additional 

payment when the imputed cost 

exceeds a certain threshold and 

therefore, receive additional payment 

outside of the case-mix system. 

Comment: A commenter stated that 

the R-squared value of the payment 

regression model has increased from the 

2012 payment regression model even 

though variables were dropped from the 

four-equation model. The commenter 

stated that less variables in the fourequation model should weaken the Rsquared value. 

Response: We do note that while the 

R-squared value for the payment 

regression increased for the CY 2015 

payment regression model when 

compared to the CY 2012 payment 

regression model, the R-squared value 

for the CY 2015 four-equation model did 

decrease when compared to the Rsquared value for the CY 2012 fourequation model, from 0.462 to 0.427. 

However, we point out that for the CY 

2015 four-equation model and payment 

regression model, we used 2013 data. 

For the CY 2012 four-equation model, 

we used 2005 data and for the CY 2012 

payment regression model, we used data 

from 2007. R-squared values will change 

depending on what data are used and 

cannot be directly compared. 

Comment: Commenters supported the 

idea of recalibrating the weights with 

newer data but expressed concerns with 

the resulting proposed weights. 

Commenters stated their concerns with 

the continued use of therapy thresholds 

in the case-mix system. Commenters 

recommended that the therapy 

thresholds be eliminated from the 

payment system and that home health 

services be paid solely based on patient 

characteristics. A commenter stated that 


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though CMS has made efforts to reduce 

payments for therapy episodes, the 

incentives of the therapy thresholds, 

with more visits receiving higher 

payments, still remain in effect. The 

commenter stated that the adjustments 

to the case-mix weights would not be 

necessary if the therapy thresholds were 

eliminated. 

Response: We recognize the issues 

around the use of the therapy thresholds 

and the use of therapy utilization in the 

payment system. We are currently 

looking into findings of the home health 

study authorized by section 3131(d) of 

the Affordable Care Act and payment 

reform options, including alternate ways 

to explain the amount of therapy 

resources without using therapy 

utilization variables. Further research is 

needed to find alternatives that will 

compensate for some of the loss of the 

explanatory power associated with the 

removal of the therapy utilization 

variables. 

Comment: Several commenters were 

concerned about the implications for 

agencies of adjusting to several 

successive recalibrations. Commenters 

said recalibrations cause instability for 

HHAs, with one saying recalibrations 

were inconsistent with one another. A 

commenter was concerned that multiple 

recalibrations make calculations with 

the case mix weights useless as a 

comparative tool over time. This 

commenter also cited problems with 

calculations from including therapy 

utilization and by the constant annual 

revision to the various OASIS items or 

diagnoses included/excluded. 

Response: We note that other postacute payment systems, such as the 

inpatient rehabilitation facility PPS and 

acute inpatient PPS, recalibrate their 

case-mix weights annually. The 

differences in the recalibration results 

for the CY 2012 recalibration and the CY 

2015 recalibration largely result from 

the six to eight year difference in the 

data used. We expect future annual 

recalibrations to have less significant 

changes in the case-mix points and 

values. With regard to the use of therapy 

utilization in our methodology, as stated 

in our response above, we are looking 

into alternate ways to explain the 

amount of therapy resources. Since the 

2008 refinements, there have been no 

changes to the payment items on the 

OASIS. In addition, besides last year’s 

changes to the ICD–9–CM codes 

included into the case-mix system 

(effective January 1, 2014 and therefore 

not reflected in the CY 2013 data used 

to recalibration the CY 2015 case-mix 

weights) and the removal of the 

hypertension codes in 2012, we did not 

make significant changes to the 

diagnoses included or excluded in the 

case-mix system. We also note in 2013, 

changes in the rules for using the 

payment diagnosis field were simulated 

and the simulations showed impacts in 

payment of less than one percent. 

Comment: A commenter stated that to 

the extent that CMS is pursuing the 

adjustments to the weights for 2015, the 

agency should analyze the payment-tocost ratios for the proposed payment 

weights before and after the manual 

adjustment, similar to the analysis 

conducted during the CY 2012 

recalibration. The commenter stated that 

this additional analysis would allow 

CMS to assess whether these 

adjustments equalize the financial 

incentives for therapy and non-therapy 

episodes. Another commenter urged 

CMS to adjust the CY 2015 case-mix 

weights to ensure appropriate use of 

therapy visits and move reimbursement 

for therapy-based episodes towards 

actual costs incurred. Commenters 

recommended that CMS conduct a 

thorough validation review of the 

proposed case-mix weight recalibration 

and evaluate the potential impact on 

utilization, spending, access to care, and 

other relevant matters. Other 

commenters urged CMS to re-examine 

the case-mix recalibration and refine it 

to control for variables that might skew 

outcomes and ensure that the end result 

does not create rewards for high therapy 

resource use that may be inappropriate. 

A commenter suggested that CMS revisit 

the case-mix weight recalibration to 

accomplish its stated intention or 

alternatively provide a detailed 

explanation how the recalibrated casemix weights are consistent with its 

intent. The commenter also stated that 

there has been no testing to determine 

whether the adjustments will achieve 

the desired outcomes. The commenter 

recommended that CMS retain the 

current case-mix weights until an 

approach to recalibration that actually 

achieves the desired outcomes can be 

developed and tested. The commenter 

stated that the changes to the payment 

system don’t seem to have achieved the 

desired impact. 

Response: We performed an analysis 

of the payment-to-cost ratio for episodes 

with varying levels of therapy visits. 

This analysis used cost report data to 

estimate episode cost and showed that 

the payment to cost ratios across the 

varying levels of therapy visits for the 

recalibrated weights were similar to the 

payment to cost ratios for the current 

weights. The analysis also justified the 

need for the continued adjustments 

(finalized in CY 2012) to be applied to 

the raw weights to lower the case-mix 

weights for high therapy episodes. The 

payment-to-cost ratios across the 

individual therapy visits were all 

relatively similar to each other, with 

some exceptions in the tails of the 

distribution, and indicated that there 

may not be a strong incentive to provide 

unnecessary amounts of therapy visits. 

The goal of the recalibration is to better 

align payment with current costs and 

we believe the recalibration achieves 

this. 

Comment: Commenters expressed 

their support for CMS’ decision to apply 

a full case-mix budget neutrality factor 

rather than a reduced case-mix budget 

neutrality factor which would take into 

account nominal case-mix growth. 

However, they expressed concern about 

the uncertainty for providers in 

planning for projected rates in CY 2015 

and beyond given the possibility of 

case-mix reductions in the future. 

Commenters urged CMS to closely 

collaborate with the industry and 

stakeholders to ensure that the 

appropriate analysis is conducted in 

evaluating case-mix growth before 

proposing case-mix reductions in the 

future. Another commenter suggested 

that CMS perform a comprehensive 

study of individual patient clinical 

records before asserting that case-mix 

growth has occurred by anything other 

than necessary clinical care being 

provided. Another commenter urged 

CMS to use their enforcement authority 

to conduct targeted claims reviews and 

deny payment for claims where the 

case-mix weight is not supported by the 

plan of care rather than cut the national 

standardized episode rate for all 

agencies. Yet another commenter stated 

that case-mix change should not be 

measured using 1999 data as a baseline 

and that HHAs are providing better care 

for a more needy clinical population. 

Other commenters questioned the 

methodology used to determine real and 

nominal case-mix. 

Response: While we appreciate the 

commenters’ suggestion about the 

clinical record review, we note that our 

resources are not sufficient to conduct a 

review of patient records and/or claims 

on a scale that would be required to 

counteract the broad-based uptrend in 

case-mix weights; therefore, we cannot 

perform the review as suggested. 

However, we note that the MACs, in 

conjunction with supplemental review 

contractors, perform medical review of 

claims. When they perform medical 

review, they review the plan of care and 

OASIS and make adjustments to HHRGs 

if they deem that the documentation is 

not sufficient to support what was billed 

by the agency. Furthermore, we note 

that our statistical methods using 

available administrative data are 


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feasible and sufficiently reliable to 

utilize for the purpose of case-mix 

reductions. 

With regard to the comments about 

patient severity, as stated in the CY 

2012 proposed rule, a detailed analysis 

of Medicare Expenditure Panel Survey 

(MEPS) data (which is independent of 

our real case-mix model) was performed 

to examine the severity of the Medicare 

home health population. The trends in 

health status from 2000 to 2008 were 

analyzed. The analysis showed a slight 

increase in the overall health status of 

the Medicare home health population, 

and in particular, the percent of home 

health Medicare beneficiaries 

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

of work-limiting pain decreased 

substantially, from 56.6 percent in 2000 

to 45.4 percent in 2008 (p = 0.039). 

While we recognize that there are some 

limitations to this analysis, we conclude 

that the results of this analysis provide 

no evidence of an increase in patient 

severity from 2000 to 2008. 

In addition, we would like to note 

that during the CY 2012 rulemaking, we 

incorporated HCC data, which is used 

by CMS to risk-adjust payments to 

managed care organization in the 

Medicare program, in our model to 

assess real case-mix growth. Our 

findings of real and nominal case-mix 

growth, even when incorporating HCC 

data, were consistent with past results. 

Most of the case-mix change was 

identified as nominal case-mix change. 

We will continue to solicit suggestions 

for other data that can be incorporated 

into our analysis of real and nominal 

growth and solicit suggestions on 

possible ways to improve our models. 

We plan to continue to monitor real and 

nominal case-mix growth and may 

propose additional case-mix reductions 

as necessary. 

Comment: One commenter stated that 

CMS has adjusted payments in 2008 to 

2013 based on an analysis of changes in 

coding not related to changes in patient 

severity, but that CMS has not proposed 

a coding adjustment for 2015. The 

commenter stated that given the history 

of coding increases not attributable to 

severity, CMS should analyze the 

nominal case-mix change in the 

reported average case-mix for more 

recent years and implement additional 

payment reductions as warranted. 

Response: We agree and we will 

continue to monitor nominal case-mix 

growth and propose case-mix 

adjustments, as necessary. We also note 

that annually recalibrating (and 

normalizing the weights to 1.00) may 

minimize nominal case-mix growth in 

future years. 

Comment: Another commenter stated 

that CMS should address and eliminate 

fraudulent activities in a targeted 

manner that does not burden the whole 

industry for the actions of a small 

number of bad actors. The commenter 

stated that CMS should target bad actors 

rather than continue to implement 

across the board reductions that could 

reduce the number and quality of home 

health providers. 

Response: For a variety of reasons, as 

we have noted in previous regulations, 

we have not proposed targeted 

reductions for nominal case-mix change. 

Many agencies have small patient 

populations, which would make it 

practically impossible to reliably 

measure nominal case-mix change at the 

agency level. Further, we believe 

changes and improvements in coding 

practices have been widespread, making 

it difficult to clearly categorize agencies 

into high and low coding-change 

groups. As discussed in the CY 2012 

final rule, when performing an 

independent review of our case-mix 

measurement methodology, Dr. David 

Grabowski and his team at Harvard 

University agreed with our reasons for 

not proposing targeted reductions, 

stating their concerns about the small 

sample size of many agencies and their 

findings of significant nominal case-mix 

increases across different classes of 

agencies. 

We note that although we have stated 

in past regulations that a targeted 

system would be administratively 

burdensome, the reasons we have just 

presented go beyond administrative 

complexity. We do not agree that 

agency-specific case-mix levels can 

precisely differentiate agencies with 

inappropriate coding practices from 

other agencies that are coding 

appropriately. System wide, case-mix 

levels have risen over time while data 

on patient characteristics indicate little 

change in patient severity over time. 

That is, the main problem is not the 

level of case-mix reached over a period 

of time, but the amount of change in the 

billed case-mix not attributable to 

underlying changes in actual patient 

severity. We will continue to monitor 

nominal case-mix growth and determine 

whether case-mix reductions are 

needed. 

Comment: Commenters questioned 

why CMS has not expanded the 

recalibration analysis to include 

additional variables that impact the cost 

of home health services to Medicare 

beneficiaries, such as those examined in 

the home health study and associated 

with low-income beneficiaries, 

beneficiaries in medically underserved 

areas, and those with varying levels of 

severity of illness. Commenters urged 

CMS to incorporate findings from the 

access study into the case-mix system 

for CY 2015. A commenter expressed 

disappointment that CMS continued to 

rely on the current case-mix system 

rather than testing and implementing 

new models. The commenter stated that 

the current case-mix system and 

proposed adjustments have reached a 

level of complexity that make it 

challenging to determine the accuracy of 

the proposed technical refinements. The 

commenter stated that the inaccuracies 

in the current system, resulting from the 

limitations of the current OASIS 

variables and the use of average costs 

that do not represent the full costs of 

treating more complex patients, 

continue to result in underpayment for 

patients whose resource use and cost of 

care are not fully captured in the casemix weights. Another commenter 

suggested that CMS work with the 

industry to develop the case-mix 

methodology. 

Response: We are currently doing 

follow-on work to the home health 

study to explore findings and 

recommendations from the home health 

study on access to care for vulnerable 

populations. Under this contract, we are 

also exploring payment reform options 

to better capture costs associated with 

the various types of home health 

patients. However, the project is in its 

preliminary stages and will take some 

time to complete. We plan to provide 

updates on the follow on study and 

payment reform work in future 

rulemaking and plan to consult with 

stakeholders once further progress has 

been made. 

Comment: While outside the scope of 

the rule, some commenters provided 

suggestions for our payment reform 

work. 

Response: We thank the commenter 

for their input. We will take their 

comments into consideration for our 

payment reform work. 

Final Decision: We are finalizing the 

points for the case-mix variables, the 

revised thresholds for the clinical and 

functional levels, and the case-mix 

weights for CY 2015 shown in the tables 

above. We are also finalizing our 

proposal to recalibrate the case-mix 

weights every year with more current 

data. We will continue to monitor casemix growth and may consider whether 

to propose nominal case-mix reductions 

in future rulemaking. 


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D. CY 2015 Home Health Rate Update 

1. CY 2015 Home Health Market Basket 

Update 

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

requires that the standard prospective 

payment amounts for CY 2015 be 

increased by a factor equal to the 

applicable HH market basket update for 

those HHAs that submit quality data as 

required by the Secretary. The home 

health market basket percentage 

increase for CY 2015 is based on IHS 

Global Insight Inc.’s (IGI) third quarter 

2014 forecast with historical data 

through the second quarter of 2014. The 

home health market basket percentage 

increase for CY 2015 is 2.6 percent. The 

HH market basket was rebased and 

revised in CY 2013. A detailed 

description of how we derive the HH 

market basket is available in the CY 

2013 HH PPS final rule (77 FR 67080, 

67090). 

For CY 2015, section 3401(e) of the 

Affordable Care Act, requires that, in CY 

2015 (and in subsequent calendar 

years), the market basket percentage 

under the HH prospective payment 

system as described in section 

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

adjusted by changes in economy-wide 

productivity. The statute defines the 

productivity adjustment, described in 

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

to be equal to the 10-year moving 

average of change in annual economywide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

fiscal year, calendar year, cost reporting 

period, or other annual period)(the 

‘‘MFP adjustment’’). The Bureau of 

Labor Statistics (BLS) is the agency that 

publishes the official measure of private 

nonfarm business MFP. Please see 

http://www.bls.gov/mfp to obtain the 

BLS historical published MFP data. We 

note that the proposed methodology for 

calculating and applying the MFP 

adjustment to the HHA payment update 

is similar to the methodology used in 

other Medicare provider payment 

systems as required by section 3401 of 

the Affordable Care Act. Please refer to 

the CY 2015 HH PPS proposed rule (79 

FR 38384 through 38386) for more 

detailed information regarding the 

computation of the MFP adjustment. 

We did not receive any comments on 

our proposal related to the computation 

of the statutorily-required productivity 

adjustment. Therefore, we are finalizing 

our proposal to adjust the HH market 

basket percentage increase by the MFP 

adjustment as discussed in the proposed 

rule. The CY 2015 HH market basket 

percentage of 2.6 percent will be 

reduced by the MFP adjustment (the 10- 

year moving average of MFP for the 

period ending December 31, 2015) of 0.5 

percent, which is based on IGI’s third 

quarter 2014 forecast. The resulting 

MFP-adjusted HH market basket update 

is equal to 2.1 percent, or 2.6 percent 

less 0.5 percentage point. 

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

requires that the home health market 

basket percentage increase be decreased 

by 2 percentage points for those HHAs 

that do not submit quality data as 

required by the Secretary. For HHAs 

that do not submit the required quality 

data for CY 2015, the home health 

market basket update will be 0.1 percent 

(2.1 percent minus 2.0 percentage 

points). 

2. Home Health Care Quality Reporting 

Program (HH QRP) 

a. General Considerations Used for 

Selection of Quality Measures for the 

HH QRP 

The successful development of the 

Home Health Quality Reporting Program 

(HH QRP) that promotes the delivery of 

high quality healthcare services is one 

of our paramount concerns in 

administering the home health program. 

We seek to adopt measures for the HH 

QRP that promote more efficient and 

safer care. Our measure selection 

activities for the HH QRP take into 

consideration input we receive from the 

Measure Applications Partnership 

(MAP), convened by the National 

Quality Forum (NQF) as part of a prerulemaking 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 under 

section 1890 of the Act, recommended 

by multi-stakeholder organizations, and 

developed with the input of patients, 

providers, purchasers/payers, and other 

stakeholders. At this time, the NQF is 

the national consensus organization that 

is under contract with HHS to provide 

review and endorsement of quality 

measures. 

b. Background and Quality Reporting 

Requirements 

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

states that ‘‘each home health agency 

shall submit to the Secretary such data 

that the Secretary determines are 

appropriate for the measurement of 

health care quality. Such data shall be 

submitted in a form and manner, and at 

a time, specified by the Secretary for 

purposes of this clause.’’ 

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

of the Act states that ‘‘for 2007 and each 

subsequent year, in the case of a home 

health agency that does not submit data 

to the Secretary in accordance with 

subclause (II) with respect to such a 

year, the home health market basket 

percentage increase applicable under 

such clause for such year shall be 

reduced by 2 percentage points.’’ This 

requirement has been codified in 

regulations at § 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 


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Healthcare Providers and Systems 

Survey® (HHCAHPS) data to meet the 

quality reporting requirements of 

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

provide quality measure data to HHAs 

via the Certification and Survey 

Provider Enhanced Reports (CASPER 

reports) which are available on the CMS 

Health Care Quality Improvement 

System (QIES). A subset of the HH 

quality measures has been publicly 

reported on the Home Health Compare 

(HH Compare) Web site since 2003. The 

CY 2012 HH PPS final rule (76 FR 

68576), identifies the current HH QRP 

measures. The selected measures that 

are made available to the public can be 

viewed on the HH Compare Web site 

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

HHCompare/Home.asp. As stated in the 

CY 2012 and CY 2013 HH PPS final 

rules (76 FR 68575 and 77 FR 67093, 

respectively), we finalized that we will 

also use measures derived from 

Medicare claims data to measure HH 

quality. 

In the CY 2014 HH PPS final rule, we 

finalized a proposal to add two 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 their 

removal from the CASPER folders in 

October 2014. In addition, five short 

stay measures which had previously 

been reported on HH Compare were 

recently removed from public reporting 

and replaced with non-stratified ‘‘all 

episodes of care’’ versions of these 

measures. 

Comment: One commenter urged 

CMS to only adopt quality measures 

that have been endorsed by the Measure 

Applications Partnership (MAP) and 

National Quality Forum (NQF). 

Response: To the extent practicable, 

we seek to adopt measures that have 

been endorsed by a consensus based 

entity, such as NQF. We also intend to 

continue seeking input from the MAP as 

part of the pre-rulemaking process. 

Comment: One commenter asked 

CMS to comment on the timeframe for 

the public release of the two ‘‘post-acute 

30 day measures.’’ 

Response: We believe the commenter 

is requesting information about the 

status of public reporting for the two HH 

claims based measures titled 

‘‘Rehospitalization during the First 30 

Days of HH’’ and ‘‘Emergency 

Department Use without Readmission 

during the First 30 Days of HH’’ that 

were finalized in the CY 2014 HH PPS 

final rule (78 FR 72256). In the CY 2014 

HH PPS final rule, we stated that ‘‘these 

measures will be added to HH Compare 

for public reporting in CY 2015’’ (78 FR 

72298.). 

c. OASIS Data Submission and OASIS 

Data for Annual Payment Update 

(1) Regulatory Authority 

The HH conditions of participation 

(CoPs) at § 484.55(d) require that the 

comprehensive assessment must be 

updated and revised (including the 

administration of the OASIS) no less 

frequently than: (1) The last 5 days of 

every 60 days beginning with the start 

of care date, unless there is a 

beneficiary-elected transfer, significant 

change in condition, or discharge and 

return to the same HHA during the 60- 

day episode; (2) within 48 hours of the 

patient’s return to the home from a 

hospital admission of 24-hours or more 

for any reason other than diagnostic 

tests; and (3) at discharge. 

It is important to note that to calculate 

quality measures from OASIS data, 

there must be a complete quality 

episode, which requires both a Start of 

Care (initial assessment) or Resumption 

of Care OASIS assessment and a 

Transfer or Discharge OASIS 

assessment. Failure to submit sufficient 

OASIS assessments to allow calculation 

of quality measures, including transfer 

and discharge assessments, is a failure 

to comply with the CoPs. 

HHAs do not need to submit OASIS 

data for those patients who are excluded 

from the OASIS submission 

requirements. As described in the 

December 23, 2005 Medicare and 

Medicaid Programs: Reporting Outcome 

and Assessment Information Set Data as 

Part of the Conditions of Participation 

for Home Health Agencies final rule (70 

FR 76202), we define the exclusion as 

those patients: 

• Receiving only non-skilled services; 

• For whom neither Medicare nor 

Medicaid is paying for HH care (patients 

receiving care under a Medicare or 

Medicaid Managed Care Plan are not 

excluded from the OASIS reporting 

requirement); 

• Receiving pre- or post-partum 

services; or 

• Under the age of 18 years. 

As set forth in the CY 2008 HH PPS 

final rule (72 FR 49863), HHAs that 

become Medicare-certified on or after 

May 31 of the preceding year are not 

subject to the OASIS quality reporting 

requirement nor any payment penalty 

for quality reporting purposes for the 

following year. For example, HHAs 

certified on or after May 31, 2013 are 

not subject to the 2 percentage point 

reduction to their market basket update 

for CY 2014. These exclusions only 

affect quality reporting requirements 

and do not affect the HHAs’ reporting 

responsibilities as announced in the 

December 23, 2005 final rule, ‘‘Medicare 

and Medicaid Programs; Reporting 

Outcome and Assessment Information 

Set Data as Part of the Conditions of 

Participation for Home Health 

Agencies’’ (70 FR 76202). 

(2) HH QRP Requirements for CY 2015 

Payment and Subsequent Years 

In the CY 2014 HH PPS Final rule (78 

FR 72297), we finalized a proposal to 

consider OASIS assessments submitted 

by HHAs to CMS in compliance with 

HH CoPs and Conditions for Payment 

for episodes beginning on or after July 

1, 2012, and before July 1, 2013 as 

fulfilling one portion of the quality 

reporting requirement for CY 2014. In 

addition, we finalized a proposal to 

continue this pattern for each 

subsequent year beyond CY 2014. 

OASIS assessments submitted for 

episodes beginning on July 1st of the 

calendar year 2 years prior to the 

calendar year of the Annual Payment 

Update (APU) effective date and ending 

June 30th of the calendar year 1 year 

prior to the calendar year of the APU 

effective date fulfill the OASIS portion 

of the HH QRP requirement. 

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

Performance Requirement for 

Submission of OASIS Quality Data 

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

states that ‘‘for 2007 and each 

subsequent year, in the case of a home 

health agency that does not submit data 

to the Secretary in accordance with 

subclause (II) with respect to such a 

year, the home health market basket 

percentage increase applicable under 

such clause for such year shall be 

reduced by 2 percentage points.’’ This 

‘‘pay-for-reporting’’ requirement was 

implemented on January 1, 2007. 

However, to date, the quantity of OASIS 

assessments each HHA must submit to 

meet this requirement has never been 

proposed and finalized through 

rulemaking or through the subregulatory process. We believe that this 

matter should be addressed for several 

reasons. 

We believe that defining a more 

explicit performance requirement for 


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

00460.asp 

25The 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. 

the submission of OASIS data by HHAs 

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

the Deficit Reduction Act of 2005 

(DRA), which requires that ‘‘each home 

health agency shall submit to the 

Secretary such data that the Secretary 

determines are appropriate for the 

measurement of health care quality. 

Such data shall be submitted in a form 

and manner, and at a time, specified by 

the Secretary for purposes of this 

clause.’’ 

In February 2012, the Department of 

Health & Human Services Office of the 

Inspector General (OIG) performed a 

study to: (1) Determine the extent to 

which HHAs met federal reporting 

requirements for the OASIS data; (2) to 

determine the extent to which states met 

federal reporting requirements for 

OASIS data; and (3) to determine the 

extent to which the CMS was overseeing 

the accuracy and completeness of 

OASIS data submitted by HHAs. In a 

report entitled, ‘‘Limited Oversight of 

Home Health Agency OASIS Data,’’24

the OIG stated their finding that ‘‘CMS 

did not ensure the accuracy or 

completeness of OASIS data.’’ The OIG 

recommended that we ‘‘identify all 

HHAs that failed to submit OASIS data 

and apply the 2 percent payment 

reduction to them’’. We believe that 

establishing a performance requirement 

for submission of OASIS quality data 

would be responsive to the 

recommendations of the OIG. 

In response to these requirements and 

the OIG report, we designed a pay-forreporting performance system model 

that could accurately measure the level 

of an HHA’s submission of OASIS data. 

The performance system is based on the 

principle that each HHA is expected to 

submit a minimum set of two 

‘‘matching’’ assessments for each patient 

admitted to their agency. These 

matching assessments together create 

what is considered a ‘‘quality episode of 

care’’, consisting ideally of a Start of 

Care (SOC) or Resumption of Care (ROC) 

assessment and a matching End of Care 

(EOC) assessment. However, it was 

determined that there are several 

scenarios that could meet this 

‘‘matching assessment requirement’’ of 

the new pay-for-reporting performance 

requirement. These scenarios or 

‘‘quality assessments,’’ are defined as 

assessments that create a quality 

episode of care during the reporting 

period or could create a quality episode 

if the reporting period were expanded to 

an earlier reporting period or into the 

next reporting period. 

Seven types of assessments submitted 

by an HHA fit this definition of a quality 

assessment. These are: 

• A Start of Care (SOC) or 

Resumption of Care (ROC) assessment 

that has a matching End of Care (EOC) 

assessment. EOC assessments are 

assessments that are conducted at 

transfer to an inpatient facility (with or 

without discharge), death, or discharge 

from HH care. These two assessments 

(the SOC or ROC assessment and the 

EOC assessment) create a regular quality 

episode of care and both count as 

quality assessments. 

• A SOC/ROC assessment that could 

begin an episode of care, but occurs in 

the last 60 days of the performance 

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

ROC’’ quality assessment. 

• An EOC assessment that could end 

an episode of care that began in the 

previous reporting period, (that is, an 

EOC that occurs in the first 60 days of 

the performance period.) This is labeled 

as an ‘‘Early EOC’’ quality assessment. 

• A SOC/ROC assessment that is 

followed by one or more follow-up 

assessments, the last of which occurs in 

the last 60 days of the performance 

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

Pseudo Episode’’ quality assessment. 

• An EOC assessment is preceded by 

one or more follow-up assessments, the 

last of which occurs in the first 60 days 

of the performance period. This is 

labeled an ‘‘EOC Pseudo Episode’’ 

quality assessment. 

• A SOC/ROC assessment that is part 

of a known one-visit episode. This is 

labeled as a ‘‘One-Visit episode’’ quality 

assessment. 

• SOC, ROC, and EOC assessments 

that do not meet any of these definitions 

are labeled as ‘‘Non-Quality’’ 

assessments. 

• Follow-up assessments (that is, 

where the M0100 Reason for 

Assessment = ‘04’ or ‘05’) are 

considered ‘‘Neutral’’ assessments and 

do not count toward or against the pay 

for reporting performance requirement. 

Compliance with this performance 

requirement can be measured through 

the use of an uncomplicated 

mathematical formula. This pay for 

reporting performance requirement 

metric has been titled as the ‘‘Quality 

Assessments Only’’ (QAO) formula 

because only those OASIS assessments 

that contribute, or could contribute, to 

creating a quality episode of care are 

included in the computation. The 

formula based on this definition is as 

follows: 

Our ultimate goal is to require all 

HHAs to achieve a pay-for-reporting 

performance requirement compliance 

rate of 90 percent or more, as calculated 

using the QAO metric illustrated above. 

However, we proposed to implement 

this performance requirement in an 

incremental fashion over a 3 year 

period. We proposed to require each 

HHA to reach a compliance rate of 70 

percent or better during the first 

reporting period 25 that the new pay-forreporting performance requirement is 

implemented. We further proposed to 

increase the pay-for-reporting 

performance requirement by 10 percent 

in the second reporting period, and then 

by an additional 10 percent in the third 

reporting period until a pay-forreporting performance level of 90 

percent is reached. 

To summarize, we proposed to 

implement the pay-for-reporting 

performance requirement beginning 

with all episodes of care that occur on 

or after July 1, 2015, in accordance with 

the following schedule: 

• For episodes beginning on or after 

July 1st, 2015 and before June 30th, 

2016, HHAs must score at least 70 

percent on the QAO metric of pay-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. 


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• For episodes beginning on or after 

July 1st, 2017, and thereafter, and before 

June 30th, 2018 and thereafter, HHAs 

must score at least 90 percent on the 

QAO metric of pay-for-reporting 

performance or be subject to a 2 

percentage point reduction to their 

market basket update for CY 2019, and 

each subsequent year thereafter. 

We solicited public comment on our 

proposal to implement the pay-forreporting performance requirement, as 

described previously, for the HH QRP. 

We received the following comments in 

response to our proposal: 

Comment: MedPAC submitted a 

comment in which they expressed full 

support for the proposal to establish a 

minimum requirement for submission of 

OASIS assessments. MedPAC stated that 

‘‘the requirement for submission of 

OASIS data to receive a full payment 

update has been in effect for many 

years, and agencies should have many 

years of experience with the 

transmission of this data’’ and suggested 

that CMS consider phasing in the 

requirement at a faster rate, given the 

familiarity of HHAs with these 

processes. MedPAC recommended 

raising the threshold to 90 percent in 

the second year. Another commenter, 

who stated support for this proposal, 

suggested increasing the compliance 

thresholds to 75 percent, 85 percent and 

95 percent (instead of the 70 percent, 80 

percent and 90 percent threshold that 

were proposed). Another commenter 

suggested that CMS should carefully 

monitor compliance rates over the next 

two years to determine if a 90 percent 

compliance rate is a realistic goal. 

Several commenters supported our 

proposal to establish a minimum 

requirement for submission of OASIS 

assessments for a variety of reasons. One 

commenter stated a belief that this 

proposal demonstrates CMS’ efforts to 

obtain more complete patient data sets. 

Another commenter expressed an 

opinion that the proposed OASIS 

minimum reporting requirement is a 

program integrity reform and cost 

cutting measure that is preferable to the 

across the board payment cuts 

established by CMS in previous HH PPS 

rules. 

Response: We thank MedPAC and 

other commenters who support our 

proposal to establish a pay-for-reporting 

performance requirement for the HH 

QRP. We agree that the requirements for 

OASIS reporting have been in effect for 

many years. The HH CoPs which are 

codified at 42 CFR 484.55 and mandate 

use of the OASIS data set when 

evaluating adult non-maternity patients 

receiving skilled services were 

established in 1999 (64 FR 3764 through 

3784). OASIS reporting was first 

implemented on July 19, 1999 and in 

2007, OASIS reporting became 

mandatory for quality reporting 

purposes under section 

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

have been required to submit OASIS 

data as a condition of payment of their 

Medicare claims since 2010. As HHAs 

have been required to report OASIS data 

for the past 15 years as a CoP in the 

Medicare program and as a condition of 

payment of their Medicare claims for 

the past 4 years, our establishment of a 

minimum threshold for OASIS reporting 

should not place any new or additional 

burden on HHAs. 

Our ultimate goal is to require all 

HHAs to achieve a pay-for-reporting 

performance requirement compliance 

rate of 90 percent or more, as calculated 

using the QAO metric described and in 

this section. In the proposed rule, we 

proposed to require each HHA to reach 

a compliance rate of 70 percent or better 

during the first reporting period that the 

new pay-for-reporting performance 

requirement is implemented. We believe 

that use of the 70 percent standard is 

one that is attainable by any HHA, 

whether it is a large corporate entity or 

very small family run business. We had 

further proposed to increase the 

performance requirement by 10 percent 

in the second reporting period, and then 

by an additional 10 percent in the third 

reporting period until a pay-forreporting performance requirement of 

90 percent is reached, because we 

believed that this schedule would 

promote successful performance by all 

HHAs. 

However, after carefully considering 

the comments submitted, we have 

reconsidered our proposal for 

implementation of a ‘‘pay-forperformance’’ performance requirement 

over a 3 year period. MedPAC suggested 

that CMS consider phasing in the 

OASIS reporting requirement at a faster 

rate, given the familiarity that HHAs 

have with the OASIS process. MedPAC 

recommended raising the threshold to 

90 percent in the second year. 

We agree with MedPAC’s contention 

that HHAs have been statutorily 

required to report OASIS for a number 

of years and therefore should have many 

years of experience with the collection 

of OASIS data and transmission of this 

data to CMS. Given the length of time 

that HHAs have been mandated to 

report OASIS data, we believe that 

HHAs will adapt quickly to the 

implementation of the ‘‘pay-forreporting’’ performance requirement, if 

phased in over a 2 year period. On the 

other hand, the ‘‘pay-for-reporting’’ 

performance requirement is a new 

reporting requirement that can have a 

significant financial impact any HHA 

that is not able to meet the 

requirements. 

We believe that it is best to proceed 

with the establishment of the 70 percent 

reporting requirement during the first 

reporting period (that is, July 1, 2015 

through June 30, 2016) and will finalize 

this part of our proposal. However, we 

will not finalize our proposal to increase 

the reporting requirement in 10 percent 

increments over a 2 year period until 

the maximum rate of 90 percent is 

reached. In consideration of the 

recommendations made, we plan to 

monitor provider performance under the 

‘‘pay-for-reporting’’ performance 

requirement during the time period of 

July 1, 2014 through June 30, 2015. We 

will then use such information, as 

available, to make a determination about 

what the ‘‘pay-for-reporting’’ 

performance requirement will be set at 

in the 2nd and subsequent years. For 

example, we will review OASIS data 

from a recent reporting period 

simulating the ‘‘pay-for reporting’’ 

performance 70 percent submission 

requirement to determine the 

‘‘hypothetical performance’’ of each 

HHA ‘‘as if’’ the ‘‘pay for reporting’’ 

performance requirement were in effect 

during the reporting period preceding 

its implementation. We will provide a 

report to each HHA of their 

‘‘hypothetical performance’’ under the 

‘‘pay for reporting’’ performance 

requirement during the 2014–2015 ‘‘preimplementation reporting period.’’ We 

will also consider provider performance 

during the first part of the first year of 

the ‘‘pay for reporting’’ performance 

requirement as data are available in 

determining the OASIS reporting 

requirement for the 2nd and subsequent 

years. 

Comment: A commenter expressed 

agreement with our proposal to 

implement the OASIS minimum 

reporting requirements over a 3 year 

period, but strongly recommended that 

such requirements be limited to the 

OASIS data sets collected for Medicare 

PPS episodes only. This commenter 

stated a belief that it would be too 

burdensome if HHAs were required to 

complete OASIS assessments for 

patients on other payment programs. 

Response: Patients receiving care 

under a Medicare or Medicaid managed 

care plan are not excluded from the 

OASIS reporting requirements, and 

HHAs are required to submit OASIS 

assessments for these patients. OASIS 

reporting is mandated for all Medicare 

beneficiaries (under 42 CFR 484.250(a), 

484.225(i), and 484.55). The HH CoPs 

require that the Home Health Registered 


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26The state-based OASIS submission system is 

scheduled to shut down permanently at 6:00 p.m. 

on December 26, 2014. Beginning at 12:00 a.m. 

midnight on January 1, 2015, HHAs must begin to 

submit their OASIS assessment via the national 

ASAP system. With the implementation of the 

ASAP system, HHAs will no longer submit OASIS 

assessment data to CMS via their state databases. 

Nurse (HH RN) or qualified therapist 

perform an initial assessment within 48 

hours of referral, within 48 hours of the 

patient’s return home, or on the 

physician-ordered start of care date. The 

HH RN or qualified therapist must also 

complete a comprehensive assessment 

within 5 days from the start of care. 

During these assessments, the HH RN or 

qualified therapist must determine the 

patient’s eligibility for the Medicare HH 

benefit, including homebound status (42 

CFR 484.55(a)(1) and 42 CFR 484.55 

(b)). In addition, the requirement for 

OASIS reporting on Medicare and 

Medicaid Managed Care patients was 

established in a final rule titled 

‘‘Medicare and Medicaid Programs: 

Reporting Outcome and Assessment 

Information Set Data as Part of the 

Conditions of Participation for Home 

Health Agencies Final Rule’’ dated 

December 23, 2005 (70 FR 76202), 

which stated the following: 

In the January 25, 1999, interim final rule 

with comment period (64 FR 3749), we 

generally mandated that all HHAs 

participating in Medicare and Medicaid 

(including managed care organizations 

providing home health services to Medicare 

and Medicaid beneficiaries) report their 

OASIS data to the database we established 

within each State via electronic transmission. 

(76 FR 76200). 

We do not believe that there is more 

burden associated with the collection of 

OASIS assessment data for a Medicare 

Managed Care patient than there is for 

a HH patient that receives traditional 

Medicare PPS benefits. The 

requirements for the HH RN or qualified 

therapist to perform an initial and 

comprehensive assessment and 

complete all required OASIS 

assessments is the same for all Medicare 

patients regardless of the type of 

Medicare benefits they receive. The 

completion of these activities is a 

condition of payment of both Medicare 

PPS and managed care claims. 

Comment: A commenter, while in 

general agreement with the 

establishment of a minimum reporting 

requirement for OASIS reporting, 

expressed disagreement with 

implementation of this requirement on 

July 1, 2015. This commenter voiced the 

opinion that HHAs should first be 

informed of their current OASIS 

submission compliance rate, so they 

have an opportunity to improve, if 

below the 70 percent threshold. Another 

commenter suggested that CMS provide 

each HHA with their current OASIS 

reporting compliance rates to allow 

them to assess and understand their 

compliance levels and create a 

benchmark against which they can seek 

to improve over time. Another 

commenter requested that CMS publish 

the current rate of HHA compliance 

with OASIS reporting and 

recommended that the new compliance 

standard be based on incremental 

increases from those rates. 

Response: HHAs have been required 

to report OASIS data on 100 percent of 

their Medicare beneficiary patients for 

the past 15 years as a CoP and as a 

condition of payment of their Medicare 

claims. Also, since 2007, HHAs have 

been required to report OASIS quality 

data on 100 percent of their Medicare 

beneficiary patients in order to receive 

their full yearly market basket update. 

We do not agree that revealing sub-par 

provider compliance rates will be 

helpful to providers as several 

commenters have requested. Our 

establishment of the pay-for reporting 

performance requirement is a means by 

which we can measure HHA 

compliance with the established and 

long standing OASIS reporting 

requirements, while allowing HHAs a 2 

year period to bring their performance 

up to the 90 percent compliance level. 

As the OASIS reporting requirements 

have been in existence for 15 years, 

HHAs should already possess 

knowledge of these requirements and 

know what they need to do to bring 

their agency into compliance. 

Furthermore, as OASIS reporting on 

each Medicare beneficiary is a 

requirement for payment of Medicare 

billing claims and also a HH CoP, our 

establishment of a minimum threshold 

for OASIS reporting should not place 

any new or additional burden on HHAs. 

Comment: Several commenters, while 

in general agreement with this proposal, 

requested that CMS provide clarification 

of the term ‘‘submission’’ and inquired 

whether this requires both submission 

and acceptance of OASIS data by the 

state agency. Another commenter sought 

assurance that HHAs will not be 

penalized for delayed acceptance of 

OASIS data by state agency due to CMS 

server/IT issues. 

Response: The pay-for reporting 

performance requirements will go into 

effect on July 1, 2015. However, on 

January 1, 2015, the data submission 

process for OASIS will convert from the 

current state-based OASIS submission 

system to a new national OASIS 

submission system known as the 

Assessment Submission and Processing 

(ASAP) System.26 Therefore, the 

commenter’s question about whether 

successful submission requires both 

submission and acceptance of OASIS 

data by the state agency is moot because 

the state-based OASIS submission 

system will not be in existence. 

On July 1, 2015, when the pay-for 

reporting performance requirement of 

70 percent goes into effect, providers 

will be required to submit their OASIS 

assessment data into the ASAP system. 

Successful submission of an OASIS 

assessment will consist of the 

submission of the data into the ASAP 

system with a receipt of no fatal error 

messages. Error messages received 

during submission can be an indication 

of a problem that occurred during the 

submission process and could also be an 

indication that the OASIS assessment 

was rejected. Successful submission can 

be verified by ascertaining that the 

submitted assessment data resides in the 

national database after the assessment 

has met all of the quality standards for 

completeness and accuracy during the 

submission process. 

Should one or more OASIS 

assessments submitted by a HHA be 

rejected due to an IT/servers issue cause 

by CMS, we may, at our discretion, 

excuse the non-submission of OASIS 

data. We anticipate that such a scenario 

would rarely, if ever, occur. In the event 

that a HHA believes they were unable to 

submit OASIS assessments due to an IT/ 

server issue on the part of CMS, the 

HHA should be prepared to provide any 

documentation or proof available which 

demonstrates that no fault on their part 

contributed to the failure of the OASIS 

records to transmit to CMS. 

Comment: Several commenters 

suggested that CMS provide 

comprehensive education on the new 

OASIS minimum reporting 

requirements for at least 6 months 

before it is effective. One commenter 

stated a belief that provider education is 

especially necessary since the failure to 

meet the submission threshold would 

result in a 2 percent reduction in 

payment for an entire calendar year. 

Response: We agree that educating 

HH providers about the new OASIS data 

submission requirements is very 

important and necessary. The initial 

performance period for the pay-forreporting performance requirement will 

consist of July 1, 2015 through June 30, 

2016. Prior to and during this 

performance period, we will schedule 

multiple Open Door Forums and 

webinars to educate HHA personnel 

about the pay-for-reporting performance 

requirement program and the pay-forVerDate Sep<11>2014 20:03 Nov 05, 2014 Jkt 235001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\FR\FM\06NOR2.SGM 06NOR2

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reporting performance QAO metric. 

Additionally, OASIS Education 

Coordinators (OECs) will be trained to 

provide state-level instruction on this 

program and metric. We have already 

posted a report which provides a 

detailed explanation of the methodology 

for this pay-for-reporting QAO 

methodology. To view this report, go to: 

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

Home-Health-Quality-ReportingRequirements.html. Training 

announcements and additional 

educational information related to the 

pay-for-reporting Performance 

Requirement will be provided in the 

near future on the HH Quality Initiatives 

Web page (http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

HomeHealthQualityInits/index.html). 

Comment: Another commenter 

expressed an opinion that the terms of 

our proposed ‘‘pay-for reporting 

performance requirement’’ reporting are 

not clear. This commenter states the 

opinion that the definitions of both the 

numerator and the denominator in the 

proposed ratio are not clear. 

Response: We have posted a technical 

report which provides a detailed 

explanation of the methodology used for 

the pay-for-reporting QAO 

methodology. This report provides a 

detailed definition of both the 

numerator and denominator of the QAO 

metric, and also addresses the definition 

of quality vs. non quality assessments. 

In addition, this report provides an 

extensive analysis of the pay-for 

reporting methodology using 2012–2013 

OASIS assessment data. To view this 

report, go to: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

HomeHealthQualityInits/Downloads/

Pay-for-Reporting-Quality-AssessmentsOnly-Methodology.pdf. 

Comment: A commenter believes that 

it is not necessary for CMS to establish 

a minimum threshold for the 

submission of OASIS quality data 

because state surveyors have access to 

the OASIS data and, therefore, have 

ways to ensure HHAs are in compliance 

with OASIS data submission 

requirements. 

Response: We respectfully disagree 

with this commenter. State surveyors 

would not be able to ensure compliance 

with the OASIS data submission 

requirements for several reasons. First, 

state surveyors have limited access to 

the OASIS data. Second, state surveyors 

do not have access to the claims/billing 

information that is necessary to 

determine if complete quality episodes 

have been submitted for each patient. 

Third, compliance with OASIS quality 

reporting requirements must be assessed 

on an annual basis in order to determine 

whether an HHA will receive their full 

market basket update or the 2 

percentage point reduction for noncompliance. Therefore, use of state 

surveyors to perform this task is not 

possible. 

Comment: A commenter 

recommended that CMS provide HHAs 

with a 30-day period in which to review 

CMS’s assessment of their compliance 

and submit corrections if necessary. 

Response: Such a process has been in 

place for the HH QRP for some time. 

This process is referred to as the 

‘‘reconsideration process.’’ 

The OASIS data collection period 

runs from July 1st each year to June 30th 

of the following year. At the conclusion 

of each reporting period, we will assess 

the type and amount of OASIS data 

submitted by each HHA during the 

reporting period to determine whether 

each provider met the quality reporting 

requirements. HHAs that do not meet 

the requirements for that reporting 

period will be sent a ‘‘notice of noncompliance’’ letter by their Medicare 

Administrative Contractor (MAC). A 

HHA will have 30 days from the date of 

the ‘‘notice of non-compliance’’ letter to 

file a request for reconsideration to us. 

The HHA must tell us why they think 

the finding of non-compliance was 

incorrect and provide any 

documentation that proves they did 

meet the reporting requirements for that 

reporting period. 

The reconsideration process can also 

serve to provide notice to HHAs who 

fall below the pay-for-reporting 

performance requirement for a given 

reporting period of their OASIS 

compliance score for the reporting 

period. The HHA will then have 30 days 

to submit a request for reconsideration 

if they disagree with the compliance 

score provided by us. The HHA will 

also have the opportunity to submit 

evidence on their behalf of a higher 

compliance score. 

Comment: A commenter suggested 

that CMS should include an exemption 

from the OASIS minimum reporting 

requirements for small agencies similar 

to that given with the HH–CAHPS 

requirements. 

Response: Small HHAs are exempt 

from reporting HHCAHPS for several 

reasons. First, the data is not collected 

using OASIS, but is instead collected by 

the HHCAHPS, which is a non-payment 

related data collection instrument. 

Second, HHCAHPS data are collected 

for the purpose for quality monitoring. 

If data were collected from very small 

HHAs, there is a high probability that 

protected patient information or 

confidential information could be 

identified simply because of the small 

number of responses. Therefore, the 

granting of an exemption to small HHAs 

is done to protect the integrity of the 

data. 

However, the reporting of OASIS 

assessment data on each patient by 

HHAs is mandated by section 

1895(b)(3)(B)(v)(II) of the Act. This 

statute required that ‘‘each home health 

agency shall submit to the Secretary 

such data that the Secretary determines 

are appropriate for the measurement of 

health care quality. Such data shall be 

submitted in a form and manner, and at 

a time, specified by the Secretary for 

purposes of this clause.’’ Section 

1895(b)(3)(B)(v)(I) of the Act states that 

‘‘for 2007 and each subsequent year, in 

the case of a home health agency that 

does not submit data to the Secretary in 

accordance with sub clause (II) with 

respect to such a year, the home health 

market basket percentage increase 

applicable under such clause for such 

year shall be reduced by 2 percentage 

points.’’ 

None of the statutes or Medicare 

regulations related to OASIS reporting 

exempt small HHAs from the OASIS 

reporting requirements. In fact, we 

would not be able to provide such an 

exemption, as submission of OASIS 

assessments is a condition of payment 

and condition of participation in the 

Medicare program. Any HHA 

(regardless of size) that wants to bill for 

HH care of a Medicare patient must 

submit the proper OASIS assessments in 

order to file valid claims. Also, any 

HHA (regardless of size) that wants to 

participate in the Medicare program, 

must submit the required type and 

amount of OASIS assessments for their 

Medicare patients. 

Comment: One commenter, though in 

agreement with the timeframes and the 

minimum scores proposed by CMS, 

expressed a belief that CMS should 

establish a disaster/exceptional 

circumstances policy to address 

situations beyond the control of the 

HHA that could result in the inability to 

submit OASIS data in a timely manner. 

This commenter noted that such a 

policy has been established in other 

post-acute care settings. 

Response: We thank this commenter 

for their support of our proposal to 

establish a pay-for-reporting 

performance requirement. However, the 

commenter’s suggestion that CMS 

establish an exceptional circumstances/ 

disaster waiver policy for the HH QRP 

is outside the scope of the proposals 

that made in the proposed rule and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66079 

27For 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. 

therefore, we are unable to comment on 

this suggestion. We will however take 

this suggestion under advisement. 

Comment: One commenter expressed 

concern that the proposal to establish a 

‘‘pay-for-reporting’’ performance 

requirement for OASIS reporting is 

actually based on a ‘‘pay for 

performance’’ model. 

Response: The ‘‘pay-for-reporting 

performance requirement’’ discussed 

above is not a pay-for-performance 

model. This performance requirement 

simply sets a standard for the type and 

minimum number of OASIS 

assessments that each HHA must submit 

during a 12 month reporting period. If 

a HHA submits the required number of 

OASIS assessments during the 12 month 

reporting period, they will receive their 

full market basket update for the 

following calendar year. 

Final Decision: After consideration of 

the public comments received, we are 

adopting as final, our proposal to 

establish a pay-for-reporting 

performance requirement, with the 

modifications stated below: 

• For episodes beginning on or after 

July 1st, 2015 and before June 30th, 

2016, HHAs must score at least 70 

percent on the QAO metric of pay-forreporting performance requirement or 

be subject to a 2 percentage point 

reduction to their market basket update 

for CY 2017. 

• We defer for now from setting a 

minimum OASIS reporting requirement 

for the 2nd and subsequent years of the 

OASIS ‘‘pay-for-reporting’’ performance 

requirement program. However, we will 

consider increasing the requirement in 

subsequent years. We anticipate rates of 

at least 80 percent or higher, not exceed 

90 percent, in years 2 and 3. 

d. Updates to HH QRP Measures Which 

Are Made as a Result of Review by the 

NQF Process 

In the proposed rule, we noted that 

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

generally requires the Secretary to adopt 

measures that have been endorsed by 

the entity with a contract under section 

1890(a) of the Act. This contract is 

currently held by the NQF. The NQF is 

a voluntary consensus standard-setting 

organization with a diverse 

representation of consumer, purchaser, 

provider, academic, clinical, and other 

health care stakeholder organizations. 

The NQF was established to standardize 

health care quality measurement and 

reporting through its consensus 

development process.27

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 

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 proposed that, in the event that 

the NQF makes updates to an endorsed 

measure that we have adopted for the 

HH QRP in a manner that we consider 

to not substantially change the nature of 

the measure, we will use a subregulatory process to incorporate those 

updates to the measure specifications 

that apply to the program. Specifically, 

we stated that we would revise the 

information that is posted on the CMS 

Home Health Quality Initiatives Web 

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

Quality-Initiatives-Patient-AssessmentInstruments/HomeHealthQualityInits/

HHQIQualityMeasures.html so that it 

clearly identifies the updates and 

provides links to where additional 

information on the updates can be 

found. We also stated that we would 

refer HHAs to the NQF Web site for the 

most up-to date information about the 

quality measures (http://

www.qualityforum.org/). In addition, we 

stated that we would provide sufficient 

lead time for HHAs to implement the 

changes where changes to the data 

collection systems would be necessary. 

We further proposed to use the 

traditional ‘‘notice and comment’’ 

rulemaking process to adopt changes to 

measures that we consider to 

substantially change the nature of the 

measure. Examples of changes that we 

might consider to be substantive would 

be those in which the changes are so 

significant that the measure is no longer 

the same measure, or when a standard 

of performance assessed by a measure 

becomes more stringent, such as 

changes in acceptable timing of 

medication, procedure/process, test 

administration, or expansion of the 

measure to a new setting. We believed 

that our proposal adequately balances 

our need to incorporate NQF updates to 

NQF endorsed measures used in the HH 

QRP in the most expeditious manner 

possible, while preserving the public’s 

ability to comment on updates to 

measures that so fundamentally change 

an endorsed measure that it is no longer 

the same measure that we originally 

adopted. 

We noted that a similar policy was 

adopted for the Hospital IQR Program, 

the PPS-Exempt Cancer Hospital (PCH) 

Quality Reporting Program, the 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 invited 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 


tkelley on DSK3SPTVN1PROD with RULES2
66080 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

changes that are substantive in nature 

will be adopted through the rulemaking 

process. We received the following 

public comments in response to this 

proposal: 

Comment: One commenter was 

opposed to our proposal to use subregulatory guidance to incorporate NQF 

updates to previously endorsed 

measures unless NQF itself, in 

communication accompanying such 

updates, affirms that such updates do 

not substantially change the nature of 

the measure. 

Response: We believe it unlikely that 

NQF will undertake to make a 

determination as to whether a change to 

a measure is substantive or nonsubstantive. This is a policy 

determination that NQF is likely to 

leave to the discretion of the measure 

steward. In the event that a measure that 

has been previously adopted for use in 

the HH QRP is updated in a manner that 

we determine to be non-substantive in 

nature, we will ensure that stakeholders 

are fully informed about these changes 

and that they have been afforded 

adequate lead time to make any 

necessary changes. The NQF process 

requires an ad-hoc review of any 

measures that undergo substantive 

changes, and any party may request 

such an ad hoc review. If stakeholders 

believe a change to measures is 

substantive, they are encouraged to 

participate in the NQF process. 

Comment: Several commenters 

expressed a concern that the definition 

of what changes are considered to 

substantive and what changes are nonsubstantive is not clear. 

Response: As noted above, with 

respect to what constitutes a substantive 

versus a non-substantive change, we 

expect to make this determination on a 

measure-by-measure basis. Examples of 

such non-substantive changes might 

include updated diagnosis or procedure 

codes, medication updates for categories 

of medications, broadening of age 

ranges, and changes to exclusions for a 

measure. We believe that 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. 

Comment: One commenter expressed 

the opinion that CMS should develop a 

more comprehensive list of substantive 

and non-substantive change in a 

measure, and further suggested that 

stakeholders should be given the 

opportunity to submit comments on the 

list for CMS to consider. 

Response: We appreciate the 

commenters request for a more 

comprehensive list of substantive and 

non- substantive change in a measure, 

and the opportunity to submit 

comments on such lists. However, as 

noted above, we believe that our 

proposal adequately balances our need 

to incorporate NQF updates to NQF 

endorsed measures used in the HH QRP 

in the most expeditious manner 

possible, while preserving the public’s 

ability to comment on updates to 

measures that so fundamentally change 

an endorsed measure that it is no longer 

the same measure that we originally 

adopted. We noted that a similar policy 

was adopted for the Hospital Inpatient 

Quality Reporting (IQR) Program, the 

PPS-Exempt Cancer Hospital (PCH) 

Quality Reporting Program, the 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. 

Comment: A commenter expressed 

concern that most HH providers are not 

aware of the NQF Consensus 

Development process, and therefore 

may not have the opportunity to 

comment on changes to measures. 

Response: The NQF regularly 

maintains its endorsed measures 

through annual and triennial reviews, 

which may result in updates to the 

NQF-endorsed measures. HHAs can go 

to the NQF Web page for information 

about the measure endorsement process. 

The NQF process is open to the public 

and transparent and incorporates an 

opportunity for public comment and 

engagement in the measure maintenance 

process. 

In the event that any measure that has 

been previously adopted for use in the 

HH QRP is updated through the NQF 

process, we will ensure that 

stakeholders are fully informed about 

these changes and that they have been 

afforded adequate lead time to make any 

necessary changes. Some of the methods 

that we will use to keep our 

stakeholders informed include: (1) 

Posting of information on the HH 

Quality Initiatives Web page; (2) holding 

special open door forums; (3) posting 

information in the CMS weekly E-News 

publication; and (4) responding to 

provider questions. While we expect to 

provide notice to stakeholders when we 

intend to seek NQF’s review of 

measures, the NQF process also 

incorporates an opportunity for public 

comment and engagement in the 

measure maintenance process. 

Comment: Another commenter 

recommended that CMS notify HH 

providers when NQF, in their 

Consensus Development Process, is 

asking for input on NQF-endorsed 

measures used by HHAs, in order to 

give them an opportunity to comment 

on a change in the measure. 

Response: We anticipate that in most 

cases such changes will occur, not 

during the measure development 

process, but after a measure has already 

been endorsed by NQF and has been 

adopted for use in the HH QRP. Changes 

to adopted measures could take place 

during yearly measure maintenance or 

during the 3 year measure review 

process. 

We acknowledge that the NQF postendorsement reviews may provide 

limited opportunity for provider 

engagement in the process. Therefore, 

we will make every effort to keep 

stakeholders informed about reviews to 

HH quality measures. Some of the 

methods that we will use to keep our 

stakeholders informed include: (1) 

Posting of information on the HH 

Quality Initiatives Web page; (2) holding 

special open door forums; (3) posting 

information in the CMS weekly E-News 

publication; and (4) responding to 

provider questions. 

Comment: One commenter expressed 

the concern about whether changes 

labeled as non-substantive changes are 

truly ‘‘non-substantive’’. This 

commenter proposed that CMS convene 

a panel of HH experts, drawn from 

individuals representing various regions 

of the country and types of agencies 

(urban, rural, profit, non-profit, 

governmental, etc.) with experience in 

the industry, to offer their opinion on 

whether changes to a measure are truly 

‘‘non-substantive’’ in nature. The 

commenter further suggested that the 

panel be allowed to consider the 

changes for ‘‘two cycles of 

consideration’’ and if the panel supports 

the changes, then the sub-regulatory 

could be used. 

Response: In the proposed rule, we 

proposed to establish a policy that ‘‘in 

the event that the NQF makes updates 

to an endorsed measure that we have 

adopted for the HH QRP in a manner 

that we consider to not substantially 

change the nature of the measure, we 

will use a sub-regulatory process to 

incorporate those updates to the 

measure specifications that apply to the 

program.’’ It is our intent that this 

policy apply to existing NQF-endorsed 

quality measures that have already been 

adopted for use in the HH QRP. These 

measures have undergone the measure 


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development and endorsement process 

which typically includes multiple 

opportunities for input from 

stakeholders. Examples of stakeholder 

involvement include, but are not limited 

to: (1) Expert opinions obtained from a 

technical expert panel consisting of 

experts drawn from the HH community, 

(2) public comments solicited during 

the measure development process, and 

(3) multiple opportunities to provide 

input during the NQF endorsement 

process. HHAs will have multiple 

opportunities to become familiar with 

and provide their input related to the 

existing HH quality measures by the 

time they come up for the NQF one year 

measure maintenance review or the 3 

year re-endorsement review. 

Because the NQF process is open and 

transparent and readily available to 

HHAs, they can learn of possible 

changes existing HH quality measure as 

a result of the NQF process and provide 

their input should they choose to do so. 

Furthermore, the NQF process provides 

for a comprehensive and in-depth 

review of all quality measures under 

review (including changes to these 

measures) by a highly qualified panel of 

experts in the field of home health care. 

For these reasons, we do not believe it 

is necessary to convene another panel of 

home health experts, as suggested by 

this commenter, to seek an opinion on 

whether changes to a measure are truly 

‘‘non-substantive’’ in nature. 

This commenter further suggested 

that the expert panel be allowed to 

consider the changes for ‘‘two cycles of 

consideration’’ and if the panel supports 

the changes, then the sub-regulatory 

process should be used. It is not clear 

how this commenter defines ‘‘two 

cycles of consideration’’, however, it is 

not feasible for CMS to allow a decision 

regarding changes to an existing quality 

measure to go unresolved for a 

prolonged period of time. It is necessary 

for CMS to immediately assess any 

changes made to existing quality 

measures to determine if changes to the 

data collection process, data collection 

instrument, or technical specifications 

must be made. In addition CMS must 

determine if provider training or 

educational materials are required. 

Final Decision: After consideration of 

the public comments we received, we 

are adopting final a policy to: (1) Utilize 

a sub-regulatory process to incorporate 

updates to the HH QRP quality 

measures that are not substantive in 

nature; and (2) continue use of the 

rulemaking process to adopt changes to 

measures that we consider to be 

substantive in nature. 

e. Home Health Care CAHPS® 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 are 

continuing to maintain the stated 

HHCAHPS data requirements for CY 

2015 that have been set out in CY 2014 

and in previous rules. We note that 

home health agencies and HHCAHPS 

survey vendors sometimes refer to the 

Home Health Care CAHPS® Survey as 

‘‘HH–CAHPS’’ rather than ‘‘HHCAHPS’’. 

(1) Background and Description of 

HHCAHPS 

As part of the HHS Transparency 

Initiative, we implemented a process to 

measure and publicly report patient 

experiences with home health care, 

using a survey developed by the Agency 

for Healthcare Research and Quality’s 

(AHRQ’s) Consumer Assessment of 

Healthcare Providers and Systems 

(CAHPS®) 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 

continue to consider additional 

language translations of the HHCAHPS 

in response to the needs of the home 

health patient population. 

All of the requirements about home 

health patient eligibility for the 

HHCAHPS survey and conversely, 

which home health patients are 

ineligible for the HHCAHPS survey are 

delineated and detailed in the 

HHCAHPS Protocols and Guidelines 

Manual, which is downloadable at 

https://homehealthcahps.org. Home 

health patients are eligible for 

HHCAHPS if they received at least two 

skilled home health visits in the past 2 

months, which are paid for by Medicare 

or Medicaid. 

Home health patients are ineligible for 

inclusion in HHCAHPS surveys if one of 

these conditions pertains to them: 

• Are under the age of 18; 

• Are deceased prior to the date the 

sample is pulled; 

• Receive hospice care; 

• Receive routine maternity care only; 

• Are not considered survey eligible 

because the state in which the patient 

lives restricts release of patient 

information for a specific condition or 

illness that the patient has; or 

• No Publicity patients, defined as 

patients who on their own initiative at 

their first encounter with the HHAs 

make it very clear that no one outside 

of the agencies can be advised of their 

patient status, and no one outside of the 

HHAs can contact them for any reason. 

We stated in previous rules that 

Medicare-certified HHAs are required to 

contract with an approved HHCAHPS 

survey vendor. This requirement 

continues, and Medicare-certified 

agencies also must provide on a 

monthly basis a list of their patients 

served to their respective HHCAHPS 

survey vendors. Agencies are not 

allowed to influence at all how their 

patients respond to the HHCAHPS 

survey. 


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As previously required, HHCAHPS 

survey vendors are required to attend 

introductory and all update trainings 

conducted by CMS and the HHCAHPS 

Survey Coordination Team, as well as to 

pass a post-training certification test. 

We have approximately 30 approved 

HHCAHPS survey vendors. The list of 

approved HHCAHPS survey vendors is 

available at https://

homehealthcahps.org. 

(2) HHCAHPS Oversight Activities 

We stated in prior final rules that all 

approved HHCAHPS survey vendors are 

required to participate in HHCAHPS 

oversight activities to ensure 

compliance with HHCAHPS protocols, 

guidelines, and survey requirements. 

The purpose of the oversight activities 

is to ensure that approved HHCAHPS 

survey vendors follow the HHCAHPS 

Protocols and Guidelines Manual. As 

stated in previous HH PPS final rules, 

all HHCAHPS approved survey vendors 

must develop a Quality Assurance Plan 

(QAP) for survey administration in 

accordance with the HHCAHPS 

Protocols and Guidelines Manual. An 

HHCAHPS survey vendor’s first QAP 

must be submitted within 6 weeks of the 

data submission deadline date after the 

vendor’s first quarterly data submission. 

The QAP must be updated and 

submitted annually thereafter and at any 

time that changes occur in staff or 

vendor capabilities or systems. A model 

QAP is included in the HHCAHPS 

Protocols and Guidelines Manual. The 

QAP must include the following: 

• Organizational Background and 

Staff Experience; 

• Work Plan; 

• Sampling Plan; 

• Survey Implementation Plan; 

• Data Security, Confidentiality and 

Privacy Plan; and 

• Questionnaire Attachments 

As part of the oversight activities, the 

HHCAHPS Survey Coordination Team 

conducts on-site visits to all approved 

HHCAHPS survey vendors. The purpose 

of the site visits is to allow the 

HHCAHPS Survey Coordination Team 

to observe the entire HHCAHPS Survey 

implementation process, from the 

sampling stage through file preparation 

and submission, as well as to assess data 

security and storage. The HHCAHPS 

Survey Coordination Team reviews the 

HHCAHPS survey vendor’s survey 

systems, and assesses administration 

protocols based on the HHCAHPS 

Protocols and Guidelines Manual posted 

at https://homehealthcahps.org. The 

systems and program site visit review 

includes, but is not limited to the 

following: 

• Survey management and data 

systems; 

• Printing and mailing materials and 

facilities; 

• Telephone call center facilities; 

• Data receipt, entry and storage 

facilities; and 

• Written documentation of survey 

processes. 

After the site visits, HHCAHPS survey 

vendors are given a defined time period 

in which to correct any identified issues 

and provide follow-up documentation 

of corrections for review. HHCAHPS 

survey vendors are subject to follow-up 

site visits on an as-needed basis. 

In the CY 2013 HH PPS final rule (77 

FR 67094, 67164), we codified the 

current guideline that all approved 

HHCAHPS survey vendors fully comply 

with all HHCAHPS oversight activities. 

We included this survey requirement at 

§ 484.250(c)(3). 

(3) HHCAHPS Requirements for the CY 

2015 APU 

In the CY 2014 HH PPS final rule (78 

FR 72294), we stated that for the CY 

2015 APU, we require continued 

monthly HHCAHPS data collection and 

reporting for 4 quarters. The data 

collection period for CY 2015 APU 

includes the second quarter 2013 

through the first quarter 2014 (the 

months of April 2013 through March 

2014). Although these dates are past, we 

included them in the proposed rule so 

that HHAs were reminded of what 

months constituted the requirements for 

the CY 2015 APU. HHAs were required 

to submit their HHCAHPS data files to 

the HHCAHPS Data Center for the 

HHCAHPS data from the first quarter of 

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

16, 2014. 

(4) HHCAHPS Requirements for the CY 

2016 APU 

For the CY 2016 APU, we require 

continued monthly HHCAHPS data 

collection and reporting for 4 quarters. 

The data collection period for the CY 

2016 APU includes the second quarter 

2014 through the first quarter 2015 (the 

months of April 2014 through March 

2015). We are in this data collection 

period now. HHAs are required to 

submit their HHCAHPS data files to the 

HHCAHPS Data Center for the second 

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

October 16, 2014; for the third quarter 

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

2015; for the fourth quarter 2014 by 

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

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

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

are firm; no exceptions are permitted. 

We exempt HHAs receiving Medicare 

certification after the period in which 

HHAs do their patient count (April 1, 

2013 through March 31, 2014) on or 

after April 1, 2014, from the full 

HHCAHPS reporting requirement for the 

CY 2016 APU, because these HHAs are 

not Medicare-certified throughout the 

period of April 1, 2013, through March 

31, 2014. These HHAs do not need to 

complete a HHCAHPS Participation 

Exemption Request form for the CY 

2016 APU. 

We require that all HHAs that had 

fewer than 60 HHCAHPS-eligible 

unduplicated or unique patients in the 

period of April 1, 2013 through March 

31, 2014 request an exemption from the 

HHCAHPS data collection and 

submission requirements for the CY 

2016 APU by completing the CY 2016 

HHCAHPS Participation Exemption 

Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or 

unique patients in the period of April 1, 

2013, through March 31, 2014, are 

required to submit their patient counts 

on the HHCAHPS Participation 

Exemption Request form for the CY 

2016 APU posted on https://

homehealthcahps.org from April 1, 

2014, to 11:59 p.m., e.s.t. on March 31, 

2015. This deadline for the exemption 

form is firm, as are all of the quarterly 

data submission deadlines. 

(5) HHCAHPS Requirements for the CY 

2017 APU 

For the CY 2017 APU, we require 

continued monthly HHCAHPS data 

collection and reporting for 4 quarters. 

The data collection period for the CY 

2017 APU includes the second quarter 

2015 through the first quarter 2016 (the 

months of April 2015 through March 

2016). HHAs are required to submit 

their HHCAHPS data files to the 

HHCAHPS Data Center for the second 

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

October 15, 2015; for the third quarter 

2015 by 11:59 p.m., e.s.t. on January 21, 

2016; for the fourth quarter 2015 by 

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

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

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

are firm; no exceptions are permitted. 

We exempt HHAs receiving Medicare 

certification after the period in which 

HHAs do their patient count (April 1, 

2014 through March 31, 2015) on or 

after April 1, 2015, from the full 

HHCAHPS reporting requirement for the 

CY 2016 APU, because these HHAs are 

not Medicare-certified throughout the 

period of April 1, 2014, through March 

31, 2015. These HHAs do not need to 

complete a CY 2017 HHCAHPS 

Participation Exemption Request form. 

We require that all HHAs that had 

fewer than 60 HHCAHPS-eligible 

unduplicated or unique patients in the 


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period of April 1, 2014, through March 

31, 2015 request an exemption from the 

HHCAHPS data collection and 

submission requirements for the CY 

2017 APU by completing the CY 2017 

HHCAHPS Participation Exemption 

Request form. Agencies with fewer than 

60 HHCAHPS-eligible, unduplicated or 

unique patients in the period of April 1, 

2014, through March 31, 2015, are 

required to submit their patient counts 

on the CY 2017 HHCAHPS Participation 

Exemption Request form posted on 

https://homehealthcahps.org from April 

1, 2015, to 11:59 p.m., e.s.t. on March 

31, 2016. This deadline for the 

exemption form is firm, as are all of the 

quarterly data submission deadlines. 

(6) HHCAHPS Reconsiderations and 

Appeals Process 

HHAs should always monitor their 

respective HHCAHPS survey vendors to 

ensure that vendors submit their 

HHCAHPS data on time, by accessing 

their HHCAHPS Data Submission 

Reports on https://

homehealthcahps.org. This helps HHAs 

ensure that their data are submitted in 

the proper format for data processing to 

the HHCAHPS Data Center. 

We continue HHCAHPS oversight 

activities as finalized in the previous 

rules. In the CY 2013 HH PPS final rule 

(77 FR 6704, 67164), we codified the 

current guideline that all approved 

HHCAHPS survey vendors must fully 

comply with all HHCAHPS oversight 

activities. We included this survey 

requirement at § 484.250(c)(3). 

We continue the HHCAHPS 

reconsiderations and appeals process 

that we have finalized and that we have 

used for all prior periods cited in the 

previous rules, and utilized in the CY 

2012 through CY2014 annual payment 

update recommendations and 

determinations. We have described the 

HHCAHPS reconsiderations and appeals 

process requirements in the Technical 

Direction Letter that we send to the 

affected HHAs annually in September. 

HHAs have 30 days from their receipt of 

the Technical Direction Letter informing 

them that they did not meet the 

HHCAHPS requirements to reply to 

CMS with documentation that supports 

their requests for reconsideration of the 

annual payment update to CMS. It is 

important that the affected HHAs send 

in comprehensive information in their 

reconsideration letter/package because 

we will not contact the affected HHAs 

to request additional information or to 

clarify incomplete or inconclusive 

information. If clear evidence to support 

a finding of compliance is not present, 

then the 2 percent reduction in the APU 

will be upheld. If clear evidence of 

compliance is present, then the 2 

percent reduction for the APU will be 

reversed. We will notify affected HHAs 

by December 31st of the decisions that 

affect payments in the annual year 

beginning on January 1st. If we 

determine to uphold the 2 percent 

reduction for the annual payment 

update, the affected HHA may further 

appeal the 2 percent reduction via the 

Provider Reimbursement Review Board 

(PRRB) appeals process, which is 

described in the December letter. 

The following is a summary of the 

comments we received regarding 

HHCAHPS: 

Comment: A commenter stated that 

HHCAHPS is an unfunded 

administrative mandate that entails 

financial and resource burdens to 

HHAs. 

Response: This comment is outside 

the scope of the proposed rule. We 

finalized the collection of HHCAHPS in 

the CY2014 HH PPS Final Rule 

published in the Federal Register on 

December 2, 2013 (78 FR 72256). Please 

see the comments received and our 

responses on pages 72295 and 72296. 

Comment: A commenter stated that a 

more timely way of collecting and 

publicly reporting the HHCAHPS survey 

data needs to be developed. 

Response: We understand this 

concern to collect the data in a timely 

manner. This is why the patients are 

sampled in the month following the two 

months of their care. We have a very 

strict timetable for how the 42-day 

survey data collection period is to be 

implemented, as described in the 

HHCAHPS Protocols and Guidelines 

Manual that is posted on https://

homehealthcahps.org. We also allow 

time for the data received in from 

thousands of home health agencies to be 

processed and analyzed to ensure 

comparisons that are reliable and valid. 

We apply patient mix adjustment to the 

HHCAHPS data to allow for national 

comparisons. The best way to 

understand the reasons for our detailed 

survey implementation procedures is to 

examine the relevant sections in the 

HHCAHPS Protocols and Guidelines 

Manual which is posted on https://

homehealthcahps.org. 

HHAs may always request their 

respective HHCAHPS survey vendors to 

provide continual feedback on 

particular questions of the survey so 

that they are kept apprised of any issues 

that their patients are reporting on the 

HHCAHPS surveys. When HHAs 

contract with their vendors about the 

terms of their HHCAHPS data collection 

and processing processes, they may 

arrange for ways to receive survey 

feedback information in real-time. 

Final Decision: We are not 

recommending any changes as a result 

of comments we received. 

(7) For Further Information on the 

HHCAHPS Survey 

We strongly encourage HHAs to learn 

about the HHCAHPS Survey and to 

view the official Web site for HHCAHPS 

at https://homehealthcahps.org. For 

further information, HHAs may also 

send email correspondence to the 

HHCAHPS Survey Coordination Team 

at HHCAHPS@rti.org; or telephone tollfree (1–866–354–0985) for more 

information about HHCAHPS. 

3. CY 2015 Home Health Wage Index 

a. Background 

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

of the Act require the Secretary to 

provide appropriate adjustments to the 

proportion of the payment amount 

under the HH PPS that account for area 

wage differences, using adjustment 

factors that reflect the relative level of 

wages and wage-related costs applicable 

to the furnishing of HH services. Since 

the inception of the HH PPS, we have 

used inpatient hospital wage data in 

developing a wage index to be applied 

to HH payments. We proposed to 

continue this practice for CY 2015, as 

we continue to believe that, in the 

absence of HH-specific wage data, using 

inpatient hospital wage data is 

appropriate and reasonable for the HH 

PPS. Specifically, we proposed to 

continue to use the pre-floor, 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 will apply the appropriate wage 

index value to the labor portion of the 

HH PPS rates based on the site of 

service for the beneficiary (defined by 

section 1861(m) of the Act as the 

beneficiary’s place of residence). 

Previously, we determined each HHA’s 

labor market area based on definitions 

of metropolitan statistical areas (MSAs) 

issued by the Office of Management and 

Budget (OMB). In the CY 2006 HH PPS 

final rule (70 FR 68132), we adopted 

revised labor market area definitions as 

discussed in the OMB Bulletin No. 03– 

04 (June 6, 2003). This bulletin 

announced revised definitions for MSAs 

and the creation of micropolitan 

statistical areas and core-based 

statistical areas (CBSAs). The bulletin is 

available online at 

www.whitehouse.gov/omb/bulletins/

b03–04.html. In adopting the CBSA 


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geographic designations, we provided a 

one-year transition in CY 2006 with a 

blended wage index for all sites of 

service. For CY 2006, the wage index for 

each geographic area consisted of a 

blend of 50 percent of the CY 2006 

MSA-based wage index and 50 percent 

of the CY 2006 CBSA-based wage index. 

We referred to the blended wage index 

as the CY 2006 HH PPS transition wage 

index. As discussed in the CY 2006 HH 

PPS final rule (70 FR 68132), since the 

expiration of this one-year transition on 

December 31, 2006, we have used the 

full CBSA-based wage index values. 

In the CY 2015 HH PPS proposed 

rule, we proposed to continue to use the 

same methodology discussed in the CY 

2007 HH PPS final rule (71 FR 65884) 

to address those geographic areas in 

which there are no inpatient hospitals, 

and thus, no hospital wage data on 

which to base the calculation of the CY 

2015 HH PPS wage index. For rural 

areas that do not have inpatient 

hospitals, we would use the average 

wage index from all contiguous CBSAs 

as a reasonable proxy. For FY 2015, 

there are no rural geographic areas 

without hospitals for which we would 

apply this policy. For rural Puerto Rico, 

we would not apply this methodology 

due to the distinct economic 

circumstances that exist there (for 

example, due to the close proximity to 

one another of almost all of Puerto 

Rico’s various urban and non-urban 

areas, this methodology would produce 

a wage index for rural Puerto Rico that 

is higher than that in half of its urban 

areas). Instead, we would continue to 

use the most recent wage index 

previously available for that area. For 

urban areas without inpatient hospitals, 

we would use the average wage index of 

all urban areas within the state as a 

reasonable proxy for the wage index for 

that CBSA. For CY 2015, the only urban 

area without inpatient hospital wage 

data is Hinesville, Georgia (CBSA 

25980). 

A summary of the comments we 

received regarding the wage index and 

our responses to those comments 

appears below. Comments on the 

specific proposal to use revised OMB 

delineations as part of the wage index 

are discussed further below. 

Comment: A commenter is concerned 

about the policy for imputing a rural 

wage index in instances where there is 

no hospital. The commenter is 

concerned about the impact for Texas 

and sizable rural areas, where some 

rural geographic areas that almost 

certainly do not have an inpatient 

hospital, but are significant 

metropolitan areas such as Dallas and 

Houston. The commenter asserts that 

wage rates vary considerably in Texas 

between these urban and rural areas and 

urges CMS to be extremely cautious in 

this pursuit and analyze the effects of 

such assumptions in the methodology. 

Response: As stated previously, there 

are currently no rural areas without 

hospitals. Therefore, the wage index 

proxy is not applicable for any rural 

area in CY 2015. We appreciate the 

comment and assure the commenter that 

if the need for a rural wage index proxy 

should arise, we would re-evaluate the 

policy in order to avoid possible 

unintended consequences. As such, we 

would propose any potential revision to 

this policy through rulemaking. 

Comment: Commenters stated that 

hospitals have a competitive advantage 

in being able to apply for geographic 

reclassification to other CBSAs and 

being able to apply for the rural floor 

and that this creates a competitive 

advantage for hospitals in recruiting and 

retaining nurses and therapists. 

Commenters stated that the wage index 

can be very volatile with large decreases 

and increases in an area index value 

from one year to the next. Commenters 

stated that all provider sectors should 

use the same index with the same rights 

of reclassification, exceptions, and 

appeals. Commenters urged us to work 

with home health providers to develop 

regulatory and legislative remedies to 

the continuing problem of wage index 

disparity. One commenter stated that 

the same MSAs continue to be rewarded 

with higher wage indexes, while MSAs 

like Asheville, NC and rural NC 

continue to be penalized with lower 

wage indexes. This commenter states 

that the current system rewards MSAs 

that have inefficient and inappropriate 

hospital costs, and is very volatile with 

large decreases and increases in an MSA 

from one year to the next. One 

commenter noted that CMS is reviewing 

the entire wage index system and 

considering a move to a CommutingBased Wage Index that would set 

hospital-specific wage indices. The 

commenter urges CMS to expedite that 

review and implement a system that not 

only recognizes variations between 

localities, but also treats all provider 

types within a local market equitably. In 

the meantime, commenters urge CMS to 

implement an immediate policy to limit 

the wage index variations among 

provider types within CBSA’s and 

adjacent markets. Another stated that 

unexpected increases and decreases in 

wage index values should be spread 

over two or more years to reduce the 

rapid escalation or decline in wage 

index values and thus create more 

payment stability in a budget neutral 

fashion. The commenter specifically 

requests CMS respond to this broader 

recommendation. One commenter urged 

CMS to adjust the 2015 home health 

agency wage index to reflect a policy to 

limit the wage index disparity between 

provider types within a given CBSA to 

no more than 10%. 

Response: Consistent with our 

previous responses to these recurring 

comments (most recently published in 

the CY 2014 HH PPS final rule (78 FR 

72302)), the regulations that govern the 

HH PPS do not provide a mechanism for 

allowing HHAs to seek geographic 

reclassification or to utilize the rural 

floor provisions that exist for IPPS 

hospitals. The rural floor provision in 

section 4410 of the Balanced Budget Act 

of 1997 (BBA) (Pub. L. 105–33) is 

specific to hospitals. The 

reclassification provision found in 

section 1886(d)(10) of the Act is also 

specific to hospitals. CMS is exploring 

opportunities to reform the wage index. 

We refer readers to the CMS Web site at: 

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

AcuteInpatientPPS/Wage-IndexReform.html). We do not believe it 

would be appropriate to limit wage 

index differences or changes which are 

above or below a given level or to 

spread changes in wage index values 

over multiple years. The wage index 

values are updated annually and 

applying these types of changes would 

make the area wage index less reflective 

of the geographic area’s wages. 

Comment: A commenter believes that 

linking home health wage index 

adjustments to the pre-floor, prereclassified hospital wage index may 

have been acceptable when this index 

only impacted the home health payment 

caps under cost reimbursement that 

most providers never reached. However, 

the commenter believes that this 

measure is imprecise to adjust every 

home health payment under HHPPS and 

creates clear and meaningful 

inaccuracies. Previously, CMS 

responded to this comment by citing a 

historical precedent of 20 years ago 

when a home health specific wage index 

was proposed by CMS as part of the 

payment capping mechanism and was 

opposed by many home health agencies. 

The commenter requests that CMS agree 

to collaborate with the home health 

community to develop a home health 

specific wage index based on current 

data on the wage categories used in 

home health care today and the related 

costs of this labor. An additional 

commenter also suggested that CMS 

pursue a home health specific wage 

index. Another commenter suggested 

that a new wage system could be 


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considered for non-hospital provider 

sectors. 

Response: Developing a wage index 

that utilizes data specific to HHAs 

would require us to engage resources in 

an audit process. In order to establish a 

home health specific wage index, we 

would need to collect data that is 

specific to home health services. This is 

not currently feasible due to the 

volatility of existing home health wage 

data and the significant amount of 

resources that would be required to 

improve the quality of that data. 

Furthermore, we believe the collection 

of home health specific wage data 

would place a significant amount of 

additional burden on HHAs. As 

discussed above, we continue to believe 

that in the absence of home health 

specific wage data, using the pre-floor, 

pre-reclassified hospital wage data is 

appropriate and reasonable for the HH 

PPS. 

Comment: A commenter expressed 

concern that when a hospital appeals or 

requests exceptions to what they believe 

are errors in the wage data, that 

corrections are not granted. The 

commenter asked us to reconsider this 

matter and believes that all providers 

should have the right to appeal or 

request exceptions when they suspect 

that there are errors in the data on 

which their rates will be based. 

Response: When a hospital submits an 

appeal of its wage data, CMS ensures 

that the appeal goes through the proper 

protocol and is given consideration. Not 

every appeal will warrant being granted. 

When appeals are valid, CMS take 

immediate action to correct the wage 

data and publish corrections to the wage 

indices for all provider types. 

Comment: A commenter is concerned 

that the home health wage index is 

based on inpatient hospital wage data, 

which in some cases contains errors that 

can result in significant fluctuations in 

the HHA wage index. Based on the 

Hospital Wage Index Development 

Timetable, there are specific deadlines 

for hospitals to report errors in the wage 

data to their MAC, CMS emphasizes that 

data that is incorrect in the preliminary 

hospital wage index data PUFs, but for 

which no correction request was 

received by the deadline, will not be 

changed for inclusion in the wage 

index. Another commenter stated that 

the inaction of a hospital or a 

mishandling of data by CMS or the MAC 

should not result in the lowering of an 

area’s wage index value and, therefore, 

lowering Medicare payments for all 

HHAs in the area. Other commenters 

stated that inaccurate cost report data 

results in unpredictable year to year 

swings in the wage index values. 

Commenters are concerned that HHAs 

are subject to a wage index database that 

they have no control over. As such, 

HHAs are at the mercy of hospital data 

submission and have no means to 

correct erroneous data or avoid the 

impact of any unusual compensation 

changes in a hospital. 

Response: We believe that the 

mechanisms we employ ensure the 

accuracy of the hospital cost report data 

and resulting wage index. Our 

contractors perform desk reviews of all 

hospital cost report Worksheet S–3 wage 

data. In addition, we perform edits on 

the wage data to further ensure the 

accuracy and validity of the wage data. 

Any provider may submit comments on 

the hospital wage index during the 

annual IPPS rulemaking. We believe 

that our review processes result in an 

accurate collection of wage data. 

Comment: A commenter requested 

that CMS remove six specific counties 

in New Jersey from the New York City 

wage index. 

Response: We believe that the OMB 

standards for delineating Metropolitan 

and Micropolitan Statistical Areas are 

appropriate for determining wage area 

differences. We do not believe it would 

be appropriate to make exceptions and 

carve out specific areas from the OMB 

delineations. The 2010 Standards for 

Delineating Metropolitan and 

Micropolitan Statistical Areas were 

published in a Federal Register Notice 

on June 28, 2010 (75 FR 37246). 

Final Decision: After considering the 

comments received, for the reasons 

discussed above and in the CY 2015 HH 

PPS proposed rule (79 FR 38366), we 

are finalizing our proposal to continue 

to use the pre-floor, pre-reclassified 

hospital inpatient wage index data to 

develop the HH PPS wage index. For CY 

2015, the updated wage data are for 

hospital cost reporting periods 

beginning on or after October 1, 2010 

and before October 1, 2011 (FY 2011 

cost report data). 

b. Update 

On February 28, 2013, OMB issued 

Bulletin No. 13–01, announcing 

revisions to the delineations of MSAs, 

Micropolitan Statistical Areas, and 

CBSAs, and guidance on uses of the 

delineation of these areas. This bulletin 

is available online at http://

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

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

bulletin states that it ‘‘provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published on June 28, 

2010, in the Federal Register (75 FR 

37246–37252) and Census Bureau data.’’ 

While the revisions OMB published 

on February 28, 2013 are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for CY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that have become rural, rural counties 

that have become urban, and existing 

CBSAs that have been split apart. 

As discussed in the CY 2014 HH PPS 

final rule (78 FR 72302), the changes 

made by the bulletin and their 

ramifications required extensive review 

by CMS before using them for the HH 

PPS wage index. We completed our 

assessment and in the FY 2015 IPPS 

final rule (79 FR 49854), and stated that 

we will use the most recent labor market 

area delineations issued by OMB for 

payments for inpatient stays at general 

acute care and long-term care hospitals 

(LTCHs). In addition, in the FY 2015 

Skilled Nursing Facility (SNF) PPS final 

rule (79 FR 45628), we made a final 

decision to use the new labor market 

delineations issued by OMB for 

payments for SNFs. 

c. Implementation of New Labor Market 

Delineations 

We believe it is important for the HH 

PPS to use the latest OMB delineations 

available to maintain a more accurate 

and up-to-date payment system that 

reflects the reality of population shifts 

and labor market conditions. While 

CMS and other stakeholders have 

explored potential alternatives to the 

current CBSA-based labor market 

system (we refer readers to the CMS 

Web site at www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

AcuteInpatientPPS/Wage-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 will 

increase the integrity of the HH PPS 

wage index by creating a more accurate 

representation of geographic variation in 

wage levels. We have reviewed our 

findings and impacts relating to the new 

OMB delineations, and have concluded 

that there is no compelling reason to 

further delay implementation. 

We proposed to incorporate the new 

CBSA delineations into the CY 2015 HH 

PPS wage index in the same manner in 


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which the CBSAs were first 

incorporated into the HH PPS wage 

index in CY 2006 (70 FR 68138). We 

proposed to use a one-year blended 

wage index for CY 2015. We referred to 

this blended wage index as the CY 2015 

HH PPS transition wage index. The 

proposed transition wage index would 

consist of a 50/50 blend of the wage 

index values using OMB’s old area 

delineations and the wage index values 

using OMB’s new area delineations. 

That is, for each county, a blended wage 

index would be calculated equal to fifty 

percent of the CY 2015 wage index 

using the old labor market area 

delineation and fifty percent of the CY 

2015 wage index using the new labor 

market area delineation (both using FY 

2011 hospital wage data). This 

ultimately results in an average of the 

two values. 

The comments we received on the 

proposal to include the newest OMB 

area delineations into the HH PPS wage 

index and the proposed wage index 

transition methodology and our 

responses to these comments, appear 

below: 

Comment: Some commenters have 

reservations about CMS’s proposal to 

adopt revisions to the CBSAs developed 

by the Census Bureau and OMB. 

Commenters strongly support a phasedin approach to provide a more uniform 

and equitable transition for providers 

impacted by the CBSA revisions. 

Commenters believe that a phased-in 

approach will mitigate short-term 

financial instability and better align 

OMB’s labor market areas with the 

actual labor costs of provider 

organizations. 

Response: While CMS and other 

stakeholders have explored potential 

alternatives to the current CBSA-based 

labor market system (we refer readers to 

the CMS Web site at: www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Reform.html), no consensus has 

been achieved regarding how best to 

implement a replacement system. As 

stated in the FY 2005 IPPS final rule (69 

FR 49027), while we recognize that 

MSAs are not designed specifically to 

define labor market areas, we believe 

they do represent a useful proxy for this 

purpose. We believe that using the most 

current OMB delineations would 

increase the integrity of the HH PPS 

wage index by creating a more accurate 

representation of geographic variation in 

wage levels. We believe that the most 

current OMB delineations accurately 

reflect the local economies and wage 

levels of the areas in which hospitals are 

currently located. In the CY 2015 HH 

PPS proposed rule, we proposed a 

transition period of one year, during 

which a 50/50 blended wage index 

would be used for all providers in CY 

2015, in order to mitigate the resulting 

short-term instability and negative 

impacts on certain providers and to 

provide time for providers to adjust to 

their new labor market delineations. 

Under this proposal, providers would 

receive 50 percent of their FY 2015 

wage index based on the new OMB 

delineations and 50 percent of their FY 

2015 wage index based on the labor 

market delineations for CY 2014 (both 

using FY 2011 hospital wage data). 

Comment: Most commenters support 

using a 50/50 blend of the current CBSA 

areas with the new CBSA areas as a way 

of easing the transition to the new 

geographic area designations. A 

commenter supports the budget 

neutrality adjustment to account for 

changes in the wage indices. 

Response: We thank the commenters 

for their support of these two policies. 

Comment: While a commenter 

commends CMS on the proposed wage 

index phase-in, which should afford 

home health providers time to adjust 

their budgets, expenses and operations, 

the commenter also recommends that 

home health providers that have been 

negatively impacted in such reclassified 

areas be permitted to seek a hardship 

exception or additional phase-in period. 

Such measures could be used in the 

event providers find that the 

characteristics of their operating areas 

remain representative of rural 

communities. This will help ensure that 

beneficiary access to home health 

services in such areas is not stifled or 

significantly negatively impacted. 

Response: We do not believe that the 

adoption of the OMB’s new area 

delineations will impact HHAs that 

provide care to beneficiaries who are 

located in areas whose delineations 

have changed to such an extent that the 

HHAs will no longer be able to provide 

care in their current locale. As always, 

we continue to monitor home health 

utilization to determine if there are any 

problems related to beneficiary access to 

care. 

Comment: A commenter states that 

CMS’ one-year transition policy of using 

a 50/50 blend of the previous and 

updated CBSA values is inconsistent 

with CMS’ policy published in the 

Inpatient Prospective Payment System 

(IPPS) and Long- Term Acute Care 

Hospital-Prospective Payment System 

(LTCH–PPS) final rule. That rule applies 

a one-year 50/50 blending of the 

previous and updated CBSA values, 

respectively, only to facilities whose 

payments will decrease based on the use 

of the updated CBSAs. This 

inconsistency unfairly penalizes home 

health agencies that would benefit from 

applying the new CBSA delineations 

exclusively. Consequently, the 

commenter recommends that CMS 

apply the one-year 50/50 blend to any 

agencies experiencing a decrease in 

their payments, but utilize the new 

CBSA delineations for those agencies 

that will experience an increase in their 

Medicare payments. In contrast, another 

commenter stated that while the current 

requirement to maintain budget 

neutrality means that some agencies 

will not immediately see the full 

increases in their wage index values to 

reduce the impact of those with 

decreases, the commenter believes this 

is a worthwhile trade-off to assure that 

those agencies who would otherwise 

suffer sudden and significant payment 

declines. 

Response: The implementation of the 

revised OMB delineations, which we are 

finalizing in this rule, sets home health 

payments at a level that more accurately 

reflects the costs of labor in a geographic 

area. Accordingly, under this policy, 

HHAs will experience a decrease from 

their current wage index only to the 

extent that their current wage index 

value actually exceeds what the latest 

area wage data warrants using the 

revised OMB delineations, and they will 

experience an increase from their 

current wage index value to the extent 

that their current wage index value is 

less than what the latest area wage data 

warrants using the revised OMB 

delineations. As discussed in the CY 

2015 HH PPS proposed rule (79 FR 

38416), we considered whether or not 

the blended wage index should be used 

for all HHAs or for only a subset of 

HHAs, such as those HHAs that would 

experience a decrease in their respective 

wage index values due to 

implementation of the revised OMB 

delineations. If we were to apply the 

transition policy only to those HHAs 

that would experience a decrease in 

their respective wage index values due 

to implementation of the revised OMB 

delineations, the wage index budget 

neutrality factor, discussed in section 

III.D.4, would result in reduced base 

rates for all HHAs as compared to the 

budget neutrality factor that results from 

applying the blended wage index to all 

HHAs. We believe that our proposal to 

apply a one-year blended wage index in 

CY 2015 for all geographic areas 

appropriately balances the interests of 

all HHAs and would best achieve our 

objective of providing relief to 

negatively impacted HHAs. 

Final Decision: For the reasons 

previously discussed, we are finalizing 

our proposal to include changes to the 


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HH PPS wage index based on the 

newest OMB area delineations and to 

apply a one-year blended wage index in 

CY 2015 for all geographic areas to 

assist providers in adapting to these 

changes. This transition policy will be 

in effect for a one-year period, beginning 

January 1, 2015, and continuing through 

December 31, 2015. Thus, beginning 

January 1, 2016, the wage index for all 

HH PPS payments will be fully based on 

the new OMB delineations. 

The wage index Addendum provides 

a crosswalk between the CY 2015 wage 

index using the current OMB 

delineations in effect in CY 2014 and 

the CY 2015 wage index using the 

revised OMB delineations. Addendum 

A shows each state and county and its 

corresponding transition wage index 

along with the previous CBSA number, 

the new CBSA number and the new 

CBSA name. Due to the calculation of 

the blended transition wage index, some 

CBSAs may have more than one 

transition wage index value associated 

with that CBSA. However, each county 

will have only one transition wage 

index. Therefore, for counties located in 

CBSAs that correspond to more than 

one transition wage index, a number 

other than the CBSA number will need 

to be input on the claim for CY 2015 

only. These numbers are shown in the 

last column of Addendum A. The final 

CY 2015 transition wage index as set 

forth in Addendum A is available on the 

CMS Web site at http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/HomeHealthPPS/HomeHealth-Prospective-Payment-SystemRegulations-and-Notices.html 

4. CY 2015 Annual Payment Update 

a. Background 

The Medicare HH PPS has been in 

effect since October 1, 2000. As set forth 

in the July 3, 2000 final rule (65 FR 

41128), the base unit of payment under 

the Medicare HH PPS is a national, 

standardized 60-day episode payment 

rate. As set forth in 42 CFR 484.220, we 

adjust the national, standardized 60-day 

episode payment rate by a case-mix 

relative weight and a wage index value 

based on the site of service for the 

beneficiary. 

To provide appropriate adjustments to 

the proportion of the payment amount 

under the HH PPS to account for area 

wage differences, we apply the 

appropriate wage index value to the 

labor portion of the HH PPS rates. The 

labor-related share of the case-mix 

adjusted 60-day episode rate will 

continue to be 78.535 percent and the 

non-labor-related share will continue to 

be 21.465 percent as set out in the CY 

2013 HH PPS final rule (77 FR 67068). 

The CY 2015 HH PPS rates will use the 

same case-mix methodology as set forth 

in the CY 2008 HH PPS final rule with 

comment period (72 FR 49762) and 

adjusted as described in section III.C. of 

this rule. The following are the steps we 

take to compute the case-mix and 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. CY 2015 National, Standardized 60- 

Day Episode Payment Rate 

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

required that the 60-day episode base 

rate and other applicable amounts be 

standardized in a manner that 

eliminates the effects of variations in 

relative case mix and area wage 

adjustments among different home 

health agencies in a budget neutral 

manner. To determine the CY 2015 

national, standardized 60-day episode 

payment rate, we will apply a wage 

index standardization factor, a case-mix 

budget neutrality factor described in 

section III.C, the rebasing adjustment 

described in section II.C, and the MFPadjusted home health market basket 

update discussed in section III.D.1 of 

this final rule. 

To calculate the wage index 

standardization factor, henceforth 

referred to as the wage index budget 

neutrality factor, we simulated total 

payments for non-LUPA episodes using 

the 2015 wage index and compared it to 

our simulation of total payments for 

non-LUPA episodes using the 2014 

wage index. By dividing the total 

payments for non-LUPA episodes using 

the 2015 wage index by the total 

payments for non-LUPA episodes using 

the 2014 wage index, we obtain a wage 

index budget neutrality factor of 1.0024. 

We will apply the wage index budget 

neutrality factor of 1.0024 to the CY 

2015 national, standardized 60-day 

episode rate. 

As discussed in section III.C of this 

final rule, to ensure the changes to the 

case-mix weights are implemented in a 

budget neutral manner, we will apply a 

case-mix weights budget neutrality 

factor to the CY 2015 national, 

standardized 60-day episode payment 

rate. The case-mix weights budget 

neutrality factor is calculated as the 

ratio of total payments when CY 2015 

case-mix weights are applied to CY 2013 

utilization (claims) data to total 

payments when CY 2014 case-mix 

weights are applied to CY 2013 

utilization data. The case-mix budget 

neutrality factor for CY 2015 will be 

1.0366 as described in section III.C of 

this final rule. 


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Then, we will apply the ¥$80.95 

rebasing adjustment finalized in the CY 

2014 HH PPS final rule (78 FR 72256) 

and discussed in section II.C. Lastly, we 

will update the payment rates by the CY 

2015 HH payment update percentage of 

2.1 percent (MFP-adjusted home health 

market basket update) as described in 

section III.D.1 of this final rule. The CY 

2015 national, standardized 60-day 

episode payment rate will be $2,961.38 

as calculated in Table 22. 

TABLE 22—CY 2015 60-DAY NATIONAL, STANDARDIZED 60-DAY EPISODE PAYMENT AMOUNT

CY 2014 National, 

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 

CY 2015 National, 

standardized 

60-day episode 

payment 

$2,869.27 ×; 1.0024 ×; 1.0366 ¥$80.95 ×; 1.021 = $2,961.38 

The CY 2015 national, standardized 

60-day episode payment rate for an 

HHA that does not submit the required 

quality data is updated by the CY 2015 

HH payment update (2.1 percent) minus 

2 percentage points and is shown in 

Table 23. 

TABLE 23—FOR HHAS THAT DO NOT SUBMIT THE QUALITY DATA—CY 2015 NATIONAL, STANDARDIZED 60-DAY

EPISODE PAYMENT AMOUNT

CY 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 

CY 2015 National, 

standardized 

60-day episode 

payment 

$2,869.27 ×; 1.0024 ×; 1.0366 ¥$80.95 ×; 1.001 = $2,903.37 

c. National Per-Visit Rates 

The national per-visit rates are used to 

pay LUPAs (episodes with four or fewer 

visits) and are also used to compute 

imputed costs in outlier calculations. 

The per-visit rates are paid by type of 

visit or HH discipline. The six HH 

disciplines are as follows: 

• Home health aide (HH aide); 

• Medical Social Services (MSS); 

• Occupational therapy (OT); 

• Physical therapy (PT); 

• Skilled nursing (SN); and 

• Speech-language pathology (SLP). 

To calculate the CY 2015 national 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 1.0012. We will 

apply the wage index budget neutrality 

factor of 1.0012 to the CY 2015 national 

per-visit rates. 

The LUPA per-visit rates are not 

calculated using case-mix weights. 

Therefore, there is no case-mix weights 

budget neutrality factor needed to 

ensure budget neutrality for LUPA 

payments. Finally, the per-visit rates for 

each discipline are updated by the CY 

2015 HH payment update percentage of 

2.1 percent. The national per-visit rates 

are adjusted by the wage index based on 

the site of service of the beneficiary. The 

per-visit payments for LUPAs are 

separate from the LUPA add-on 

payment amount, which is paid for 

episodes that occur as the only episode 

or initial episode in a sequence of 

adjacent episodes. The CY 2015 national 

per-visit rates are shown in Tables 24 

and 25. 

TABLE 24—CY 2015 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY

DATA

HH Discipline type 

CY 2014 

Per-visit 

payment 

Wage index 

budget 

neutrality 

factor 

CY 2015 

Rebasing 

adjustment 

CY 2015 HH 

Payment 

update 

percentage 

CY 2015 

Per-visit 

payment 

Home Health Aide .......................................................................... $54.84 ×; 1.0012 + $1.79 ×; 1.021 $57.89 

Medical Social Services ................................................................. 194.12 ×; 1.0012 + $6.34 ×; 1.021 204.91 

Occupational Therapy .................................................................... 133.30 ×; 1.0012 + $4.35 ×; 1.021 140.70 

Physical Therapy ........................................................................... 132.40 ×; 1.0012 + $4.32 ×; 1.021 139.75 

Skilled Nursing ............................................................................... 121.10 ×; 1.0012 + $3.96 ×; 1.021 127.83 

Speech-Language Pathology ......................................................... 143.88 ×; 1.0012 + 4.70 ×; 1.021 151.88 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66089 

The CY 2015 per-visit payment rates 

for an HHA that does not submit the 

required quality data are updated by the 

CY 2015 HH payment update (2.1 

percent) minus 2 percentage points and 

is shown in Table 25. 

TABLE 25—CY 2015 NATIONAL PER-VISIT PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED

QUALITY DATA

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 

CY 2015 

Per-visit 

rates 

Home Health Aide .......................................................................... $54.84 ×; 1.0012 + $1.79 ×; 1.001 $56.75 

Medical Social Services ................................................................. 194.12 ×; 1.0012 + $6.34 ×; 1.001 200.89 

Occupational Therapy .................................................................... 133.30 ×; 1.0012 + $4.35 ×; 1.001 137.95 

Physical Therapy ........................................................................... 132.40 ×; 1.0012 + $4.32 ×; 1.001 137.02 

Skilled Nursing ............................................................................... 121.10 ×; 1.0012 + $3.96 ×; 1.001 125.33 

Speech-Language Pathology ......................................................... 143.88 ×; 1.0012 + 4.70 ×; 1.001 148.90 

d. Low-Utilization Payment Adjustment 

(LUPA) Add-On Factors 

LUPA episodes that occur as the only 

episode or as an initial episode in a 

sequence of adjacent episodes are 

adjusted by applying an additional 

amount to the LUPA payment before 

adjusting for area wage differences. In 

the CY 2014 HH PPS final rule, we 

changed the methodology for 

calculating the LUPA add-on amount by 

finalizing the use of three LUPA add-on 

factors: 1.8451 for SN; 1.6700 for PT; 

and 1.6266 for SLP (78 FR 72306). We 

multiply the per-visit payment amount 

for the first SN, PT, or SLP visit in 

LUPA episodes that occur as the only 

episode or an initial episode in a 

sequence of adjacent episodes by the 

appropriate factor to determine the 

LUPA add-on payment amount. For 

example, for LUPA episodes that occur 

as the only episode or an initial episode 

in a sequence of adjacent episodes, if 

the first skilled visit is SN, the payment 

for that visit will be $235.86 (1.8451 

multiplied by $127.83), subject to area 

wage adjustment. 

e. Non-Routine Medical Supply (NRS) 

Conversion Factor Update 

Payments for NRS are computed by 

multiplying the relative weight for a 

particular severity level by the NRS 

conversion factor. To determine the CY 

2015 NRS conversion factor, we start 

with the 2014 NRS conversion factor 

($53.65) and apply the ¥2.82 percent 

rebasing adjustment described in 

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

0.9718). We then update the conversion 

factor by the CY 2015 HH payment 

update percentage (2.1 percent). We do 

not apply a standardization factor as the 

NRS payment amount calculated from 

the conversion factor is not wage or 

case-mix adjusted when the final claim 

payment amount is computed. The NRS 

conversion factor for CY 2015 is shown 

in Table 26. 

TABLE 26—CY 2015 NRS CONVERSION FACTOR FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

CY 2014 NRS 

Conversion factor 

CY 2015 Rebasing 

adjustment 

CY 2015 HH 

Payment update 

percentage 

CY 2015 NRS 

Conversion factor 

$53.65 ×; 0.9718 ×; 1.021 = $53.23 

Using the CY 2015 NRS conversion 

factor, the payment amounts for the six 

severity levels are shown in Table 27. 

TABLE 27—CY 2015 NRS PAYMENT AMOUNTS FOR HHAS THAT DO SUBMIT THE REQUIRED QUALITY DATA

Severity level Points (scoring) Relative 

weight 

CY 2015 

NRS 

Payment 

amounts 

1 ........................................................................................ 0 ....................................................................................... 0.2698 $14.36 

2 ........................................................................................ 1 to 14 .............................................................................. 0.9742 51.86 

3 ........................................................................................ 15 to 27 ............................................................................ 2.6712 142.19 

4 ........................................................................................ 28 to 48 ............................................................................ 3.9686 211.25 

5 ........................................................................................ 49 to 98 ............................................................................ 6.1198 325.76 

6 ........................................................................................ 99+ ................................................................................... 10.5254 560.27 

For HHAs that do not submit the 

required quality data, we again begin 

with the CY 2014 NRS conversion factor 

($53.65) and apply the ¥-2.82 percent 

rebasing adjustment discussed in 

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

= 0.9718). We then update the NRS 

conversion factor by the CY 2015 HH 

payment update percentage (2.1 

percent) minus 2 percentage points. The 

CY 2015 NRS conversion factor for 


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HHAs that do not submit quality data is 

shown in Table 28. 

TABLE 28—CY 2015 NRS CONVERSION FACTOR FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA

CY 2014 NRS 

conversion factor 

CY 2015 rebasing 

adjustment 

CY 2015 HH 

payment update percentage 

minus 2 percentage points 

CY 2015 NRS 

conversion factor 

$53.65 ×; 0.9718 ×; 1.001 $52.19 

The payment amounts for the various 

severity levels based on the updated 

conversion factor for HHAs that do not 

submit quality data are calculated in 

Table 29. 

TABLE 29—CY 2015 NRS PAYMENT AMOUNTS FOR HHAS THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA

Severity level Points 

(scoring) 

Relative 

weight 

CY 2015 

NRS 

payment 

amounts 

1 ........................................................................................ 0 ....................................................................................... 0.2698 $ 14.08 

2 ........................................................................................ 1 to 14 .............................................................................. 0.9742 50.84 

3 ........................................................................................ 15 to 27 ............................................................................ 2.6712 139.41 

4 ........................................................................................ 28 to 48 ............................................................................ 3.9686 207.12 

5 ........................................................................................ 49 to 98 ............................................................................ 6.1198 319.39 

6 ........................................................................................ 99+ ................................................................................... 10.5254 549.32 

f. Rural Add-On 

Section 421(a) of the MMA required, 

for HH services furnished in a rural 

areas (as defined in section 

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

visits ending on or after April 1, 2004, 

and before April 1, 2005, that the 

Secretary increase the payment amount 

that otherwise will have been made 

under section 1895 of the Act for the 

services by 5 percent. 

Section 5201 of the DRA amended 

section 421(a) of the MMA. The 

amended section 421(a) of the MMA 

required, for HH services furnished in a 

rural area (as defined in section 

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

January 1, 2006 and before January 1, 

2007, that the Secretary increase the 

payment amount otherwise made under 

section 1895 of the Act for those 

services by 5 percent. 

Section 3131(c) of the Affordable Care 

Act amended section 421(a) of the MMA 

to provide an increase of 3 percent of 

the payment amount otherwise made 

under section 1895 of the Act for HH 

services furnished in a rural area (as 

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

Act), for episodes and visits ending on 

or after April 1, 2010, and before 

January 1, 2016. 

Section 421 of the MMA, as amended, 

waives budget neutrality related to this 

provision, as the statute specifically 

states that the Secretary shall not reduce 

the standard prospective payment 

amount (or amounts) under section 1895 

of the Act applicable to HH services 

furnished during a period to offset the 

increase in payments resulting in the 

application of this section of the statute. 

The comments we received regarding 

the rural add-on, along with our 

responses, appear below: 

Comment: One commenter questioned 

why the rural add-on will not apply 

after CY 2015. Several commenter urged 

CMS to not eliminate the rural add-on 

scheduled to sunset on December 31, 

2015. A commenter stated that CMS 

should conduct a separate and 

comprehensive impact analysis on what 

the impact of elimination of the ruraladd would have in the availability of 

home health services in rural areas. 

Another commenter asked if CMS 

would encourage the continuation of the 

rural add-on for the indefinite future 

beyond 2016. 

Response: The rural add-on is a 

legislative provision, mandated by the 

Affordable Care Act, and CMS does not 

have the authority to revise the date at 

which the rural add-on expires. Since 

the inception of the HH PPS, at various 

points in time, rural add-ons have been 

applied to home health payments due to 

legislation. These rural add-ons have 

not been subject to budget neutrality. If 

CMS were to propose a regulatory 

policy change to provide a rural add-on 

payment, we would have to apply the 

add-on in a budget neutral manner and 

adjust (decrease) other components of 

the payment rates. 

Comment: A commenter suggests that 

CMS should investigate the impact of a 

applying a population density 

adjustment factor to the rates. This 

adjustment factor would increase 

payments in less densely populated 

areas (primarily rural) to offset higher 

costs of providing care in rural areas. 

These costs include increases in 

transportation costs and the scarcity of 

skilled professionals in rural areas. The 

commenter states that an increase to 

rural payments rates is necessary as 

rural wage indices are uniformly lower 

than urban wage indices. 

Response: We do not have evidence 

that a population density adjustment is 

appropriate. While rural HHAs cite the 

added cost of long distance travel to 

provide care for their patients, urban 

HHAs cite added costs associated with 

needed security measures and traffic 

congestion. In regard to the commenters 

assertion that rural wage indices are 

uniformly lower than urban wage 

indices, our analysis shows that almost 

18 percent of urban wage index values 

are less than the rural wage index in the 

corresponding state. 

Comment: Commenters recommend 

that the rural add-on should apply for 

at least one year for services provided to 

beneficiaries in counties that are 

transitioning from rural to urban status 

for wage index purposes. Other 

commenters requested that CMS clarify 

which areas qualify for the rural add-on 

on as numerous areas lose rural status 

under the new CBSAs. Some 

commenters state that in 2006 when 

CMS blended MSA and CBSA regions as 


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part of a comparable wage index 

transition policy, CMS applied the rural 

add-on for both patients residing in a 

non-MSA and non-CBSA area. In other 

words, the rural add-on applied in the 

rural areas under the old MSA 

designations as well as the new CBSA 

designations during the transition year. 

Response: When we implemented 

OMB revised delineations in CY 2006, 

we applied the rural add-on to counties 

in non-CBSA areas. If a county had been 

previously classified as rural but 

changed to urban classification under 

the new CBSAs, the rural add-on was 

not applied. The commenters who 

stated that CMS applied the rural addon for patients residing in non-MSA 

areas and patients residing in non-CBSA 

areas are mistaken. This policy was 

implemented in CMS Transmittal 887 

which was published on March 10, 

2006. In order to remain consistent with 

our previous policy for applying the 

rural add-on, we would implement the 

rural add-on in the same manner for CY 

2015. That is, only counties that are 

classified as rural under the new area 

delineations would receive the rural 

add-on. As stated previously, we believe 

that this method of adopting the most 

current OMB delineations would 

increase the integrity of the wage index 

as it is a more accurately represents 

geographic variation in wage levels. 

Comment: One commenter 

recommended that CMS adopt the same 

definition of a ‘‘rural’’ area that is used 

by the Federal Office of Rural Health 

(ORH). The commenter states that the 

ORH explicitly recognizes that ‘‘the 

New England states require special 

consideration as ‘‘their geographic 

divisions are different than typical 

counties.’’ There are many towns within 

Massachusetts that are very rural, yet 

they lie within large counties that are 

designated a CBSA based on the fact 

that there is a small city within that 

county. The commenter recommended 

that CMS modify the CBSA approach to 

recognize rural census tracts within 

large counties. 

Response: In the CY 2015 HH PPS 

proposed rule, we did not propose 

alternatives to the use of CBSAs, which 

were adopted in the CY 2006 HH PPS 

final rule, to classify areas as ‘‘rural’’ for 

wage adjustment purposes. In the CY 

2006 HH PPS final rule (70 FR 68132), 

we proposed and finalized the adoption 

of revised labor market area definitions 

as discussed in the OMB Bulletin No. 

03–04 (June 6, 2003). This bulletin 

announced revised definitions for MSAs 

and the creation of micropolitan 

statistical areas and core-based 

statistical areas (CBSAs). 

Comment: A commenter requested 

that CMS disclose the areas that would 

lose their rural status under the new 

CBSAs. 

Response: We provided several tables 

in the CY 2015 HH PPS proposed rule 

(79 FR 38392–38395) which display the 

counties whose status will change if we 

finalize our proposal to adopt the new 

OMB delineations. Table 13 shows the 

37 counties that would change from 

urban to rural status. Table 14 shows the 

105 counties that would change from 

rural to urban status. Lastly, Table 15 

displays the 46 urban counties that 

would move from one urban CBSA to 

another urban CBSA. 

Final Decision: For CY 2015, home 

health payment rates for services 

provided to beneficiaries in areas that 

are defined as rural under the new OMB 

delineations will be increased by 3 

percent as mandated by section 3131(c) 

of the Affordable Care Act. The 3 

percent rural add-on is applied to the 

national, standardized 60-day episode 

payment rate, national per visit rates, 

and NRS conversion factor when HH 

services are provided in rural (nonCBSA) areas. Refer to Tables 30 through 

33 for these payment rates. 

TABLE 30—CY 2015 PAYMENT AMOUNTS FOR 60-DAY EPISODES FOR SERVICES PROVIDED IN A RURAL AREA

For HHAs that DO submit quality °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 

CY 2015 rural 

national, 

standardized 

60-day 

pisode 

payment rate 

CY 2015 

national, 

standardized 

60-day 

episode 

payment rate 

Multiply by the 

3 percent rural 

add-on 

CY 2015 rural 

national, 

standardized 

60-day 

episode payment rate 

$2,961.38 ............................................................................. ×; 1.03 $3,050.22 $2,903.37 ×; 1.03 $2,990.47 

TABLE 31—CY 2015 PER-VISIT AMOUNTS FOR SERVICES PROVIDED IN A RURAL AREA

HH Discipline type 

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

CY 2015 

per-visit rate 

Multiply by the 

3 percent rural 

add-on 

CY 2015 rural 

per-visit rates 

CY 2015 

per-visit rate 

Multiply by the 

3 percent rural 

add-on 

CY 2015 rural 

per-visit rates 

HH Aide .................................................... $57.89 ×; 1.03 $59.63 $56.75 ×; 1.03 $58.45 

MSS ......................................................... 204.91 ×; 1.03 211.06 200.89 ×; 1.03 206.92 

OT ............................................................ 140.70 ×; 1.03 144.92 137.95 ×; 1.03 142.09 

PT ............................................................. 139.75 ×; 1.03 143.94 137.02 ×; 1.03 141.13 

SN ............................................................ 127.83 ×; 1.03 131.66 125.33 ×; 1.03 129.09 

SLP .......................................................... 151.88 ×; 1.03 156.44 148.90 ×; 1.03 153.37 

TABLE 32—CY 2015 NRS CONVERSION FACTOR FOR SERVICES PROVIDED IN RURAL AREAS

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

CY 2015 conversion factor 

Multiply by the 

3 percent rural 

add-on 

CY 2015 rural 

NRS conversion factor 

CY 2015 

Conversion 

factor 

Multiply by the 

3 percent rural 

add-on 

CY 2015 rural 

NRS conversion factor 

$53.23 .................................................................................. ×; 1.03 $54.83 $52.19 ×; 1.03 $53.76 


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TABLE 33—CY 2015 NRS PAYMENT AMOUNTS FOR SERVICES PROVIDED IN RURAL AREAS

Severity level Points 

(scoring) 

For HHAs that DO submit 

quality data 

(CY 2015 NRS Conversion 

Factor = $54.83) 

For HHAs that DO NOT 

submit quality data 

(CY 2015 NRS Conversion 

Factor = $53.76) 

Relative 

weight 

CY 2015 NRS 

Payment 

amounts for 

rural areas 

Relative 

weight 

CY 2015 NRS 

Payment 

amounts for 

rural areas 

1 ............................................................ 0 ........................................................... 0.2698 $14.79 0.2698 $14.50 

2 ............................................................ 1 to 14 .................................................. 0.9742 53.42 0.9742 52.37 

3 ............................................................ 15 to 27 ................................................ 2.6712 146.46 2.6712 143.60 

4 ............................................................ 28 to 48 ................................................ 3.9686 217.60 3.9686 213.35 

5 ............................................................ 49 to 98 ................................................ 6.1198 335.55 6.1198 329.00 

6 ............................................................ 99+ ....................................................... 10.5254 577.11 10.5254 565.85 

E. Payments for High-Cost Outliers 

Under the HH PPS 

1. Background 

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

for the provision of an addition or 

adjustment to the national, standardized 

60-day case-mix and wage-adjusted 

episode payment amounts in the case of 

episodes that incur unusually high costs 

due to patient care needs. Prior to the 

enactment of the Affordable Care Act, 

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

that projected total outlier payments 

could not exceed 5 percent of total 

projected or estimated HH payments in 

a given year. In the Medicare Program; 

Prospective Payment System for Home 

Health Agencies final rule (65 FR 41188 

through 41190), we described the 

method for determining outlier 

payments. Under this system, outlier 

payments are made for episodes whose 

estimated costs exceed a threshold 

amount for each HH Resource Group 

(HHRG). The episode’s estimated cost is 

the sum of the national wage-adjusted 

per-visit payment amounts for all visits 

delivered during the episode. The 

outlier threshold for each case-mix 

group or PEP adjustment is defined as 

the 60-day episode payment or PEP 

adjustment for that group plus a 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, 

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 

qualifying outlier episodes. 

Alternatively, a lower FDL ratio means 

that more episodes can qualify for 

outlier payments, but outlier payments 

per episode must then be lower. 


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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. 

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. 

For this final rule, simulating 

payments using more complete CY 2013 

claims data (as of June 30, 2014 rather 

than preliminary data as of December 

31, 2013) and the CY 2014 payment 

rates (78 FR 72304 through 72308), we 

estimate that outlier payments in CY 

2014 would comprise 2.00 percent of 

total payments. Based on simulations 

using CY 2013 claims data and the CY 

2015 payments rates in section III.D.4 of 

this final rule, we estimate that outlier 

payments will comprise approximately 

2.25 percent of total HH PPS payments 

in CY 2015. 

Given the increases to the CY 2015 

national per-visit payment rates and the 

national, standardized 60-day episode 

payment rate as a result of making the 

case-mix recalibration in section III.C 

budget neutral, our analysis estimates 

an additional 0.25 percentage point 

increase in outlier payments as a 

percent of total HH PPS payments each 

year that we phase-in the rebasing 

adjustments described in the 

background (section II.C). We estimate 

that by CY 2016 outlier payments as a 

percent of total HH PPS payments will 

be approximately 2.5 percent. We did 

not propose a change to the FDL ratio 

or loss-sharing ratio for CY 2015 as we 

believed that maintaining an FDL of 

0.45 and a loss-sharing ratio of 0.80 are 

appropriate given the percentage of 

outlier payments is estimated to 

increase as a result of the increasing the 

national per-visit amounts through the 

rebasing adjustments. We will continue 

to monitor the percent of total HH PPS 

payments paid as outlier payments to 

determine if future adjustments to either 

the FDL ratio or loss-sharing ratio are 

warranted. 

Although we did not propose any 

changes to the outlier policy, the 

following is a summary of the comments 

we received regarding outlier payments. 

Comment: Several commenters stated 

that estimated outlier payments as a 

percent of total payments for CY 2015 

is below the ‘budgeted’ amount of 2.5 

percent, which has ‘deprived’ an 

appropriate level of payment for those 

HHAs that field high-cost cases 

(including cases for beneficiaries in very 

rural areas). These commenters further 

suggest that the FDL ratio and/or losssharing ratio should be modified so that 

estimated outlier payments as a percent 

of total payments would reach 2.5 

percent. 

Response: We did not propose a 

change to the FDL ratio for CY 2015 

given the finalized increases to the CY 

2015 national per-visit payment rates, 

which our analysis estimates will yield 

an additional 0.25 percentage point 

increase in estimated outlier payments 

as a percent of total HH PPS payments 

each year that we phase-in the rebasing 

adjustments described in section II.C. 

We estimate that for CY 2016, estimated 

outlier payments as a percent of total 

HH PPS payments will increase to 2.5 

percent. We note that per section 

1895(b)(5)(A) of the Act, outlier 

payments as a percent of total HH PPS 

payments ‘‘may not exceed 2.5 percent 

of the total payments projected or 

estimated to be made based on the 

prospective payment system under this 

subsection in that year’’. The statute 

does not require us to pay out 2.5 

percent of total HH PPS payments as 

outlier payments; it requires us to pay 

no more than 2.5 percent of total HH 

PPS payments as outlier payments. 

Additionally, we noted that these 

estimates do not take in to account any 

changes in utilization that may have 

occurred in CY 2014, and will continue 

to occur in CY 2015. We are concerned 

that if we decreased the FDL ratio we 

could potentially pay more than 2.5 

percent of estimated total payments as 

outlier payments and that episodes 

without unusual variations in the type 

or amount of medically-necessary care 

will qualify for outlier payments, which 

is contrary to the intent of the policy. 

Moreover, we remain committed to 

addressing potentially fraudulent 

activities, especially those in areas 

where we suspect suspicious outlier 

payments (74 FR 58085). We believe 

that maintaining the current thresholds 

supports our prudent approach in light 

of such studies as those conducted by 

the Office of Inspector General (August 

2013 Management Implications Report). 

We continue to examine potential 

revisions to the outlier payment 

methodology through the current 

contract with Abt Associates and will 

make recommendations and revisions if 

necessary. 

Consequently, for the above stated 

reasons, we believe that we should not 

make any changes/revisions to our 

outlier payment methodology at this 

time. 

Comment: One commenter 

recommended that CMS eliminate 

outlier payments in their entirety and 

return the 2.5 percent withhold to the 

base payment rates. 

Response: We believe that section 

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

Secretary the discretion as to whether or 

not to have an outlier policy under the 

HH PPS. We plan to continue 

investigating whether or not an outlier 

policy remains appropriate as well as 

ways to maintain an outlier policy for 

episodes that incur unusually high costs 

due to patient care needs without 

qualifying episodes of care that do not 

meet that criteria or are potentially 

fraudulent. We recently awarded a 

contract to Abt Associates to address 

any findings from the home health 

study required by section 3131(d) of the 

Affordable Care Act, monitor the 

potential impact of the rebasing 

adjustments and other recent payment 

changes, and develop payment options 

to ensure ongoing access to care for 

vulnerable populations. The work may 

include potential revisions to the outlier 

payment methodology to better reflect 

costs of treating Medicare beneficiaries 

with high levels of severity of illness. 

Comment: Several commenters stated 

that CMS’s oversight and monitoring of 

insulin injection-based outlier episodes 

will drive outlier payments down as 

well as cause incorrect projections for 

future outlier payment. 

Response: As we have noted in the 

past (74 FR 58085), we are committed to 

addressing potentially fraudulent 

activities, especially those in areas 

where we see suspicious outlier 


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28Medicare Coverage Benefit Policy Manual (Pub. 

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

29Levinson, Daniel R. Management Implication 

Report 12–0011, Unnecessary Home Health Care for 

Diabetic Patients. 

30Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

31Hendra, T.J. Starting insulin therapy in elderly 

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

Medicine. 95(9), 453–455. 

32Sinclair AJ, Turnbull CJ, Croxson SCM. 

Document of care for older people with diabetes. 

Postgrad Med J 1996;72: 334–8. 

33Coscelli 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]. 

34Flemming DR. Mightier than the syringe. Am 

J Nurs. 2000;100:44–8.[PubMed]. 

35Wright, 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. 

payments. As we noted above, we plan 

to examine potential revisions to the 

outlier payment methodology through 

ongoing studies and analysis of home 

health claims and other utilization data. 

Monitoring of potentially fraudulent 

activity will be captured in this 

analysis, and we will make policy and 

other adjustments as necessary in light 

of the new data and outcomes. 

Comment: One commenter 

recommended that CMS calculate 

outlier payments based on actual costs 

rather than imputed costs. 

Response: Currently, an HHA 

episode’s estimated cost is the sum of 

the national wage-adjusted per-visit 

payment amounts for all visits delivered 

during the episode, and the outlier 

payment is defined to be an estimate of 

the proportion of the wage-adjusted cost 

beyond the wage-adjusted threshold. We 

believe that this estimate serves as a 

valid proxy for the additional costs 

incurred by providers. However, in an 

effort to further the agency’s mission of 

providing accurate payment, we 

continue to evaluate the effectiveness of 

the current outlier payment policy 

approach and are considering the 

investigation of alternative, costoriented mechanisms for determining 

the outlier payment amount for HHA 

providers for those episodes that incur 

unusually high costs due to patient care 

needs. 

Comment: One commenter questioned 

CMS’s current outlier approach, which 

removes 5 percent from the payment 

rates, and then pays out 2.5 percent in 

outlier payments. Additionally, the 

commenter wanted to understand what 

was done with the other 2.5 percent that 

is no longer being paid to providers. 

Response: Per section 1895(b)(3)(C) of 

the Act, as amended by section 

3131(b)(1) of the Affordable Care Act, 

CMS is required to reduce payment 

rates by 5 percent and target up to 2.5 

percent of total estimated HH PPS 

payments to be paid as outliers. This 

provision is a statutory requirement and 

thus we do not have the authority to 

rescind this policy. Consequently, to 

implement this particular Affordable 

Care Act provision, CMS reduced the 

standardized 60-day episode payment 

amount by 5 percent, and set the FDL 

ratio such that it would target up to 2.5 

percent of total estimated HH PPS 

payments as outlier payments. 

Final Decision: We are finalizing no 

change to the FDL ratio or loss sharing 

ratio for CY 2015. However, we will 

continue to monitor outlier payments 

and continue to explore ways to 

maintain an outlier policy for episodes 

that incur unusually high costs due to 

patient care needs without qualifying 

episodes of care that do not meet that 

criteria. 

F. Medicare Coverage of Insulin 

Injections Under the HH PPS 

Home health policy regarding 

coverage of home health visits for the 

sole purpose of insulin injections is 

limited to patients that are physically or 

mentally unable to self-inject and there 

is no other person who is able and 

willing to inject the patient.28 However, 

the Office of Inspector General 

concluded in August 2013 that some 

previously covered home health visits 

for the sole purpose of insulin injections 

were unnecessary because the patient 

was physically and mentally able to 

self-inject.29 In addition, results from 

analysis in response to public comments 

on the CY 2014 HH PPS final rule found 

that episodes that qualify for outlier 

payments in excess of $10,000 had, on 

average, 160 skilled nursing visits in a 

60-day episode of care with 95 percent 

of the episodes listing a primary 

diagnosis of diabetes or long-term use of 

insulin (78 FR 72310). Therefore, we 

conducted a literature review regarding 

generally accepted clinical management 

practices for diabetic patients and 

conducted further analysis of home 

health claims data to investigate the 

extent to which episodes with visits 

likely for the sole purpose of insulin 

injections are in fact limited to patients 

that are physically or mentally unable to 

self-inject. 

As generally accepted by the medical 

community, older patients (age 65 and 

older) are more likely to have 

impairments in dexterity, cognition, 

vision, and hearing.30 While studies 

have shown that most elderly patients 

starting or continuing on insulin can 

inject themselves, these conditions may 

affect the elderly individual’s ability to 

self-inject insulin. It is clinically 

essential that there is careful assessment 

prior to the initiation of home care, and 

throughout the course of treatment, 

regarding the patient’s capacity for 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 

behavioral status.31 These assessment 

tools have also proved valid for judging 

patients’ ability to inject insulin 

independently and to recognize and 

deal with hypoglycemia.32

Another important consideration with 

regard to insulin administration in the 

elderly population is the possibility of 

dosing errors.33 Correct administration 

and accurate dosing is important in 

order to prevent serious complications, 

such as hypoglycemia and 

hyperglycemia. The traditional vial and 

syringe method of insulin 

administration involves several steps, 

including injecting air into the vial, 

drawing an amount out of the vial into 

a syringe with small measuring 

increments, and verifying the correct 

dose visually.34 In some cases, an 

insulin pen can be used as an 

alternative to the traditional vial and 

syringe method. 

Insulin pens are designed to facilitate 

easy self-administration, the possession 

of which would suggest the ability to 

self-inject. Additionally, insulin pens 

often come pre-filled with insulin or 

must be used with a pre-filled cartridge 

thus potentially negating the need for 

skilled nursing for the purpose of 

calculating and filling appropriate 

doses. It is recognized that visual 

impairment, joint immobility and/or 

pain, peripheral neuropathy, and 

cognitive issues may affect the ability of 

elderly patients to determine correct 

insulin dosing and injection. Our 

literature review indicates that insulin 

pen devices may be beneficial in terms 

of safety for elderly patients due to these 

visual or physical disabilities.35 To 

determine whether to use a traditional 

vial and syringe method of insulin 

administration versus an insulin pen, 

the physician must consider and 

understand the advantages these devices 

offer over traditional vials and syringes. 

These advantages include: 

• Convenience, as the insulin pen 

eliminates the need to draw up a dose; 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66095 

36Wright, 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. 

37Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

38Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

39Wright, 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. 

40Strategies for Insulin Injection Therapy in 

Diabetes Self-Management. (2011). American 

Association of Diabetes Educators. 

41Hendra, 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. 

42This 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. 

• Greater dose accuracy and 

reliability, especially for low doses 

which are often needed in the elderly; 

• Sensory and auditory feedback 

associated with the dial mechanism on 

many pens may also benefit those with 

visual impairments; 

• Pen devices are also more compact, 

portable and easier to grip, which may 

benefit those with impairments in 

manual dexterity; and 

• Less painful injections and overall 

ease of use.36

Although pen devices are often 

perceived to be more costly than vialed 

insulin, study results indicate that 

elderly diabetic patients are more likely 

to accept pen devices and adhere to 

therapy, which leads to better glycemic 

control that decreases long-term 

complications and associated healthcare 

costs.37 The significantly improved 

safety profiles of pen devices also avert 

costly episodes of hypoglycemia.38 It 

also should be noted that most 

insurance plans, including Medicare 

Part D plans, charge the patient the 

same amount for a month supply of 

insulin in the pen device as insulin in 

the vial.39 Additionally, in some cases 

the individual with coverage for insulin 

pens may have one co-pay, resulting in 

getting more insulin than if purchasing 

a vial. And, there is less waste with 

pens because insulin vials should be 

discarded after 28 days after opening. 

However, there may be clinical reasons 

for the use of the traditional vial and 

insulin syringe as opposed to the 

insulin pen, including the fact that not 

all insulin preparations are available via 

insulin pen. In such circumstances, 

there are multiple assistive aids and 

devices to facilitate self-injection of 

insulin for those with cognitive or 

functional limitations. These include: 

nonvisual insulin measurement devices; 

syringe magnifiers; needle guides; 

prefilled insulin syringes; and vial 

stabilizers to help ensure accuracy and 

aid in insulin delivery.40 It is expected 

that providers will assess the needs, 

abilities, and preference of the patient 

requiring insulin to facilitate patient 

autonomy, efficiency, and safety in 

diabetes self-management, including the 

administration of insulin. 

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.41 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 that the Office of 

Inspector General (OIG) released a 

‘‘Management Implications Report’’ in 

August of 2013 that concluded that 

there was a ‘‘systemic weakness that 

results in Medicare coverage of 

unnecessary home health care for 

diabetic patients’’. The OIG report noted 

that investigations show that the 

majority of beneficiaries involved in 

fraudulent schemes have a primary 

diagnosis of diabetes. The report noted 

that OIG Special Agents found falsified 

medical records documenting patients 

having hand tremors and poor vision 

preventing them from drawing insulin 

into a syringe, visually verifying the 

correct dosage, and injecting the insulin 

themselves, when the patients did not 

in fact suffer those symptoms. 

In light of the OIG report, we 

conducted analysis and performed 

simulations using CY 2012 claims data 

and described our findings in the CY 

2014 Home Health PPS Final Rule (78 

FR 72310). We found that nearly 44 

percent of the episodes that would 

qualify for outlier payments had a 

primary diagnosis of diabetes and 16 

percent of episodes that would quality 

for outlier payments had a primary 

diagnosis of ‘‘Diabetes mellitus without 

mention of complication, type II or 

unspecified type, not stated as 

uncontrolled.’’ Qualifying for outlier 

payments should indicate an increased 

resource and service need. However, 

uncomplicated and controlled diabetes 

typically would be viewed as stable 

without clinical complications and 

would not warrant increased resource 

and service needs nor would it appear 

to warrant outlier payments. Our 

simulations estimated that 

approximately 81 percent of outlier 

payments would be paid to proprietary 

HHAs and that approximately 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.42

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 


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distribution in the average number and 

length of skilled nursing visits for 

episodes meeting criteria 1 and 2 above 

using CY 2013 home health claims data. 

The average number of skilled nursing 

visits for beneficiaries who receive at 

least one skilled nursing visit appeared 

to increase from 20 visits at the 90th 

percentile, to 50 visits at the 95th 

percentile. Additionally, the average 

length of a skilled nursing visit for 

episodes between the 90th and 95th 

percentiles was 37 minutes, less than 

half the length of visits for episode 

between the 75th and 90th percentiles. 

Approximately 49,100 episodes met 

the study population criteria described 

above, accounting for approximately 

$298 million in Medicare home health 

payments in CY 2013. Of the 49,100 

episodes of interest, 71 percent received 

outlier payments and, on average, there 

were 86 skilled nursing visits per 

episode. In addition, 12 percent of the 

episodes in the study population were 

for patients prescribed an insulin pen to 

self-inject and more than half of the 

episodes billed (27,439) were for claims 

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

Mellitus without mention of 

complication’’, as the principal 

diagnosis code. ICD–9–CM describes the 

code 250.0x as diabetes mellitus 

without mention of complications 

(complications can include hypo- or 

hyperglycemia, or manifestations 

classified as renal, ophthalmic, 

neurological, peripheral circulatory 

damage or neuropathy). Clinically, this 

code generally means that the diabetes 

is being well-controlled and there are no 

apparent complications or symptoms 

resulting from the diabetes. Diabetes 

that is controlled and without 

complications does not warrant 

intensive intervention or daily skilled 

nursing visits; rather, it warrants 

knowledge of the condition and routine 

monitoring. 

As discussed above in this section, 

the traditional vial and syringe method 

of insulin administration is one of two 

methods of insulin administration 

(excluding the use of insulin pumps). 

The alternative to the traditional vial 

and syringe method is the use of insulin 

pens. It would seem to be a reasonable 

assumption that the possession of a 

prescribed insulin pen would suggest 

the ability to self-inject. Since insulin 

pens often come pre-filled with insulin 

or must be used with a pre-filled 

cartridge, we believe there would not be 

a need for skilled nursing for the 

purpose of insulin injection assistance. 

We expect providers to assess the needs, 

abilities, and preference of the patient 

requiring insulin to facilitate patient 

autonomy, efficiency, and safety in 

diabetes self-management, including the 

administration of insulin. As noted 

above, approximately 12 percent of the 

episodes in the study population with 

visits likely for the purpose of insulin 

injection assistance were for patients 

prescribed an insulin pen to self-inject, 

which would seem to not conform to 

our current policy that home health 

visits for the sole purpose of insulin 

injection assistance is limited to 

patients that are physically or mentally 

unable to self-inject and there is no 

other person who is able and willing to 

inject the patient. 

Furthermore, we recognize that our 

current sub-regulatory guidance may not 

adequately address the method of 

delivery. We are considering additional 

guidance that may be necessary 

surrounding insulin injection assistance 

provided via a pen based upon our 

analyses described above. We have 

found that literature supports that 

insulin pens may reduce expenses for 

the patient in the form of co-pays and 

may increase patient adherence to their 

treatment plan. Therefore, we encourage 

physicians to consider the potential 

benefits derived in prescribing insulin 

pens, when clinically appropriate, given 

the patient’s condition. 

We also investigated whether 

secondary diagnosis codes listed on 

home health claims support that the 

patient, either for physical or mental 

reasons, cannot self-inject. Our 

contractor, Abt Associates, with review 

and clinical input from CMS clinical 

staff and experts, created a list of ICD– 

9–CM codes that indicate a patient has 

impairments in dexterity, cognition, 

vision, and/or hearing that may cause 

the patient to be unable to self-inject 

insulin. We found that 49 percent of 

home health episodes in our study 

population did not have a secondary 

diagnosis from that ICD–9–CM code list 

on the home health claim that 

supported that the patient was 

physically or mentally unable to 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 

physically or mentally unable to selfinject. Using the same list of ICD–9–CM 

diagnosis codes, we examined both the 

secondary diagnoses on the home health 

claim and diagnoses on non-home 

health claims in the three months prior 

to starting home health care for initial 

home health episodes. We found that for 

initial home health episodes in our 

study population that the percentage of 

episodes that did not have a secondary 

diagnosis to support that the patient 

cannot self-inject would decrease from 

67 percent to 47 percent if the home 

health claim included diagnoses found 

in other claim types during the three 

months prior to entering home care. We 

do recognize that, in spite of all of the 

education, assistive devices and 

support, there may still be those who 

are unable to self-inject insulin and will 

require ongoing skilled nursing visits for 

insulin administration assistance. 

However, there is an expectation that 

the physician and the HHA would 

clearly document detailed clinical 

findings and rationale as to why an 

individual is unable to self-inject, 

including the reporting of an 

appropriate secondary condition that 

supports the inability of the patient to 

self-inject. 

As described above, a group of CMS 

clinicians and contractor clinicians 

developed a list of conditions that 

would support the need for ongoing 

home health skilled nursing visits for 

insulin injection assistance for instances 

where the patient is physically or 

mentally unable to self-inject and there 

is no able or willing caregiver to provide 

assistance. We expect the conditions 

included in Table 34 to be listed on the 

claim and OASIS to support the need 

for skilled nursing visits for insulin 

injection assistance. 

Table 34: ICD–9–CM Diagnosis Codes 

That Indicate a Potential Inability to 

Self-Inject Insulin 

TABLE 34—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN

ICD–9–CM 

Code Description 

Amputation 

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

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


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TABLE 34—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN—Continued 

ICD–9–CM 

Code Description 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Vision 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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TABLE 34—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN—Continued 

ICD–9–CM 

Code Description 

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

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

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

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

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

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

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

Cognitive/Behavioral 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Arthritis 

715.11 ............... Osteoarthrosis localized primary involving shoulder region. 

715.21 ............... Osteoarthrosis localized secondary involving shoulder region. 

715.31 ............... Osteoarthrosis localized not specified whether primary or secondary involving shoulder region. 

715.91 ............... Osteoarthrosis unspecified whether generalized or localized involving shoulder region. 

715.12 ............... Osteoarthrosis localized primary involving upper arm. 

715.22 ............... Osteoarthrosis localized secondary involving upper arm. 

715.32 ............... Osteoarthrosis localized not specified whether primary or secondary involving upper arm. 

715.92 ............... Osteoarthrosis unspecified whether generalized or localized involving upper arm. 

715.13 ............... Osteoarthrosis localized primary involving forearm. 

715.23 ............... Osteoarthrosis localized secondary involving forearm. 

715.33 ............... Osteoarthrosis localized not specified whether primary or secondary involving forearm. 

715.93 ............... Osteoarthrosis unspecified whether generalized or localized involving forearm. 

715.04 ............... Osteoarthrosis generalized involving hand. 

715.14 ............... Osteoarthrosis localized primary involving hand. 

715.24 ............... Osteoarthrosis localized secondary involving hand. 

715.34 ............... Osteoarthrosis localized not specified whether primary or secondary involving hand. 

715.94 ............... Osteoarthrosis unspecified whether generalized or localized involving hand. 

716.51 ............... Unspecified polyarthropathy or polyarthritis involving shoulder region. 

716.52 ............... Unspecified polyarthropathy or polyarthritis involving upper arm. 

716.53 ............... Unspecified polyarthropathy or polyarthritis involving forearm. 

716.54 ............... Unspecified polyarthropathy or polyarthritis involving hand. 

716.61 ............... Unspecified monoarthritis involving shoulder region. 

716.62 ............... Unspecified monoarthritis involving upper arm. 

716.63 ............... Unspecified monoarthritis involving forearm. 

716.64 ............... Unspecified monoarthritis involving hand. 

716.81 ............... Other specified arthropathy involving shoulder region. 

716.82 ............... Other specified arthropathy involving upper arm. 

716.83 ............... Other specified arthropathy involving forearm. 

716.84 ............... Other specified arthropathy involving hand. 

716.91 ............... Unspecified arthropathy involving shoulder region. 

716.92 ............... Unspecified arthropathy involving upper arm. 

716.93 ............... Unspecified arthropathy involving forearm. 

716.94 ............... Unspecified arthropathy involving hand. 

716.01 ............... Kaschin-Beck disease shoulder region. 

716.02 ............... Kaschin-Beck disease upper arm. 

716.04 ............... Kaschin-Beck disease forarm. 

716.04 ............... Kaschin-beck disease involving hand. 

719.81 ............... Other specified disorders of joint of shoulder region. 

719.82 ............... Other specified disorders of upper arm joint. 

719.83 ............... Other specified disorders of joint, forearm. 

719.84 ............... Other specified disorders of joint, hand. 

718.41 ............... Contracture of joint of shoulder region. 

718.42 ............... Contracture of joint, upper arm. 

718.43 ............... Contracture of joint, forearm. 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66099 

TABLE 34—ICD–9–CM DIAGNOSIS CODES THAT INDICATE A POTENTIAL INABILITY TO SELF-INJECT INSULIN—Continued 

ICD–9–CM 

Code Description 

718.44 ............... Contracture of hand joint. 

714.0 ................. Rheumatoid arthritis. 

Movement Disorders 

332.0 ................. Paralysis agitans (Parkinson’s). 

332.1 ................. Secondary parkinsonism. 

333.1 ................. Essential and other specified forms of tremor. 

736.05 ............... Wrist drop (acquired). 

After Effects from Stroke/Other Disorders of the Central Nervous System/Intellectual Disabilities 

438.21 ............... Hemiplegia affecting dominant side. 

438.22 ............... Hemiplegia affecting nondominant side. 

342.01 ............... Flaccid hemiplegia and hemiparesis affecting dominant side. 

342.02 ............... Flaccid hemiplegia and hemiparesis affecting nondominant side. 

342.11 ............... Spastic hemiplegia and hemiparesis affecting dominant side. 

342.12 ............... Spastic hemiplegia and hemiparesis affecting nondominant side. 

438.31 ............... Monoplegia of upper limb affecting dominant side. 

438.32 ............... Monoplegia of upper limb affecting nondominant side. 

343.3 ................. Congenital monoplegia. 

344.41 ............... Monoplegia of upper limb affecting dominant side. 

344.42 ............... Monoplegia of upper limb affecting nondominant side. 

344.81 ............... Locked-in state. 

344.00 ............... Quadriplegia unspecified. 

344.01 ............... Quadriplegia c1–c4 complete. 

344.02 ............... Quadriplegia c1 c4 incomplete. 

344.03 ............... Quadriplegia c5–c7 complete. 

344.04 ............... Quadriplegia c5–c7 incomplete. 

343.0 ................. Congenital diplegia. 

343.2 ................. Congenital quadriplegia. 

344.2 ................. Diplegia of upper limbs. 

318.0 ................. Moderate intellectual disabilities. 

318.1 ................. Severe intellectual disabilities. 

318.2 ................. Profound intellectual disabilities. 

Although we did not propose any 

policy changes at this time, we solicited 

public comments on whether the 

conditions in Table 34 represent a 

comprehensive list of codes that 

appropriately indicate that a patient 

may not be able to self-inject and 

solicited comments on the use of insulin 

pens in home health. We plan to 

continue monitoring claims that are 

likely for the purpose of insulin 

injection assistance. Historical evidence 

in the medical record must support the 

clinical legitimacy of the secondary 

condition(s) and resulting disability that 

limit the beneficiary’s ability to selfinject. 

The following is a summary of the 

comments we received regarding our 

discussion of Medicare Coverage of 

Insulin Injections under HH PPS. 

Comment: A few commenters 

provided additional ICD–9–CM codes 

that CMS should consider as supporting 

the need for insulin injections because 

a patient cannot self-inject. 

Response: We thank the commenters 

for identifying additional ICD–9–CM 

codes for us to consider. The ICD–9–CM 

codes that were identified by the 

commenters will be reviewed by our 

clinical staff and our contractors and 

will be taken into consideration in 

developing any future sub-regulatory 

guidance on insulin injections. 

Comment: Many commenters noted 

their general support of a 

comprehensive list of codes that 

appropriately indicate that a patient 

may not be able to self-inject. However, 

several commenters also suggested that 

CMS develop guidelines that are 

evidenced-based along with clinical and 

practical reasoning. A few commenters 

suggested that the evidence-based 

guidelines should be developed through 

the National Coverage Determination 

process, with presumptive eligibility or 

ineligibility, and an opportunity for the 

patient or HHA to rebut the 

presumption of ineligibility prior to 

denial of coverage. 

Response: The list of codes included 

in the proposed rule was not designed 

to provide guidelines for determining 

eligibility for insulin injections during a 

home health episode. Rather, the list of 

codes was designed to identify 

conditions that support the need for 

home health skilled nursing visits for 

insulin injection assistance when the 

patient is physically or mentally unable 

to self-inject and there is no able or 

willing caregiver to provide assistance. 

The National Coverage Determination 

process describes whether specific 

medical items, services, treatment 

procedures, or technologies can be paid 

for under Medicare. Under current 

policy, insulin injection assistance can 

be paid for under the Medicare home 

health benefit. Therefore, a National 

Coverage Determination is not necessary 

for insulin injections provided within a 

home health episode of care. 

Comment: One commenter stated that 

it is sometimes difficult to specify a 

single condition that describes why the 

patient cannot self-inject. The 

commenter also stated that the list of 

codes was developed using ICD–9–CM 

codes, which will be obsolete in the 

future given the expansion of codes 

available under ICD–10–CM. One 

commenter suggested that we convene 

stakeholders after ICD–10–CM is 

implemented to determine a 

comprehensive list based on ICD–10– 

CM codes. 


tkelley on DSK3SPTVN1PROD with RULES2
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Response: The list of codes that 

appropriately indicate that a patient 

may not be able to self-inject was 

developed based on codes currently 

available and is aimed at assisting 

providers and contractors in identifying 

diabetic patients who may not be able 

self-inject insulin. The list of codes is 

not designed to limit the provider’s 

ability to demonstrate the necessity for 

insulin injections based on other 

information in the medical record. We 

agree that there may be more codes 

available under ICD–10–CM and plan to 

appropriately crosswalk the list of ICD– 

9–CM codes to ICD–10-Codes. We 

would like to note that the ICD–9–CM 

codes are listed in this rule because they 

are currently the official code set for 

home health claims. In addition, 

convening a stakeholder panel to create 

a comprehensive list of ICD–10–CM 

codes is not necessary. Any subregulatory guidance issued would 

include this list of ICD–9–CM codes 

appropriately translated into ICD–10– 

CM codes developed using the general 

equivalency mapping software and the 

clinical judgment of our clinicians and 

contractor clinicians. 

Comment: One commenter noted that 

CMS should not consider a future 

proposal to use a list of conditions as 

the single means of establishing 

coverage eligibility for insulin 

injections. Many commenters stated that 

any sub-regulatory guidance that 

identifies conditions that support a 

patient’s inability to self-inject will 

result in the inaccurate denial of 

coverage for insulin injections thus 

placing the beneficiary at risk. 

Response: The discussion 

surrounding insulin injections was 

included in the rule to invite public 

comment and gather industry input on 

potential sub-regulatory guidance on 

this issue. We did not propose that the 

list of codes identified in the CY 2015 

HH PPS proposed and final rules would 

as the sole means of establishing 

coverage eligibility for insulin injection 

assistance under the Medicare home 

health benefit. Rather, we identified 

these conditions as a means for 

providers and contractors to identify 

patients who may not be able to selfinject insulin. 

Comment: One commenter stated that 

they are concerned they will be required 

to ‘‘screen’’ patients and as such, the 

patient may not be afforded appeal 

rights. 

Response: We will take this 

opportunity to remind HHAs that they 

are not to enroll patients that do not 

meet the eligibility criteria for home 

health services. A patient that has been 

determined to be ineligible by a HHA 

has the right to ask for a review of 

eligibility by the Quality Improvement 

Organization. 

Comment: A commenter noted a 

concern that ‘‘Attachment D’’ does not 

permit the HHA to report diagnoses that 

do not require interventions on the 

OASIS (and subsequently the home 

health claim), thus precluding the home 

health agency from reporting one of 

these supporting diagnoses. 

Response: ‘‘Attachment D’’ guidance 

requires that secondary diagnoses 

reported be addressed in the home 

health plan of care. The focus of this 

discussion surrounds home health visits 

for the sole purpose of insulin 

injections. If the patient requires home 

health services for the sole purpose of 

insulin injections, it appears logical for 

these services to be reported in the plan 

of care and require interventions that 

may be supported by the reporting of 

the appropriate diagnosis that prevents 

the patient from self-injecting. 

Additionally, ICD–9–CM and ICD–10– 

CM coding guidelines state ‘‘for 

reporting purposes the definition for 

‘‘other diagnoses’’ is interpreted as 

additional conditions that affect patient 

care in terms of requiring: Clinical 

evaluation; or therapeutic treatment; or 

diagnostic procedures; or extended 

length of hospital stay; or increased 

nursing care and/or monitoring.’’ 

Therefore, reporting a diagnosis that 

supports the reason for daily nursing 

visits for insulin injections would be in 

adherence with ICD–9–CM and ICD–10– 

CM coding guidelines, even if that 

condition is not the primary reason for 

the home health encounter. Because that 

condition is affecting the home health 

plan of care with the need for daily 

skilled nursing visits for insulin 

injections, it would be appropriate to 

list that diagnosis on the OASIS as well 

as on the home health claim. 

Comment: One commenter noted that 

CMS should consider a range of clinical 

reasons that indicate a patient may not 

be able to self-inject, which may or may 

not relate to the diagnosis associated 

with the current home health episode. 

The commenter provided an example of 

an amputation or a cognitive defect 

stemming from a prior stroke. 

Response: We have not proposed a 

policy that limits coverage to a list of 

conditions that would indicate why a 

home health beneficiary is unable to 

self-inject. We recognize that there can 

be a wide range of reasons and multiple 

reasons why a beneficiary is unable to 

self-inject. The list of diagnoses in the 

CY 2015 HH PPS proposed and final 

rule was determined, through clinical 

review, to support reasons why a skilled 

nurse would have to administer a daily 

insulin injection(s). In the commenter’s 

scenario, if an amputation or cognitive 

defect necessitates that a skilled nurse 

administer insulin injection(s), then 

those conditions would be related to the 

reason the patient needs home health 

care. The presence of such conditions 

could indicate why there is the need for 

the skilled nurse to provide the 

injection(s), even though the insulin 

injection itself is for the treatment and 

management of diabetes. If any of the 

diagnoses listed in the CY 2015 HH PPS 

proposed and final rules are the 

reason(s) for the inability for the 

beneficiary to self-inject, then it is 

appropriate for the home health agency 

to report these conditions as they would 

meet the ICD–9–CM and ICD–10–CM 

coding guidelines to report those 

conditions on the OASIS and home 

health claim. We would also note that 

the examples provided of an amputation 

or cognitive defect were included in our 

list of conditions that may support that 

a patient is unable to self-inject insulin. 

We thank the commenters for 

providing us with their feedback and 

will use the information collected to 

inform any sub-regulatory guidance. We 

will also continue to monitor home 

health claims likely for visits to provide 

insulin injection assistance and we 

remind providers that historical 

evidence in the medical record must 

support the patient’s inability to 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.’’ Since the release of the 

CY 2015 HH PPS proposed rule (79 FR 

38366–38420), HHS has finalized the 

new compliance date for ICD–10–CM 

and ICD–10–PCS. The August 4, 2014 

final rule titled ‘‘Administrative 

Simplification: Change to the 

Compliance Date for the International 

Classification of Diseases, 10th Revision 

(ICD–10–CM and ICD–10–PCS Medical 

Data Code Sets’’ (79 FR 45128) 

announced October 1, 2015 as the 

compliance date. Under that final rule, 

the transition to ICD–10–CM is required 

for entities covered by the Health 


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Insurance Portability and 

Accountability Act of 1996 

(HIPAA)(Pub. L. 104–91, enacted on 

August 21, 1996). The rule also requires 

covered entities to continue using ICD– 

9 through September 30, 2015. 

Diagnosis reporting on home health 

claims must adhere to ICD–9–CM 

coding conventions and guidelines 

regarding the selection of principal 

diagnosis and the reporting of 

additional diagnoses until that time. 

The current ICD–9–CM Coding 

Guidelines refer to the use of the 

International Classification of Diseases, 

9th Revision, Clinical Modification 

(ICD–9–CM) and are available through 

the CMS Web site at: http://

www.cms.gov/Medicare/Coding/

ICD9ProviderDiagnosticCodes/

index.html or on the CDC’s Web site at 

http://www.cdc.gov/nchs/icd/

icd9cm.htm. We plan to disseminate 

more information about the transition 

from ICD–9–CM to ICD–10–CM through 

the HHA Center Web site, the Home 

Health, Hospice and DME Open Door 

Forum, and in future rulemaking. 

The following is a summary of the 

comments we received regarding the 

implementation of the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM). 

Comment: One commenter stated that 

certain codes were not included in the 

translation list provided in last year’s 

rule and attributed the omission to the 

limitations of our GEMS tool. 

Response: The CY 2015 HH PPS 

proposed rule did not contain a 

discussion of the translation list. Rather, 

the translation list was discussed in the 

CY 2014 HH PPS proposed and final 

rules. We invite further comments on 

the translation list, which should be 

submitted via email to grouperemail@

mmm.com. We will review the 

comments and provide a response. 

Comment: Several commenters 

suggested that CMS post ICD–10–CM 

information and the grouper in an 

expedited manner to afford additional 

lead time to make the system changes 

that support ICD–10–CM submission 

effective October 1, 2015. 

Response: We plan to adjust our 

schedule to provide additional lead 

time. The CY 2014 HH PPS final rule 

(77 FR 67450–67531) announced a 

grouper release date in July 2014, 

providing three months lead time when 

the previous implementation date was 

October 1, 2014. We are adjusting our 

scheduled to release the ICD–10–CM 

HH PPS Grouper on April 1, 2015, 

which provides six months of lead time 

for HHAs and vendors to prepare for the 

transition to an ICD–10–CM HH PPS 

Grouper. In addition, we are planning to 

conduct additional outreach activities 

that will be announced in the future. 

As background, CMS and our support 

contractors, Abt Associates and 3M, 

spent over 2 years implementing a 

process for the transition from the use 

of ICD–9–CM diagnosis codes to ICD– 

10–CM diagnosis codes within the HH 

PPS Grouper and outlined the process 

in the CY 2014 HH PPS proposed and 

final rules. No additional changes have 

been identified since that time and no 

additional ICD–10–CM codes have been 

added that would cause us to revise the 

grouper that was designed based on the 

CY 2014 HH PPS final rule. 

The final translation list (which 

includes all of the codes listed in the 

draft posted to the CMS Web site) will 

be posted to the Home Health section of 

the CMS Web site. A draft ICD–10–CM 

HH PPS Grouper will be released on or 

before January 1, 2015 to our vendors 

that have registered as beta-testers. Betatesters are again being reminded to 

provide any comments or feedback 

within 2 weeks of receipt based upon 

the processed outlined on the CMS Web 

site. The purpose of an early release to 

the beta testers is to identify any 

significant issues early in the process. 

Providers who are interested in 

enrolling as a beta site can obtain more 

information on the HH PPS Grouper 

Web site at http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/HomeHealthPPS/

CaseMixGrouperSoftware.html. As we 

noted above, the final ICD–10–CM HH 

PPS Grouper will be posted via the CMS 

Web site by April 1, 2015. As we are 

providing three months of additional 

lead-time, providers should take 

advantage of this time to prepare their 

systems to submit ICD–10–CM codes for 

any services that reflect a date of 

October 1, 2015 and later for item 

M0090 on the OASIS. Item M0090 is the 

assessment completion date reported by 

the HHA on the OASIS and the grouper 

logic requires that any assessment with 

a M0090 date on or after October 1, 2015 

contain ICD–10–CM codes. 

H. Proposed Change to the Therapy 

Reassessment Timeframes 

Effective January 1, 2011, therapy 

reassessments must be performed on or 

‘‘close to’’ the 13th and 19th therapy 

visits and at least once every 30 days (75 

FR 70372). A qualified therapist, of the 

corresponding discipline for the type of 

therapy being provided, must 

functionally reassess the patient using a 

method which would include objective 

measurement. The measurement results 

and corresponding effectiveness of the 

therapy, or lack thereof, must be 

documented in the clinical record. We 

anticipated that policy regarding 

therapy coverage and therapy 

reassessments would address payment 

vulnerabilities that have led to high use 

and sometimes overuse of therapy 

services. We also discussed our 

expectation that this policy change 

would ensure more qualified therapist 

involvement for beneficiaries receiving 

high amounts of therapy. In our CY 

2013 HH PPS final rule, we provided 

further clarifications regarding therapy 

coverage and therapy reassessments (77 

FR 67068). Specifically, similar to the 

existing requirements for therapy 

reassessments when the patient resides 

in a rural area, we finalized changes to 

§ 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. 

Analysis of data from CYs 2010 

through 2013 shows that the frequency 

of episodes with therapy visits reaching 

14 and 20 therapy visits did not change 

substantially as a result of the therapy 

reassessment policy implemented in CY 

2011 (see Table 35). The percentage of 

episodes with at least 14 covered 

therapy visits was 17.2 percent in CY 

2010 and decreased to 16.0 percent in 

CY 2011. In CY 2013 the percentage of 

episodes with at least 14 covered 

therapy visits increased to 16.3 percent. 

Likewise, the percentage of episodes 

with at least 20 covered therapy visits 

was 6.0 percent in CY 2010 and 

decreased to 5.4 percent in CY 2011. In 

CY 2013, the percentage of episodes 

with at least 20 covered therapy visits 

was 5.3 percent. We analyzed data for 

specific types of providers (for example, 

non-profit, for profit, freestanding, 

facility-based), and we found the similar 

trends in the number of episodes with 

at least 14 and 20 covered therapy visits. 

For example, for non-profit HHAs, the 

percentage of episodes with at least 14 

covered therapy visits decreased from 

11.8 percent in CY 2010 to 11.1 in CY 

2011 and episodes with at least 20 

covered therapy visits decreased from 

4.2 percent in CY 2010 to 3.9 percent in 

CY 2011. For proprietary HHAs, the 

percentage of episodes with at least 14 

covered therapy visits decreased from 

19.7 percent in CY 2010 to 18.2 percent 

in CY 2011 and episodes with at least 

20 covered therapy visits decreased 


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66102 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

from 6.8 percent in CY 2010 to 6.1 

percent in CY 2011. 

As we stated in section III.A of this 

final rule, in addition to the 

implementation of the therapy 

reassessment requirements in CY 2011, 

HHAs were also subject to the 

Affordable Care Act face-to-face 

encounter requirement, payments were 

reduced to account for increases 

nominal case-mix, and the Affordable 

Care Act mandated that the HH PPS 

payment rates be reduced by 5 percent 

to pay up to, but no more than 2.5 

percent of total HH PPS payments as 

outlier payments. The estimated net 

impact to HHAs for CY 2011 was a 

decrease in total HH PPS payments of 

4.78 percent. The independent effects of 

any one policy may be difficult to 

discern in years where multiple policy 

changes occur in any given year. We 

note that in our CY 2012 HH PPS final 

rule (76 FR 68526), we recalibrated and 

reduced the HH PPS case-mix weights 

for episodes reaching 14 and 20 therapy 

visits, thereby diminishing the payment 

incentive for episodes at those therapy 

thresholds. 

TABLE 35—PERCENTAGE OF EPISODES WITH 14 AND 20 THERAPY VISITS, CY 2010 THROUGH 2013 

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 does not show 

significant change in the percentage of 

cases reaching the 14 therapy visit and 

20 therapy visit thresholds between CY 

2010 and CY 2011. Moreover, payment 

increases at the 14 therapy visit and 20 

therapy visit thresholds have been 

somewhat mitigated since the 

recalibration of the case-mix weights in 

CY 2012. Therefore, we proposed to 

simplify § 409.44(c)(2) to require a 

qualified therapist (instead of an 

assistant) from each discipline to 

provide the needed therapy service and 

functionally reassess the patient in 

accordance with § 409.44(c)(2)(i)(A) at 

least every 14 calendar days. 

The proposed requirement to perform 

a therapy reassessment at least once 

every 14 calendar days would apply to 

all episodes regardless of the number of 

therapy visits provided. All other 

requirements related to therapy 

reassessments will remain unchanged, 

such as a qualified therapist (instead of 

an assistant) from each therapy 

discipline provided will still be 

required to provide the ordered therapy 

service and functionally reassess the 

patient using a method which would 

include objective measurements. The 

measurement results and corresponding 

effectiveness of the therapy, or lack 

thereof, would be documented in the 

clinical record. In the proposed rule, we 

stated our belief that revising this 

requirement would make it easier and 

less burdensome for HHAs to track and 

to schedule therapy reassessments every 

14 calendar days as opposed to tracking 

and counting therapy visits, especially 

for multiple-discipline therapy 

episodes. We also believed that this 

proposal would reduce the risk of 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. 

In the CY 2015 HH PPS proposed rule 

(79 FR 38366–38420), we invited 

comment on this proposal and the 

associated change in the regulation at 

§ 409.44. The following is a summary of 

comments we received regarding the 

proposed change to the therapy 

reassessment timeframes. 

Comment: Commenters strongly 

supported removing the requirement to 

perform therapy reassessments on or 

‘‘close to’’ the 13th and 19th therapy 

visits. Commenters appreciate our effort 

to simplify the therapy reassessment 

timeframes in order to allow more time 

and energy to be focused on the patients 

and outcomes and less time on counting 

visits. However, the commenters believe 

that the proposed reassessment interval 

of every 14 days would be too frequent. 

They noted that the 14-day interval is 

not linked to a clinical objective that 

benefits the patient. They note that 

changes in function as a result of 

improvements in functional strength, 

balance, and other impairments 

typically take longer than the 14 days. 

Commenters state that physiological 

change requires six to eight weeks to 

occur depending on the patient’s 

individual goals. They believe this to be 

true especially in the case of home 

health patients who typically have 

complex, multi-system impairments. 

Most commenters believe that a 30 day 

reassessment would be more realistic in 

terms of commonly used functional 

tests, such as the Berg Balance test, Gait 

Velocity, Chair Rise test, Timed Up and 

Go, and Barthel Index, being able to 

detect a change. Several commenters 

believe the 14 day requirement would 

lead to scheduling congestion due to the 

shortage of qualified therapists and time 

constraints in rural areas where 

therapists spend a lot of time traveling 

to the patient’s residence. Commenters 

state that this would make it 

exceedingly difficult for HHAs to 

accommodate both patient and staff 

scheduling needs, which would 

negatively impact patient care. 

Commenters believe that the proposed 

14 day reassessment requirement 

discourages the proper use of assistants 

and their role in home health care. In 

addition, commenters state that the 14 

day timeframe is burdensome in that it 

increases documentation requirements 

and does nothing to promote quality of 


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43http://www.apta.org/uploadedFiles/APTAorg/

About_Us/Policies/Practice/

DirectionSupervisionPTA.pdf. 

care. For example, commenters expect 

that the 14 day reassessment timeframe 

will result in patient complaints that 

therapists are spending too much 

treatment time on documentation. 

Additionally, the 14 day reassessment 

timeframe negatively impacts continuity 

of care. For example, if a patient is being 

seen by a certified occupational therapy 

assistant and a physical therapy 

assistant, then the patient would be seen 

by four different therapists in a two 

week time period. This could be 

overwhelming for the patient. 

Continuity of care and personnel are 

important with this population to 

ensure trust and follow through which 

directly impacts the patient’s adherence 

to a home exercise program and to 

follow the functional and safety 

recommendations made by the treating 

therapists. 

Several commenters stated that 

patient care should not be determined 

by a calendar and that the reassessment 

should still be based on the frequency 

of visits. Some commenters 

recommended that the reassessment be 

performed every 5th or 6th visit while 

others recommended that it be 

performed every 8th or 10th visit. 

However, the majority of commenters 

stated that converting this requirement 

to a calendar day based interval will be 

far easier to track and manage. Most 

commenters believe that a calendar day 

based interval will reduce the likelihood 

of inadvertently missing an assessment, 

especially when the patient is receiving 

multiple types of therapy. Several 

commenters suggested a reassessment 

timeframe in the range of every 20 to 28 

days. A few commenters suggested 

every 6 to 8 weeks. One commenter 

recommended performing the 

assessment every 60 days. The 

overwhelming majority of commenters 

recommended reassessing the patient at 

least once every 30 days as the most 

appropriate time frame. Commenters 

stated that a 30 day reassessment 

timeframe aligns with many state 

practice acts, which require that a 

therapist reassess the patient at least 

once every 30 days. 

Response: As a result of the comments 

we received, in which most commenters 

suggested requiring therapy 

reassessments at least once every 30 

days, we are finalizing our proposal to 

eliminate the therapy reassessments that 

are required to be performed on or 

‘‘close to’’ the 13th and 19th therapy 

visits. We are also finalizing that a 

qualified therapist (instead of an 

assistant) from each discipline provide 

the needed therapy service and 

functionally reassess the patient in 

accordance with § 409.44(c)(2)(i)(A) at 

least once every 30 calendar days, rather 

than at least every 14 calendar days, as 

proposed. 

Comment: Some commenters 

suggested that we provide either a 3 or 

5 day window or grace period before 

and after the 30th day in which to 

complete the reassessment. 

Response: A 3–5 day window before 

the 30th day is built into the 

requirement to perform the 

reassessment at least once every 30 

calendar days. However, we will not 

adopt a policy of allowing for a 3 or 5 

day window or grace period after the 

30th calendar day as some of the 

commenters suggested. We believe that 

requiring therapy reassessments to be 

performed at least once every 30 

calendar days is flexible and enhances 

patient care. 

Comment: Some commenters asked 

for clarification as to whether the 

proposed reassessment would be 

required at least once every 14 calendar 

days or exactly every 14th calendar day. 

Response: We had intended that the 

proposed requirement would be for the 

reassessment to be performed at least 

once every 14 calendar days. We will 

finalize a requirement that the 

reassessment be performed at least once 

every 30 days. The reassessment will 

not have to be done on exactly the 30th 

day. For example, the reassessment 

could be done on the 21st day or the 

28th day as clinically appropriate and 

deemed necessary by the therapist. 

Comment: One commenter stated that 

it is in the best interest of the patient to 

have regular interaction with the actual 

therapist, not just the assistant. The 

commenter believes that assistants 

generally should not be routinely used 

in the home setting unless they have 

demonstrated advanced proficiencies in 

the setting and that assistant visits 

should be reimbursed at a lower level 

since HHAs pay them less. 

Response: We believe that therapy 

assistants play a very important role in 

supporting therapists and providing 

care to home health patients, especially 

in rural areas and areas where there is 

a shortage of therapists. The home 

health Conditions of Participation 

(CoPs), at § 484.32, state that any 

therapy services offered by the HHA 

directly or under arrangement are given 

by a qualified therapist or by a qualified 

therapy assistant under the supervision 

of a qualified therapist and in 

accordance with the plan of care. The 

qualified therapist assists the physician 

in evaluating level of function, helps 

develop the plan of care (revising it as 

necessary), prepares clinical and 

progress notes, advises and consults 

with the family and other agency 

personnel, and participates in in-service 

programs. Services furnished by a 

qualified physical therapy assistant or 

qualified occupational therapy assistant 

may be furnished under the supervision 

of a qualified physical or occupational 

therapist. A physical therapy assistant 

or occupational therapy assistant 

performs services planned, delegated, 

and supervised by the therapist, assists 

in preparing clinical notes and progress 

reports, and participates in educating 

the patient and family, and in in-service 

programs. In addition, guidelines 

published by the American Physical 

Therapy Association (APTA) state: 

When supervising the physical therapist 

assistant in any off-site setting, the following 

requirements must be observed: 

1. A physical therapist must be accessible 

by telecommunications to the physical 

therapist assistant at all times while the 

physical therapist assistant is treating 

patients/clients. 

2. There must be regularly scheduled and 

documented conferences with the physical 

therapist assistant regarding patients/clients, 

the frequency of which is determined by the 

needs of the patient/client and the needs of 

the physical therapist assistant. 

3. In those situations in which a physical 

therapist assistant is involved in the care of 

a patient/client, a supervisory visit by the 

physical therapist will be made: 

a. Upon the physical therapist assistant’s 

request for a reexamination, when a change 

in the plan of care is needed, prior to any 

planned discharge, and in response to a 

change in the patient’s/client’s medical 

status. 

b. At least once a month, or at a higher 

frequency when established by the physical 

therapist, in accordance with the needs of the 

patient/client. 

c. A supervisory visit should include: 

i. An on-site reexamination of the patient/ 

client. 

ii. On-site review of the plan of care with 

appropriate revision or termination. 

iii. Evaluation of need and 

recommendation for utilization of outside 

resources.’’43

We believe that requiring therapy 

reassessments at least once every 30 

days, the current CoP requirements, and 

the APTA guidelines together promote 

regular interaction between the therapist 

and the patient. We will continue to 

monitor the frequency of assistant visits. 

As shown in Table 36 below, CY 2011 

through CY 2013 claims data indicates 

that about 30 percent of the time, 

physical therapy is provided by 

assistants and about 15 percent of the 

time, occupational therapy is provided 

by assistants. 


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TABLE 36—PERCENTAGE OF VISITS

PROVIDED BY A PHYSICAL THERAPY

AND OCCUPATIONAL THERAPY ASSISTANTS, CY 2011 THROUGH 2013 

Year 

Percentage 

of PT visits 

provided by a 

PTA 

Percentage 

of OT visits 

provided by an 

OTA 

2011 .......... 23.8 14.4 

2012 .......... 28.5 15.4 

2013 .......... 29.2 15.4 

Source: Analysis of CY 2011 through CY 

2013 claims data from the Standard Analytic 

File (SAF). 

Note(s): We included all episodes that 

ended on or before December 31 of that CY 

(including 100% of episodes that began in the 

previous CY, but ended in the current CY). 

Bureau of Labor Statistics (BLS) data 

on wage and fringe rates is currently 

used along with the minutes of care 

provided during home health episodes, 

as found on claims, to calculate an 

episode’s resource use (an estimate of 

the relative cost of the episode). Data on 

resource use is used to construct casemix weights that adjust the base 

payment rate in order to more 

accurately pay for home health 

episodes. Since CY 2012, the case mix 

system takes into account whether visits 

were performed by a therapist or a 

therapy assistant when constructing the 

case mix weights by calculating an 

episode’s resource use accordingly. The 

Medicare HHA cost report form may be 

revised in the near future, but currently 

the form does not allow us to 

differentiate the cost of a therapist visit 

from a therapy assistant visit. We will 

consider whether separate LUPA rates 

for therapists versus therapy assistants 

are needed in the future. 

Comment: A commenter requested 

clarification regarding the semantics of 

our proposal ‘‘. . . to require a qualified 

therapist (instead of an assistant) from 

each discipline to provide the needed 

therapy service and functionally 

reassess the patient . . .’’ as this could 

be interpreted two different ways. The 

commenter is concerned that the 

language could be interpreted to mean 

that therapy assistants will no longer be 

eligible to perform visits in the home 

health setting. 

Response: We are not changing our 

existing policy regarding therapy 

assistants. Assistants may still perform 

physical therapy services and 

occupational therapy services which 

they are qualified to perform. Therapy 

assistants may provide therapy visits as 

medically reasonable and necessary to 

treat the patient throughout the duration 

of the episode. As stated in our existing 

policy, during the visit in which the 

therapist performs the assessment, the 

qualified therapist (not a therapy 

assistant) must also provide the therapy 

service(s). 

Comment: One commenter asked if 

the new therapy reassessment timeframe 

will only apply to episodes beginning 

on or after January 1, 2015 or if it will 

also apply to episodes spanning January 

1, 2015. 

Response: The new therapy 

reassessment requirement will apply to 

episodes that begin on or after January 

1, 2015. 

Comment: Several commenters 

questioned when the reassessment clock 

would start. They asked for more clarity 

about whether the count would begin at 

the start of the episode or from the date 

the patient is first seen by a therapist. 

Response: The clock would start from 

the date the patient is first seen by the 

qualified therapist, as per 

§ 409.44(c)(2)(i)(A) the patient’s 

function must be initially assessed by a 

qualified therapist. As stated in current 

guidance, the reassessment clock is not 

measured by episode but by the 

patient’s full course of treatment. That 

is, the reassessment clock starts with the 

therapist’s first assessment/visit and 

continues until the patient is discharged 

from home health. In cases where more 

than one type of therapy is being 

provided, each therapy discipline has 

its own separate clock. The 30-day clock 

begins with the first therapy service (of 

that discipline) and the clock resets 

with each therapist’s visit/assessment/

measurement/documentation (of that 

discipline). 

In order to determine when the next 

therapy reassessment visit by a qualified 

therapist would be required, as it relates 

to the ‘‘at least every 30 days’’ 

requirement, the counting should begin 

the day after the service is provided. For 

example, if a therapist conducted and 

documented an assessment of a patient 

during a visit on April 1, the count 

would begin on April 2. In this case, in 

order to fulfill the requirement of 

reassessing the patient at least once 

every 30 days, the therapist rather than 

an assistant, would need to return by 

May 1. 

We note that the intent of the policy 

is to ensure that, at a minimum, a 

patient is seen by the therapist at least 

once every 30 days. The intent is not for 

a therapist to wait until the 30th day to 

visit a patient. A therapy reassessment 

visit should include providing the 

actual therapy service(s), functionally 

assessing the patient, measuring 

progress to determine if the goals have 

been met, and documenting 

measurement results and corresponding 

therapy effectiveness in the clinical 

record. 

Comment: A commenter was 

supportive of a requirement for 

reassessing the patient every 30 days 

with the understanding that nothing 

precludes an agency from doing another 

assessment earlier than the 30th day if 

warranted by the patient’s condition or 

ending of therapy. 

Response: The commenter is correct. 

Nothing precludes an agency from doing 

another assessment earlier than the 30th 

day if warranted by the patient’s 

condition or ending of therapy. As 

stated above, the requirement is for the 

qualified therapist to reassess the 

patient at least once every 30 days. 

Comment: A commenter stated that 

education regarding any changes to the 

timing expectations is critical to reduce 

confusion and prevent 

misunderstandings and that clearly 

written instruction with specific 

examples would be extremely 

beneficial. The commenter further 

stated that partnering with the therapy 

associations in educational efforts will 

help get the correct word out to the 

therapists themselves. 

Response: We will be updating the 

policy as published in chapter 7 ‘‘Home 

Health Services’’ of the Medicare 

Benefit Policy Manual (Pub. 100–20) 

and publishing a provider education 

article related to the revised policy. As 

always, we appreciate any educational 

efforts that the professional associations 

are able and willing to provide. 

Final Decision: In summary, we are 

finalizing changes to the regulations at 

§ 409.44, effective for episodes ending 

on or after January 1, 2015, to require 

that at least every 30 days a qualified 

therapist (instead of an assistant) must 

provide the needed therapy service and 

functionally reassess the patient. Where 

more than one discipline of therapy is 

being provided, a qualified therapist 

from each of the disciplines must 

provide the needed therapy service and 

functionally reassess the patient at least 

every 30 days. Therapy reassessments 

are to be performed using a method that 

would include objective measurement, 

in accordance with accepted 

professional standards of clinical 

practice, which enables comparison of 

successive measurements to determine 

the effectiveness of therapy goals. Such 

objective measurements would be made 

by the qualified therapist using 

measurements which assess activities of 

daily living that may include but are not 

limited to eating, swallowing, bathing, 

dressing, toileting, walking, climbing 

stairs, or using assistive devices, and 

mental and cognitive factors. The 

measurement results and corresponding 

effectiveness of the therapy, or lack 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66105 

thereof, must be documented in the 

clinical record. 

I. HHA Value-Based Purchasing Model 

As we discussed previously in the FY 

2009 proposed rule for Skilled Nursing 

Facilities (73 FR 25918, 25932, May 7, 

2008), value-based purchasing (VBP) 

programs, in general, are intended to tie 

a provider’s payment to its performance 

in such a way as to reduce inappropriate 

or poorly furnished care and identify 

and reward those who furnish quality 

patient care. Section 3006(b)(1) of the 

Affordable Care Act directed the 

Secretary to develop a plan to 

implement a VBP program for home 

health agencies (HHAs) and to issue an 

associated Report to Congress (Report). 

The Secretary issued that Report, which 

is available online at http://

www.cms.gov/Medicare/Medicare-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(a)(1)(A), of the Social 

Security Amendments of 1967 (as 

amended), 42 U.S.C. 1395b–1(a)(1)(A) 

provided authority for CMS to conduct 

the Home Health Pay-for-Performance 

(HHPFP) Demonstration that ran from 

2008 to 2010. The results of that 

Demonstration found limited quality 

improvement in certain measures after 

comparing the quality of care furnished 

by Demonstration participants to the 

quality of care furnished by the control 

group. One important lesson learned 

from the HHPFP Demonstration was the 

need to link the HHA’s quality 

improvement efforts and the incentives. 

HHAs in three of the four regions 

generated enough savings to have 

incentive payments in the first year of 

the Demonstration, but the size of 

payments were unknown until after the 

conclusion of the Demonstration. This 

time lag on paying incentive payments 

did not provide a sufficient incentive to 

HHAs to make investments necessary to 

improve quality. The Demonstration 

suggested that future models could 

benefit from ensuring that incentives are 

reliable enough, of sufficient magnitude, 

and paid in a timely fashion to 

encourage HHAs to be fully engaged in 

the quality of care initiative. The 

evaluation report is available online at 

https://www.cms.gov/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 will offer both a greater 

potential reward for high performing 

HHAs as well as a greater potential 

downside risk for low performing 

HHAs. If implemented, the model will 

begin at the outset of CY 2016, and 

include an array of measures that can 

capture the multiple dimensions of care 

that HHAs furnish. Building upon the 

successes of other related programs, we 

are seeking to implement a model with 

greater upside benefit and downside 

risk to motivate HHAs to make the 

substantive investments necessary to 

improve the quality of care furnished by 

HHAs. 

As currently envisioned, the HHA 

VBP model would reduce or increase 

Medicare payments, in a 5–8 percent 

range, depending on the degree of 

quality performance in various 

measures to be selected. The model 

would apply to all HHAs in each of the 

projected five to eight states selected to 

participate in the model. The 

distribution of payments would be 

based on quality performance, as 

measured by both achievement and 

improvement across multiple quality 

measures. Some HHAs would receive 

higher payments than standard fee-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 

under the traditional FFS Medicare 

payment system, and would therefore 

see a net payment decrease to Medicare 

payments as a result of this model. We 

stated in the proposed rule that we are 

proposing to use the waiver authority 

under section 1115A of the Act to waive 

the applicable Medicare payment 

provisions for HHAs in the selected 

states and apply a reduction or increase 

to current Medicare payments to these 

HHAs, which will be dependent on 

their performance. 

We are considering a HHA VBP model 

in which participation by all HHAs in 

five to eight selected states is 

mandatory. We believe requiring all 

HHAs in selected states to participate in 

the model will ensure that: (1) There is 

no selection bias, (2) participating HHAs 

are representative of HHAs nationally, 

and (3) there is sufficient participation 

to generate meaningful results. In our 

experience, providers are generally 

reluctant to participate voluntarily in 

models in which their Medicare 

payments are subject to reduction. In 

the proposed rule, we invited comments 

on the HHA VBP model outlined above, 

including elements of the model, size of 

the payment incentives and percentage 

of payments that would need to be 

placed at risk in order to spur HHAs to 

make the necessary investments to 

improve the quality of care for Medicare 

beneficiaries, the timing of the incentive 


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66106 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

44http://www.healthit.gov/sites/default/files/ 

generalcertexchangeguidance_final_9-9-13.pdf. 

More information on the current development of 

standards applicable to HH can be found at: 

http://wiki.siframework.org/LCC+LTPAC+

Care+Transition+SWG and http:// 

wiki.siframework.org/Longitudinal+

Coordination+of+Care. 

45http://www.healthit.gov/facas/sites/faca/files/

TransmittalLetter_LTPAC_BH_Certification.pdf; 

payments, and how performance 

payments should be distributed. We 

also invited comments on the best 

approach for selecting states for 

participation in this model. Approaches 

could include: (1) Selecting states 

randomly, (2) selecting states based on 

quality, utilization, health IT, or 

efficiency metrics or a combination, or 

(3) other considerations. We noted that 

if we decide to move forward with the 

implementation of this HHA VBP model 

in CY 2016, we intended to invite 

additional comments on a more detailed 

model proposal to be included in future 

rulemaking. 

We received a number of comments 

on the model design, including the 

following: 

• A number of commenters expressed 

concern regarding the magnitude of 5– 

8 percent payment adjustment 

incentives, particularly when 

considering HHA margins, and as 

compared to the Hospital Value-based 

Purchasing program. A number of 

commenters also expressed support for 

a high payment incentive because they 

believe that this payment incentive will 

provide adequate remuneration for an 

investment in quality. 

• A number of commenters 

encouraged a combination of pay-forperformance and pay-for-reporting . 

• A number of commenters expressed 

ideas on the evaluation criteria under 

the model, for example: Not using the 5- 

star system, giving higher weight to 

quality measures relating to conditions 

requiring home health intervention, 

excluding HHCAHPS from the criteria 

due to timeliness reasons, excluding rehospitalization metrics since they are 

often determined by physician 

judgment, and excluding OASIS 

measures since they might be 

fraudulently manipulated. 

• A number of commenters expressed 

support for the inclusion of a 

beneficiary risk adjustment strategy to 

help prevent cherry picking of easier 

cases. 

• A number of commenters preferred 

for HHAs to be allowed to select 

participation as opposed to the 

mandatory participation being 

considered by CMS. 

• A number of commenters expressed 

opinions about the methodology for 

selecting the participating states, 

including choosing them from various 

MAC regions, choosing a rural and 

frontier state, and excluding states with 

moratoria on new HHAs. 

• A number of commenters supported 

the development of a VBP model. 

We thank all commenters for their 

input and will consider these comments 

as we make further decisions about 

implementing a HHA VBP model in CY 

2016 which would assess performance 

from each of the preceding baseline 

years. As stated in the proposed rule, we 

intend to invite additional comments on 

a more detailed model proposal to be 

included in future rulemaking, 

including the selection of states and the 

criteria used for selection, the specific 

measures to be employed, how these 

measures are categorized within 

domains and the criteria used for 

selection, and the payment adjustment 

percentage. 

J. Advancing Health Information 

Exchange 

HHS believes all patients, their 

families, and their healthcare providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, ‘‘Principles and Strategies for 

Accelerating Health Information 

Exchange.’’) The Department is 

committed to accelerating health 

information exchange (HIE) through the 

use of electronic health records (EHRs) 

and other types of health information 

technology (health IT) across the 

broader care continuum through a 

number of initiatives including: (1) 

Alignment of incentives and payment 

adjustments to encourage provider 

adoption and optimization of health IT 

and HIE services through Medicare and 

Medicaid payment policies, (2) adoption 

of common standards and certification 

requirements for interoperable health 

IT, (3) support for privacy and security 

of patient information across all 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. We believe 

that HIE and the use of certified EHR 

technology by HHAs (and other 

providers ineligible for the Medicare 

and Medicaid EHR Incentive Programs) 

can effectively and efficiently help 

providers improve internal care delivery 

practices, support management of 

patient care across the continuum, and 

enable the reporting of electronically 

specified clinical quality measures 

(eCQMs). 

Comments: Responses from 

commenters generally supported the use 

of EHRs to advance standards-based 

interoperable health information 

exchange, ensure privacy and security 

protections, and improve patientcentered quality care. Commenters 

noted the ability for health IT to enable 

access to essential information for 

decision-making by individuals, 

providers and their family caregivers. 

One commenter noted the possibility 

that some vendors may sunset products 

or increase costs as health IT standards 

are adopted. Other commenters noted 

the need for standards that recognize the 

distinct functional needs of the home 

care sector and requested notice 

regarding emerging standards to allow 

sufficient time for vendor and provider 

integration. Other commenters 

expressed concern regarding increased 

costs associated with implementing HIE 

and the lack of incentives to support 

capital expenditures. 

Response: We thank commenters for 

their responses. HHS will continue to 

promote the adoption and 

implementation of certified health IT. 

The use of certified health IT can 

improve interoperability through the 

use of national, consensus-based 

standards as well as facilitate the secure 

interoperable exchange of health 

information. To increase flexibility in 

the Office of the National Coordinator 

for Health Information Technology’s 

(ONC) regulatory certification structure, 

ONC expressed in the 2014 Edition 

Release 2 final rule (79 FR 54472–73) an 

intent to propose future changes to the 

ONC HIT Certification Program that 

would permit the certification of health 

IT for other health care settings, such as 

long-term and post-acute care and 

behavioral health settings. For now, we 

direct stakeholders to the ONC guidance 

for EHR technology developers serving 

providers ineligible for the Medicare 

and Medicaid EHR Incentive Programs 

titled ‘‘Certification Guidance for EHR 

Technology Developers Serving Health 

Care Providers Ineligible for Medicare 

and Medicaid EHR Incentive 

Payments.’’ 44 We encourage 

stakeholders to also review the Health 

IT Policy Committee (a Federal 

Advisory Committee) recommendations 

for areas in which certification under 

the ONC HIT Certification Program 

would help support long-term and postacute care providers.45 Further, 


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http://www.healthit.gov/facas/sites/faca/files/

HITPC_LTPAC_BH_Certification_

Recommendations_FINAL.pdf. 

46http://www.healthit.gov/sites/default/files/pdf/

HIT_LTPAC_IssueBrief031513.pdf. 

stakeholders should consider emerging 

innovative payment models, quality 

reporting programs, state Medicaid 

reimbursement for remote monitoring 

(available in some states) and grants that 

could provide funding for health IT 

implementation for home health or 

incentivize other providers to assist 

home health providers’ implementation 

efforts. For an overview of these 

opportunities, stakeholders are directed 

to the Health IT in Long-Term PostAcute Care Issue Brief.46

K. Proposed Revisions to the SpeechLanguage Pathologist Personnel 

Qualifications 

We proposed to revise the personnel 

qualifications for speech-language 

pathologists (SLP) to more closely align 

the regulatory requirements with those 

set forth in section 1861(ll) of the Act. 

We proposed to require that a qualified 

SLP be an individual who has a master’s 

or doctoral degree in speech-language 

pathology, and who is licensed as a 

speech-language pathologist by the state 

in which he or she furnishes such 

services. To the extent of our 

knowledge, all states license SLPs; 

therefore, all SLPs would be covered by 

this option. We believe that deferring to 

the states to establish specific SLP 

requirements would allow all 

appropriate SLPs to provide services to 

Medicare beneficiaries. Should a state 

choose not to offer licensure at some 

point in the future, we proposed a 

second, more specific, option for 

qualification. In that circumstance, we 

proposed to require that a SLP 

successfully complete 350 clock hours 

of supervised clinical practicum (or be 

in the process of accumulating such 

supervised clinical experience); perform 

not less than 9 months of supervised 

full-time speech-language pathology 

services after obtaining a master’s or 

doctoral degree in speech-language 

pathology or a related field; and 

successfully complete a national 

examination in speech-language 

pathology approved by the Secretary. 

These specific requirements are set forth 

in the Act, and we believe that they are 

appropriate for inclusion in the 

regulations as well. 

We invited comments on this 

technical correction and associated 

change in the regulations at § 484.4 in 

section VI. We received five public 

comments regarding this proposal from 

individual HHAs, state HHA provider 

organizations, and a national 

organization representing SLPs. 

Comment: All comments supported 

the deferral to state licensure standards 

and validated CMS’ understanding that 

all states currently have licensure 

standards for SLPs. One commenter 

supported the inclusion of separate 

qualifications for those SLPs located in 

areas without state licensure, noting that 

these regulations would also apply in 

US Territories, and that not all 

Territories have licensure standards for 

SLPs. 

Response: We agree with the 

commenters that the changes would be 

appropriate, and are finalizing them as 

such. 

Comment: A commenter suggested 

that we should replace the specific 

education, training, and experience 

requirements set forth in the Social 

Security Act with a requirement that an 

SLP must meet the certification 

standards established by the American 

Speech-Language-Hearing Association 

(ASHA). 

Response: The Social Security Act 

(the Act), on which the regulation is 

based, does not limit SLPs to only those 

individuals who meet the ASHA 

certification standards. Since this 

limitation does not exist in the Act, we 

do not believe it should exist in the 

regulations. Therefore, in order to align 

the regulatory requirements with those 

requirements set forth in the Act, we are 

not making the suggested change. States 

are free to require ASHA certification as 

part of their SLP licensure standards. 

Comment: One comment sought 

clarification on why this change was 

being proposed at this time rather than 

as part of a comprehensive revision of 

the home health agency Conditions of 

Participation (CoPs). 

Response: While a comprehensive 

revision of the home health CoPs is 

underway, we have received 

information from those in the SLP 

community that the restrictions 

currently in place for SLPs are impeding 

the ability of SLPs to practice. 

Finalizing a comprehensive revision to 

the home health agency CoPs will 

require several years. We believe that it 

is in the interest of the HHA and SLP 

communities, as well as the Medicare 

program, to effect a more timely change 

to the SLP personnel qualifications. 

Therefore, we are finalizing the revised 

requirements, as proposed, in this rule, 

and the change will be effective on 

January 1, 2015. 

Final decision: We are finalizing the 

proposal without change. 

L. Technical Regulations Text Changes 

We proposed to make technical 

corrections in § 424.22(b)(1) to better 

align the recertification requirements 

with the Medicare Conditions of 

Participation (CoPs) for home health 

services. Specifically, we proposed that 

§ 424.22(b)(1) will specify that 

recertification is required at least every 

60 days when there is a need for 

continuous home health care after an 

initial 60-day episode to coincide with 

the CoP requirements in § 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 proposed to 

specify in § 424.22(b)(1) that 

recertification is required at least every 

60 days unless there is a beneficiary 

elected transfer or a discharge with 

goals met and return to the same HHA 

during the 60-day episode. The word 

‘‘unless’’ was inadvertently 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 proposed to revised 

§ 424.22(b)(1)(ii) to clarify that if a 

beneficiary is discharged with goals met 

and/or no expectation of a return to 

home health care and returns to the 

same HHA during the 60-day episode a 

new start of care would be initiated 

(rather than an update to the 

comprehensive assessment) and thus 

the second episode will be considered a 


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47http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/OASIS/

downloads/OASISConsiderationsforPPS.pdf 

certification, not a recertification,47 and 

would be subject to § 424.22(a)(1). 

We also proposed 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. 

Most of the comments that we 

received, where the commenter 

indicated that they were commenting on 

these technical corrections and 

associated changes in the regulations at 

§ 424.22 and § 484.250 in section VI, 

were, in fact, also commenting on the 

proposed clarification on when 

documentation of a face-to-face 

encounter is required in section III.B.3. 

While we are finalizing these 

regulations text changes as proposed, 

we refer readers to the summary of the 

comments and responses in section 

III.B.3. for our rationale. 

Final Decision: We are finalizing the 

proposed regulations text changed at 

§ 424.22 and § 484.250 as proposed. 

M. Survey and Enforcement 

Requirements for Home Health Agencies 

1. Statutory Background and Authority 

Section 4023 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87) 

(Pub. L 100–203, enacted on December 

22, 1987) added subsections 1891(e) and 

(f) to the Act, which expanded the 

Secretary’s options to enforce federal 

requirements for home health agencies 

(HHAs or the agency). Sections 

1861(e)(1) and (2) of the Act provide 

that if CMS determines that an HHA is 

not in compliance with the Medicare 

home health Conditions of Participation 

and the deficiencies involved either do, 

or do not, immediately jeopardize the 

health and safety of the individuals to 

whom the agency furnishes items and 

services, then we may terminate the 

provider agreement, impose an 

alternative sanction(s), or both. Section 

1891(f)(1)(B) of the Act authorizes the 

Secretary to develop and implement 

appropriate procedures for appealing 

determinations relating to the 

imposition of alternative sanctions. 

In the November 8, 2012 Federal 

Register (77 FR 67068), we published 

the ‘‘Alternative Sanctions for Home 

Health Agencies With Deficiencies’’ 

final rule (part 488, subpart J), as well 

as made corresponding revisions to 

sections § 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 proposed 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 (ALJs), 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 

review authority) finds noncompliance 

supporting the imposition of the CMP, 

he or she must retain some amount of 

penalty consistent with the ranges of 

penalty amounts established in 

§ 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. 

The following is a summary of the 

comments we received regarding the 

proposed amendment to § 488.845 to 

explain the reviewability of a CMP by 

an ALJ. 

Comment: One commenter supported 

the proposal, as it would align HHA 

policy more closely with SNF policy 

regarding ALJ reviewability. 

Response: We agree with the 

commenter who observed that the 

proposal would align HHA policy with 

long-standing practice and policy with 

regard to the manner in which SNF 

CMPs are reviewed. We believe it is 

important that CMS be consistent in the 

application of CMPs among providers, 

and the proposed language for HHA 

CMPs is consistent with existing 

language for SNFs at § 488.438(e). 

Comment: Two commenters believed 

that the HHA CMP process was too new 

for changes to be addressed in the ALJ 

review process. 

Response: The length of time the HHA 

CMPs have been in effect is not relevant 

to the implementation of the 

requirements of the Act and 

implementing regulations. Section 

1891(f)(1)(B) of the Act requires the 

Secretary to provide appropriate 

procedures for appealing the 

determination relating to the imposition 

of a sanction. As provided at 

§ 488.845(c)(2)(i) ‘‘Appeals Procedures’’, 

the determination that is the basis for 

imposition of the CMP may be appealed. 

The proposed language does not revise 

the regulation at § 488.845(c)(2)(i), but 

adds clarification regarding the scope of 

the review during the appeal process. 

Comment: One commenter believed 

that the ALJs should be allowed to 

eliminate CMPs as a part of their 

administrative review. 

Response: Section 1891(b) of the Act 

mandates that it is the duty and 

responsibility of the Secretary to assure 

that the conditions of participation as 

well as the enforcement of such 

conditions is adequate to protect the 

health and safety of individuals under 

the care of an HHA. Section 1891(f) of 

the Act further specifies that the 

Secretary establish a range of 

intermediate sanctions which shall 

include, among others, civil money 

penalties. Finally, section 1819(f)(1)(B) 

of the Act requires the Secretary to 

provide appropriate procedures for 

appealing the determination relating to 

the imposition of the sanction and the 

implementing regulations at 

§ 488.845(c)(2)(i), ‘‘Appeals Procedures’’ 

provide that the determination that is 

the basis for imposition of the CMP may 

be appealed. It is within our discretion 

as to the choice of remedy to be 

imposed. While an ALJ may review the 

underlying findings that support CMS’s 

determination to impose a CMP and 


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whether or not the imposed amount 

falls within the regulatory range, 

elimination of any CMP is not within 

the scope of the appeal process. 

Comment: One commenter believed 

the denial of appeal of the 

implementation of the CMP may not be 

constitutionally valid. An additional 

two commenters believed this proposed 

language added additional restrictions 

to the ALJ which resulted in the lack of 

due process. 

Response: We do not believe that the 

proposed language raises constitutional 

issues or restricts due process. Section 

1128A of the Act requires that specific 

factors be considered in determining the 

amount of the penalty. Those factors, 

particularly the deficiencies cited by the 

survey, are considered by CMS in the 

establishment of the CMP amount to be 

imposed. The deficiencies which give 

rise to a CMP may be appealed. Section 

1891(f)(1)(B) of the Act requires the 

Secretary to provide appropriate 

procedures for appealing the 

determination relating to the imposition 

of the sanction. These procedures are 

provided at § 488.845(c)(2)(i). The CMP 

itself would be affected if the 

deficiencies underlying the 

determination were not sustained on 

appeal. 

Final Decision: After careful 

consideration of the comments received, 

we are finalizing the regulatory language 

as proposed. 

3. Technical Adjustment 

We also proposed to amend § 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 also 

amended § 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 proposed to amend § 498.60 to 

include specific references to HHAs and 

proposed § 488.845(h). 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on the 

information collection requirement 

(ICR) related to the proposed changes to 

the home health face-to-face encounter 

requirements in section III.B and the 

proposed change to the therapy 

reassessment timeframes in section 

III.H. These proposed changes are 

associated with ICR approved under 

OMB control number as 0938–1083. 

A. Proposed Changes to the Face-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 37—HOME HEALTH FACE-TO-FACE ENCOUNTER BURDEN ESTIMATE ASSUMPTIONS

# of Medicare-billing HHAs, from CY 2013 claims with matched OASIS assessments ................................................. 11,521 

Hourly rate of an office employee (Executive Secretaries and Executive Administrative Assistants, 43–6014) ............ $20.54 ($15.80 ×; 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 that the face-toface encounter be related to the primary 

reason the patient requires home health 

services and occur no more than 90 days 

prior to the home health start of care 

date or within 30 days after the start of 

the home health care. In addition, as 

part of the certification of eligibly, the 

certifying physician must document the 

date of the encounter and include an 

explanation (narrative) of why the 

clinical findings of such encounter 

support that the patient is homebound, 

as defined in section 1835(a) of the Act, 

and in need of either intermittent 

skilled nursing services or therapy 

services, as defined in § 409.42(c). 

To simplify the face-to-face encounter 

regulations, reduce burden for HHAs 

and 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 


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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 to 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 proposed to eliminate 

the narrative, the certifying physician 

will still be required to document the 

date of the face-to-face encounter as part 

of the certification of eligibility. We 

estimate that it would take no more than 

1 minute for the certifying physician to 

document the date that the face-to-face 

encounter occurred (1⁄60 = 0.0166 

hours). The estimated burden for the 

certifying physician to continue to 

document the date of the face-to-face 

encounter would be 0.0166 hours per 

certification or 51,405 hours total 

(0.0166 hours × 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 × $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 the proposed rule, we estimate 

that burden and costs will be reduced 

for certifying physicians by 206,548 

hours (257,953–51,405) and $23,348,967 

($29,139,759–$5,790,792), respectively 

for CY 2015. 

Comment: A commenter believed that 

the time estimates were under-reported 

for the HHA administrator (15 minutes 

(15⁄60 = 0.25 hours)) to review the 

revised certification form. The 

commenter stated that the administrator 

would have to review the pertinent 

statutory and regulatory references to 

ensure that the certification form is in 

compliance. 

Response: Since all certification 

requirements are remaining the same, 

except for the elimination of the 

narrative, the administrator should 

already be knowledgeable about the 

current statutory and regulatory 

requirements with regard to certifying 

patient eligibility for the home health 

benefit. Therefore, we will maintain our 

original estimate that it will take no 

more than 15 minutes for the HHA 

administrator to review the necessary 

changes to the certification form as a 

result of the elimination of the face-toface encounter narrative. 

2. Proposed Clarification on When 

Documentation of a Face-to-Face 

Encounter Is Required 

To determine when documentation of 

a patient’s face-to-face encounter is 

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

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

proposed to clarify that the face-to-face 

encounter requirement is applicable for 

certifications (not recertifications), 

rather than initial episodes. A 

certification (versus recertification) is 

generally considered to be any time that 

a new SOC OASIS is completed to 

initiate care. We estimate that of the 

6,562,856 episodes in the CY 2012 home 

health Datalink file, 3,096,680 SOC 

assessments were performed on initial 

home health episodes. If this proposal is 

implemented, an additional 830,287 

episodes would require documentation 

of a face-to-face encounter for 

subsequent episodes that were initiated 

with a new SOC OASIS assessment. We 

estimate that it would take no more than 

1 minute for the certifying physician to 

document the date that the face-to-face 

encounter occurred (1⁄60 = 0.0166 

hours). The estimated burden for the 

certifying physician to document the 

date of the face-to-face encounter for 

each certification (any time a new SOC 

OASIS is completed to initiate care) 

would be 0.0166 hours or 13,783 total 

hours (0.0166 hours × 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 38—ESTIMATED ONE-TIME FORM REVISION BURDEN FOR HHAS

OMB# Requirement HHAs Responses Hr. burden Total time 

(hours) Total dollars 

0938–1083 ......................................... § 424.22(a)(1)(v) 11,521 1 0.5 5,761 $245,397 


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TABLE 39—ESTIMATED BURDEN REDUCTION FOR CERTIFYING PHYSICIANS

[No longer drafting a face-to-face encounter narrative] 

OMB# Requirement Certifications Responses Hr. burden Total time 

(hours) Total dollars 

0938–1083 ................................... § 424.22(a)(1)(v) 3,096,680 1 (0.0667) (206,548) ($23,348,967) 

TABLE 40—ESTIMATED BURDEN FOR CERTIFYING PHYSICIANS

[Documenting the date of the face-to-face encounter for additional certifications] 

OMB# Requirement Certifications Responses Hr. burden Total time 

(hours) Total dollars 

0938–1083 ..................................... § 424.22(a)(1)(v) 830,287 1 0.0166 13,783 $1,552,637 

In summary, all of the changes to the 

face-to-face encounter requirements in 

section III.B of this final rule, including 

changes to § 424.22(a)(1)(v), will result 

in an estimated net reduction in burden 

for certifying physicians of 192,765 

hours or $21,796,330 (see Tables 39 and 

40). The changes to the face-to-face 

encounter requirements at 

§ 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 38 above). 

B. Proposed Change to the Therapy 

Reassessment Timeframes 

Currently, § 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. 

To lessen the burden on HHAs of 

counting visits and to reduce the risk of 

non-covered visits so that therapists can 

focus more on providing quality care for 

their patients, we are simplifying 

§ 409.44(c) to require that therapy 

reassessments must be performed at 

least once every 30 calendar days. The 

requirement to perform a therapy 

reassessment at least once every 30 

calendar days would apply to all 

episodes regardless of the number of 

therapy visits provided. All other 

requirements related to therapy 

reassessments would remain 

unchanged. A qualified therapist 

(instead of an assistant), from each 

therapy discipline provided, must 

provide the ordered therapy service and 

functionally reassess the patient using a 

method which would include objective 

measurement. The measurement results 

and corresponding effectiveness of the 

therapy, or lack thereof, must be 

documented in the clinical record. 

In the CY 2011 HH PPS final rule we 

stated that the therapy reassessment 

requirements in § 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 simplifying 

the required reassessment timeframes 

from every 30 days and prior to the 14th 

and 20th visits to every 30 calendar 

days does not place any new 

documentation requirements on HHAs. 

We are revising the currently 

approved PRA package (OMB# 0938– 

1083) to describe these changes to the 

regulatory text. 

C. Submission of PRA-Related 

Comments 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments electronically as specified in 

the ADDRESSES section of this final rule. 

PRA-specific comments must be 

received on/by December 8, 2014. 


tkelley on DSK3SPTVN1PROD with RULES2
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V. Regulatory Impact Analysis 

A. Statement of Need 

Section 1895(b)(1) of the Act requires 

the Secretary to establish a HH PPS for 

all costs of HH services paid under 

Medicare. In addition, section 

1895(b)(3)(A) of the Act requires (1) the 

computation of a standard prospective 

payment amount include all costs for 

home health services covered and paid 

for on a reasonable cost basis and that 

such amounts be initially based on the 

most recent audited cost report data 

available to the Secretary, and (2) the 

standardized prospective payment 

amount be adjusted to account for the 

effects of case-mix and wage levels 

among HHAs. Section 1895(b)(3)(B) of 

the Act addresses the annual update to 

the standard prospective payment 

amounts by the applicable percentage 

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

governs the payment computation. 

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

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

standard prospective payment amount 

to be adjusted for case-mix and 

geographic differences in wage levels. 

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

the establishment of appropriate 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 home health services 

furnished in a geographic area 

compared to the applicable national 

average level. 

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

Secretary the option to make changes to 

the payment amount otherwise paid in 

the case of outliers because of unusual 

variations in the type or amount of 

medically necessary care. Section 

1895(b)(3)(B)(v) of the Act requires 

HHAs to submit data for purposes of 

measuring health care quality, and links 

the quality data submission to the 

annual applicable percentage increase. 

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

requires that home health services 

furnished in a rural area for episodes 

and visits ending on or after April 1, 

2010, and before January 1, 2016, 

receive an increase of 3 percent the 

payment amount otherwise made under 

section 1895 of the Act. 

Section 3131(a) of the Affordable Care 

Act mandates that starting in CY 2014, 

the Secretary must apply an adjustment 

to the national, standardized 60-day 

episode payment rate and other 

amounts applicable under section 

1895(b)(3)(A)(i)(III) of the Act to reflect 

factors such as changes in the number 

of visits in an episode, the mix of 

services in an episode, the level of 

intensity of services in an episode, the 

average cost of providing care per 

episode, and other relevant factors. In 

addition, section 3131(a) of the 

Affordable Care Act mandates that 

rebasing must be phased-in over a 4- 

year period in equal increments, not to 

exceed 3.5 percent of the amount (or 

amounts) as of the date of enactment 

(2010) under section 1895(b)(3)(A)(i)(III) 

of the Act, and be fully implemented in 

CY 2017. 

B. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This final 

rule has been designated as 

economically significant under section 

3(f)(1) of Executive Order 12866, since 

the aggregate transfer impacts in 

calendar year 2015 will exceed the $100 

million threshold. The net transfer 

impacts are estimated to be ¥$60 

million. Furthermore, we estimate a net 

reduction of $21.55 million in calendar 

year 2015 burden costs related to the 

certification requirements for home 

health agencies and associated 

physicians. Lastly, this final rule is a 

major rule under the Congressional 

Review Act and as a result, we have 

prepared a regulatory impact analysis 

(RIA) that, to the best of our ability, 

presents the costs and benefits of the 

rulemaking. In accordance with the 

provisions of Executive Order 12866, 

this regulation was reviewed by the 

Office of Management and Budget. 

The update set forth in this rule 

applies to Medicare payments under HH 

PPS in CY 2015. Accordingly, the 

following analysis describes the impact 

in CY 2015 only. We estimate that the 

net impact of the proposals in this rule 

is approximately $60 million in 

decreased payments to HHAs in CY 

2015. We applied a wage index budget 

neutrality factor and a case-mix weights 

budget neutrality factor to the rates as 

discussed in section III.D.4. of this final 

rule; therefore, the estimated impact of 

the 2015 wage index in section III.D.3. 

of this final rule and the recalibration of 

the case-mix weights for 2015 in section 

III.C. of this final rule is zero. The ¥$60 

million impact reflects the 

distributional effects of the 2.1 percent 

home health payment update percentage 

($390 million increase) and the effects 

of the second year of the four-year 

phase-in of the rebasing adjustments to 

the national, standardized 60-day 

episode payment amount, the national 

per-visit payment rates, and the NRS 

conversion factor for an impact of ¥2.4 

percent ($450 million decrease). The 

$60 million in decreased payments is 

reflected in the last column of the first 

row in Table 41 as a 0.3 percent 

decrease in expenditures when 

comparing estimated CY 2014 payments 

to estimated CY 2015 payments. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of less than $7.5 million to $38.5 

million in any one year. For the 

purposes of the RFA, we consider all 

HHAs small entities as that term is used 

in the RFA. Individuals and states are 

not included in the definition of a small 

entity. The economic impact assessment 

is based on estimated Medicare 

payments (revenues) and HHS’s practice 

in interpreting the RFA is to consider 

effects economically ‘‘significant’’ only 

if greater than 5 percent of providers 

reach a threshold of 3 to 5 percent or 

more of total revenue or total costs. The 

majority of HHAs’ visits are Medicarepaid visits and therefore the majority of 

HHAs’ revenue consists of Medicare 

payments. Based on our analysis for this 

final rule, which incorporates additional 

Medicare home health claims data that 

were not available at the time the CY 

2015 HH PPS proposed rule was 

published, we conclude that the policies 

final in this rule will result in an 

estimated total impact of 3 to 5 percent 

or more on Medicare revenue for greater 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66113 

than 5 percent of HHAs. Therefore, the 

Secretary has determined that this final 

rule will have a significant economic 

impact on a substantial number of small 

entities. Further detailed analysis is 

presented below and in Table 41, by 

HHA classification, type, and location. 

Executive Order 13563 specifies, to 

the extent practicable, agencies should 

assess the costs of cumulative 

regulations. However, given potential 

utilization pattern changes, wage index 

changes, changes to the market basket 

forecasts, and unknowns regarding 

future policy changes, we believe it is 

neither practicable nor appropriate to 

forecast the cumulative impact of the 

rebasing adjustments on Medicare 

payments to HHAs for future years at 

this time. Changes to the Medicare 

program may continue to be made as a 

result of the Affordable Care Act or new 

statutory provisions. Although these 

changes may not be specific to the HH 

PPS, the nature of the Medicare program 

is such that the changes may interact 

and the complexity of the interactions 

would make it difficult to predict 

accurately the full scope of the impact 

upon HHAs for future years beyond CY 

2015. We note that the rebasing 

adjustments to the national, 

standardized 60-day episode payment 

rate and the national per-visit rates are 

capped at the statutory limit of 3.5 

percent of the CY 2010 amounts for each 

year, 2014 through 2017, and the NRS 

rebasing adjustment will be ¥2.82 

percent in each year, 2014 through 2017 

(as described in section II.C. of this final 

rule). 

In addition, section 1102(b) of the Act 

requires us to prepare a RIA if a rule 

may have a significant impact on the 

operations of a substantial number of 

small rural hospitals. This analysis must 

conform to the provisions of section 604 

of RFA. For purposes of section 1102(b) 

of the Act, we define a small rural 

hospital as a hospital that is located 

outside of a metropolitan statistical area 

and has fewer than 100 beds. This final 

rule applies to HHAs. Therefore, the 

Secretary has determined that this rule 

will not have a significant economic 

impact on the operations of small rural 

hospitals. 

C. Detailed Economic Analysis 

This final rule sets forth updates for 

CY 2015 to the HH PPS rates contained 

in the CY 2014 HH PPS final rule (78 

FR 72304 through 72308). The impact 

analysis of this final rule presents the 

estimated expenditure effects of policy 

changes final in this rule. We use the 

latest data and best analysis available, 

but we do not make adjustments for 

future changes in such variables as 

number of visits or case-mix. 

This analysis incorporates the latest 

estimates of growth in service use and 

payments under the Medicare home 

health benefit, primarily using Medicare 

claims data for CY 2013. We note that 

certain events may combine to limit the 

scope or accuracy of our impact 

analysis, because such an analysis is 

future-oriented and, thus, susceptible to 

errors resulting from other changes in 

the impact time period assessed. Some 

examples of such possible events are 

newly-legislated general Medicare 

program funding changes made by the 

Congress, or changes specifically related 

to HHAs. In addition, changes to the 

Medicare program may continue to be 

made as a result of the Affordable Care 

Act or new statutory provisions. 

Although these changes may not be 

specific to the HH PPS, the nature of the 

Medicare program is such that the 

changes may interact and the 

complexity of the interactions could 

make it difficult to predict accurately 

the full scope of the impact upon HHAs. 

Table 41 represents how HHA 

revenues are likely to be affected by the 

policy changes finalized in this rule. For 

this analysis, we used an analytic file of 

CY 2013 home health claims data (as of 

June 30, 2014) for dates of service that 

ended on or before December 31, 2013, 

linked to OASIS assessments. The first 

column of Table 41 classifies HHAs 

according to a number of characteristics 

including provider type, geographic 

region, and urban and rural locations. 

The third column shows the payment 

effects of CY 2015 wage index. The 

fourth column shows the payment 

effects of the CY 2015 case-mix weights. 

The fifth column shows the effects of 

the rebasing adjustments to the national, 

standardized 60-day episode payment 

rate, the national per-visit payment 

rates, and NRS conversion factor. The 

sixth column shows the effects of the 

CY 2015 home health payment update 

percentage (the home health market 

basket update adjusted for multifactor 

productivity as discussed in section 

III.D.1. of this final rule). The last 

column shows the overall payment 

effects of all the policies discussed in 

this final rule. 

As illustrated in Table 41, the 

combined effects of all of the changes 

vary by specific types of providers and 

by location. A substantial amount of the 

variation in the estimated impacts of the 

policies finalized in this rule in 

different areas of the country can be 

attributed to variations in the CY 2015 

wage index used to adjust payments 

under the HH PPS and to the effects of 

the recalibration of the HH PPS casemix weights. For example, the estimated 

impact due to the recalibration of the 

HH PPS case-mix weights for the West 

South Central census region is a 2.2 

percent decrease in payments for CY 

2015. The case-mix weights for third or 

later episodes of care with no or low 

therapy generally decreased as a result 

of the recalibration of the HH PPS casemix weights (see section III.C. of this 

final rule). In the West South Central 

region, approximately one-third of 

episodes are either the first or second 

episode of care and nearly two-thirds of 

episodes are the third or later episode of 

care (analysis of episodes with 0–19 

therapy visits). This differs drastically 

from the rest of the nation where over 

two-thirds of episodes are either the first 

or second episode of care and less than 

one-third of episodes are the third or 

later episode of care (analysis of 

episodes with 0–19 therapy visits). 

Thus, the West South Central census 

region experiences a larger estimated 

reduction in payments due to the 

recalibration of the case-mix weights 

because it has a much larger share of 

episodes that are the third or later 

episode compared to the rest of the 

nation. Instances where the impact, due 

to the rebasing adjustments, is less than 

others can be attributed to differences in 

the incidence of outlier payments and 

LUPA episodes, which are paid using 

the national per-visit payment rates that 

are subject to payment increases due to 

the rebasing adjustments. We note that 

some individual HHAs within the same 

group may experience different impacts 

on payments than others due to the 

distributional impact of the CY 2015 

wage index, the extent to which HHAs 

had episodes in case-mix groups where 

the case-mix weight decreased for CY 

2015 relative to CY 2014, and the degree 

of Medicare utilization. 

For CY 2015, the average impact for 

all HHAs due to the effects of rebasing 

is an estimated 2.4 percent decrease in 

payments. The overall impact for all 

HHAs as a result of this final rule is a 

decrease of approximately 0.3 percent in 

estimated total payments from CY 2014 

to CY 2015. 


tkelley on DSK3SPTVN1PROD with RULES2
66114 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

TABLE 41—ESTIMATED HOME HEALTH AGENCY IMPACTS BY FACILITY TYPE AND AREA OF THE COUNTRY, CY 2015 

Number of 

agencies 

CY 2015 

wage index 1

(percentage) 

CY 2015 

case-mix 

weights 2

(percentage) 

Rebasing 3

(percentage) 

CY 2015 

HH payment 

update 

percentage 4

Impact of 

all CY 2015 

policies 

(percentage) 

All Agencies ............................................. 11,781 0.0 0.0 ¥2.4 2.1 ¥0.3 

Facility Type and Control: 

Free-Standing/Other Vol/NP ............. 1,062 0.3 1.0 ¥2.3 2.1 1.1 

Free-Standing/Other Proprietary ...... 9,194 ¥0.1 ¥0.5 ¥2.4 2.1 ¥0.9 

Free-Standing/Other Government .... 402 0.4 0.5 ¥2.3 2.1 0.7 

Facility-Based Vol/NP ....................... 774 0.2 1.6 ¥2.3 2.1 1.6 

Facility-Based Proprietary ................. 115 ¥0.2 1.3 ¥2.3 2.1 0.9 

Facility-Based Government .............. 234 0.2 1.4 ¥2.4 2.1 1.3 

Subtotal: Freestanding .............. 10,658 0.0 ¥0.2 ¥2.4 2.1 ¥0.5 

Subtotal: Facility-based ............. 1,123 0.2 1.5 ¥2.3 2.1 1.5 

Subtotal: Vol/NP ........................ 1,836 0.3 1.2 ¥2.3 2.1 1.3 

Subtotal: Proprietary .................. 9,309 ¥0.1 ¥0.5 ¥2.4 2.1 ¥0.9 

Subtotal: Government ................ 636 0.3 0.9 ¥2.3 2.1 1.0 

Facility Type and Control: Rural: 

Free-Standing/Other Vol/NP ............. 192 0.1 1.3 ¥2.3 2.1 1.2 

Free-Standing/Other Proprietary ...... 140 0.9 0.6 ¥2.4 2.1 1.2 

Free-Standing/Other Government .... 466 0.2 ¥0.6 ¥2.4 2.1 ¥0.7 

Facility-Based Vol/NP ....................... 251 0.6 1.5 ¥2.5 2.1 1.8 

Facility-Based Proprietary ................. 27 0.1 0.3 ¥2.5 2.1 0.0 

Facility-Based Government .............. 137 0.6 1.3 ¥2.3 2.1 1.7 

Facility Type and Control: Urban: 

Free-Standing/Other Vol/NP ............. 922 0.3 1.0 ¥2.3 2.1 1.1 

Free-Standing/Other Proprietary ...... 8,870 ¥0.1 ¥0.5 ¥2.4 2.1 ¥0.9 

Free-Standing/Other Government .... 164 0.3 0.5 ¥2.4 2.1 0.5 

Facility-Based Vol/NP ....................... 523 0.2 1.6 ¥2.3 2.1 1.6 

Facility-Based Proprietary ................. 88 ¥0.2 1.4 ¥2.3 2.1 1.0 

Facility-Based Government .............. 97 0.0 1.4 ¥2.4 2.1 1.1 

Facility Location: Urban or Rural: 

Rural ................................................. 1,117 0.4 0.4 ¥2.4 2.1 0.5 

Urban ................................................ 10,664 0.0 0.0 ¥2.4 2.1 ¥0.3 

Facility Location: Region of the Country: 

Northeast .......................................... 882 0.4 0.9 ¥2.2 2.1 1.2 

Midwest ............................................. 3,165 0.2 0.8 ¥2.5 2.1 0.6 

South ................................................. 5,722 ¥0.3 ¥0.9 ¥2.4 2.1 ¥1.5 

West .................................................. 1,962 0.5 0.9 ¥2.4 2.1 1.1 

Other ................................................. 50 1.7 1.8 ¥2.4 2.1 3.2 

Facility Location: Region of the Country 

(Census Region): 

New England .................................... 340 0.8 0.9 ¥2.2 2.1 1.6 

Mid Atlantic ....................................... 542 0.1 0.9 ¥2.1 2.1 1.0 

East North Central ............................ 2,415 0.2 0.6 ¥2.5 2.1 0.4 

West North Central ........................... 750 0.1 1.6 ¥2.4 2.1 1.4 

South Atlantic .................................... 2,054 ¥0.1 0.0 ¥2.4 2.1 ¥0.4 

East South Central ........................... 440 ¥0.6 0.0 ¥2.5 2.1 ¥1.0 

West South Central .......................... 3,228 ¥0.5 ¥2.2 ¥2.4 2.1 ¥3.0 

Mountain ........................................... 689 0.4 1.5 ¥2.4 2.1 1.6 

Pacific ............................................... 1,273 0.5 0.6 ¥2.4 2.1 0.8 

Facility Size (Number of 1st Episodes): 

< 100 episodes ................................. 2,924 ¥0.3 ¥0.3 ¥2.4 2.1 ¥0.9 

100 to 249 ......................................... 2,767 ¥0.3 ¥0.6 ¥2.4 2.1 ¥1.2 

250 to 499 ......................................... 2,569 ¥0.2 ¥0.8 ¥2.4 2.1 ¥1.3 

500 to 999 ......................................... 1,878 0.0 ¥0.2 ¥2.4 2.1 ¥0.5 

1,000 or More ................................... 1,643 0.1 0.3 ¥2.4 2.1 0.1 

Source: CY 2013 Medicare claims data for episodes ending on or before December 31, 2013 (as of June 30, 2014) for which we had a linked

OASIS assessment. 1The impact of the CY 2015 home health wage index reflects the transition to new CBSA designations as outlined in section III.D.3 this final 

rule offset by the wage index budget neutrality factor described in section III.D.4 this final rule. 2 The impact of the CY 2015 home health case-mix weights reflects the recalibration of the case-mix weights as outlined in section III.C of this 

final rule offset by the case-mix weight budget neutrality factor described in section III.D.4 of this final rule. 3The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate (¥2.73 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 the case-mix budget neutrality factor and 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 final rule. 4 The CY 2015 home health payment update percentage reflects the home health market basket update of 2.6 percent, reduced by a 0.5 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 final rule. 


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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. 

D. Anticipated Effects 

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 final 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. 

E. Alternatives Considered 

In recalibrating the HH PPS case-mix 

weights for CY 2015, as discussed in 

section III.C. of this final rule, we 

considered adjusting the payment rates 

in section III.D.4 to make the 

recalibration budget neutral only with 

regard 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. 

However, instead of implementing a 

case-mix budget neutrality factor that 

only reflects our estimate of real 

increases in patient severity; we 

finalized the recalibration of the casemix weights in a fully budget-neutral 

manner. We will continue to monitor 

case-mix growth (both real and nominal 

case-mix growth) as more data become 

available. 

With regard to the adoption of the 

revised OMB delineations for purposes 

of calculating the wage index, we will 

implement the new OMB delineations 

as we believe they will 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 new OMB 

delineations beginning in CY 2015. 

However, this would not provide time 

for HHAs to adapt to the new OMB 

delineations. We believe that a 

transition period would help to mitigate 

the potential for resulting short-term 

instability and negative impact on 

certain HHAs, and to provide time for 

HHAs to adjust to their new labor 

market area delineations. In determining 

an appropriate transition methodology, 

consistent with the objectives set forth 

in the FY 2006 SNF PPS final rule (70 

FR 45041), we first considered 

transitioning the wage index to the 

revised OMB delineations over a 

number of years in order minimize the 

impact of the wage index changes in a 

given year. However, the transition must 

be balanced against the need to ensure 

the most accurate payments possible, 

which called for a faster transition to the 

revised OMB delineations. As such, 

utilizing a one-year (rather than a 

multiple year) transition with a blended 

wage index in CY 2015 will strike the 

best balance. Second, we considered 

what type of blend would be 

appropriate for purposes of the 

transition wage index. We are finalizing 

that HHAs will receive a one-year 

blended wage index using 50 percent of 

their CY 2015 wage index based on the 

new OMB delineations and 50 percent 

of their CY 2015 wage index based on 

the FY 2014 OMB delineations. A 50/50 

blend best mitigates the negative 

payment impacts associated with the 

implementation of the new OMB 

delineations. While we considered 

alternatives to the 50/50 blend, this type 

of split balances the increases and 

decreases in wage index values as well 

as provides a readily understandable 

calculation for HHAs. 

Next, we considered whether or not 

the blended wage index should be used 

for all HHAs or for only a subset of 

HHAs, such as those HHAs that would 

experience a decrease in their respective 

wage index values due to 

implementation of the revised OMB 

delineations. As required in section 

1895(b)(3) of the Act, the wage index 

adjustment must be implemented in a 

budget-neutral manner. If we were to 

apply the transition policy only to those 

HHAs that would experience a decrease 

in their respective wage index values 

due to implementation of the revised 

OMB delineations, the wage index 

budget neutrality factor, discussed in 

section III.D.4, would result in reduced 

base rates for all HHAs as compared to 

the budget neutrality factor that results 

from applying the blended wage index 

to all HHAs. 

For the reasons discussed above, we 

believe that finalizing our proposal to 

use a one-year transition with a 50/50 

blended wage index in CY 2015 as this 

policy balances the interests of all HHAs 

and will best achieve our objective of 

providing relief to negatively impacted 

HHAs. 

Section 3131(a) of the Affordable Care 

Act mandates that starting in CY 2014, 

the Secretary must apply an adjustment 

to the national, standardized 60-day 

episode payment rate and other 

amounts applicable under section 

1895(b)(3)(A)(i)(III) of the Act to reflect 

factors such as changes in the number 

of visits in an episode, the mix of 

services in an episode, the level of 

intensity of services in an episode, the 

average cost of providing care per 

episode, and other relevant factors. In 

addition, section 3131(a) of the 

Affordable Care Act mandates that 

rebasing must be phased-in over a 4- 

year period in equal increments, not to 

exceed 3.5 percent of the amount (or 

amounts) as of the date of enactment 

(2010) under section 1895(b)(3)(A)(i)(III) 

of the Act, and be fully implemented in 

CY 2017. Therefore, in the CY 2014 HH 

PPS final rule (78 FR 77256), we 

finalized rebasing adjustments to the 

national, standardized 60-day episode 

payment amount, the national per-visit 

rates and the NRS conversion factor. As 

we noted in the CY 2014 HH PPS final 

rule, because section 3131(a) of the 

Affordable Care Act requires a four year 

phase-in of rebasing, in equal 

increments, to start in CY 2014 and be 

fully implemented in CY 2017, we do 

not have the discretion to delay, change, 

or eliminate the rebasing adjustments 

once we have determined that rebasing 

is necessary (78 FR 72283). 

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

requires that the standard prospective 

payment amounts for CY 2015 be 

increased by a factor equal to the 

applicable home health market basket 

update for those HHAs that submit 

quality data as required by the 

Secretary. For CY 2015, section 3401(e) 

of the Affordable Care Act, requires that, 

in CY 2015 (and in subsequent calendar 

years), the market basket update under 

the HHA prospective payment system, 

as described in section 1895(b)(3)(B) of 

the Act, be annually adjusted by 

changes in economy-wide productivity. 

Beginning in CY 2015, section 

1895(b)(3)(B)(vi)(I) of the Act, as 

amended by section 3401(e) of the 

Affordable Care Act, requires the 

application of the productivity 


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adjustment described in section 

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

HHA PPS for CY 2015 and each 

subsequent CY. The ¥0.5 percentage 

point productivity adjustment to the CY 

2015 home health market basket update 

(2.6 percent) is discussed in the 

preamble of this rule and is not 

discretionary as it is a requirement in 

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

amended by the Affordable Care Act). 

F. Accounting Statement and Table 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars_

a004_a-4), in Table 42, we have 

prepared an accounting statement 

showing the classification of the 

transfers and costs associated with the 

provisions of this final rule. Table 42 

provides our best estimate of the 

decrease in Medicare payments under 

the HH PPS as a result of the changes 

finalized in this rule. Table 42 also 

reflects the estimated change in costs 

and burden for certifying physicians 

and HHAs as a result of the changes to 

the face-to-face encounter requirements 

finalized in section III.B. We estimate a 

net reduction in burden for certifying 

physicians of 192,765 hours or 

$21,796,330 (see section IV of this rule). 

In addition, Table 42 reflects our 

estimate of a one-time burden for HHAs 

to revise the certification form of 5,761 

hours or $245,397 as described in 

section IV. of this rule. 

TABLE 42—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS, FROM THE CYS 2014 TO

2015 * 

Category Transfers 

Annualized monetized transfers ................................................................................................................................ ¥$60 million. 

From Whom to Whom? ............................................................................................................................................. Federal Government to HHAs. 

Category Costs 

Annualized Monetized Net Burden 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 this final rule is a decrease 

in Medicare payments to HHAs of $60 

million for CY 2015. The $60 million 

decrease in estimated payments for CY 

2015 reflects the distributional effects of 

the 2.1 percent CY 2015 home health 

payment update percentage ($390 

million increase) and the second year of 

the 4-year phase-in of the rebasing 

adjustments required by section 3131(a) 

of the Affordable Care Act ($450 million 

decrease). Also, starting in CY 2015, 

certifying physicians are estimated to 

incur a net reduction in burden costs of 

$21,796,330 and HHAs are expected to 

incur a one-time increase in burden 

costs to revise the certification form of 

$245,397 as a result of the elimination 

of the face-to-face encounter narrative 

requirement finalized in section III.B. 

This analysis, together with the 

remainder of this preamble, constitutes 

the Regulatory Flexibility Analysis. 

VI. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a final rule that 

imposes substantial direct requirement 

costs on state and local governments, 

preempts state law, or otherwise has 

Federalism implications. We have 

reviewed this final rule under the 

threshold criteria of Executive Order 

13132, Federalism, and have 

determined that it will not have 

substantial direct effects on the rights, 

roles, and responsibilities of states, local 

or tribal governments. 

List of Subjects 

42 CFR Part 409 

Health facilities, Medicare. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

and Reporting and recordkeeping 

requirements. 

42 CFR Part 484 

Health facilities, Health professions, 

Medicare, and Reporting and 

recordkeeping requirements. 

42 CFR Part 488 

Administrative practice and 

procedure, Health facilities, Medicare, 

and Reporting and recordkeeping 

requirements. 

42 CFR Part 498 

Health facilities, Medicare, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 409—HOSPITAL INSURANCE 

BENEFITS 

■ 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). 

§ 409.44 [Amended] 

■ 2. Section 409.44 is amended by— 

■ a. Removing ‘‘intermediary’s’’ from 

paragraph (a) and adding ‘‘Medicare 

Administrative Contractor’s’’ in its 

place. 

■ b. Adding ‘‘calendar’’ between ‘‘30’’ 

and ‘‘days’’ in paragraph (c)(2)(i)(B). 

■ 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 

‘‘paragraph (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— 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66117 

■ 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 

sections 1814(a)(2)(C) and 1835(a)(2)(A) 

of the Act, as follows in paragraphs 

(a)(1)(i) through (v) of this section. The 

patient’s medical record, as specified in 

paragraph (c) of this section, must 

support the certification of eligibility as 

outlined in paragraph (a)(1)(i) through 

(v) of this section. 

(i) The individual needs or needed 

intermittent skilled nursing care, or 

physical therapy or speech-language 

pathology services as defined in 

§ 409.42(c) of this chapter. If a patient’s 

underlying condition or complication 

requires a registered nurse to ensure that 

essential non-skilled care is achieving 

its purpose, and necessitates a registered 

nurse be involved in the development, 

management, and evaluation of a 

patient’s care plan, the physician will 

include a brief narrative describing the 

clinical justification of this need. If the 

narrative is part of the certification 

form, then the narrative must be located 

immediately prior to the physician’s 

signature. If the narrative exists as an 

addendum to the certification form, in 

addition to the physician’s signature on 

the certification form, the physician 

must sign immediately following the 

narrative in the addendum. 

(ii) Home health services are or were 

required because the individual is or 

was confined to the home, as defined in 

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

except when receiving outpatient 

services. 

(iii) A plan for furnishing the services 

has been established and will be or was 

periodically reviewed by a physician 

who is a doctor of medicine, osteopathy, 

or podiatric medicine, and who is not 

precluded from performing this function 

under paragraph (d) of this section. (A 

doctor of podiatric medicine may 

perform only plan of treatment 

functions that are consistent with the 

functions he or she is authorized to 

perform under State law.) 

(iv) The services will be or were 

furnished while the individual was 

under the care of a physician who is a 

doctor of medicine, osteopathy, or 

podiatric medicine. 

(v) A face-to-face patient encounter, 

which is related to the primary reason 

the patient requires home health 

services, occurred no more than 90 days 

prior to the home health start of care 

date or within 30 days of the start of the 

home health care and was performed by 

a physician or allowed non-physician 

practitioner as defined in paragraph 

(a)(1)(v)(A) of this section. The 

certifying physician must also 

document the date of the encounter as 

part of the certification. 

(A) The face-to-face encounter must 

be performed by one of the following: 

(1) The certifying physician himself or 

herself. 

(2) A physician, with privileges, who 

cared for the patient in an acute or 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] 

(2) [Reserved] 

(b) Recertification—(1) Timing and 

signature of recertification. 

Recertification is required at least every 

60 days when there is a need for 

continuous home health care after an 

initial 60-day episode. Recertification 

should occur at the time the plan of care 

is reviewed, and must be signed and 

dated by the physician who reviews the 

plan of care. Recertification is required 

at least every 60 days unless there is a— 

(i) Beneficiary elected transfer; or 

(ii) Discharge with goals met and/or 

no expectation of a return to home 

health care. 

(2) Content and basis of 

recertification. The recertification 

statement must indicate the continuing 

need for services and estimate how 

much longer the services will be 

required. Need for occupational therapy 

may be the basis for continuing services 

that were initiated because the 

individual needed skilled nursing care 

or physical therapy or speech therapy. 

If a patient’s underlying condition or 

complication requires a registered nurse 

to ensure that essential non-skilled care 

is achieving its purpose, and 

necessitates a registered nurse be 

involved in the development, 

management, and evaluation of a 

patient’s care plan, the physician will 

include a brief narrative describing the 

clinical justification of this need. If the 

narrative is part of the recertification 

form, then the narrative must be located 

immediately prior to the physician’s 

signature. If the narrative exists as an 

addendum to the recertification form, in 

addition to the physician’s signature on 

the recertification form, the physician 

must sign immediately following the 

narrative in the addendum. 

(c) Determining patient eligibility for 

Medicare home health services. 

Documentation in the certifying 

physician’s medical records and/or the 

acute/post-acute care facility’s medical 

records (if the patient was directly 

admitted to home health) shall be used 

as the basis for certification of home 

health eligibility. This documentation 

shall be provided upon request to the 

home health agency, review entities, 

and/or CMS. Criteria for patient 

eligibility are described in paragraphs 

(a)(1) and (b) of this section. If the 

documentation used as the basis for the 

certification of eligibility is not 

sufficient to demonstrate that the 

patient is or was eligible to receive 

services under the Medicare home 

health benefit, payment will not be 

rendered for home health services 

provided. 

* * * * * 


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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) * * * 

(1) 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. 

* * * * * 

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 (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 (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: October 22, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: October 28, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–26057 Filed 10–30–14; 4:15 pm] 

BILLING CODE 4120–01–P 


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