Home Health & Hospice Week

Just how much the feds will dock you for perceived upcoding may depend on the health reform battle.

You’ll be getting 2.75 percent less in Medicare reimbursement next year thanks to socalled case mix creep, and that cut may only get steeper in years to come.

The Centers for Medicare & Medicaid

Services set the home health agency episodic payment rate at $2,312.94 for 2010 in its prospective payment system rate update notice published in the Nov. 10 Federal Register (see Eli’s HCW, Vol. XVIII, No. 39, p. 298). That’s a net 1.75 percent increase over this year’s rate, because changes to outlier payments and an inflation increase offset the cut for case mix creep.

CMS has made similar case mix creep cuts the last two years and already has set a 2.71 percent cut for 2011. But don’t count on the 2011 cut being the last one, or even staying at that level.

“Given the continued growth in nominal case-mix, we expect to revise upward the 2.71 percent reduction … in next year’s rule,” CMS says in the rate update.

But the industry isn’t taking the cuts lying down. “Our disagreements with CMS over its case mix creep adjustments continue,” notes the National Association for Home Care & Hospice’s Val Halamandaris. “We have no doubt that agencies are seeing sicker patients and more patients with needs for therapy.”

As shown by patient outcomes, agencies “are doing the right things for their patients,” Halamandaris says. “And Medicare has seen the benefits through controlled home health spending and reduced hospital readmissions. This is not the result of abusive coding creep.”

But in the final rule, CMS fends off numerous commenters’ arguments against the adjustment. A common protest was that clinicians’ OASIS coding skills have merely gotten more accurate.

Rationale: “Improved OASIS implementation, staff education, and improvements in documentation are indications of coding change, not an actual change in patient case-mix,” CMS maintains.

“While they may represent a much-desired improvement in the accuracy of data used to manage the care of patients, they do not represent cost increases related to the health status of patients.”

Bigger Case Mix Creep Cuts Loom

CMS actually is maintaining the 2.75 percent 2010 cut even though data show that the case mix increase was higher than the agency originally calculated. Case mix continues to “creep” upward, CMS finds.

It’s surprising to see a continued increase in perceived upcoding, notes financial expert Mark Sharp with BKD in Springfield, Mo. “You’d like to think that the creep would start to level off after an initial significant jump following the implementation of a new payment system,” Sharp says.

More ahead: In fact, CMS may assess even steeper case mix creep cuts when it starts examining data dating after the 2007 PPS refinements rule. That’s because you’d expect to see coding changes sparked by the reimbursement structure change. The influx of new providers in the past few years may also contribute to higher creep determinations, Sharp predicts.

Whether CMS actually imposes higher case mix creep cuts in the future could depend heavily on the health care reform legislation working its way through Congress (see related story, p. 308), notes financial expert Pat Laff with Laff Associates in Hilton Head Island, S.C. Some legislation under consideration would preempt CMS’s cuts, but impose even steeper ones, Laff warns.

Don’t Consider These Rates Set In Stone

Watch out: Agencies should realize that the pending reform legislation could also affect rates in 2010, with significant cuts proposed for next year, Laff warns.

Planning for 2011 is difficult because “it seems light years away,” Laff laments. Agencies are having enough trouble planning for next year with legislative changes hanging over their heads.

“To say that this situation is fluid is an understatement,” Laff tells Eli. “There is a lot in play right now,” Sharp agrees. Most likely, the “final form of health care reform will determine what ultimately happens with 2011 home health payment rates.”

Note: For a free PDF copy of the 2010 PPS rate notice final rule, e-mail editor Rebecca Johnson with “2010 PPS Rule” in the subject line. Or download the rule online at http://edocket.access.gpo.gov/2009/pdf/E9-26503.pdf.

For more information on the PPS rate final rule and how to prepare for the changes, sign up for Eli’s Dec. 14 audioconference, “Get Ready for HHA PPS for FY 2010,” presented by BKD’s M. Aaron Little. More information is at com/conference"Home-Health-PPS-2010.