Home Health & Hospice Week

Asurprising policy shift about HHA outliers is meeting with approval from the industry.

The Centers for Medicare & Medicaid Services began seeing a rapid increase in outlier payments for high-visit patients in the last few years,it says in the proposed rule for the 2010 prospective payment system update.

"We noticed statistical anomalies in outlier payments in terms of both high outlier dollars and as a percentage of total HH PPS payments, in areas such as Miami-Dade Florida," CMS says in the rule published in the Aug. 6 Federal Register. "Outlier payments to providers far exceed the national average and the 5 percent target for outlier payments" in these areas, CMS notes. Other outlier hot spots are in Texas and California, the agency notes.

Background: CMS started out with a fixed dollar loss (FDL) ratio of 1.13 when PPS began in 2000, when it aimed to have outliers meet 5 percent  of overall home health agency payments. The FDL ratio says how much money an agency will lose before outlier payments kick in. Over time, CMS gradually lowered the FDL ratio to 0.65 by 2006. Then it ratcheted the FDL back up to 0.89 by 2008 in response to the increasing outlier utilization.

To help fight the problem of outlier abuse, CMS wants to scale down its outlier target to 2.5 percent of overall HHA payments, it says in the proposed rule. That frees up the other 2.5 percent to go back into the PPS pisodic base payment (see story, p. 218).

To achieve the 2.5 percent figure, CMS is proposing a 10 percent cap on outlier payments per agency, says the notice. "In our analysis of 2007 data, after implementing the 10 percent cap, outlier dollars accounted for approximately 2.1 percent of total HH PPS payments," the agency explains. CMS also wants to put the FDL ratio back down to 0.67 for 2010.

Near miss: CMS considered eliminating outlier payments altogether. "However, we are concerned that eliminating outlier payments to HHAs could result in denying added protection to HHAs that historically treat sicker, more costly patients," CMS notes in the rule.

But complete elimination of outliers isn't off the table altogether. "If we are unable to see measurable improvements with respect to suspected fraudulent billing practices as they relate to HHA outlier payments, CMS may consider eliminating the outlier policy entirely in future rulemaking," the agency warns.

How it would work: "The claims processing system would maintain a running tally of [year to date] total HH PPS payments and YTD actual outlier payments," CMS explains in the proposal. "The claims processing system would ensure that each lier payments for that calendar year could never exceed 10 percent of YTD total HH PPS payments for that provider for that calendar year."

The outlier change is so far getting a thumbs up. "Few HHAs would be negatively impacted with the proposal as the vast majority of providers have far lower than 10 percent of revenues from outlier episodes," notes the National Association for Home Care & Hospice. NAHC has been recommending a similar measure to Congress. "The proposal is a good idea," says Tom Boyd with Rohnert Park, Calif.-based Boyd & Nicholas. "Rarely does a HHA ... get to 10 percent outlier payments."

It seems CMS has actually listened to industry feedback on this issue, Boyd tells Eli.