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Final Change of Ownership (CHOW) Rules for Home Health Agencies 

Source: www.palmettogba.com

Updated: 01/05/11

Provider Types Affected

Home Health Agencies (HHAs) submitting claims to Fiscal Intermediaries (FIs), Regional Home Health Intermediaries (RHHIs), and A/B Medicare Administrative Contractors (A/B MACs) for Medicare beneficiaries are affected.

 

Provider Action Needed

This article informs you that Change Request (CR) 7253 directs Medicare contractors to update the 60-day national episode rates, national per-visit rates, Low Utilization Payment Adjustment (LUPA) add-on amount, and Non-Routine Supplies (NRS) payment amounts under the HH PPS for CY 2011. The attached Recurring Update Notification applies to Chapter 10, Section 10.1.6 of the Medicare Claims Processing manual (Pub. 100-04). Please be sure to inform your staff of the information in the background and policy sections below.

 

Background

Section 1895 (b)(3)(B)(v) of the Social Security Act provides that Medicare payments be updated by the applicable market basket percentage increase for CY 2011. Section 3401(e) of The Affordable Care Act amended Section 1895(b)(3)(B) of The Social Security Act by adding a new clause (vi) which states, “After determining the HH market basket percentage increase … the Secretary shall reduce such percentage … for each of 2011, 2012, and 2013, by 1 percentage point. The application of this clause may result in the HH market basket percentage increase under clause (iii) being less than 0.0 for a year, and may result in payment rates under the system under this subsection for a year being less than such payment rates for the preceding year.”  The HH market basket percentage increase for CY 2011 is 2.1 percent. However, after reducing it by 1 percentage point as required by the Affordable Care Act, the HH market basket update for CY 2011 becomes 1.1 percent. In addition, Section 1895 (b)(3)(B)(v) of the Social Security Act requires that HHAs report such quality data as determined by the Secretary of Health and Human Services. HHAs that do not report the required quality data will receive a 2 percent reduction to the HH market basket percentage increase of -0.9 percent for CY 2011. 

 

Section 3131(b)(1) of The Affordable Care Act amended Section 1895(b)(3)(C) of the Social Security Act, “Adjustment for outliers,” to state, “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 Social Security Act by re-designating the existing language as Section 1895(b)(5)(A) of the Social Security Act, and revising it to state that the Secretary, “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 with respect to 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, the Centers for Medicare & Medicaid Services (CMS) HH PPS outlier policy must reduce payment rates by 5 percent, and target up to 2.5 percent of total estimated HH PPS payments to be paid as outlier payments. 

 

For CY 2010, CMS implemented a 1-year agency-level cap by limiting HH outlier payments to be no more than 10 percent of an agency’s total payments. Section 3131(b)(2)(C) of the Affordable Care Act makes this 10 percent agency-level cap a statutory requirement, by adding a paragraph, (B) “Program Specific Outlier Cap”, to Section 1895(b)(5) of the Social Security Act. The new paragraph states, “The estimated total amount of additional payments or payment adjustments made … with respect to a HHA for a year (beginning with 2011) may not exceed an amount equal to 10 percent of the estimated total amount of payments made under this section (without regard to this paragraph) with respect to the HHA for the year”. Therefore, the 10 percent agency-level outlier cap will continue in CY 2011 and subsequent calendar years. 

 

In addition, Section 3131(c) of the Affordable Care Act amended Section 421(a) of the Medicare Modernization Act (MMA), which was amended by Section 5201(b) of the Deficit Reduction Act of 2005 (DRA). The amended Section 421(a) of the MMA provides an increase of 3 percent of the payment amount otherwise made under Section 1895 of the Social Security Act for HH services furnished in a rural area (as defined in Section 1886(d)(2)(D) of the Social Security Act), with respect to episodes and visits ending on or after April 1, 2010 and before January 1, 2016. The statute 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 Social Security 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.

 

Specifics of the HH PPS update for 2011 are as follows:

1)      Market Basket Update

The HH market basket percentage increase for CY 2011 is 2.1 percent. After reducing it by 1 percentage point as required by the Affordable Care Act, the HH market basket update for CY 2011 becomes 1.1 percent. HHAs that do not report the required quality data will receive a 2 percent reduction to the HH market basket update of 1.1 percent resulting in a HH market basket update of -0.9 percent for CY 2011.

 

2)      Outlier payments

Section 3131(b) of the Affordable Care Act requires the following outlier policy:  (1) reduce the standard payment amount (or amounts) by 5 percent; (2) target to pay no more than 2.5 percent of estimated total payments for outliers; and (3) apply a 10 percent agency-level cap on outlier payments as a percentage of total HH PPS payments. 

 

CMS will first return the 2.5 percent held for the target CY 2010 outlier pool to the CY 2011 payment rates. CMS will then reduce these rates by 5 percent as required by Section 1895(b)(3)(C) of the Social Security Act, as amended by Section 3131(b)(1) of the Affordable Care Act. For CY 2011 and subsequent calendar years, the total amount of the additional payments or payment adjustments made may not exceed 2.5 percent of the total payments projected or estimated to be made based on the PPS in that year as required by Section 1895(b)(5)(A) of the Social Security Act, as amended by Section 3131(b)(2)(B) of the Affordable Care Act. Per Section 3131(b)(2)(C) of The Affordable Care Act, outlier payments to HHAs will be capped at 10 percent of that HHA’s total HH PPS payments.

 

The fixed dollar loss ratio of 0.67 and the loss-sharing ratio of 0.80, used to calculate outlier payments for CY 2010, remain unchanged for CY 2011.

 

3) Rural Add-on

As stipulated in Section 3131(c) of The Affordable Care Act, the 3 percent rural add-on is applied to the national standardized 60-day episode rate, national per-visit rates, low utilization payment adjustment (LUPA) add-on payment, and non-routine medical supply conversion factor when HH services are provided in rural (non-CBSA) areas.

 

4) Payment Calculations & Rate Tables

In order to calculate the CY 2011 national standardized 60-day episode payment rate, CMS will first increase the CY 2010 national standardized 60-day episode payment rate to return the outlier funds that paid for the 2.5 percent target for outlier payments in CY 2010. CMS will then reduce that adjusted payment amount by 5 percent, to account for the new outlier policy as established per Section 3131(b)(1) of the Affordable Care Act. Next, CMS updates the payment amount by the CY 2011 HH market basket update of 1.1 percent (the 2.1 percent HH market basket update percentage minus 1 percentage point, per Section 3401(e)(2) of the Affordable Care Act).

 

CMS’ updated analysis of the change in case-mix that is not due to an underlying change in patient health status reveals additional increase in nominal change in case-mix. Therefore, CMS next reduced rates by 3.79 percent resulting in an updated CY 2011 national standardized 60-day episode payment rate. The updated CY 2011 national standardized 60-day episode payment rate for an HHA that submits the required quality data is shown in Table 1. These payments are further adjusted by the individual episode’s case-mix weight and wage index.

 

Table 1

For HHAs that DO Submit Quality Data -- National 60-Day Episode Amounts Updated by the HH Market Basket Update for CY 2011 Before Case-Mix Adjustment, Wage Index Adjustment Based on the Site of Service for the Beneficiary

 

Total CY 2010 National Standardized 60-Day Episode Payment Rate

Adjusted to return the outlier funds that paid for the 2.5 % target for outlier payments in CY 2010

Reduced by 5% due to the outlier adjustment mandated by The Affordable Care Act

Multiply by the HH market basket update of 1.1%

Reduce by 3.79% for nominal change in case-mix

 

CY 2011 National Standardized 60-Day Episode Payment Rate

 

$2,312.94

÷  0.975

X 0.95

X 1.011

X 0.9621

$2,192.07

 

The updated CY 2011 national standardized 60-day episode payment rate for an HHA that does not submit the required quality data is subject to a HH market basket update of 1.1 percent reduced by 2 percentage points as shown in Table 2. These payments are further adjusted by the individual episode’s case-mix weight and wage index.

 

Table 2

For HHAs that DO NOT Submit Quality Data -- National 60-Day Episode Payment Amount Updated by the HH Market Basket Update (minus 2 percentage points) for CY 2011 Before Case-Mix Adjustment and Wage Adjustment Based on the Site of Service for the Beneficiary

 

CY 2010 National Standardized 60-Day Episode Payment Rate 

Adjusted to return the outlier funds that paid for the 2.5 percent target for outlier payments in CY 2010

Reduced by 5 percent due to the outlier adjustment mandated by The Affordable Care Act

Multiply by the HH market basket update of 1.1 percent minus 2 percentage points (-0.9 percent)

Reduce by 3.79 percent for nominal change in case-mix

 

CY 2011 National Standardized 60-Day Episode Payment Rate

 

$2,312.94

÷ 0.975

X 0.95

X 0.991

X 0.9621

$2,148.71

 

In calculating the CY 2011 national per-visit rates used to calculate payments for LUPA episodes and to compute the imputed costs in outlier calculations, the CY 2010 national per-visit rates for each discipline are first adjusted to return the outlier funds that paid for the 2.5 percent target for outlier payments in CY 2010. These national per-visit rates are then reduced by 5 percent as mandated by Section 1895(b)(3)(C) of the Social Security Act, as amended by Section 3131(b)(1) of the Affordable Care Act. Finally, the national per-visit rates are updated by the CY 2011 HH market basket update of 1.1 percent for HHAs that submit quality data, and by 1.1 percent minus 2 percentage points (-0.9 percent) for HHAs that do not submit quality data. 

 

The CY 2011 national per-visit rates per discipline are shown in Table 3.  The six HH disciplines are as follows:

  • HH Aide (HH Aide);

  • Medical Social Services (MSS);

  • Occupational Therapy (OT);

  • Physical Therapy (PT); 

  • Skilled Nursing (SN); and 

  • Speech Language Pathology Therapy (SLP).  

 

Table 3

National Per-Visit Amounts for LUPAs (Not including the LUPA Add-On Amount for a Beneficiary’s Only Episode or the Initial Episode in a Sequence of Adjacent Episodes) and Outlier Calculations Updated by the CY 2011 HH Market Basket Update, Before Wage Index Adjustment  

 

 

 

 

 

For HHAs that DO submit quality data

For HHAs that DO NOT submit quality data

HH Discipline Type

CY 2010 Per-Visit Amounts Per 60-Day Episode

Adjusted to return the outlier funds that paid for the 2.5 percent target for outlier payments in CY 2010

Reduced by 5 percent due to the outlier adjustment mandated by The Affordable Care Act

 

Multiply by the HH market basket update of 1.1 percent

 

CY 2011 per-visit payment amount for HHAs that DO submit the required quality data

 

Multiply by the HH market basket update of 1.1 percent minus 2 percentage points

(-0.9 percent)

 

CY 2011

per-visit payment amount  for HHAs that DO NOT submit the required quality data

 

HH Aide

$51.18 

÷ 0.975

X 0.95

X 1.011

$50.42

X 0.991

$49.42

MSS

$181.16 

÷ 0.975

X 0.95

X 1.011

$178.46

X 0.991

$174.93

OT

$124.40

÷ 0.975

X 0.95

X 1.011

$122.54

X 0.991

$120.12

PT

$123.57

÷ 0.975

X 0.95

X 1.011

$121.73

X 0.991

$119.32

SN

$113.01 

÷ 0.975

X 0.95

X 1.011

$111.32

X 0.991

$109.12

SLP

$134.27 

÷ 0.975

X 0.95

X 1.011

$132.27

X 0.991

$129.65

 
 

LUPA episodes that occur as initial episodes in a sequence of adjacent episodes or as the only episode receive an additional payment.  The per-visit rates noted above are before that additional payment is added to the LUPA amount. The CY 2011 LUPA add-on payment is updated in Table 4.

 

Table 4

CY 2011 LUPA Add-On Amounts

 

 

 

For HHAs that DO submit quality data

For HHAs that DO NOT submit

quality data

CY 2010 LUPA Add-On Amount

Adjusted to return the outlier funds that  paid for the original 5  percent target for outliers

Adjusted to return the outlier funds that paid for the 2.5 percent target for outlier payments in CY 2010

 

Reduced by 5 percent due to the outlier adjustment mandated by The Affordable Care Act

 

Multiply by the HH market basket update of 1.1 percent

 

CY 2011 LUPA Add-On Amount for HHAs that DO submit required quality data

 Multiply by the HH market basket update of 1.1 percent minus 2 percentage points 

(-0.9 percent)

CY 2011 LUPA Add-On Amount for HHAs that DO NOT submit required quality data

$94.72

÷ 0.975

X 0.95

X 1.011

$93.31

X 0.991

$91.46

 

Payments for NRS are computed by multiplying the relative weight for a particular NRS severity level by the NRS conversion factor. The NRS conversion factor for CY 2011 payments is updated in Table 5a.

 

Table 5a

CY 2011 NRS Conversion Factor for HHAs that DO Submit Quality Data

CY 2010 NRS Conversion Factor

 

Adjusted to return the outlier funds that paid for the 2.5 % target for outlier payments in CY 2010

Reduced by 5% due to the outlier adjustment mandated by The Affordable Care Act

 

Multiply by the HH Market Basket Update (1.1%)

 

CY 2011 NRS Conversion Factor

 

53.34

÷  0.975

X 0.95

X 1.011

$52.54

 
 

 

 

 

 

 

 

The payment amounts for the various NRS severity levels based on the updated conversion factor are shown in Table 5b.

 

Table 5b

Relative Weights for the 6-Severity NRS System for HHAs that DO Submit Quality Data

Severity Level

 

Points (Scoring)

 

Relative Weight

 

NRS Payment Amount

 

1

0

0.2698

$14.18

2

1 to 14

0.9742

$51.18

3

15 to 27

2.6712

$140.34 

4

28 to 48

3.9686

$208.51 

5

49 to 98

6.1198

$321.53 

6

99+

10.5254

$553.00 

 

 

 

 

 

 

 

 

 

 

The NRS conversion factor for HHAs that do not submit quality data is shown in Table 6a.

Table 6a

CY 2011 NRS Conversion Factor for HHAs that DO NOT Submit Quality Data

CY 2010 NRS Conversion Factor

 

Adjusted to return the outlier funds that paid for the 2.5 % target for outlier payments in CY 2010

Reduced by 5% due to the outlier adjustment mandated by The Affordable Care Act

 

Multiply by the HH Market Basket Update (1.1%) minus 2 percentage points

(-0.9 percent)  

CY 2011 NRS Conversion Factor

 

53.34

÷  0.975

X 0.95

X 0.991

$51.50

 

The payment amounts for the various NRS severity levels based on the updated conversion factor are shown in Table 6b.

 

Table 6b

Relative Weights for the 6-Severity NRS System for HHAs that DO NOT Submit Quality Data

Severity Level

Points (Scoring)

Relative Weight

NRS Payment Amount

1

0

0.2698

$13.89

2

1 to 14

0.9742

$50.17

3

15 to 27

2.6712

$137.57 

4

28 to 48

3.9686

$204.38 

5

49 to 98

6.1198

$315.17 

6

99+

10.5254

$542.06 

 

 

 

 

 

 

 

 

 

The 3 percent rural add-on, per Section 3131(c) of the Affordable Care Act, is applied to the national standardized 60-day episode rate, national per-visit rates, LUPA add-on payment, and NRS conversion factor when HH services are provided in rural (non-CBSA) areas. Refer to Tables 7 thru 10b for these payment rates.

 

Table 7

CY 2011 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area Before Case-Mix and Wage Index Adjustment

For HHAs that DO Submit Quality Data

 

For HHAs that DO NOT Submit Quality Data

CY 2011 National Standardized 60-Day Episode Payment Rate

 

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 National Standardized 60-Day Episode Payment Rate

CY 2011 National Standardized 60-Day Episode Payment Rate

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 National Standardized 60-Day Episode Payment Rate

$2,192.07

X 1.03

$2,257.83

$2,148.71

X 1.03

$2,213.17

 
 

 

 

 

 

 

 

Table 8

Per-Visit Amounts for Services Provided in a Rural Area, Before Wage Index Adjustment 

 

For HHAs that DO submit quality data

For HHAs that DO NOT submit quality data

HH Discipline Type

CY 2011 per-visit rate  For HHAs that DO submit quality data

Multiply by the 3 Percent Rural Add-On

Total CY 2011 per-visit rate for Rural Area

CY 2011 per-visit rate  For HHAs that DO NOT submit quality data    

Multiply by the 3 Percent Rural Add-On

Total CY 2011 per-visit rate for Rural Areas

HH Aide

$50.42

X 1.03

$51.93

$49.42

X 1.03

$50.90

MSS

$178.46

X 1.03

$183.81

$174.93

X 1.03

$180.18

OT

$122.54

X 1.03

$126.22

$120.12

X 1.03

$123.72

PT

$121.73

X 1.03

$125.38

$119.32

X 1.03

$122.90

SN

$111.32

X 1.03

$114.66

$109.12

X 1.03

$112.39

SLP

$132.27

X 1.03

$136.24

$129.65

X 1.03

$133.54

  

Table 9

Total CY 2011 LUPA Add-On Amounts for Services Provided in Rural Areas

For HHAs that DO submit quality data

For HHAs that DO NOT submit quality data

CY 2011 LUPA Add-On Amount For HHAs that DO submit quality data

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 LUPA Add-On Amount for Rural Areas

 

CY 2011 LUPA Add-On Amount For HHAs that DO NOT submit quality data

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 LUPA Add-On Amount for Rural Areas

$93.31

X 1.03

$96.11

$91.46

X 1.03

$94.20

 

 

 

 

 

 

 

 

Table 10a

Total CY 2011 Conversion Factor for Services Provided in Rural Areas

For HHAs that DO submit  quality data  

For HHAs that DO NOT submit 

quality data

CY 2011 Conversion Factor For HHAs that DO submit quality data

 

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 Conversion Factor for Rural Areas

 

CY 2011 Conversion Factor For HHAs that DO NOT submit quality data

Multiply by the 3 Percent Rural Add-On

 

Total CY 2011 Conversion Factor for Rural Areas

 

$52.54

X 1.03

$54.12

$51.50

X 1.03

$53.05

 

 

 

 

 

 

 

 

 

 

Table 10b

Relative Weights for the 6-Severity NRS System for Services Provided in Rural Areas

For HHAs that DO submit quality data (NRS Conversion Factor=$54.12)

For HHAs that DO NOT submit quality data (NRS Conversion Factor=$53.05)

Severity Level

Points (Scoring)

Relative Weight

Total NRS Payment Amount for Rural Areas

Relative Weight

Total NRS Payment Amount for Rural Areas

1

0

0.2698

$14.60

0.2698

$14.31

2

1 to 14

0.9742

$52.72

0.9742

$51.68

3

15 to 27

2.6712

$144.57

2.6712

$141.71

4

28 to 48

3.9686

$214.78

3.9686

$210.53

5

49 to 98

6.1198

$331.20

6.1198

$324.66

6

99+

10.5254

$569.63

10.5254

$558.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Information

The official instruction, CR7253 issued to your FI, RHHI, or A/B MAC regarding this change may be viewed at http://www.cms.gov/Transmittals/downloads/R2116CP.pdf on the CMS website. 

If you have any questions, please contact the Palmetto GBA Provider Contact Center at their toll-free number, (877) 567-9249 (South Carolina Part A) or (866) 801-5301 (Regional Home Health).

 

 

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