Nursing Homes Get Pay Boost, But Home Health Care Agencies Take Cut in New CMS Proposals

Home health services will get $900 million less, nursing homes $542 million more

The Centers for Medicare & Medicaid Services (CMS) has announced pay changes for 2011 that will represent a 4.75 percent decrease for home health agencies (HHAs), but a 1.7 percent increase for nursing homes. CMS says the HHAs changes will promote efficiency in payments, implement provisions of the Affordable Care Act (ACA), and enhance program integrity. For nursing homes, it reflects changes in the prices of goods and services used to furnish covered care.

Home Health Agencies Get $900 Million Less Than 2010

The change for HHAs in calendar year 2011 will be a decrease of $900 million compared to payments they received in CY 2010.

It includes the combined effects of a market basket update, a wage index update, reductions to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are unrelated to underlying changes in patients’ health status, and other provisions mandated by the Affordable Care Act (ACA) of 2010.

The ACA mandates that CMS apply a 1 percentage point reduction to the CY 2011 home health market basket amount, which equates to a proposed 1.4 percent update for HHAs in CY 2011. CMS also proposes to further reduce HH PPS rates in CY 2011 to account for additional growth in aggregate case-mix that is unrelated to changes in patients’ health status.

Based on updated data analysis, instead of the planned 2.71 percent reduction for CY 2011, CMS proposes to reduce HH PPS rates by 3.79 percent in CY 2011 and an additional 3.79 percent in CY 2012.

The ACA also changes the existing home health outlier policy through a 5 percent reduction to HH PPS rates, with total outlier payments not to exceed 2.5 percent of the total payments estimated for a given year. HHAs are also permanently subject to a 10 percent agency-level cap on outlier payments.

“The new HH PPS provisions will help ensure more accurate payments under Medicare and reflect prudent financial stewardship of the Medicare Trust Fund,” said Jonathan Blum, director of the Center for Medicare and deputy administrator for CMS.

Other Changes for HHAs

The proposed rule also offers an approach to implement an ACA provision, which mandates that, prior to certifying a patient’s eligibility for the Medicare home health benefit, the physician must document that the physician or a non-physician practitioner has had a face-to-face encounter with the patient. “Patient care and access are ultimately what CMS is looking to protect, while working aggressively to prevent fraud. The proposed rule establishes timeframes for these encounters and documentation requirements associated with the provision,” Blum said.

In CY 2010, CMS finalized a policy, which requires HHAs that change ownership within three years of initial enrollment to obtain a new State survey or accreditation. CMS now proposes exceptions to the 36-month provision for certain types of ownership transactions. CMS also proposes other changes to the 36-month rule and provides further clarification on its capitalization provisions.

In addition, CMS proposes to clarify policies regarding the coverage of therapy services in the home health setting. Further, CMS provides clarification in this proposed rule regarding the quality reporting requirements for the CY 2012 HH PPS rate update, as it relates to the Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey.

Finally, the rule proposes an approach to implement an ACA hospice provision, which requires a hospice physician or nurse practitioner to see a patient prior to recertifying the patient’s eligibility for hospice services.

Background on HHAs

To qualify for the Medicare home health benefit, a Medicare beneficiary must be under the care of a physician, have an intermittent need for skilled nursing care, or need physical or speech therapy, or continue to need occupational therapy. The beneficiary must be homebound and receive home health services from a Medicare approved home health agency.

Medicare pays HHAs through a system of prospective payments that pays at higher rates to care for those beneficiaries with greater needs. Payment rates are based on relevant data from patient assessments conducted by clinicians as currently required for all Medicare-participating HHAs.

Home health payment rates are updated annually by the home health market basket percentage increase. CMS uses the home health market basket index, which measures (and tracks) inflation in the prices of an appropriate mix of goods and services included in home health services.

Section 5201(c) of the Deficit Reduction Act (DRA) of 2005 provides for an adjustment to the home health market basket percentage update for CY 2007 and subsequent years depending on HHAs submission of quality data. HHAs that submit the required quality data would receive payments based on the home health market basket update of 1.4 percent for CY 2011. If an HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2 percentage points to -0.6 percent for CY 2011.

The proposed rule will be published on July 23, 2010 at the Federal Register. The rule can be located at: http://www.ofr.gov/OFRUpload/OFRData/2010-17753_PI.pdf

CMS Says Skilled Nursing Facilities to Get Nice Boost

The Centers for Medicare & Medicaid Services (CMS) today announced nursing home payment rates for fiscal year 2011 will increase 1.7 percent. This

The 1.7% pay raise will result in an estimated $542 million increase in Medicare payments to nursing homes across the country during FY 2011.

CMS says it updates the payment rates annually, using a market basket index reflecting changes in the prices of goods and services used to furnish covered care in nursing homes.

In addition, CMS makes a forecast error adjustment whenever the difference between the forecasted and actual change in the market basket exceeds a 0.5 percentage point threshold for the most recently available fiscal year for which there is final data. In initially establishing the forecast error adjustment, CMS noted that it would reflect both upward and downward adjustments, as appropriate.

For FY 2009 (the most recently available fiscal year for which there is final data), the estimated increase in the market basket index was 3.4 percentage points, while the actual increase was 2.8 percentage points. This resulted in the actual increase being 0.6 percentage point lower than the estimated increase.

Accordingly, as the difference between the estimated and actual amount of change exceeds the 0.5 percentage point threshold, the payment rates for FY 2011 include a negative 0.6 percentage point forecast error adjustment. This adjustment, when combined with the FY 2011 market basket increase factor of 2.3 percent, yields a net update of positive 1.7 percent for FY 2011.

“CMS is committed to ensuring that beneficiaries in skilled nursing facilities continue to receive high quality care while paying those facilities appropriately for that care,” said Jonathan Blum CMS deputy administrator and director of the Center for Medicare. “The payment rates for the coming year that we are announcing today reflect that goal.”

In the notice, CMS discusses a self-implementing provision contained in section 10325 of the Patient Protection and Affordable Care Act. This provision modifies the FY 2011 implementation schedule for the Resource Utilization Groups, version 4 (RUG-IV) case-mix classification system that CMS announced last year. CMS plans to delay implementation of the provision until system modifications are completed.

For more information, see www.cms.hhs.gov/center/snf.asp. This rule will publish in the Federal Register on July 22, 2010 A copy of the update notice is available on the CMS website at: http://www.ofr.gov/OFRUpload/OFRData/2010-17628_PI.pdf

The comment period closes on September 14, 2010.

More information is available at www.healthcare.gov, a new web portal made available by the U.S. Department of Health and Human Services.

About the Author

Throughout his 20 year career in human resources and recruiting, Tony Perry has been placing top health care industry talent with prominent organizations. His firm, Executive Search Solutions, is one of nations leading senior care recruiting firms. Check out his BLOG and WEBSITE to secure the right candidate for critical open positions or for representation in your job search.