Home Health Agency Prospective Payment System Unveiled - Brief Article - Statistical Data Included

Healthcare Financial Management, Dec, 1999

The long-awaited proposed rule for a prospective payment system (PPS) for home health agencies was published by HCFA in the October 28, 1999 Federal Register. Under the 1997 Balanced Budget Act, HCFA was required to establish and implement a home health agency PPS by September 30, 2000. Had HCFA missed its deadline, per-visit and per-beneficiary cost limits automatically would have been reduced by 15 percent. While governmental and not-for-profit home health agencies would likely fare better under the proposed PPS than under a 15 percent reduction, for-profit agencies likely would be worse off. HCFA states that this difference is due, in part, to the fact that the proposed PPS is driven primarily by the needs of patients rather than by utilization incentives.

HCFA proposes that a 60-day episode be the basic unit of payment. The proposal includes adjusting payment for partial episodes or episodes during which utilization was low or the patient's condition changed significantly. HCFA proposes to pay outlier amounts for cases in which a home health agency incurs extraordinary costs.

The home health PPS would involve 80 Home Health Resource Groups into which Medicare patients would be categorized based on patient assessment data from the Outcome and Assessment Information Set and the number of therapy hours received.

The proposed rule includes a consolidated billing requirement under which each home health agency would have to submit all Medicare home health service claims while the beneficiaries to whom the agency provides services are under the agency's home health plan of care. The home health services included in the consolidated billing are skilled nursing and health aide visits, covered therapy, medical social services, and medical supplies. Durable medical equipment (DME) also is included in the consolidated billing requirements but, under the proposed PPS, would continue to be paid under the DME fee schedule.

The PPS for home health agencies will take effect October 1, 2000. There will be no transition period. Comments are due December 27, 1999.