by Mark Sharp,
& M. Aaron Little,

Medicare Home Health Payment Rate Updates for 2010

On November 10, 2009, the Centers for Medicare & Medicaid Services (CMS) published the final rule on the Medicare home health prospective payment system (PPS) update for calendar year 2010. As for the PPS payment update provisions, little changed from the proposed rule issued in August. The final rule provides for a 2% inflation factor for 2010. However, this increase is more than offset by a 2.75% reduction due to perceived increases in home health case mix in recent years unrelated to the severity of patients’ conditions. The case-mix creep adjustment represents the third consecutive 2.75% annual reduction CMS has implemented. They continue to propose another case-mix creep reduction of 2.71% for calendar year 2011. CMS indicates the 2010 and 2011 case-mix creep reductions might be lower than recent data suggest, and they will continue to monitor creep in the future and make additional adjustments when deemed necessary.

As disclosed in the August proposed rule, CMS has observed wide fluctuations in the amount of outlier payments paid to agencies in different parts of the country. The current CMS outlier policy is designed to pay approximately 5% of total home health payments as outlier payments. Effective for one year, CMS is imposing a 10% cap on outlier payments per agency in 2010 as well as changing the outlier payment formula to attempt to reduce outlier payments to 2.5% of total home health payments. The reduction in the outlier target from 5% to 2.5% of total payments means the base home health payment rate will be increased 2.5%. With all factors considered, the base payment rate will increase approximately 1.75% for 2010 before any changes in wage index.

The outlier changes mean that agencies with low outlier payments should experience a net increase in their overall home health payments while those with high outlier payments will experience a net decrease in overall payments. Agencies should evaluate their current level of outlier payments reported on their cost report and available on their Provider Statistical and Reimbursement System summary report to determine how this change may affect their reimbursement.

The final rule moves forward with the implementation of the Home Health Consumer Assessment of Healthcare Providers and Systems (HH-CAHPS) patient perception of care survey. This will be a component of the quality reporting system for all home health agencies. The HH-CAHPS survey includes 25 questions about patient perceptions of the quality of care they received from an agency as well as nine demographic questions concerning the patient. While the survey is initially voluntary, agencies not participating by the last quarter of 2010 will be subject to a 2% reduction in their future annual payment inflation adjustments. Small agencies, i.e., those with less than 60 eligible patients per year, will be exempted from the inflation factor reduction penalty.

A now-controversial provision that “slid” through the final rule involves the sale of home health agencies that have been open for fewer than 36 months. This provision prohibits the conveyance of the Medicare provider agreement and Medicare billing privileges to the buyer if an owner of an agency sells (including asset sales or stock transfers), transfers or relinquishes ownership of the agency within 36 months after the effective date of the agency’s enrollment in Medicare. Buyers in these circumstances will need to enroll in Medicare as a new home health agency and become surveyed or accredited prior to billing Medicare. Since the issuance of this rule, many questions have surfaced about how and in what circumstances this prohibition will be applied.

For questions or more information, please contact your BKD advisor. Calculations of the final 2010 home health PPS rates are available upon request.

Hospice Billing Changes Include Therapy Visits, Social Worker Calls

January 1, 2010, marks the implementation of the latest phase of Medicare hospice billing reporting requirements mandated by the CMS. These changes were outlined in CMS Transmittal 1738, Change Request 6440 and are effective for Medicare hospice services provided on and after January 1, 2010. The following is a brief summary of these changes.

Reporting of Therapy Visits

Effective January 1, hospice claims must report all physical, occupational and speech therapy visits provided to hospice patients. Similar to the existing billing requirement for nursing, medical social worker and aide visits, therapy visits must be billed using the appropriate revenue codes for each therapy discipline, as detailed in the table below.

The definition of a “visit” remains unchanged under the new reporting requirements. All visits billed must be reasonable and medically necessary for the palliation and management of the patient’s terminal illness and related conditions described in the plan of care.

Because hospice therapy visits have never before been required to bill, providers will need to establish a standard visit charge for each discipline of service.

Reporting of Social Worker Phone Calls

To date, the billing reporting requirement for medical social worker visits has been limited to person-to-person interactions with patients and family members. This latest phase of billing changes continues to require billing of medical social worker visits but adds a new requirement that providers bill for medical social worker phone calls when those calls meet the following criteria:

• Necessary for the palliation and management of the terminal illness and related conditions as described in the patient’s plan of care, such as counseling or speaking with a patient’s family or arranging placement

• Related to providing and or coordinating care to the patient and family and are documented in the patient’s clinical record

Calls made to other individuals or entities other than the patient or patient’s family should not be reported. Billable social worker calls should be reported using revenue code 0569. As with therapy visits, providers need to establish a standard service charge for social worker phone calls.

Detailed Visit Reporting

Effective January 1, visits for all disciplines of services, including the newly required therapy visits and medical social worker phone calls, must be reported by date of service in 15-minute increments.

This requirement only is effective for visits provided to patients receiving routine home care, continuous home care or inpatient respite care services and is a departure from the previous requirement of reporting visits on a weekly basis. For patients receiving general inpatient care services, visits should continue to be reported on a weekly basis according to the appropriate discipline of service. As with existing billing requirements, all visits should be reported according to the location where the patient received care, e.g., patient home, inpatient facility, etc.

In addition to the itemization requirement, visits also must now be reported with the corresponding Healthcare Common Procedure Coding System (HCPCS) code for each discipline of service, as detailed in the table below.

Medicare Hospice Visit Reporting Requirements Effective January 1, 2010

Avoid Financial Misstatements

While these new requirements for billing therapy visits and social worker calls do require a standard service charge, there is no change in Medicare’s payment of hospice services. To avoid overstating revenues and accounts receivable, it is critical to examine billing and accounting software system settings to ensure charges for these services are applied to a contractual adjustment or other similar offset account to avoid financial misstatements.

Other Future Billing Reporting Changes

As CMS continues to refine the Medicare hospice billing and reporting requirements, it has announced future phases will include required billing for visits by chaplains, spiritual counselors and volunteers. At this time, though, no implementation date has been suggested for such requirements.

Take Action Now

Because these billing changes will take effect for hospice services on and after January 1, claims subject to the new requirements will most likely not be billed until February. However, now is the time to examine your organization’s billing software system to ensure it is set up to properly bill and account for each of these changes.

Your BKD Health Care Group advisor can help prepare your organization for these upcoming hospice billing and reporting changes.