The changes are soon upon us as 2012 soon arrives.

The Federal Register published Nov. 4, 2011 provided the final rule that updates the home health prospective payment system (PPS) rates for 2012.

The notice identifies changes to the national standardized 60-day episode rates and per visit LUPA rates based on the market basket update and the case-mix creep adjustment. Additionally, this rule includes notable changes to the HH PPS case-mix system

As mandated by the Patient Protection and Affordable Care Act, the payment updates for 2012 include a 1.4 percent update factor to the episode rates, which reflects a 1 percent reduction applied to the 2.4 percent market basket update factor,

Average Episode Payment Rate Timeline

These episodes will then be reduced by 3.79 percent for case mix creep, resulting in an overall episode and per visit reduction of 2.39 percent. An additional 3 percent will be applied to payments for services to patients in rural areas based on the Congress-approved rural add-on. Be aware that agencies failing to submit required quality date will be subject to a reduction of 2 percent to their episodes and per visit payments.

The Centers for Medicare and Medicaid Services (CMS) will apply the CY 2012 HH PPS payment rates for episodes with claim statement “through” dates on or after Jan. 1, 2012, and on or before Dec. 31, 2012.

The 2012 national standardized episode payment will be $2,138.52, prior to case-mix and wage adjustments, as compared to 2011’s $2,192.07.

The table below gives a more detailed comparison:

Case-Mix System Changes

The case mix system 2012 changes identify removal of two hypertension codes – 401.1 benign essential hypertension, and 401.9 unspecified essential. Coders will need to be very careful that clinician written “renal failure” or “renal insufficiency” in a record for a hypertensive patient requires a query to the physician to be certain the insufficiency/failure is chronic as that is the only way they will garner their HTN points in 2012.

Policy changes in the CY 2012 HH PPS final rule related to the case-mix system will be effective beginning with episodes with OASIS M0090 dates of Jan. 1, 2012.

Therapy

Because of the presenting patterns of therapy utilization over the past few years, payments impacted by therapy have been revised by CMS. Lower therapy cases seem to be encouraged. Payment for higher-therapy episodes is reduced, while payment for lower-therapy episodes is increased.

The case-mix model has five steps:

• Step 1: First and second episodes, 0-13 therapy visits
• Step 2: First and second episodes, 14-19 therapy visits
• Step 3: Third episodes and beyond, 14-19 therapy visits
• Step 4: Third episodes and beyond, 0-13 therapy visits
• Step 5: All episodes with 20+ therapy visits

The revision seems to be indicating that the industry may have been providing more therapy than was expected by CMS. The changes also parallel payment with costs and redistribute dollars from high therapy payment groups to other case-mix groups.

Prepare Now

Change in regulation means a need for updated policies and procedures. Do not forget to alter your casemix list for coders. Be certain everyone understands the changes in therapy reimbursement. Therapy visit numbers should correlate to the OASIS integrated assessment identification for need.

Remember, CMS expects the changes to this rule to decrease payments to agencies by over $425 million dollars. It is essential that agencies are very efficient in assessment, care, and documentation.

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