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«DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 409, 424, and 484 [CMS-1560-F] RIN 0938-AP55 Medicare ...»

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previously proposed provisions for HHCAHPS. The first change is the delay in the HHCAHPS linkage to the annual payment update, from CY 2011 to CY 2012. This delay means that home health agencies will need to conduct a dry run for at least one month in the third quarter 2010, and continuously collect survey data beginning in the fourth quarter 2010 and moving forward. HHAs are urged to note the revised dates in this Final Rule and to routinely check the website www.homehealthcahps.org for the key dates. The second change concerns the patients eligible for the survey: only Medicare and/or Medicaid patients will be eligible to take the HHCAHPS survey. The third change is that V codes may be submitted if ICD-9 codes are unavailable. Home Health Compare will be updated to reflect the addition of HHCAHPS to the quality reporting requirements.

3. Home Health Wage Index Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require that we adjust the HH PPS payment rates to account for differences in area wage levels, using a wage index that we find appropriate. Since the inception of the HH PPS, we have used hospital wage data in developing a wage index to be applied to

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In the CY 2010 proposed rule, we proposed to continue that practice, as we continue to believe that using the pre-floor, pre-reclassified hospital inpatient wage index is appropriate and reasonable for the HH PPS. As explained in the update notice for CY 2009 (73 FR 65359), the HH PPS does not use the hospital area wage index’s occupational mix adjustment, as this adjustment serves specifically to define the occupational categories more clearly in a hospital setting.

We apply the appropriate wage index value to the labor portion (77.082 percent) of the HH PPS rates based on the site of service for the beneficiary (defined by section 1861(m) of the Act as the beneficiary's place of residence).

In the HH PPS final rule for CY 2006 (70 Fr 68138, November 9, 2005), we adopted the changes discussed in the Office of Management and Budget (OMB) Bulletin No. 03-04 (June 6, 2003), available online at http://www.whitehouse.gov/omb/bulletins/b03html, which announced revised definitions for Metropolitan Statistical Areas (MSAs), and the creation of Micropolitan Statistical Areas and Combined Statistical Areas. In addition, OMB published subsequent bulletins regarding CBSA changes, including changes in CBSA numbers and titles.

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geographic designations, we provided for a 1-year transition with a blended wage index for all providers. For CY 2006, the wage index for each provider consisted of a blend of 50 percent of the CY 2006 MSA-based wage index and 50 percent of the CY 2006 CBSA-based wage index (both using FY 2002 hospital data).

We referred to the blended wage index as the CY 2006 HH PPS transition wage index. As discussed in the HH PPS final rule for CY 2006 (70 FR 68138, November 9, 2005), subsequent to the expiration of the 1-year transition on December 31, 2006, we use the full CBSA-based wage index values.

We continue to use the methodology discussed in the CY 2007 final rule (71 FR 65884, November 9, 2006) to address those geographic areas in which there are no hospitals and, thus, no hospital wage data on which to base the calculation of the HH PPS wage index. For those areas, we use the average wage index from all contiguous CBSAs as a reasonable proxy. This methodology is used to calculate the wage index for rural Massachusetts. However, we do not apply this methodology to rural Puerto Rico due to the distinct economic circumstances that exist there, but instead continue using the most recent wage index previously available for that area (from CY 2005).

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average wage indexes of all urban areas within the State to serve as a reasonable proxy for the wage index of that that urban CBSA. The only urban area without wage data is Hinesville-Fort Stewart, Georgia (CBSA 25980).

On November 20, 2008, OMB issued Bulletin No. 09-01 located at web address http://www.whitehouse.gov/omb/bulletins/fy2009/09-01.pdf. This bulletin highlights three geographic areas that were previously classified as Micropolitan Statistical Areas but now qualify as Metropolitan Statistical Areas. The three areas are: (1) CBSA 16020, Cape Girardeau-Jackson, MO-IL (this includes Alexander County in Illinois and Bollinger and Cape Girardeau Counties in Missouri); (2) CBSA 31740, Manhattan, KS (this includes Geary, Pottawatomie, and Riley Counties in Kansas); and (3) CBSA 31860, Mankato-North Mankato, MN (this includes Blue Earth and Nicollet Counties in Minnesota).

The comments that we received on the wage index adjustment to the HH PPS rates, and our responses to those comments, appear below.

Comment: A commenter requested that CMS develop an

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Response: Our previous attempts at either proposing or developing a home health specific wage index were not well received by commenters or the industry. Generally, the volatility of the home health wage data and the resources needed to audit and verify those data make it difficult to ensure that such a wage index accurately reflects the wages and wage-related costs applicable to the furnishing of services. We believe it is important that a HH specific wage index be more reflective of the wages and salaries paid in a specific area, be based upon stable data sources, and significantly improve our ability to determine HH payments without being overly burdensome.

Comment: As an alternative to the rural floor, one commenter suggested we adjust for population density during calculation of the labor portion of payments to account for the increased costs of providing services in rural areas.

Response: The proposal of utilizing a population density adjustment is suggestive of a rural add-on. The HH PPS has utilized rural add-ons during various time periods since its inception. However, rural add-ons must be legislated. The last rural add-on, which was mandated by section 5201(b) of the Deficit Reduction Act (DRA), expired in early CY 2007.

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be tied to erroneous hospital data with no recourse.

Response: CMS utilizes efficient means to ensure and review the accuracy of the hospital cost report data and resulting wage index. The home health wage index is derived from the pre-floor, pre-reclassified hospital wage index which is calculated based on cost report data from hospitals paid under the hospital inpatient prospective payment system (IPPS).

All IPPS hospitals must complete the wage index survey (Worksheet S–3, Parts II and III) as part of their Medicare cost reports. Cost reports will be rejected if Worksheet S–3 is not completed. In addition, our intermediaries perform desk reviews on all hospitals’ Worksheet S–3 wage data, and we run edits on the wage data to further ensure the accuracy and validity of the wage data. Furthermore, HHAs have the opportunity to submit comments on the hospital wage index data during the annual IPPS rulemaking period. Therefore, we believe our review processes result in an accurate reflection of the applicable wages for the areas given.

Comment: A few commenters objected to our using CBSA area, which they stated creates arbitrary payment differences along CBSA borders, and exacerbate instability in the wage index.

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CBSA areas is the best available method of compensating for differences in labor markets.

Comment: A few commenters suggested we establish limits on allowable annual changes in wage index values from one year to the next. One suggested spreading any wage index value changes greater than 2 percent over at least 2 years.

Response: Updating the wage index must be done in a budget neutral manner. Establishing limits on how much a particular wage index could increase or decrease from one year to another would not be consistent with budget neutrality. Consequently, we implement updated versions of the wage index, in their entirety.

Comment: Several commenters asked CMS to allow HHAs to apply for the type of geographic reclassification that IPPS hospitals are provided. In addition, several commenters recommended establishing a rural floor.

Response: The commenters are referring to rural floor and geographic reclassification provisions in the IPPS which are only applicable to hospital payments. The rural floor provision is provided at section 4410 of Public Law 105–33 and is specific to hospitals. The reclassification provision provided at

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In its June 2007 report titled, “Report to Congress: Promoting Greater Efficiency in Medicare”, MedPAC recommends that Congress “repeal the existing hospital wage index statute, including reclassification and exceptions, and give the Secretary authority to establish new wage index systems.” We believe that adopting the IPPS wage index policies (such as reclassification or floor) would not be prudent at this time, because MedPAC suggests that the reclassification and exception policies in the IPPS wage index alter the wage index values for one-third of IPPS hospitals. In addition, MedPAC found that the exceptions may lead to anomalies in the wage index. By adopting the IPPS reclassification and exceptions at this time, the HH PPS wage index could become vulnerable to problems similar to those that MedPAC identified in their June 2007 Report to Congress.

However, we will continue to review and consider MedPAC’s recommendations on a refined alternative wage index methodology for the HH PPS in the future.

Comment: Several commenters recommended MedPAC’s approach to the HH wage index outlined in its June 2007 report. This approach would use Bureau of Labor Statistics (BLS) data to provide more consistent values among neighboring markets and

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MedPAC methodology would utilize data that are available for all labor areas, eliminating the need to impute a wage index in areas with no hospital.

Response: In February 2008, CMS awarded a Task Order under its Expedited Research and Demonstration Contract, to Acumen, LLC. Acumen, LLC conducted a study of both the current methodology used to construct the Medicare wage index and the recommendations in MedPAC’s 2007 report to Congress. Part One of Acumen’s final report, which analyzes the strengths and weaknesses of the data sources used to construct the CMS and MedPAC indexes, is available online at http://www.acumenllc.com/reports/cms. We will continue monitoring wage index reform efforts and their potential influence on the HH PPS wage index.

Moreover, in light of all of the pending research and review of wage index issues in general, it would be premature at this time to initiate revisiting the use of CBSA labor market areas and review of a HH specific wage index.

Therefore, in this final rule, we will continue to use hospital wage data to calculate the HH PPS wage index adjustment, and are finalizing the wage index policies as

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August 13, 2009). Refer to Addenda A and B of this final rule for the wage index applicable to CY 2010 HH PPS payments.

4. CY 2010 Payment Update a. National Standardized 60-Day Episode Rate The CY 2010 HH PPS rates use the same case-mix methodology and application of the wage index adjustment to the labor portion of the HH PPS rates as set forth in the CY 2008 HH PPS final rule with comment period. We multiply the national 60-day episode rate by the patient's applicable case-mix weight. We divide the case-mix adjusted amount into a labor and non-labor portion. We multiply the labor portion by the applicable wage index based on the site of service of the beneficiary. We add the wage-adjusted portion to the non-labor portion yielding the case-mix and wage adjusted 60-day episode rate subject to any additional applicable adjustments.

For CY 2010, we base the wage index adjustment to the labor portion of the HH PPS rates on the most recent pre-floor and pre-reclassified hospital wage index. As discussed in the July 3, 2000 HH PPS final rule, for episodes with four or fewer visits, Medicare pays the national per-visit amount by

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visit rates by discipline annually by the applicable home health market basket percentage. We adjust the national per-visit rate by the appropriate wage index based on the site of service for the beneficiary, as set forth in §484.230. We will adjust the labor portion of the updated national per-visit rates used to calculate LUPAs by the most recent pre-floor and prereclassified hospital wage index, as discussed in the CY 2008 HH PPS final rule with comment period. We update the LUPA add-on payment amount and the NRS conversion factor by the applicable home health market basket update of 2.0 percent for CY 2010.

Medicare pays the 60-day case-mix and wage-adjusted episode payment on a split percentage payment approach. The split percentage payment approach includes an initial percentage payment and a final percentage payment as set forth in §484.205(b)(1) and §484.205(b)(2). We may base the initial percentage payment on the submission of a request for anticipated payment (RAP) and the final percentage payment on the submission of the claim for the episode, as discussed in §409.43. The claim for the episode that the HHA submits for the final percentage payment determines the total payment amount for the episode and whether we make an applicable adjustment to the

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of the 60-day episode as reported on the claim determines which calendar year rates Medicare would use to pay the claim.

We may also adjust the 60-day case-mix and wage-adjusted episode payment based on the information submitted on the claim

to reflect the following:

• A low utilization payment provided on a per-visit

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b. Updated CY 2010 National Standardized 60-Day Episode Payment Rate In calculating the annual update for the CY 2010 national standardized 60-day episode payment rates, we first look at the CY 2009 rates as a starting point. The CY 2009 national standardized 60-day episode payment rate is $2,271.92.

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