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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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a rolling basis, as the agency’s YTD payments support payment of the outlier. We plan to have a periodic reconciliation process under which outlier payments that were withheld are subsequently paid if the HHA’s total payments have increased to the point that their outlier payments can be made. This reconciliation process will always result in additional cash flow to HHAs, and so we believe it is preferable. With regard to revenue tracking, distinct coding will be used on the HHA’s remittance advice when outlier payments are withheld, assisting receivables accountants to identify and account for the differences between expected and actual payments. For these reasons, we agree with the commenter that supported a rolling implementation of the cap and will finalize this proposal.

Comment: A number of commenters encouraged CMS to take more aggressive actions through program integrity activities.

One commenter recommended that a high rate of outliers for a particular HHA should trigger medical review, creating a greater/more effective deterrent to fraudulent behavior. In general, the commenter supported more aggressive enforcement. A commenter stated that reference areas with fraud should have much higher incidence of additional document requests (ADRs) and

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Documentation should be closely reviewed for medical necessity, qualifications, and homebound status.

Response: As we stated in the proposed rule, so far as activities related to high levels of suspicious outlier payments, CMS is continuing with program integrity efforts including possible payment suspensions for HHAs with questionable outlier billing activities.

Comment: Commenters asked that CMS clarify that while outlier payments would be capped at 10 percent, at the agency level, that the non-outlier portion of the payment would still be paid.

Response: We thank the commenters for this comment, and apologize if we were not clear as to what portion of the HH PPS payment would be subject to the 10 percent cap. As stated in the proposed rule (at 74 FR 40957),the outlier policy, finalized for CY 2010 only, will include a 10 percent cap on outlier payments at the agency level. That is to say, an agency’s outlier payments are to be capped at 10 percent of its total HH PPS payments (of which outlier payments are a part). For any claim with an outlier payment, if it were determined that paying the outlier portion of the total HH PPS payment for that claim

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payments, only the outlier portion of the claim would not be paid at that time. However, the regular HH PPS payment (based on the HHRG that applies to that claim) is not subject to that 10 percent outlier cap, and thus would be paid. Any HH PPS payment adjustments other than the outlier payment (that is, PEP, recoding for therapy visits, etc.), would also continue to apply to the claim.

Comment: CMS’ analysis in the proposed rule started by first identifying “all providers who receive outlier payments” but excluded agencies with greater than 15 percent outlier episodes for one reason or another. Such exclusion skews analysis in favor of the 10 percent cap at the agency level, without considering that HHAs are shouldering the burden of serving sicker, more costly patients, represented by the excluded agencies with greater than 15 percent outlier episodes.

Response: The purpose of our analyses was to show the impact of the outlier cap policy on agencies not likely to be receiving inappropriate outlier payments. It is clear that a 10 percent agency outlier cap would have a major effect on agencies in certain areas of the country involved in suspect inappropriate billing practices. As such, we did not want to

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we did not exclude agencies with either outlier payments or outlier episodes greater than 15 percent. We did exclude agencies from our analysis that received sizeable outlier payments (totaling at least $100,000), had high ratio of outlier payments to total HH PPS payments (30 percent or more), and were located in the counties in Florida, Texas and California where program integrity issues had been identified. Those agencies simultaneously satisfying all three of these exclusion criteria were considered highly suspect for inappropriate billing practices. We also excluded a small number of agencies that had fewer than 20 Medicare HH PPS episodes, believing that Medicare beneficiaries account for such a small part of their business that they are not representative of the types of agencies we are most concerned about disadvantaging with an outlier cap policy.

Finally, we excluded a few additional agencies because they, too, were located in those same counties experiencing program integrity issues, and thus we did not want to have data from those agencies skewing the results either.

Comment: Some commenters suggested that the proposed outlier policies will put small HHAs out of business, while larger HHAs will be impacted only slightly. A commenter

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patients to larger HHAs that generate enough income to receive outlier patients, leaving small HHAs with limited service offerings and more competitive disadvantages. The commenter further asked CMS to further research the impact that the 10 percent cap will have on HHAs that generate $2 million or less.

Another commenter stated that special consideration should be given to smaller HHAs with fewer than 50 patients with low socioeconomic status(SES). The commenter also stated that CMS should take into account that there are cultural and racial reasons why certain areas may have more home health chronic patients. Another commenter stated that our proposed outlier policies would eliminate a safety net for HHAs that typically treat higher needs patients. Some commenters cautioned CMS to analyze carefully the effects of such an outlier policy to ensure that HHAs and beneficiaries and rural and under-served areas are not adversely affected. A number of commenters urged CMS to ensure that HHAs that legitimately serve sicker/more clinically complex patients are not penalized or put out of business, causing access issues for beneficiaries. Another commenter suggested that in some areas lacking of other post acute settings available to beneficiaries, HHAs may have higher

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the proposed outlier policy assumes some financial loss from outlier episodes, but that the commenter’s analysis on freestanding HHAs indicates that some HHAs have lower costs than those costs assumed in the proposed policy. Consequently, these HHAs with lower costs may be able to profit from abusing the outlier policy, even with a smaller outlier pool and provider level cap.

Response: Our analysis (see proposed rule at 74 FR 40956) shows that when the counties with program integrity problems are removed, the vast majority of the remaining providers have outlier dollars below 10% of their total home health expenditures and thus will not be affected by the policy.

Further mitigating the effects of the outlier policy is that the base rates for all episodes are being increased by 2.5%. An alternative, as was discussed in the proposed rule, would be to eliminate the outlier policy altogether, an option that some providers might find even less appealing. While we continue to believe that our proposed outlier policy would not negatively impact the access to home health care, we believe it prudent to carefully monitor the impact that this new policy may have on access to home health care. Therefore, we are finalizing our

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monitor data trends and we may make this policy, or some variation of this policy, permanent in future rulemaking. We believe that a final outlier policy for CY 2010 that includes a 10 percent agency level outlier cap, a target of approximately

2.5 percent for outlier dollars as a percentage of total HH PPS payments, returning 2.5 percent back into the HH PPS rates, and a 0.67 FDL ratio is the appropriate policy at this time.

Comment: Some commenters opposed the proposed outlier policy, stating that it penalized HHAs that treat insulindependent diabetes mellitus (IDDM) patients. These commenters stated that this policy would ultimately end up causing patients with IDDM to be denied treatment, and thus jeopardizing their lives. The same commenter stated that IDDM patients have always been the exception to the rule, “end in sight”. The commenter went on to say that this policy would be life threatening to insulin dependent diabetics because they would have no one to administer their insulin. The commenter stated that they were one of the few HHAs that accepted these types of patients, and that if the 10 percent outlier cap were implemented, there would be no HHA to take these patients, resulting in insulin mismanagement, increased hospitalizations, and complications

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population of IDDM patients, and that CMS should consider regions/geography as to how an outlier cap should appropriately be applied.

A few commenters wanted to see exceptions for certain types of patients, while other commenters wanted to see exceptions for HHAs specializing in treating certain types of patients. One commenter proposed that HHAs specializing in chronic disease management (diabetes, congestive heart failure (CHF), wound care, etc), with criteria to safeguard against fraud, should be exempt from the 10 percent outlier cap policy. The commenter stated that criteria may include having specialty providers working with the HHA and that enhanced services (placing the patient as an outlier) are necessary. The commenter pointed out that, in their state, an association of diabetes educators was working towards being able to certify HHAs with a “Diabetes Education Program” which could also be a requirement for those with outlier diabetics. HHAs providing that specialty care should be willing to collect and report data on outcomes to assure quality care is being provided. A commenter stated that while a 10 percent outlier cap may be appropriate in most cases, episodes in which IDDM patients are being served should be

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exemption for those HHAs willing to follow criteria for specialty care to safeguard against fraud should be excluded from the cap.

Another commenter adamantly opposed the 10 percent outlier cap, as they specialize in diabetic care, and such a policy would affect the way they do business and their cash flow. The commenter stated that they would be forced to transfer IDDM patients to other HHAs. The commenter stated that such patients should not be punished by forcing them to change providers due to government policy rather than choice. The commenter also suggested that CMS do more research on the impact of such a change and the effects that such a change would have on competitive dynamics as well as ways to “even the playing field”. Another commenter suggested that CMS allow higher cap percentages for counties with high IDDM populations.

Another commenter was opposed to the 10 percent outlier cap, stating that it would put their patients in jeopardy. The commenter went on to say that they see elderly and mentally disabled adults through Diabetic Outreach Services (DOS). The commenter stated that many patients in DOS have vision disturbances, cognitive impairment, or dexterity issues and are

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injections. Without the HHA, or a willing /able caregiver, these patients would likely dose incorrectly or not at all, leading to hospitalization, SNF placement, or death. The commenter further stated that those IDDM patients receiving services from home health agencies have fewer hospitalization or urgent use of the medical system.

A few commenters were opposed to the proposed outlier policy, stating that they take the “difficult cases” such as the unwanted children with psychiatric issues, low SES, IV, woundcare, and other diabetic cases, many of whom do not have caregivers. Many of their homebound patients are also vision impaired, have dexterity issues, or have dementia and/or Alzheimer’s disease and require someone to be involved in their care. Those in assisted living facilities have even more specialized needs. The commenter stated that assisted living facilities are not always able to check glucose levels, and some are prohibited from administering insulin. The commenter stated that many patients cannot administer insulin safely, and families are unable to do so due to work schedules. The commenter wrote that incorrectly administered insulin can cause frequent calls to 911 and visits to emergency room, and that

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and death. The commenter stated that if this outlier policy were to be implemented, their patients would end up in the hospital, only redirecting Medicare costs to high hospital bills. The commenter went on to say that their agency sees patients in the homes and assisted living facilities for “house call” diabetic services, and that patients who are homebound and residing in assisted living facilities would be adversely affected by this proposal. The commenter stated that putting a cap on outliers will force HHAs to “dump” IDDM patients, causing concern about these patients losing access to quality care.

Response: Excessive billing for IDDM patients in counties with program integrity concerns is one of the main reasons necessitating the new outlier policy. However, we are sensitive to the commenter’s concerns that homebound IDDM patients receive diabetes management support; likewise, we are sensitive to the support and disease management needs of patients with chronic diseases such as other types of diabetes, CHF, and wound care.

Under Medicare’s home health benefit, agencies are expected to provide education and training to help IDDM (and other diabetic) patients self-manage their diabetes. Many homebound patients with diabetes require short-term management for skilled

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