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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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Response: We appreciate the public’s continuing effort to provide us with comments and creative suggestions. The Secretary does not have authority under current law to establish profit/loss corridors. Should these be mandated, we welcome suggestions about how to implement them. Congress specifically addressed the possibility that nominal coding change might occur when it authorized (in BIPA legislation) the Secretary to offset such changes by reducing rates (see Section 1895(b)(3)(B)(iv) of the Act), and we are cognizant of the large reduction in costs per episode that accompanied prospective payment. Therefore, in 2007 we proposed and finalized a phased reduction in codingbased payment increases that we believe were not reflected by

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and CY2005. We have continued to monitor nominal case-mix change through CY2007, and found continuing evidence that such changes were occurring. We received public comments on the case-mix change adjustment methodology in the past, and we have enhanced the model consistent with comments where necessary. As we noted in the proposed rule, after developing more data, we intend to test additional enhancements pursuant to comments we received in this rulemaking. At this time, we do not know whether any future results incorporating enhancements will measure additional real case-mix change than we have already accounted for using the existing model and data. We continue to welcome suggestions on how to improve our measurement method in a feasible and cost-efficient manner.

Comment: A number of commenters were opposed to the continuing decision to apply case-mix reductions to all agencies regardless of their average case-mix or rate of case-mix change.

A commenter stated that the analysis focused on averages and does not account for states or regions with slower, more modest growth. A few commenters suggested that the Abt Associates reports showed that freestanding nonprofit agencies have not contributed to nominal case-mix change at a level comparable to

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commenter believes such a policy was unfair, and damaged agencies that CMS should be rewarding for their compliance, particularly non-profits. Several commenters stated that the reductions disproportionately affected hospital-based agencies or smaller agencies, particularly in rural areas.

While one commenter recognized the logistical problems if CMS were to excuse some agencies from further case-mix reductions, such as those that didn’t have high average case-mix or which had not increased their average case-mix at a rate suggesting nominal change, the commenter wrote that CMS is obligated to apply policy fairly. The commenter suggested that we exempt agencies with low case-mix weights or which have not had excessive case-mix change from further across-the-board reductions.

Response: We continue to believe that it is more appropriate and feasible to implement a nationwide approach to case-mix change adjustment. An individual agency approach would be administratively burdensome and difficult to implement.

Policies to address the identity of agencies in light of changes to organizational structures and configurations would need to be developed. Furthermore, smaller agencies might have difficulty

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of their small caseloads. We do not foresee being able to administer an individualized rate reduction fairly and effectively. Nor do we believe it would be possible to administer a regional or other classification-based reduction fairly. Any sort of special regional payment adjustments, the most common example being a rural add-on payment, would need to be legislated by Congress. Contrary to the statement a commenter made about the conclusions of the Abt Associates reports, the reports documented that freestanding voluntary/nonprofit agencies had relatively low average case-mix weights in FY2000. The analysis allowed changes in the ownership/affiliation composition of the population of agencies to contribute to real case-mix change, but it did not identify differences in case-mix growth since FY2000 within any class of agencies. Further, it seems unlikely that some significant number of agencies has avoided nominal case-mix change. It is counterintuitive to believe that agencies in general have not advanced and updated their application of OASIS and ICD9-CM diagnosis coding. In accordance with continuing educational efforts on the part of CMS, the state OASIS coordinators help agencies understand and apply OASIS, and other public and

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proper and accurate interpretation of OASIS items and selection of the correct response to each item. That process of advancing and updating the application of OASIS is a natural outgrowth of the fundamental approach to payment adopted under the HH PPS.

Comment: A commenter wrote that CMS should adopt criteria to identify and protect “safety net” agencies from the impact of case-mix payment reductions, which admit patients based on need rather than on profitability. This commenter is concerned that these safety net agencies would be pushed out of the Medicare program by negative margins, creating a loss of critical patient access. This commenter stated that CMS should pay for the reasonable cost of care so that safety net agencies could be viable.

Response: Currently, the law does not provide for payment differentials for “safety net” agencies. Additionally, we believe that it would be extremely difficult to accurately identify safety-net providers, and any such process to identify and pay such providers differently could be inaccurate, prone to program vulnerabilities and costly to administer. Additionally, it would require CMS to enforce compliance with whatever criteria we used to identify that such providers, to ensure that

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differential. Rather, CMS is currently focusing on demonstrations which have a goal to reward providers based on the high quality of care provided, and savings associated with high quality, such as decreased hospitalizations.

Comment: Some commenters suggested further refinements to the case-mix adjustment model as a way of mitigating effects of the case mix change adjustment to the episode payment rate. The commenters mentioned giving credit for the absence of a caregiver, Medicaid status, residence in high crime areas, use of wound care and other supplies, use of innovative technologies, and for patients with advanced stages of debilitating chronic diseases.

Response: We appreciate the commenters’ concerns and point out that we addressed the absence of caregivers in our CY 2008 final rule. OASIS item M0350 asks whether there are assisting persons in the home, other than the home care agency staff. On average, episodes without caregivers might be underpaid under the current case-mix model, but our analysis also showed that the payment difference was not large. Moreover, we continue to believe this variable raises significant policy concerns. We restate our belief that a case-mix adjustment should not

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patients believe that there is some financial stake in how they report their familial supports while they are receiving home health services. Adoption of this measure of case-mix risks introduction of negative incentives into the case-mix adjustment system; these negative incentives potentially could have adverse effects on home health Medicare beneficiaries.

We also considered Medicaid status. After accounting for a broad range of clinical and functional factors which predict resource use, the presence of a Medicaid number was found to add a negligible amount to the predicted resource use, suggesting that having Medicaid is not a strong predictor of resource use.

Given the administrative burdens of verifying the current Medicaid status of a patient, we judged that, on balance, adding Medicaid enrollment to the case-mix model was not warranted.

We know of no data to measure residence in high crime areas reliably for purposes of payment operations; nor are there studies documenting the role of this variable in patient-bypatient cost differences. The idea of incorporating technology use, such as wound care supplies and other innovative technologies, in determining the payment for specific patients raises significant policy issues about the role of the

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to be used in delivering care. Our approach has been to document and pay in accordance with the average costs incurred when treating patients with different characteristics, but not to pay in accordance with agency technology choices. To the extent that costly technology is reflected in NRS costs and charges routinely available in administrative data, and use of such technology is the standard of care in specific circumstances, then we welcome proposals for identifying these situations in current data collection processes so that we can study their impact on NRS costs. We believe that any proposals from the public should balance the burden from adding complexity to coding systems and data collection processes on account of a small number of episodes against the impact on payment accuracy.

Instruments such as OASIS are not designed to focus on uncommon situations. Regarding refinements for advanced stages of debilitating chronic diseases, we have concerns that measurement of this aspect of case mix would not be reliable, and could lead to inequities and nominal case mix change. Nonetheless, we welcome specific suggestions in future comment periods for measurement items and instruments that promise to reliably capture this dimension of health status.

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real vs. nominal case-mix change, CMS consider factors such as OASIS implementation, educational initiatives to teach agencies how to more comprehensively assess patient needs and more accurately code OASIS, improvements in documentation, and the quality of care.

Response: As we have noted in responding to similar comments in previous regulations, improved OASIS implementation, staff education, and improvements in documentation are indications of coding change, not an actual change in patient case-mix. While they may represent a much-desired improvement in the accuracy of data used to manage the care of patients, they do not represent cost increases related to the health status of patients. We have no basis to recognize the quality of care as a factor to consider in the review of nominal vs.

real case-mix change. The legal basis for making payment reductions is nominal case-mix increases that can result from changes in coding practices and from coding improvements, as well as from financial incentives in the payment system.

Comment: Commenters cited an evolving home health population and changes in patient characteristics as factors to consider in the review of nominal vs. real case-mix change. A

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health are sicker, have more complex conditions with more comorbidities, and require a more costly inter-disciplinary approach. One noted that the 1997 to 2000 increase of 13.4% in case-mix weights demonstrates the substantial effect that changes in patient characteristics can produce; this commenter wrote that if real case-mix could increase prior to HH PPS, it is unreasonable to assume that none of the change after that point is real.

Response: In our case-mix change model, we measured demographic and health status factors, and utilization indicators of health status, and then related them to the HH PPS case-mix weight in a regression equation. The methodology attempts to capture the effects of an evolving home health population by measuring the entire set of factors at two points in time. Having established the relationship between predictors and case-mix weight using data from the first time period, we then use the model to predict the case-mix weight based on the factors during the second time period. Therefore, this approach does consider changes in the home health population. To the extent that patients entering home health are sicker, have more complex conditions, and more comorbidities, the variables

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reflect such changes to a large extent. As we indicated in the proposed rule, we intend to test additional variables to pick up possible unmeasured population changes. It is not certain that these attempts will identify additional real case-mix change. If home health practice has evolved between FY2000 and today to provide an inter-disciplinary approach, this is not necessarily a change in the real case-mix of the treated population; it could well be a change in treatment practices, given that evidence from the case-mix change model and other evidence we have presented in previous regulations point to little change in the health characteristics of home health users. Notwithstanding the question of whether any shift towards an interdisciplinary approach has occurred, data cited by the Medicare Payment Advisory Commission and our own analyses of home health margins indicate that home health agencies are being adequately paid under the HH PPS.

Contrary to the assertion of the specific commenter that we had concluded that all of the change in case-mix was nominal, we identified nearly one-tenth of the difference between the average case-mix weight for FY2000 and CY2007 as real case-mix change. We allowed for that amount in the rate reductions.

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weight between 1997 and 2000 (that is, the last year of the IPS), in the 2007 proposed rule (72 FR 25393), we reviewed and discussed comparative OASIS data from the original Abt Associates case-mix study (1996-1998) and from FY 1999, as well as several studies of the effects of the Balanced Budget Act, and specifically, of the Interim Payment System (IPS).

The literature and data identified several changes in the health and demographic characteristics of the home health user population. An important implication of those studies and data was that patients with intensive or lengthy needs for nursing and personal care services as opposed to short-term or rehabilitative needs were less likely to be found in the national home care caseload as a result of the IPS (72 FR 25393). We also noted in that discussion that changes in therapy utilization during the final year of the IPS period, after the proposals for the HH PPS were issued, could have reflected an anticipatory response to the coming payment system.

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