Medicare Payment Policy

endnotes
1 The exceptions pertain to therapy services that require
equipment that is not available in the home, such as whirlpool
therapy and other treatments requiring specialized equipment.
2 Medicare pays for most services under the home health
PPS through a bundled 60-day payment that does not have
payment amounts for individual services. The per visit
payment amounts for home health services indicated here
have been estimated using a pro-rata share of the average full
episode payment in 2010, $2,877. This amount was divided
among the different visit types (nursing, aide, therapy, and
social work) based on each discipline’s share of standardized
costs in the average home health episode. Costs were
standardized with the per visit payment amounts Medicare
uses to reimburse episodes with fewer than five visits,
referred to as the low utilization payment adjustment (LUPA).
The LUPA rate is useful because it allows the weights for
allocating the payment to each discipline to reflect the relative
costliness of each discipline (i.e., that nursing is more costly
than aide services). However, the payment levels included in
the 60-day episode payment are set separately from the LUPA
rates, so LUPA rates cannot be used as a proxy for the per
visit amount assumed in the full 60-day payment.
3 Surety bond firms review the organizational and financial
integrity of an HHA and agree to cover the Medicare
obligations, up to a set amount, for those agencies that the
surety bond firm believes are low risk.
4 Our measure of access is based on data collected and
maintained as part of CMS’s home health compare database
as of November 2012. The service areas listed are ZIP codes
where an agency has provided services in the past 12 months.
This definition may overestimate access because agencies
need not serve the entire ZIP code to be counted as serving
it. At the same time, the definition may understate access if
HHAs are willing to serve a ZIP code that did not receive
a request in the previous 12 months. The analysis excludes
beneficiaries with unknown ZIP codes.
5 Certificate-of-need laws vary from state to state, and not all
states have them. In general, the laws require that an area have
a demonstrated need for additional health care services before
a new provider is permitted to enter the market.
210 Home health care services: Assessing payment adequacy and updating payments
6 In 2011, Medicare implemented a –3.79 adjustment to
account for changes in agency coding practice that appeared
unrelated to severity. PPACA also reduced the payment update
by 1 percent and had a base rate reduction of 2.5 percent. The
combined impact of all these adjustments lowered the 60-day
episode payment rate by 5.2 percent.
7 The Commission’s review of margins has generally found
that larger agencies have higher margins, suggesting some
economies of scale for HHAs. These economies, combined
with Medicare’s per unit payment system, suggest that
agencies with higher episode volume can achieve higher
profits.
8 Home health care users were categorized into PAC users
and community-admitted users based on the share of their
episodes in 2010 that were preceded by a hospitalization
or other PAC use. Users with more than 50 percent of their
episodes preceded by a hospitalization or PAC use were
categorized as primarily PAC users; those with less than
50 percent of their episodes preceded by these events were
categorized as primarily community-admitted users.
9 The home health care PPS includes additional payments
for therapy at the 6th, 14th, and 20th therapy visits (with
incremental increases in the intervals between these numbers).
In 2011, CMS implemented a requirement that agencies
conduct additional reviews shortly before the 14th and 20th
therapy visits but made no similar requirement for the 6th
therapy visit.
10 This risk-adjusted measure of hospitalization includes those
that occur at the end of a home health stay or within 30 days
of the end of a stay.
11 The recommendation applied only to full episodes—those that
include five or more visits.