Home/Federal/Federal Register/2021-13763

Proposed Rule2021-13763

Medicare and Medicaid Programs; CY 2022 Home Health Prospective Payment System Rate Update; Home Health Value-Based Purchasing Model Requirements and Proposed Model Expansion; Home Health Quality Reporting Requirements; Home Infusion Therapy Services Requirements; Survey and Enforcement Requirements for Hospice Programs; Medicare Provider Enrollment Requirements; Inpatient Rehabilitation Facility Quality Reporting Program Requirements; and Long-Term Care Hospital Quality Reporting Program Requirements

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Published

July 7, 2021

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule would set forth routine updates to the home health and home infusion therapy services payment rates for calendar year (CY) 2022 in accordance with existing statutory and regulatory requirements. This rule also provides monitoring and analysis of the Patient-Driven Groupings Model (PDGM); solicits comments on a methodology for determining the difference between assumed versus actual behavior change on estimated aggregate expenditures for home health payments as result of the change in the unit of payment to 30 days and the implementation of the PDGM case-mix adjustment methodology; and proposes to recalibrate the PDGM case-mix weights, functional levels, and comorbidity adjustment subgroups while maintaining the low utilization payment adjustment (LUPA) thresholds for CY 2022. Additionally, this rulemaking proposes to utilize the physical therapy LUPA add-on factor to establish the occupational therapy add-on factor for the LUPA add-on payment amounts; and make conforming regulations text changes to reflect that allowed practitioners are able to establish and review the plan of care. This rulemaking also proposes changes to the Home Health Quality Reporting Program (QRP) to remove one measure, remove two claims-based measures and replace them with one claims-based measure, publicly report two measures, propose a modification to the effective date for the reporting of the Transfer of Health to Provider-Post Acute Care and Transfer of Health to Patient-Post Acute Care (TOH) measures and Standardized Patient Assessment Data Elements and requests information on two topics: Advancing to digital quality measurement through the use of Fast Healthcare Interoperability Resources and our efforts surrounding closing the health equity gap. It also proposes modifications to the effective date for the reporting of TOH measures and certain Standardized Patient Assessment Data Elements. Additionally, this proposed rule requests information on two topics: Advancing to digital quality measurement through the use of Fast Healthcare Interoperability Resources and our efforts surrounding closing the health equity gap. It also proposes modifications to the effective date for the reporting of TOH measures and certain Standardized Patient Assessment Data Elements in the Inpatient Rehabilitation Facility (IRF) QRP and Long-Term Care Hospital (LTCH) QRP. In addition, this proposed rule would incorporate into regulation certain Medicare provider and supplier enrollment policies. In addition, this rulemaking proposes to make permanent selected regulatory blanket waivers related to home health aide supervision that were issued to Medicare participating home health agencies during the COVID-19 public health emergency (PHE), and would update the home health conditions of participation to implement Division CC, section 115 of the Consolidated Appropriations Act, 2021 (CAA 2021) regarding occupational therapists completing the initial and comprehensive assessments reflect these changes. This proposed rule also would expand the Home Health Value-Based Purchasing (HHVBP) Model, beginning January 1, 2022, to the 50 States, territories, and District of Columbia. This rulemaking also proposes to end the original HHVBP Model one year early for the home health agencies (HHAs) in the nine original Model States, such that CY 2020 performance data would not be used to calculate a payment adjustment for CY 2022 under the original Model. Additionally, this proposed rule establishes survey and enforcement requirements for hospice programs as set forth in Division CC, section 407, of the CAA 2021.

Full Text

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[Federal Register Volume 86, Number 127 (Wednesday, July 7, 2021)]
[Proposed Rules]
[Pages 35874-36016]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13763]

[[Page 35873]]

Vol. 86

Wednesday,

No. 127

July 7, 2021

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 409, 424, et al.

Medicare and Medicaid Programs; CY 2022 Home Health Prospective Payment
System Rate Update; Home Health Value-Based Purchasing Model
Requirements and Proposed Model Expansion; Home Health Quality
Reporting Requirements; Home Infusion Therapy Services Requirements;
Survey and Enforcement Requirements for Hospice Programs; Medicare
Provider Enrollment Requirements; Inpatient Rehabilitation Facility
Quality Reporting Program Requirements; and Long-Term Care Hospital
Quality Reporting Program Requirements; Proposed Rule

Federal Register / Vol. 86 , No. 127 / Wednesday, July 7, 2021 /
Proposed Rules

[[Page 35874]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 424, 484, 488, 489, and 498

[CMS-1747-P]
RIN 0938-AU37

Medicare and Medicaid Programs; CY 2022 Home Health Prospective
Payment System Rate Update; Home Health Value-Based Purchasing Model
Requirements and Proposed Model Expansion; Home Health Quality
Reporting Requirements; Home Infusion Therapy Services Requirements;
Survey and Enforcement Requirements for Hospice Programs; Medicare
Provider Enrollment Requirements; Inpatient Rehabilitation Facility
Quality Reporting Program Requirements; and Long-Term Care Hospital
Quality Reporting Program Requirements

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth routine updates to the home
health and home infusion therapy services payment rates for calendar
year (CY) 2022 in accordance with existing statutory and regulatory
requirements. This rule also provides monitoring and analysis of the
Patient-Driven Groupings Model (PDGM); solicits comments on a
methodology for determining the difference between assumed versus
actual behavior change on estimated aggregate expenditures for home
health payments as result of the change in the unit of payment to 30
days and the implementation of the PDGM case-mix adjustment
methodology; and proposes to recalibrate the PDGM case-mix weights,
functional levels, and comorbidity adjustment subgroups while
maintaining the low utilization payment adjustment (LUPA) thresholds
for CY 2022. Additionally, this rulemaking proposes to utilize the
physical therapy LUPA add-on factor to establish the occupational
therapy add-on factor for the LUPA add-on payment amounts; and make
conforming regulations text changes to reflect that allowed
practitioners are able to establish and review the plan of care.
This rulemaking also proposes changes to the Home Health Quality
Reporting Program (QRP) to remove one measure, remove two claims-based
measures and replace them with one claims-based measure, publicly
report two measures, propose a modification to the effective date for
the reporting of the Transfer of Health to Provider-Post Acute Care and
Transfer of Health to Patient-Post Acute Care (TOH) measures and
Standardized Patient Assessment Data Elements and requests information
on two topics: Advancing to digital quality measurement through the use
of Fast Healthcare Interoperability Resources and our efforts
surrounding closing the health equity gap. It also proposes
modifications to the effective date for the reporting of TOH measures
and certain Standardized Patient Assessment Data Elements.
Additionally, this proposed rule requests information on two topics:
Advancing to digital quality measurement through the use of Fast
Healthcare Interoperability Resources and our efforts surrounding
closing the health equity gap. It also proposes modifications to the
effective date for the reporting of TOH measures and certain
Standardized Patient Assessment Data Elements in the Inpatient
Rehabilitation Facility (IRF) QRP and Long-Term Care Hospital (LTCH)
QRP. In addition, this proposed rule would incorporate into regulation
certain Medicare provider and supplier enrollment policies.
In addition, this rulemaking proposes to make permanent selected
regulatory blanket waivers related to home health aide supervision that
were issued to Medicare participating home health agencies during the
COVID-19 public health emergency (PHE), and would update the home
health conditions of participation to implement Division CC, section
115 of the Consolidated Appropriations Act, 2021 (CAA 2021) regarding
occupational therapists completing the initial and comprehensive
assessments reflect these changes.
This proposed rule also would expand the Home Health Value-Based
Purchasing (HHVBP) Model, beginning January 1, 2022, to the 50 States,
territories, and District of Columbia. This rulemaking also proposes to
end the original HHVBP Model one year early for the home health
agencies (HHAs) in the nine original Model States, such that CY 2020
performance data would not be used to calculate a payment adjustment
for CY 2022 under the original Model.
Additionally, this proposed rule establishes survey and enforcement
requirements for hospice programs as set forth in Division CC, section
407, of the CAA 2021.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 27, 2021.

ADDRESSES: In commenting, please refer to file code CMS-1747-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1747-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1747-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Brian Slater, (410) 786-5229, for home
health and home infusion therapy payment inquiries. For general
information about home infusion payment, send your inquiry via email to
<a href="/cdn-cgi/l/email-protection#7e3611131b3710180b0d1711102e1112171d073e1d130d5016160d50191108">[email&#160;protected]</a>.
For general information about the Home Health Prospective Payment
System (HH PPS), send your inquiry via email to
<a href="/cdn-cgi/l/email-protection#b7ffd8dad2ffd2d6dbc3dfe7d8dbded4cef7d4dac499dfdfc499d0d8c1">[email&#160;protected]</a>.
For more information about the Home Health Value-Based Purchasing
Model, send your inquiry via email to <a href="/cdn-cgi/l/email-protection#1a52524c584a6b6f7f696e737574695a79776934727269347d756c">[email&#160;protected]</a>.
For information about the Home Health Quality Reporting Program (HH
QRP), send your inquiry via email to <a href="/cdn-cgi/l/email-protection#2b63637a797b5a5e4e585f424445586b48465805434358054c445d">[email&#160;protected]</a>.
For information about the home health conditions of participation,
contact Mary Rossi-Coajou at: <a href="/cdn-cgi/l/email-protection#c4a9a5b6bdeab6abb7b7ada7aba5aeabb184a7a9b7eaacacb7eaa3abb2">[email&#160;protected]</a>, James
Cowher at <a href="/cdn-cgi/l/email-protection#513b303c34227f323e26342311323c227f3939227f363e27">[email&#160;protected]</a>, or Jeannine Cramer at
<a href="/cdn-cgi/l/email-protection#f2b897939c9c9b9c97dc9180939f9780b2919f81dc9a9a81dc959d84">[email&#160;protected]</a>.
For provider and supplier enrollment process inquiries: Frank
Whelan, (410) 786-1302.

[[Page 35875]]

For information about the survey and enforcement requirements for
hospice programs, send your inquiry via email to
<a href="/cdn-cgi/l/email-protection#58090b171f0710372b28313b3d183b352b7630302b763f372e">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on
that website to view public comments.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of the Provisions of This Rule
C. Summary of Costs, Transfers, and Benefits
II. Home Health Prospective Payment System
A. Overview of the Home Health Prospective Payment System
B. Proposed Provisions for Payment Under the HH PPS
III. Home Health Value-Based Purchasing (HHVBP) Model
A. Proposal To Expand the HHVBP Model Nationwide
B. Provisions Under the Home Health Value-Based Purchasing
(HHVBP) Original Model
IV. Home Health Quality Reporting Program (HH QRP) and Other Home
Health Related Provisions
A. Vaccinations for Home Health Agency Health Care Personnel
B. Advancing Health Information Exchange
C. Home Health Quality Reporting Program (HH QRP)
D. Proposed Changes to the Home Health Conditions of
Participation
V. Home Infusion Therapy Services: Annual Payment Updates for CY
2022
A. Home Infusion Therapy Payment Categories
B. Payment Adjustments for CY 2022 Home Infusion Therapy
Services
C. CY 2022 Payment Amounts for Home Infusion Therapy Services
VI. Medicare Provider and Supplier Enrollment Changes
A. Background--Provider and Supplier Enrollment Process
B. Proposed Provisions
VII. Survey and Enforcement Requirements for Hospice Programs
A. Background
B. Provisions of the Proposed Rule
VIII. Requests for Information
A. Fast Healthcare Interoperability Resources (FHIR) in Support
of Digital Quality Measurement in Post-Acute Care Quality Reporting
Programs--Request for Information
B. Closing the Health Equity Gap in Post-Acute Care Quality
Reporting Programs--Request for Information
IX. Revised Compliance Date for Certain Reporting Requirements
Adopted for Inpatient Rehabilitation Facilities (IRF) QRP and Long-
Term Care Facilities Quality QRP
A. Proposal of a Revised Compliance Date for Certain Inpatient
Rehabilitation Facility (IRF) QRP Reporting Requirements
B. Proposal of a Revised Compliance Date for Certain Long-Term
Care Hospital (LTCH) QRP Reporting Requirements
X. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. Collection of Information Requirements
C. Submission of PRA-Related Comments
XI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Detailed Economic Analysis
D. Limitations of Our Analysis
E. Regulatory Review Cost Estimation
F. Alternatives Considered
G. Accounting Statement and Tables
H. Regulatory Flexibility Act (RFA)
I. Unfunded Mandates Reform Act (UMRA)
J. Federalism
K. Conclusion
L. Executive Order 12866
Regulations Text

I. Executive Summary

A. Purpose

1. Home Health Prospective Payment System (HH PPS)
This proposed rule provides preliminary monitoring analysis of the
implementation of the PDGM, discusses the change in the unit of payment
to 30 days and the implementation of the PDGM case-mix adjustment
methodology on estimated aggregate expenditures under the HH PPS, and
includes a comment solicitation on the methodology for determining the
difference between assumed versus actual behavior change on estimated
aggregate expenditures for home health payments. This proposed rule
would update the payment rates for HHAs for CY 2022, as required under
section 1895(b) of the Social Security Act (the Act). This rule also
proposes to maintain the CY 2021 LUPA thresholds for CY 2022. However,
the rule also proposes to recalibrate the case-mix weights under
section 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day periods of
care in CY 2022. This proposed rule would update the CY 2022 fixed-
dollar loss ratio (FDL) for outlier payments (outlier payments as a
percentage of estimated total payments are not to exceed 2.5 percent,
as required by section 1895(b)(5)(A) of the Act). Finally, this rule
proposes to use the physical therapy (PT) add-on factor to establish
the occupational therapy (OT) LUPA add-on factor and proposes
conforming regulations text changes at Sec. 409.43, ensuring the
regulations reflect that allowed practitioners, in addition to
physicians, may establish and periodically review the home health plan
of care.
2. Home Health Value Based Purchasing (HHVBP) Model
In this proposed rule, we would expand the Home Health Value-Based
Purchasing (HHVBP) Model to all Medicare-certified HHAs in the 50
States, territories, and District of Columbia beginning January 1, 2022
with CY 2022 as the first performance year and CY 2024 as the first
payment year, based on HHA performance in CY 2022. This rule also
proposes to end the original HHVBP Model 1 year early for the HHAs in
the nine original Model States, such that CY 2020 performance data
would not be used to calculate a payment adjustment for CY 2022.
3. Home Health (HH) Quality Reporting Program (HH QRP), Inpatient
Rehabilitation Facility (IRF) QRP and Long-Term Care Hospital (LTCH)
QRP
This proposed rule would update the HH QRP by removing an OASIS-
based measure, the Drug Education on All Medications Provided to
Patient/Caregiver During All Episodes of Care measure, from the HH QRP
under measure removal factor 1: Measure performance among HHAs is so
high and unvarying that meaningful distinctions in improvements in
performance can no longer be made. This proposed rule also proposes to
replace the Acute Care Hospitalization During the First 60 Days of Home
Health (NQF #0171) measure and Emergency Department Use Without
Hospitalization During the First 60 Days of Home Health (NQF #0173)
measure with the Home Health Within Stay Potentially Preventable
measure and proposes to publicly report the Percent of Residents
Experiencing One or More Major Falls with Injury measure and
Application of Percent of Long-Term Care Hospital Patients with an
Admission and Discharge Functional Assessment and a Care Plan that
Addresses Function (NQF #2631) measure beginning in April 2022.
Finally, this proposed rule proposes revisions for certain HHA QRP
reporting requirements. This proposed rule would also revise similar
compliance dates for certain IRF QRP and LTCH QRP requirements.
4. Proposed Changes to the Home Health Conditions of Participation
In this rule, we propose to make permanent selected regulatory
blanket waivers related to home health aide

[[Page 35876]]

supervision that were issued to Medicare participating home health
agencies during the COVID-19 PHE. In addition, Division CC, section 115
of CAA 2021 requires CMS to permit an occupational therapist to conduct
a home health initial assessment visit and complete a comprehensive
assessment under the Medicare program, but only when occupational
therapy is on the home health plan of care, with either physical
therapy or speech therapy, and when skilled nursing services are not
initially in the plan of care.
We are proposing changes to the home health aide supervision
requirements at Sec. 484.80(h)(1) and Sec. 484.80(h)(2) and
conforming regulation text changes at Sec. 484.55(a)(2) and (b)(3),
respectively, to allow occupational therapists to complete the initial
and comprehensive assessments for patients in accordance with changes
in the law.
5. Medicare Coverage of Home Infusion Therapy
This proposed rule includes updates to the home infusion therapy
services payment rates for CY 2022, as required by section 1834(u) of
the Act.
6. Provider and Supplier Enrollment Processes
In section VI. of this proposed rule, we address a number of
provisions regarding Medicare provider and supplier enrollment. Most of
these provisions involve the incorporation into 42 CFR part 424,
subpart P of certain subregulatory policies. These are addressed in
section VI.B. of this proposed rule and include, for example, policies
related to: (1) The effective date of billing privileges for certain
provider and supplier types and certain provider enrollment
transactions; and (2) the deactivation of a provider or supplier's
billing privileges.
In addition, we propose in section VI.C. of this proposed rule two
regulatory clarifications related to HHA changes of ownership and HHA
capitalization requirements.
7. Survey and Enforcement Requirements for Hospice Programs
In this proposed rule, CMS seeks to increase and improve
transparency, oversight, and enforcement for hospice programs in
addition to implementing the provisions of Division CC, section 407(b)
of CAA 2021. CMS continues to review and revise our health and safety
requirements and survey processes to ensure that they are effective in
driving quality of care for hospice programs.

B. Summary of the Provisions of This Rule

1. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this rule, we provide data analyses on PDGM
utilization since implementation of the new payment system in CY 2020.
We describe a methodology for determining budget neutrality for CY 2020
and solicit comments on the difference between assumed versus actual
behavior change on estimated aggregate expenditures.
In section II.B.3. of this rule, we propose to recalibrate the PDGM
case-mix weights, functional levels, and comorbidity adjustment
subgroups while proposing to maintain the CY 2021 LUPA thresholds for
CY 2022. The PDGM relies on clinical characteristics and other patient
information to place patients into meaningful payment categories and
eliminates the use of therapy service thresholds, as required by
section 1895(b)(4)(B) of the Act, as amended by section 51001(a)(3) of
the Bipartisan Budget Act of 2018 (BBA of 2018).
In section II.B.4. of this rule, we propose to update the home
health wage index, the CY 2022 national, standardized 30-day period
payment amounts and the CY 2022 national per-visit payment amounts by
the home health payment update percentage. The home health payment
update percentage for CY 2022 is estimated to be 1.8 percent.
Additionally, this proposed rule proposes to update the FDL ratio to
0.41 for CY 2022.
In section II.B.4.(c).(5). of this proposed rule, we discuss the
regulations under Division CC, section 115 of CAA 2021 that revised
Sec. Sec. 484.55(a)(2) and 484.55(b)(3) to allow occupational
therapists (OTs) to conduct initial and comprehensive assessments for
all Medicare beneficiaries under the home health benefit when the plan
of care does not initially include skilled nursing care. We propose to
utilize the physical therapy (PT) LUPA add-on factor to establish the
OT add-on factor for the LUPA add-on payment amounts.
In section II.B.6. of this proposed rule, we are proposing
conforming regulations text changes at Sec. 409.43 to reflect that
allowed practitioners, in addition to physicians, may establish and
periodically review the home health plan of care in accordance with
section 3708 of the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act) (Pub. L. 116-136, March 27, 2020).
2. Home Health Value Based Purchasing (HHVBP) Model
In section III.A. of this proposed rule, we are proposing to expand
the HHVBP Model to all Medicare-certified HHAs in the 50 States,
territories, and District of Columbia beginning January 1, 2022 with CY
2022 as the first performance year and CY 2024 as the first payment
year, with a proposed maximum payment adjustment, upward or downward,
of 5-percent. We propose that the expanded Model would generally use
benchmarks, achievement thresholds, and improvement thresholds based on
CY 2019 data to assess achievement or improvement of HHA performance on
applicable quality measures and that HHAs would compete nationally in
their applicable size cohort, smaller-volume HHAs or larger-volume
HHAs, as defined by the number of complete unique beneficiary episodes
for each HHA in the year prior to the performance year. All HHAs
certified to participate in the Medicare program prior to January 1,
2021 would be required to participate and eligible to receive an annual
Total Performance Score based on their CY 2022 performance. We propose
the applicable measure set for the expanded Model, as well as policies
related to the removal, modification, and suspension of quality
measures, and the addition of new measures and the form, manner and
timing of the OASIS-based, HHCAHPS survey-based, and claims-based
measures submission in the proposed applicable measure set beginning CY
2022 and subsequent years. We also include proposals for an appeals
process, an extraordinary circumstances exception policy, and public
reporting of annual performance data under the expanded Model.
In section III.B. of this proposed rule, we propose to end the
original HHVBP Model one year early. We propose that we would not use
CY 2020 performance data for the HHAs in the nine original Model States
to apply payment adjustments for the CY 2022 payment year. We also
propose that we would not publicly report CY 2020 (performance year 5)
annual performance data under the original HHVBP Model.
3. HH QRP
In section IV.C. of this proposed rule, we propose updates to the
HH QRP including: The removal of one OASIS-based measure, replacement
of two claims-based measures with one claims-based quality measure;
public reporting of two measures; revising the compliance date for
certain reporting

[[Page 35877]]

requirements for certain HH QRP reporting requirements and requests for
information regarding digital quality measures and health equity.
4. Proposed Changes to the Home Health Conditions of Participation
In section IV.D. of this rule, we propose to make permanent
selected regulatory blanket waivers related to home health aide
supervision that were issued to Medicare participating home health
agencies during the COVID-19 PHE. In addition, Division CC, section 115
of CAA 2021 requires CMS to permit an occupational therapist to conduct
the initial assessment visit and complete the comprehensive assessment
under the Medicare program, but only when occupational therapy is on
the home health plan of care with either physical therapy or speech
therapy and skilled nursing services are not initially on the plan of
care. We are proposing changes to the home health aide supervision
requirements at Sec. 484.80(h)(1) and (h)(2) and we are proposing
conforming regulation text changes at Sec. 484.55(a)(2) and (b)(3),
respectively to allow occupational therapists completing the initial
and comprehensive assessments for patients
5. Medicare Coverage of Home Infusion Therapy
In section V.A.1. of this proposed rule, we discuss the home
infusion therapy services payment categories, as finalized in the CYs
2019 and 2020 HH PPS final rules with comment period (83 FR 56406, 84
FR 60611). In section V.A.2. of this proposed rule, we discuss the home
infusion therapy services payment adjustments including a proposal to
update the GAFs used for wage adjustment and a proposal to maintain the
percentages finalized for the initial and subsequent visit policy. In
section V.A.3. of this proposed rule, we discuss updates to the home
infusion therapy services payment rates for CY 2022, as required by
section 1834(u) of the Act.
6. Provider and Supplier Enrollment Processes
In section VI. of this proposed rule, we address a number of
provisions regarding Medicare provider and supplier enrollment. Most of
these provisions involve the incorporation into 42 CFR part 424,
subpart P of certain subregulatory policies. These are addressed in
section VI.B. of this proposed rule and include, for example, policies
related to: (1) The effective date of billing privileges for certain
provider and supplier types and certain provider enrollment
transactions; and (2) the deactivation of a provider or supplier's
billing privileges.
In addition, we propose in section VI.C. of this proposed rule two
regulatory clarifications related to HHA changes of ownership and HHA
capitalization requirements.
7. Survey and Enforcement Requirements for Hospice Programs
In section VII. of this proposed rule, there are a number of
provisions related to Division CC, section 407 of CAA 2021. These
proposed provisions enhance the hospice program survey process by
requiring the use of multidisciplinary survey teams, prohibiting
surveyor conflicts of interest, expanding CMS-based surveyor training
to accrediting organizations (AOs), and requiring AOs with CMS-approved
hospice programs to begin use of the Form CMS-2567. Additionally, the
proposed provisions establish a hospice program complaint hotline.
Finally, the proposed provisions create a Special Focus Program (SFP)
for poor-performing hospice programs and the authority for imposing
enforcement remedies for noncompliant hospice programs including the
development and implementation of a range of remedies as well as
procedures for appealing determinations regarding these remedies.
Section 1865(a) of the Act provides that CMS may recognize and
approve national AO Medicare accreditation programs which demonstrate
that their health and safety standards and survey and oversight
processes meet or exceed those used by CMS to determine compliance with
applicable requirements. The CAA 2021 provisions expanding requirements
for AOs will apply to AOs that accredit and ``deem'' hospice programs,
and currently there are three such AOs: Accreditation Commission for
Health Care (ACHC), Community Health Accreditation Partner (CHAP), and
The Joint Commission (TJC). Half of all the Medicare-certified hospices
have been deemed by these AOs.
We describe and solicit comments on all aspects of these proposed
survey and enforcement provisions for hospice programs.
8. Inpatient Rehabilitation Facility Quality Reporting Program
In section IX.A. of this proposed rule, we propose to modify the
compliance date for certain reporting requirements in the IRF QRP.
9. Long Term Care Hospital Quality Reporting Program
In section IX.B. of this proposed rule, we propose to modify the
compliance date for certain reporting requirements in the -LTCH QRP.

C. Summary of Costs, Transfers, and Benefits

BILLING CODE 4120-01-P

[[Page 35878]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.000

BILLING CODE 4120-01-C

II. Home Health Prospective Payment System

A. Overview of the Home Health Prospective Payment System

1. Statutory Background
Section 1895(b)(1) of the Act requires the Secretary to establish a
Home Health Prospective Payment System (HH PPS) for all costs of home
health services paid under Medicare. Section 1895(b)(2) of the Act
required that, in defining a prospective payment amount, the Secretary
will consider an appropriate unit of service and the number, type, and
duration of visits provided within that unit, potential changes in the
mix of services provided within that unit and their cost, and a general
system design that provides for continued access to quality services.
In accordance with the statute, as amended by the Balanced Budget
Act of 1997 (BBA), (Pub. L. 105-33, enacted August 5, 1997) we
published a final rule in the July 3, 2000 Federal Register (65 FR
41128) to implement the HH PPS legislation. Section 4603(a) of the BBA
allowed the Secretary to consider an appropriate unit of service and at
such time, a 60-day unit of payment was established. The July 2000
final rule established requirements for the new HH PPS for home health
services as required by section 4603 of the BBA, as subsequently
amended by section 5101 of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act for Fiscal Year 1999 (OCESAA) (Pub. L.
105-277, enacted October 21, 1998); and by sections 302, 305, and 306
of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999, (BBRA) (Pub. L. 106-113,

[[Page 35879]]

enacted November 29, 1999). For a complete and full description of the
HH PPS as required by the BBA, see the July 2000 HH PPS final rule (65
FR 41128 through 41214).
Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v)
to the Act, requiring home health agencies (HHAs) to submit data for
purposes of measuring health care quality, and linking the quality data
submission to the annual applicable payment percentage increase. This
data submission requirement is applicable for CY 2007 and each
subsequent year. If an HHA does not submit quality data, the home
health market basket percentage increase is reduced by 2 percentage
points. In the November 9, 2006 Federal Register (71 FR 65935), we
published a final rule to implement the pay-for-reporting requirement
of the DRA, which was codified at Sec. 484.225(h) and (i) in
accordance with the statute. The pay-for-reporting requirement was
implemented on January 1, 2007.
Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of
2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a
change to the home health unit of payment to 30-day periods beginning
January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new
subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the
Secretary to calculate a standard prospective payment amount (or
amounts) for 30-day units of service furnished that end during the 12-
month period beginning January 1, 2020, in a budget neutral manner,
such that estimated aggregate expenditures under the HH PPS during CY
2020 are equal to the estimated aggregate expenditures that otherwise
would have been made under the HH PPS during CY 2020 in the absence of
the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of
the Act requires that the calculation of the standard prospective
payment amount (or amounts) for CY 2020 be made before the application
of the annual update to the standard prospective payment amount as
required by section 1895(b)(3)(B) of the Act.
Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in
calculating the standard prospective payment amount (or amounts), the
Secretary must make assumptions about behavior changes that could occur
as a result of the implementation of the 30-day unit of service under
section 1895(b)(2)(B) of the Act and case-mix adjustment factors
established under section 1895(b)(4)(B) of the Act. Section
1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide
a description of the behavior assumptions made in notice and comment
rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH
PPS final rule with comment period (83 FR 56461).
Section 51001(a)(2)(B) of the BBA of 2018 also added a new
subparagraph (D) to section 1895(b)(3) of the Act. Section
1895(b)(3)(D)(i) of the Act requires the Secretary to annually
determine the impact of differences between assumed behavior changes,
as described in section 1895(b)(3)(A)(iv) of the Act, and actual
behavior changes on estimated aggregate expenditures under the HH PPS
with respect to years beginning with 2020 and ending with 2026. Section
1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a
manner determined appropriate, through notice and comment rulemaking,
to provide for one or more permanent increases or decreases to the
standard prospective payment amount (or amounts) for applicable years,
on a prospective basis, to offset for such increases or decreases in
estimated aggregate expenditures, as determined under section
1895(b)(3)(D)(i) of the Act. Additionally, 1895(b)(3)(D)(iii) of the
Act requires the Secretary, at a time and in a manner determined
appropriate, through notice and comment rulemaking, to provide for one
or more temporary increases or decreases to the payment amount for a
unit of home health services for applicable years, on a prospective
basis, to offset for such increases or decreases in estimated aggregate
expenditures, as determined under section 1895(b)(3)(D)(i) of the Act.
Such a temporary increase or decrease shall apply only with respect to
the year for which such temporary increase or decrease is made, and the
Secretary shall not take into account such a temporary increase or
decrease in computing the payment amount for a unit of home health
services for a subsequent year. Finally, section 51001(a)(3) of the BBA
of 2018 amends section 1895(b)(4)(B) of the Act by adding a new clause
(ii) to require the Secretary to eliminate the use of therapy
thresholds in the case-mix system for CY 2020 and subsequent years.
2. Current System for Payment of Home Health Services Beginning in CY
2020 and Subsequent Years
For home health periods of care beginning on or after January 1,
2020, Medicare makes payment under the HH PPS on the basis of a
national, standardized 30-day period payment rate that is adjusted for
case-mix and area wage differences in accordance with section
51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-day
period payment rate includes payment for the six home health
disciplines (skilled nursing, home health aide, physical therapy,
speech-language pathology, occupational therapy, and medical social
services). Payment for non-routine supplies (NRS) is now also part of
the national, standardized 30-day period rate. Durable medical
equipment provided as a home health service, as defined in section
1861(m) of the Act, is paid the fee schedule amount or is paid through
the competitive bidding program and such payment is not included in the
national, standardized 30-day period payment amount.
To better align payment with patient care needs and to better
ensure that clinically complex and ill beneficiaries have adequate
access to home health care, in the CY 2019 HH PPS final rule with
comment period (83 FR 56406), we finalized case-mix methodology
refinements through the Patient-Driven Groupings Model (PDGM) for home
health periods of care beginning on or after January 1, 2020. The PDGM
did not change eligibility or coverage criteria for Medicare home
health services, and as long as the individual meets the criteria for
home health services as described at 42 CFR 409.42, the individual can
receive Medicare home health services, including therapy services. For
more information about the role of therapy services under the PDGM, we
refer readers to the Medicare Learning Network (MLN) Matters article
SE2000 available at <a href="https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005">https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005</a>. To adjust for
case-mix for 30-day periods of care beginning on and after January 1,
2020, the HH PPS uses a 432-category case mix classification system to
assign patients to a home health resource group (HHRG) using patient
characteristics and other clinical information from Medicare claims and
the Outcome and Assessment Information Set (OASIS) assessment
instrument. These 432 HHRGs represent the different payment groups
based on five main case-mix categories under the PDGM, as shown in
Figure 1. Each HHRG has an associated case-mix weight that is used in
calculating the payment for a 30-day period of care. For periods of
care with visits less than the low-utilization payment adjustment
(LUPA) threshold for the HHRG, Medicare pays national per-visit rates
based on the discipline(s) providing the

[[Page 35880]]

services. Medicare also adjusts the national standardized 30-day period
payment rate for certain intervening events that are subject to a
partial payment adjustment (PEP). For certain cases that exceed a
specific cost threshold, an outlier adjustment may also be available.
Under this case-mix methodology, case-mix weights are generated for
each of the different PDGM payment groups by regressing resource use
for each of the five categories (admission source, timing clinical
grouping, functional impairment level, and comorbidity adjustment)
using a fixed effects model. A detailed description of each of the
case-mix variables under the PDGM have been described previously, and
we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through
70305).
[GRAPHIC] [TIFF OMITTED] TP07JY21.001

B. Proposed Provisions for Payment Under the HH PPS

1. Monitoring the Effects of the Implementation of PDGM
a. Background
The PDGM made several changes to the HH PPS, including replacing
60-day episodes of care with 30-day periods of care, removing therapy
volume from directly determining payment, and developing 432 case-mix
adjusted payment groups in place of the previous 153 groups. In the CY
2020 HH PPS final rule with comment period (84 FR 60513), we stated
that continued monitoring is needed to understand how the PDGM,
including the variables that determine the case-mix weights, affects
the provision of home health care in order to inform any future
refinements, if needed.
CMS recognizes it takes time for HHAs to operationalize and adjust
to a new payment system. We believe these adjustments are still
occurring and HHAs are still adjusting to the new payment system given
that these changes are the most significant changes to the HH PPS since
its inception in

[[Page 35881]]

2000. Additionally, the COVID-19 PHE was declared on January 31, 2020
and was retroactive to January 27, 2020.\1\ Therefore, any emerging
trends may or may not be temporary, permanent, or unrelated to the
implementation of the PDGM. Nevertheless, we understand stakeholders
want to learn about how home health utilization patterns may have
changed under the PDGM, so we are providing preliminary information in
this proposed rule.
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\1\ <a href="https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx">https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx</a>.
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b. Claims Data Overview Used in PDGM Monitoring
We believe using actual claims data, whenever possible, will
provide the most comprehensive and complete evaluation of changes
before and after implementation of the PDGM. Prior to the PDGM, HHAs
were paid a case-mix adjusted payment for 60-day episodes of care using
one of the 153 HHRGs with various therapy utilization thresholds. Under
the PDGM, HHAs are paid a case-mix adjusted payment for 30-day periods
of care using one of the 432 HHRGs that do not include therapy
thresholds. For our analysis, we used the analytic file described in
the CY 2020 HH PPS final rule with comment period (84 FR 60512) and
applied the three behavioral assumptions to only half of the 30-day
periods of care (randomly selected). That is, we used the CY 2018 home
health data to divide one 60-day episode of care into two simulated 30-
day periods of care that were used to set payment rates in the CY 2020
HH PPS final rule with comment period (84 FR 60518). We also used the
analytic file described in the CY 2021 HH PPS final rule (85 FR 70298)
and applied the three behavioral assumptions to only half of the 30-day
periods of care (randomly selected). That is, we used the CY 2019 home
health data to divide one 60-day episode of care into two simulated 30-
day periods of care that we used to for routine rate-setting updates
and changes for CY 2021. The simulated data in these analytical files
represent pre-PDGM utilization. We refer readers to the CY 2019 HH PPS
proposed rule (83 FR 32382 through 32388) for a detailed description of
how these analytical files were created. Finally, we used CY 2020
claims data as of March 30, 2021 to analyze utilization changes post-
implementation of the PDGM and 30-day unit of payment.
c. Routine PDGM Monitoring
As noted previously, section 1895(b)(3)(D) of the Act requires CMS
to annually determine the impact of assumed versus actual behavior
changes on aggregate expenditures under the HH PPS for CYs 2020 through
2026. Analyses for routine monitoring may include, but would not be
limited to, analyzing: Overall total 30-day periods of care and average
periods of care per HHA user; the distribution of visits in a 30-day
period of care; the percentage of periods that receive the low-
utilization payment adjustment (LUPA); the percentage of 30-day periods
of care by clinical group, comorbidity adjustment, admission source,
timing, and functional impairment level; and the proportion of 30-day
periods of care with and without any therapy visits. As a reminder, the
beginning of CY 2020 included ongoing 60-day episodes of care that
began in CY 2019 and ended in CY 2020. Depending on the length of the
remainder of the episode, those 60-day episodes were simulated into one
or two 30-day periods of care and are included in this year's proposed
rule monitoring tables. Approximately, 6.1 percent of the 30-day
periods of care in CY 2020 data were simulated because the original 60-
day episode of care began in CY 2019 and ended in CY 2020. We remind
readers, our preliminary analysis described in this section is not tied
to any quality program.
(1) Utilization
We evaluate utilization by comparing our simulated 30-day periods
in our analytical files, to actual CY 2020 PDGM claims, as described
previously. The analytic files used for annual ratesetting do not
include all 60-day episodes or 30-day periods of care because some of
these episodes/periods are dropped for various reasons (for example,
the claim could not be matched to an OASIS assessment). For all of the
tables that follow, we examined utilization for CY 2018 simulated 30-
day periods of care, CY 2019 simulated 30-day periods of care, and CY
2020 actual 30-day periods of care. Table 2 shows the overall
utilization of home health over time. Table 3 shows utilization of
visits per 30-day period of care by home health discipline over time.
Preliminary data indicates while the number of 30-day periods of care
decreased between CY 2018 and CY 2020, the average number of 30-day
periods of care per unique HHA user is similar. Additionally, our
preliminary data indicates, on average, the number of visits per 30-day
period of care for all disciplines decreased between CY 2018 and CY
2020. On average, the total number of visits decreased by 1.27 visits
per 30-day period of care between CY 2018 and CY 2020. Table 4 shows
the proportion of 30-day periods of care that are LUPAs and the average
number of visits per discipline of those LUPA 30-day periods of care
over time.
BILLING CODE 4120-01-P

[[Page 35882]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.002

[GRAPHIC] [TIFF OMITTED] TP07JY21.003

[[Page 35883]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.004

BILLING CODE 4120-01-C
(2) Analysis of 2019 Cost Report Data for 30-Day Periods of Care
In the CY 2020 HH PPS final rule with comment period (84 FR 60483),
we provided a summary of analysis on fiscal year (FY) 2017 HHA cost
report data and how such data, if used, would impact our estimate of
the percentage difference between Medicare payments; the CY 2020 30-day
payment amount and estimated, average HHA costs for a 30-day period of
care. In that rule, we utilized FY 2017 cost reports and CY 2017 home
health claims to estimate both 60-day episode of care and 30-day period
of care costs. We then updated the estimated CY 2017 60-day episode
costs and 30-day period of care costs by the home health market basket
update, reduced by the productivity adjustment for CYs 2018, 2019 and
2020 to calculate the 2020 estimated 60-day episode and 30-day period
of care costs. As stated in the CY 2020 HH PPS final rule with comment
period (84 FR 60485), we estimated that the CY 2020 30-day payment
amount was approximately 16 percent higher than the average costs for a
30-day period of care. In MedPAC's March 2020 Report to Congress,\2\
their review of home health payment adequacy found that ``access is
more than adequate in most areas and that Medicare payments are
substantially in excess of costs''.
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\2\ <a href="http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch9_sec.pdf?sfvrsn=0">http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch9_sec.pdf?sfvrsn=0</a>.
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In this proposed rule, we examined 2019 HHA Medicare cost reports,
as this is the most recent and complete cost report data at the time of
rulemaking, and CY 2020 30-day period of care home health claims, to
estimate 30-day period of care costs. We excluded LUPAs and PEPs in the
average number of visits. The 2019 average NRS costs per visit is
$3.94. We updated the estimated 30-day period of care costs, 2019
average costs per visit with NRS by the CY 2020 home health market
basket update, reduced by the productivity adjustment of 2.6 percent.
Table 5 shows the estimated average costs for 30-day periods of care by
discipline with NRS and the total 30-day period of care costs with NRS
for CY 2020.

[[Page 35884]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.005

The CY 2020 national, standardized 30-day period payment rate was
$1,864.03, which is approximately 34 percent more than the estimated CY
2020 30-day period cost of $1,394.68. Note that in the CY 2020 HH PPS
final rule with comment period (84 FR 60484), the estimated average
number of visits for a 30-day period of care in 2017 was estimated to
be 10.5 visits. Using actual CY 2020 claims data, the average number of
visits in a 30-day period was 9.25 visits--a decrease of approximately
12 percent. We recognize that with the COVID-19 PHE, the 2019 data on
the Medicare cost reports may not reflect the most recent changes such
as increased telecommunications technology costs, increased personal
protective equipment (PPE) costs, and hazard pay. In its March 2021
Report to Congress, to estimate Medicare margins for 2021, MedPAC
assumed a cost growth of 3 percent for CY 2020 (2 percentage points due
to inflation and higher expenses for PPE and telehealth and 1
percentage point due to temporary surge pricing for PPE and other
temporary costs of the PHE).\3\ Furthermore, MedPAC noted that for more
than a decade, payments under the HH PPS have significantly exceeded
HHAs' costs primarily due to two factors--agencies reducing visits to
reduce episode costs and cost growth in recent years has been lower
than the annual payment updates.\4\ As shown in Table 3 in this
proposed rule, HHAs have reduced visits under the PDGM in CY 2020. When
the 2020 cost reports become available, we will update the estimated
30-day period of care costs in CY 2020 in future rulemaking.
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\3\ <a href="http://www.medpac.gov/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf?sfvrsn=0">http://www.medpac.gov/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf?sfvrsn=0</a>.
\4\ Ibid.
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(3) Clinical Groupings and Comorbidities
Each 30-day period of care is grouped into one of 12 clinical
groups, which describe the primary reason for which patients are
receiving home health services under the Medicare home health benefit.
The clinical grouping is based on the principal diagnosis reported on
the home health claim. Table 6 shows the distribution of the 12
clinical groups over time. We also include the average case-mix weight
for all 30-day periods in each of the clinical groups in CY 2020. In
other words, the average case-mix weight for each clinical group
includes all possible comorbidity adjustments, admission source and
timing, and functional impairment levels. We refer readers to Table 16
in the CY 2020 HH PPS final rule with comment period (84 FR 60522
through 60533) for the CY 2020 PDGM LUPA threshold and case mix weight
for each HHRG payment group.

[[Page 35885]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.006

Thirty-day periods will receive a comorbidity adjustment category
based on the presence of certain secondary diagnoses reported on home
health claims. These diagnoses are based on a home health specific list
of clinically and statistically significant secondary diagnosis
subgroups with similar resource use. We refer readers to section II. of
this proposed rule and the CY 2020 final rule with comment period (84
FR 60493) for further information on the categories of the comorbidity
adjustment. Home health 30-day periods of care can receive a low or a
high comorbidity adjustment, or no comorbidity adjustment. Table 7
shows the distribution of 30-day periods of care by comorbidity
adjustment category for all 30-day periods. We also include the average
case-mix weight for each of the comorbidity adjustments in CY 2020. In
other words, the average case-mix weight for each comorbidity
adjustment includes all possible clinical groupings, admission source
and timing, and functional impairment levels.
[GRAPHIC] [TIFF OMITTED] TP07JY21.007

(4) Admission Source and Timing
Each 30-day period of care is classified into one of two admission
source categories--community or institutional--depending on what
healthcare setting was utilized in the 14 days prior to receiving home
health care. Thirty-day periods of care for beneficiaries with any
inpatient acute care hospitalizations, inpatient psychiatric facility
(IPF) stays, skilled nursing facility (SNF) stays, inpatient
rehabilitation facility (IRF) stays, or long-term care hospital (LTCH)
stays within 14 days prior to a home health admission are designated as
institutional admissions. Thirty-day periods of care are classified as
``early'' or ``late'' depending on when they occur within a sequence of
30-day periods of care. The first 30-day period of care is classified
as early and all subsequent 30-day periods of care in the sequence
(second or later) are classified as late. A subsequent 30-day period of
care would not be considered early unless there is

[[Page 35886]]

a gap of more than 60 days between the end of one previous period of
care and the start of another. Information regarding the timing of a
30-day period of care comes from Medicare home health claims data and
not the OASIS assessment to determine if a 30-day period of care is
``early'' or ``late''. Table 8 shows the distribution of 30-day periods
of care by admission source and timing over time. We also include the
average case-mix weight for each of the admission source and period
timing in CY 2020. In other words, the average case-mix weight for each
admission source and period timing includes all possible clinical
groupings, comorbidity adjustment, and functional impairment levels. We
refer readers to Table 16 in the CY 2020 HH PPS Final Rule with comment
period (84 FR 60522 through 60533) for the CY 2020 PDGM LUPA threshold
and case mix weight for each HHRG payment group.
[GRAPHIC] [TIFF OMITTED] TP07JY21.008

(5) Functional Impairment Level
Each 30-day period of care is placed into one of three functional
impairment levels (low, medium, or high) based on responses to certain
OASIS functional items associated with grooming, bathing, dressing,
ambulating, transferring, and risk for hospitalization. The specific
OASIS items that are used for the functional impairment level are found
in Table 7 in the CY 2020 HH PPS final rule with comment period (84 FR,
60490). Responses to these OASIS items are grouped together into
response categories with similar resource use and each response
category has associated points. A more detailed description as to how
these response categories were established can be found in the
technical report, ``Overview of the Home Health Groupings Model''
posted on the HHA web page.\5\ The sum of these points' results in a
functional impairment level score used to group 30-day periods of care
into a functional impairment level with similar resource use. The
scores associated with the functional impairment levels vary by
clinical group to account for differences in resource utilization. The
functional impairment level will remain the same for the first and
second 30-day periods of care unless there has been a significant
change in condition which that warranted an ``other follow-up''
assessment prior to the second 30-day period of care. For each 30-day
period of care, the Medicare claims processing system will look for the
most recent OASIS assessment based on the claims ``from date.'' Table 9
shows the distribution of 30-day periods by functional status. We also
include the average case-mix weight for each functional impairment
level in CY 2020. In other words, the average case-mix weight for each
functional impairment level includes all possible clinical groupings,
comorbidity adjustment, and admission source and period timing. We
refer readers to Table 16 in the CY 2020 HH PPS Final Rule with comment
period (84 FR 60522 through 60533) for the CY 2020 PDGM LUPA threshold
and case mix weight for each HHRG payment group.
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\5\ Overview of the Home Health Groupings Model. November 18,
2016. <a href="https://downloads.cms.gov/files/hhgm%20technical%20report%20120516%20sxf.pdf">https://downloads.cms.gov/files/hhgm%20technical%20report%20120516%20sxf.pdf</a>.
[GRAPHIC] [TIFF OMITTED] TP07JY21.009

[[Page 35887]]

Currently, the functional impairment level is determined by
responses to certain OASIS items associated with functional activities
of daily living and risk of hospitalization; that is, responses to
OASIS items M1800-M1860 and M1032. However, the Improving Medicare
Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-
185, enacted on October 6, 2014) amended Title XVIII of the Act to
include enacting new data reporting requirements for certain post-acute
care (PAC) providers, including HHAs. Sections 1899B(b)(1)(A) of the
Act requires the Secretary to require home health agencies to report
standardized patient assessment data beginning no later than January 1,
2019. The standardized patient assessment data categories include
functional status, such as mobility and self-care at admission and
discharge, in accordance with 1899B(b)(1)(B)(i) of the Act. As such,
CMS finalized adding the functional items, Section GG, ``Functional
Abilities and Goals'', to the OASIS data set, effective January 1,
2019, in order to be able to measure functional status across PAC
providers. At the time of CY 2020 rulemaking, we did not yet have the
data to determine the effect, if any, of these newly added items on
resource costs utilization during a home health period of care for use
in the PDGM. Therefore, the GG functional items are not currently used
to determine the functional impairment level under the PDGM.
We have examined the correlation between the current functional
items used for payment (that is, M1800-1860) and the analogous GG
items. We note that M1032, Risk for Hospitalization, does not have a
corresponding GG item. Our preliminary analysis shows there is a
correlation between the current responses to the M1800-1860 items and
the GG items. However, there are certain information in M1800 items
that are being collected at follow-up that are not collected with GG
items (for example, the M1800 items associated with upper and lower
body dressing are collected at follow up). Additionally, the GG items
include an ``Activity Not Attempted'' (ANA) option, meaning the
clinician did not put a response for the patient. Furthermore, there
are a variety of ANA responses, including ``Not attempted due to
medical or safety concerns'', and ``Not applicable''. Figure 2 shows
the frequencies by response type in CY 2020 to the OASIS GG items.
[GRAPHIC] [TIFF OMITTED] TP07JY21.010

Our analysis of the GG items shows a significant amount of these
ANA responses, making it difficult to map to the corresponding M1800-
1860 item responses. Therefore, we will continue to monitor the GG
items to determine the correlation between the current functional items
used to case-mix adjust home health payments and the GG items, and we
will provide additional analysis of the GG functional items in future
rulemaking.
(6) Therapy Visits
Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act
eliminated the use of therapy thresholds in calculating payments for CY
2020 and subsequent years. Prior to implementation of the PDGM, HHAs
could receive an adjustment to payment based on the number of therapy
visits provided during a 60-day episode of care. As such, we examined
the proportion of simulated 30-day periods with and without any therapy
visits for CYs 2018 and 2019, prior to the removal of therapy
thresholds. We also examined the proportion of actual 30-day periods of
care with and without therapy visits for CY 2020, after the removal of
therapy thresholds. To be

[[Page 35888]]

covered as skilled therapy, the services must require the skills of a
qualified therapist (that is, PT, OT, or SLP) or qualified therapist
assistant and must be reasonable and necessary for the treatment of the
patient's illness or injury.\6\ As shown in Table 3, we are monitoring
the number of visits per 30-day periods of care by each home health
discipline. Any 30-day period of care can include both therapy and non-
therapy visits. If any 30-day period of care consisted of only visits
for PT, OT, and/or SLP, then this 30-day period of care is considered
``therapy only''. If any 30-day period of care consisted of only visits
for skilled nursing, home health aide, or social worker, then this 30-
day period of care is considered ``no therapy''. If any 30-day period
of care consisted of at least one therapy visit and one non-therapy,
then this 30-day period of care is considered ``therapy + non-
therapy''. Table 10 shows the proportion of 30-day periods of care with
only therapy visits, at least one therapy visit and one non-therapy
visits, and no therapy visits. Figure 3 shows the proportion of 30-day
periods of care by the number of therapy visits (excluding zero)
provided during 30-day periods of care.
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\6\ Medicare Benefit Policy Manual, Chapter 7 Home Health
Services, Section 40.2 Skilled Therapy Services <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf</a>.
[GRAPHIC] [TIFF OMITTED] TP07JY21.011

[GRAPHIC] [TIFF OMITTED] TP07JY21.012

Both Table 10 and Figure 3, as previously discussed, indicate there
have been changes in the distribution of both therapy and non-therapy
visits in CY 2020. For example, the percent of 30-day periods with six
or less therapy

[[Page 35889]]

visits during a 30-day period increased in CY 2020. However, the
percent of 30-day periods with seven or more therapy visits decreased
in CY 2020.
In addition, we also examined the proportion of 30-day periods of
care with and without skilled nursing, social work, or home health aide
visits for CYs 2018, 2019 and 2020. Table 11 shows the number of 30-day
periods of care with only skilled nursing visits, at least one skilled
nursing visit and one other visit type (therapy or non-therapy), and no
skilled nursing visits. Table 13 shows the number of 30-day periods of
care with and without home health aide and/or social worker visits.
[GRAPHIC] [TIFF OMITTED] TP07JY21.013

[GRAPHIC] [TIFF OMITTED] TP07JY21.014

We will continue to monitor the provision of home health services,
including any changes in the number and duration of home health visits,
composition of the disciplines providing such services, and overall
home health payments to determine if refinements to the case-mix
adjustment methodology may be needed in the future.
We solicit public comments on the preliminary data analysis
presented in this rule and we solicit comments on whether there are
other analyses that should be conducted to examine the effects of the
PDGM on home health expenditures and utilization.
2. Comment Solicitation on the Annual Determination of the Impact of
Differences Between Assumed Behavior Changes and Actual Behavior
Changes on Estimated Aggregate Payment Expenditures Under the HH PPS
a. Background
Section 1895(b)(3)(A)(iv) of the Act, required CMS, with respect to
payments for home health units of service furnished that end during the
12-month period beginning January 1, 2020, to calculate a standard
prospective payment amount (or amounts) for 30-day units of service in
a manner such that the estimated aggregate amount of expenditures would
be equal to the estimated aggregate amount of expenditures that
otherwise would have been made had the 30-day unit of payment not been
enacted. In calculating such amount (or amounts), CMS was required to
make assumptions about behavior changes that could occur as a result of
the implementation of the 30-day unit of payment and the case-mix
adjustment factors that eliminated the use of therapy thresholds. CMS
was to provide a description of such assumptions through notice and
comment rulemaking.
In the CY 2019 HH PPS final rule with comment period (83 FR 56454),
as required by law, we stated that this means we were required to
calculate a 30-day period payment amount for CY 2020 in a budget
neutral manner such that estimated aggregate expenditures under the HH
PPS during CY 2020 were equal to the estimated aggregate expenditures
that otherwise would have been made under the HH PPS during CY 2020 in
the absence of the change to a 30-day unit of payment and the
implementation of the PDGM case-mix adjustment methodology. This means

[[Page 35890]]

that aggregate Medicare payments under the new 432-group payment system
and 30-day unit of payment would be the same as they would have been
under the 153-group payment system and 60-day unit of payment.
In the CY 2019 HH PPS final rule with comment period (83 FR 56455),
we finalized three behavior assumptions in order to calculate a 30-day
budget-neutral payment amount for CY 2020:
<bullet> Clinical Group Coding: The clinical group is determined by
the principal diagnosis code for the patient as reported by the HHA on
the home health claim. This behavior assumption assumes that HHAs will
change their documentation and coding practices and put the highest
paying diagnosis code as the principal diagnosis code in order to have
a 30-day period be placed into a higher-paying clinical group.
<bullet> Comorbidity Coding: The PDGM further adjusts payments
based on patients' secondary diagnoses as reported by the HHA on the
home health claim. The OASIS only allows HHAs to designate 1 principal
diagnosis and 5 secondary diagnoses while the home health claim allows
HHAs to designate 1 principal diagnosis and up to 24 secondary
diagnoses. This behavior assumption assumes that by taking into account
additional ICD-10-CM diagnosis codes listed on the home health claim
(beyond the 6 allowed on the OASIS), more 30-day periods of care will
receive a comorbidity adjustment.
<bullet> LUPA Threshold: This behavior assumption assumes that for
one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold
HHAs will provide 1 to 2 extra visits to receive a full 30-day payment.
There are overlaps and interactions between these behavior
assumptions, and when combined, the budget-neutral payment amount for
CY 2020 resulted in a proposed -8.389 percent adjustment to the 30-day
period payment amount compared to the payment amount calculated in a
budget neutral manner without these assumptions applied. In response to
the proposed rule, commenters stated that CMS overestimated the
magnitude of the assumed behavior changes. We reconsidered the
frequency of the assumed behaviors during the first year of the
transition to the new unit of payment and case-mix adjustment
methodology in response to these comments, and in the CY 2020 HH PPS
final rule with comment period (84 FR 60519), we finalized a -4.36
percent behavior assumption adjustment in order to calculate a
national, standardized 30-day base payment rate. After applying the
wage index budget neutrality factor and the home health payment update,
the CY 2020 30-day payment rate was set at $1,864.03, and for
determining outlier payments the fixed-dollar loss (FDL) ratio was set
at 0.56.
Section 1895(b)(3)(D)(i) of the Act requires CMS to annually
determine the impact of the differences between assumed behavior
changes and actual behavior changes on estimated aggregate expenditures
beginning with 2020 and ending with 2026. In the CY 2020 final rule (84
FR 60513), we stated that we interpret actual behavior changes to
encompass both behavior changes that were previously outlined, as
assumed by CMS, and other behavior changes not identified at the time
that the budget neutral 30-day payment for CY 2020 was determined. As
required by 1895(b)(3)(D)(ii) of the Act, the Secretary shall, at a
time and in a manner determined appropriate, through notice and comment
rulemaking, provide for one or more permanent increases or decreases to
the standard prospective payment amount (or amounts) for applicable
years, on a prospective basis, to offset for such increases or
decreases in estimated aggregate expenditures.
As required by section 1895(b)(3)(D)(iii) of the Act, the Secretary
shall, at a time and in a manner determined appropriate, through notice
and comment rulemaking, provide for one or more temporary increases or
decreases to the payment amount for a unit of home health services for
applicable years, on a prospective basis, to offset for such increases
or decreases in estimated aggregate expenditures. Such a temporary
increase or decrease shall apply only with respect to the year for
which such temporary increase or decrease is made, and the Secretary
shall not take into account such a temporary increase or decrease in
computing such amount for a subsequent year. That is, we are required
to retrospectively determine if the 30-day payment amount in CY 2020
resulted in the same level of estimated aggregate expenditures that
would have been made if the change in the unit of payment and the PDGM
case-mix adjustment methodology had not been implemented, and make
adjustments to the 30-day payment amount prospectively, if needed.
b. Methodology To Determine the Difference Between Assumed Versus
Actual Behavior Changes on Estimated Aggregate Expenditures
Using CY 2020 data (as of March 30, 2021), the most recent,
complete data available at the time of this proposed rule, we analyzed
the impact of the differences between assumed behavior changes and
actual behavior changes on estimated aggregate expenditures to
determine whether a temporary and/or a permanent increase or decrease
is needed to the national, standardized 30-day period payment in CY
2022. We analyzed data to determine if the CY 2020 30-day payment
amount resulted in the same estimated aggregate expenditures that would
have been paid if the PDGM and change in the unit of payment had not
been implemented.
To evaluate if whether the 30-day budget neutral payment amount for
CY 2020 maintained budget neutrality given the change to a 30-day unit
of payment and the implementation of a new case-mix adjustment
methodology without therapy thresholds was accurate, we used actual CY
2020 30-day period claims data to simulate 60-day episodes and we
determined what CY 2020 payments would have been under the 153-group
case-mix system and 60-day unit of payment. To do this, we used the
steps outlined as follows as detailed in this section of this rule.
The first step in repricing CY 2020 PDGM claims was to determine
which 30-day periods of care could be grouped together to form 60-day
episodes of care. To facilitate grouping, we made some exclusions and
assumptions.
(1) Exclusions
We limited the sample to 30-day periods where the claim occurrence
code 50 date (representing the OASIS assessment date) occurred on or
before October 31, 2020. This was done to ensure the simulated 60-day
episodes we constructed contained both 30-day periods and would not be
simulated 60-day episodes that would have overlapped into 2021.
We excluded the following:
<bullet> Beneficiaries and all of their claims if they had
overlapping claims from the same provider (as identified by CCN).\7\
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\7\ All of a beneficiary's claims were dropped so as not to
create problems with assigning episode timing if only a subset of
claims were dropped. 1,320 claims from 224 beneficiaries are
excluded.
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<bullet> Beneficiaries and all of their claims if three or more
claims from the same provider are linked to the same occurrence code 50
date.\8\
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\8\ This was done because if three or more claims linked to the
same OASIS it would not be clear which claims should be joined to
simulate a 60-day episode. 11,794 claims from 351 beneficiaries are
excluded.
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(2) Assumptions
We assumed the following:
<bullet> If two 30-day periods of care from the same provider
reference the same

[[Page 35891]]

OASIS assessment date (using occurrence code 50), and then we assume
those two 30-day periods of care would have been billed as a 60-day
episode of care under the 153-group system.
<bullet> If there are two 30 day-periods of care that reference
different OASIS assessment dates and each of those assessment dates is
referenced by a single 30-day period of care and those two 30-day
periods of care occur together close in time (that is, the from date of
the later 30-day period of care is between 0 to 14 days after the
through date of the earlier 30-day period of care), then we assume
those two 30-day periods of care also would have been billed as a 60-
day episode of care under the 153-group system.
<bullet> For all other 30-day periods of care, we assumed that they
would not be combined with another 30-day period of care and would have
been billed alone. We excluded such periods that occurred at the start
of the year (January 1, 2020-January 14, 2020) or end of the year
(December 1-31, 2020) so as not to count a single 30-day period of care
that may have had a counterpart that could not be observed.
Once we applied our exclusions and assumptions, we assigned each
60-day episode of care as a normal episode, PEP, LUPA, or outlier based
on the payment parameters established in the CY 2020 final rule with
comment period (84 FR 60478) for 60-day episodes of care. Next, using
the 3M Home Health Grouper (v8219) we assigned a Health Insurance
Prospective Payment System (HIPPS) code to each simulated 60-day
episode of care using the 153-group methodology. Finally, we priced out
the simulated 60-day episodes of care using the payment parameters
described in the CY 2020 final rule with comment period (84 FR 60537)
for 60-day episodes of care. Before comparing payments for the 30-day
periods of care using the 432-group PDGM methodology, we first removed
any claim that was excluded in the simulated 60-day episode dataset.
Therefore, our comparison between payments had the same utilization
between the CY 2020 simulated 60-day episodes of care and the CY 2020
actual 30-day periods of care.
We began with 8,165,808 30-day periods of care and dropped 524,163
30-day periods of care that had a claim occurrence code 50 date after
October 31, 2020. We also eliminated 81,641 30-day periods of care that
appeared to not group with another 30-day period of care to form a 60-
day episode of care if the 30-day period of care had a ``from date''
before January 15, 2020 or a ``through date after'' November 30, 2020.
This was done to ensure the 30-day period of care would not have been
part of a 60-day episode of care that would have spanned into a prior
or subsequent year. As described previously, we excluded claims and
made assumptions when combining two 30-day periods of care.
Additionally, any simulated 60-day episode of care where no OASIS
information was available or could not be grouped to a HIPPS due to a
missing primary diagnosis or other reason was excluded from analysis.
Our simulated 60-day episodes of care produced a distribution between
two 30-day periods of care (69.8 percent) and single 30-day periods of
care (30.2 percent) that was similar to what we found when we simulated
two 30-day periods of care for implementation of the PDGM. After all
exclusions and assumptions were applied, the final dataset included
7,441,602 actual 30-day periods of care and 4,378,823 simulated 60-day
episodes of care for CY 2020.
For the simulated 60-day episodes of care and before any adjustment
for PEP, LUPA, or outliers were applied, payments were calculated using
the CY 2020 153-group 60-day base payment rate of $3,220.79, the 153-
group case-mix adjustment methodology, and FDL of 0.51, as described in
the CY 2020 HH PPS final rule with comment period (84 FR 60537). For
the actual 30-day periods of care that constructed the simulated 60-day
episodes of care and before any adjustment for PEP, LUPA, or outliers
were applied, payments were calculated using the CY 2020 30-day base
payment rate of $1,864.03, the 432-group PDGM case-mix adjustment
methodology, and FDL of 0.56 as described in the CY 2020 final rule
with comment period (84 FR 60539). After the claims in the simulated
60-day episodes of care and 30-day periods of care were priced using
the payment rates described previously, we calculated the total
payments for all periods, normal periods, PEPs, LUPAs, and outliers
(excluding the base payment to ensure outlier payments were no more
than 2.5 percent of total estimated HH PPS payments). Our preliminary
results indicated that aggregate payments to HHAs were higher in CY
2020 under the PDGM case-mix adjustment methodology and the 30-day unit
of payment compared to what HHAs would have been paid had the PDGM and
30-day unit of payment not been implemented.
Next, we calculated what the CY 2020 30-day periods of care base
payment rate and FDL should have been, to achieve the estimated
aggregate payments for the simulated 60-day episodes in CY 2020. We
then calculated a percent change between the payment rates. In other
words, we divided the CY 2020 repriced 30-day base payment rate by the
actual CY 2020 base-payment rate minus one. We determined the CY 2020
30-day base payment rate was approximately 6 percent higher than it
should have been, and would require temporary retrospective adjustments
for CY 2020 and subsequent years until a permanent prospective
adjustment could be implemented in future rulemaking.
One of the driving factors between what we paid HHAs under the
current 432-group PDGM methodology with a 30-day unit of payment and
what we would have paid HHAs under the previous 153-group case-mix
adjustment methodology with a 60-day unit of payment is related to the
average case-mix weights. The average case-mix weight for the 30-day
periods of care used to construct the simulated 60-day of care episodes
was 1.0310; compared to the average case-mix weight for the simulated
60-day of care episodes was 0.9657, a difference of 0.0653. As the
difference between the two average case-mix weights increases (that is,
farther from zero) the higher the difference in payments; conversely as
the difference between the two average case-mix weights decreases (that
is, closer to zero) the smaller the difference in payments. HHAs should
be providing visits in accordance with patient care needs.
The law provides flexibility for the Secretary to make an increase
or decrease adjustment to the 30-day payment amount to offset any
difference between assumed versus actual behavior of estimated
aggregate expenditures, at a time and manner determined appropriate and
allows for prospective adjustments based on retrospective behavior. As
stated previously, currently our preliminary analysis shows an
additional payment decrease would more appropriately account for
behaviors reflected in CY 2020, after the implementation of the PDGM
and 30-day unit of payment. However, we anticipate potentially seeing
further variability in this percentage as we continue to analyze full
claims data from CY 2020 and subsequent years, and considering that the
COVID-19 PHE is still ongoing. We intend to propose a methodology and,
if appropriate, a temporary and permanent payment adjustment based on
our analysis in future rulemaking. However, we note that by not
proposing any adjustment for CY 2022, this could potentially result in
larger, compounding payment adjustments in future years to fully

[[Page 35892]]

account for the difference between assumed versus actual behavior
change on estimated aggregate expenditures beginning in CY 2020.
We recognize that stakeholders may have other ways to analyze the
data to determine the difference between assumed versus actual behavior
change on estimated aggregate expenditures, such as analysis of nominal
case-mix growth or calculating the percent difference and percent
change of payments between simulated 30-day periods of care and actual
30-day periods of care. We solicit comments on the described repricing
method for evaluating budget neutrality for CY 2020 and any alternate
approaches to annually determine the difference between assumed and
actual behavioral changes on estimated aggregate expenditures under the
HH PPS.
3. CY 2022 PDGM LUPA Thresholds and PDGM Case-Mix Weights
a. Proposed CY 2022 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain visit threshold for
a payment group during a 30-day period of care is not met. In the CY
2019 HH PPS final rule (83 FR 56492),) we finalized that the LUPA
thresholds would be set at the 10th percentile of visits or 2 visits,
whichever is higher, for each payment group. This means that the LUPA
threshold for each 30-day period of care varies depending on the PDGM
payment group to which it is assigned. If the LUPA threshold for the
payment group is met under the PDGM, the 30-day period of care will be
paid the full 30-day period case-mix adjusted payment amount (subject
to any PEP or outlier adjustments). If a 30-day period of care does not
meet the PDGM LUPA visit threshold, then payment will be made using the
CY 2022 per-visit payment amounts as described in Section III of this
proposed rule. For example, if the LUPA visit threshold is four, and a
30-day period of care has four or more visits, it is paid the full 30-
day period payment amount; if the period of care has three or less
visits, payment is made using the per-visit payment amounts.
In the CY 2019 HH PPS final rule with comment period (83 FR 56492),
we finalized our policy that the LUPA thresholds for each PDGM payment
group would be reevaluated every year based on the most current
utilization data available at the time of rulemaking. However, CY 2020
was the first year of the new case-mix adjustment methodology and we
stated in the CY 2021 final rule (85 FR 70305, 70306) we would maintain
the LUPA thresholds that were finalized and shown in Table 17 of the CY
2020 HH PPS final rule with comment period (84 FR 60522) for CY 2021
payment purposes. At that time, we did not have sufficient CY 2020 data
to reevaluate the LUPA thresholds for CY 2021.
We have received anecdotal feedback from stakeholders that in CY
2020, HHAs billed more LUPAs because patients requested fewer in-person
visits due the COVID-19 PHE. As discussed further in this section of
this rule, while we are proposing to update the case-mix weights for CY
2022 using CY 2020 data, there are several factors that contribute to
how the case-mix weight is set for a particular case-mix group (such as
the number of visits, length of visits, types of disciplines providing
visits, and non-routine supplies) and the case-mix weight is derived by
comparing the average resource use for the case-mix group relative to
the average resource use across all groups. CMS believes that the PHE
would have impacted utilization within all case-mix groups similarly.
Therefore, the impact of any reduction in resource use caused by the
PHE on the calculation of the case-mix weight would be minimized since
the impact would be accounted for both in the numerator and denominator
of the formula used to calculate the case-mix weight. However, in
contrast, the LUPA thresholds are based on the number of overall visits
in a particular case-mix group (the threshold is the 10th percentile of
visits or 2 visits, whichever is greater) instead of a relative value
(like what is used to generate the case-mix weight) that would control
for the impacts of the PHE. We note that visit patterns and some of the
decrease in overall visits in CY 2020 may not be representative of
visit patterns in CY 2022. If we were to set the LUPA thresholds in
this proposed rule using CY 2020 data and then set the LUPA thresholds
again for CY 2023 using data from CY 2021, it is likely that there
would be an increase in these thresholds due to the lower number of
visits that occurred in CY 2020. Therefore, to mitigate any potential
future and significant short-term variability in the LUPA thresholds
due to the COVID-19 PHE, we are proposing to maintain the LUPA
thresholds finalized and displayed in Table 17 in the CY 2020 HH PPS
final rule with comment period (84 FR 60522) for CY 2022 payment
purposes. We believe that maintaining the LUPA thresholds for CY 2022
is the best approach because it mitigates potential fluctuations in the
thresholds caused by visit patterns changing from what we observed in
CY 2020 potentially due to the PHE. We will repost these LUPA
thresholds (along with the case-mix weights) that will be used for CY
2022 on the HHA Center web page.\9\ We solicit public comments on
maintaining the LUPA thresholds for CY 2022 payment purposes.
---------------------------------------------------------------------------

\9\ <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
---------------------------------------------------------------------------

b. CY 2022 Functional Impairment Levels
Under the PDGM, the functional impairment level is determined by
responses to certain OASIS items associated with activities of daily
living and risk of hospitalization; that is, responses to OASIS items
M1800-M1860 and M1032. A home health period of care receives points
based on each of the responses associated with these functional OASIS
items, which are then converted into a table of points corresponding to
increased resource use. The sum of all of these points results in a
functional score which is used to group home health periods into a
functional level with similar resource use. That is, the higher the
points, the higher the response is associated with increased resource
use. The sum of all of these points results in a functional impairment
score which is used to group home health periods into one of three
functional impairment levels with similar resource use. The three
functional impairment levels of low, medium, and high were designed so
that approximately one-third of home health periods from each of the
clinical groups fall within each level. This means home health periods
in the low impairment level have responses for the functional OASIS
items that are associated with the lowest resource use, on average.
Home health periods in the high impairment level have responses for the
functional OASIS items that are associated with the highest resource
use on average.
For CY 2022, we propose to use CY 2020 claims data to update the
functional points and functional impairment levels by clinical group.
The CY 2018 HH PPS Proposed rule (82 FR 35320) and the HHGM technical
report from December 2016 posted on the HHA Center web page provide a
more detailed explanation as to the construction of these functional
impairment levels using the OASIS items. We are proposing to use this
same methodology previously finalized to update the functional
impairment levels for CY 2022. The updated OASIS functional points
table and the table of

[[Page 35893]]

functional impairment levels by clinical group for CY 2022 are listed
in Tables 13 and 14, respectively. We solicit public comments on the
updates to functional points and the functional impairment levels by
clinical group.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP07JY21.016

c. CY 2022 Comorbidity Subgroups
Thirty-day periods of care receive a comorbidity adjustment
category based on the presence of certain secondary diagnoses reported
on home health claims. These diagnoses are based on a home-health
specific list of clinically and statistically significant secondary
diagnosis subgroups with similar resource use, meaning the diagnoses
have at least as high as the median resource use and are reported in
more than 0.1 percent of 30-day periods of care. Home health 30-day
periods of care can receive a comorbidity adjustment under the
following circumstances:
<bullet> Low comorbidity adjustment: There is a reported secondary
diagnosis on the home health-specific comorbidity subgroup list that is
associated with higher resource use.
<bullet> High comorbidity adjustment: There are two or more
secondary diagnoses on the home health-specific comorbidity subgroup
interaction list that are associated with higher resource use when both
are reported together compared to if they were reported separately.
That is, the two diagnoses

[[Page 35895]]

may interact with one another, resulting in higher resource use.
<bullet> No comorbidity adjustment: A 30- day period of care
receives no comorbidity adjustment if no secondary diagnoses exist or
none meet the criteria for a low or high comorbidity adjustment.
In the CY 2019 HH PPS final rule with comment period (83 FR 56406)
we stated that we would continue to examine the relationship of
reported comorbidities on resource utilization and make the appropriate
payment refinements to help ensure that payment is in alignment with
the actual costs of providing care. For CY 2022, we propose to use the
same methodology used to establish the comorbidity subgroups to update
the comorbidity subgroups using CY 2020 home health data.
For CY 2022, we propose to update the comorbidity subgroups to
include 20 low comorbidity adjustment subgroups as identified in Table
15 and 85 high comorbidity adjustment interaction subgroups as
identified in Table 16. The proposed CY 2022 low comorbidity adjustment
subgroups and the high comorbidity adjustment interaction subgroups
including those diagnoses within each of these comorbidity adjustments
will also be posted on the HHA Center web page at <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
We invite comments on the proposed updates to the low comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
for CY 2022.
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BILLING CODE 4120-01-C
d. CY 2022 PDGM Case-Mix Weights
As finalized in the CY 2019 HH PPS final rule with comment period
(83 FR 56502), the PDGM places patients into meaningful payment
categories based on patient and other characteristics, such as timing,
admission source, clinical grouping using the reported principal
diagnosis, functional impairment level, and comorbid conditions. The
PDGM case-mix methodology results in 432 unique case-mix groups called
home health resource groups (HHRGs). We also finalized in the CY 2019
HH PPS final rule with comment period (83 FR 56515) to annually
recalibrate the PDGM case-mix weights using a fixed effects model with
the most recent and complete utilization data available at the time of
annual rulemaking. Annual recalibration of the PDGM case-mix weights
ensures that the case-mix weights reflect, as accurately as possible,
current home health resource use and changes in utilization patterns.
To generate the proposed recalibrated CY 2022 case-mix weights, we used
CY 2020 home health claims data with linked OASIS data (as of March 30,
2021). These data are the most current and complete data available at
this time. We believe that recalibrating the case-mix weights using
data from CY 2020 would be more reflective of PDGM utilization and
patient resource use than case-mix weights that were set using
simulated claims data of 60-day

[[Page 35898]]

episodes grouped under the old system. Using data from CY 2020 would
begin to shift case-mix weights derived from data with 60-day episodes
grouped under the old system to data from actual 30-day periods under
the PDGM.
The claims data provide visit-level data and data on whether NRS
was provided during the period and the total charges of NRS. We
determine the case-mix weight for each of the 432 different PDGM
payment groups by regressing resource use on a series of indicator
variables for each of the categories using a fixed effects model as
described in the following steps:
Step 1: Estimate a regression model to assign a functional
impairment level to each 30-day period. The regression model estimates
the relationship between a 30-day period's resource use and the
functional status and risk of hospitalization items included in the
PDGM, which are obtained from certain OASIS items. We refer readers to
Table 11 for further information on the OASIS items used for the
functional impairment level under the PDGM. We measure resource use
with the cost-per-minute + NRS approach that uses information from 2019
home health cost reports. We use 2019 home health cost report data
because it is the most complete data available at the time of
rulemaking. Other variables in the regression model include the 30-day
period's admission source, clinical group, and 30-day period timing. We
also include home health agency level fixed effects in the regression
model. After estimating the regression model using 30-day periods, we
divide the coefficients that correspond to the functional status and
risk of hospitalization items by 10 and round to the nearest whole
number. Those rounded numbers are used to compute a functional score
for each 30-day period by summing together the rounded numbers for the
functional status and risk of hospitalization items that are applicable
to each 30-day period. Next, each 30-day period is assigned to a
functional impairment level (low, medium, or high) depending on the 30-
day period's total functional score. Each clinical group has a separate
set of functional thresholds used to assign 30-day periods into a low,
medium or high functional impairment level. We set those thresholds so
that we assign roughly a third of 30-day periods within each clinical
group to each functional impairment level (low, medium, or high).
Step 2: A second regression model estimates the relationship
between a 30-day period's resource use and indicator variables for the
presence of any of the comorbidities and comorbidity interactions that
were originally examined for inclusion in the PDGM. Like the first
regression model, this model also includes home health agency level
fixed effects and includes control variables for each 30-day period's
admission source, clinical group, timing, and functional impairment
level. After we estimate the model, we assign comorbidities to the low
comorbidity adjustment if any comorbidities have a coefficient that is
statistically significant (p-value of 0.05 or less) and which have a
coefficient that is larger than the 50th percentile of positive and
statistically significant comorbidity coefficients. If two
comorbidities in the model and their interaction term have coefficients
that sum together to exceed $150 and the interaction term is
statistically significant (p-value of 0.05 or less), we assign the two
comorbidities together to the high comorbidity adjustment.
Step 3: Hold the LUPA thresholds at their current thresholds as
described previously in this proposed rule.
Step 4: Take all non-LUPA 30-day periods and regress resource use
on the 30-day period's clinical group, admission source category,
episode timing category, functional impairment level, and comorbidity
adjustment category. The regression includes fixed effects at the level
of the home health agency. After we estimate the model, the model
coefficients are used to predict each 30-day period's resource use. To
create the case-mix weight for each 30- day period, the predicted
resource use is divided by the overall resource use of the 30-day
periods used to estimate the regression.
The case-mix weight is then used to adjust the base payment rate to
determine each 30-day period's payment. Table 17 shows the coefficients
of the payment regression used to generate the weights, and the
coefficients divided by average resource use.
BILLING CODE 4120-01-P

[[Page 35899]]

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[[Page 35900]]

The case-mix weights proposed for CY 2022 are listed in Table 19
and will also be posted on the HHA Center web page \10\ upon display of
this proposed rule.
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\10\ HHA Center web page: <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>
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BILLING CODE 4120-01-C
To ensure the changes to the PDGM case-mix weights are implemented
in a budget neutral manner, we then apply a case-mix budget neutrality
factor to the CY 2022 national, standardized 30-day period payment
rate. Typically, the case-mix weight budget neutrality factor is
calculated using the most recent, complete home health claims data
available. However, due to the COVID-19 PHE, we looked at using the
previous calendar year's home health claims data (CY 2019) to determine
if there were significant differences between utilizing CY 2019 and CY
2020 claims data. We note that CY 2020 is the first year of actual PDGM
utilization data, therefore, if we were to use CY 2019 data due to the
PHE we would need to simulate 30-day periods from 60-day episodes under
the old system. We believe that using CY 2020 utilization data is more
appropriate than using CY 2019 utilization data because it is actual
PDGM utilization data. The case-mix budget neutrality factor is
calculated as the ratio of 30-day base payment rates such that total
payments when the CY 2022 PDGM case-mix weights

[[Page 35909]]

(developed using CY 2020 home health claims data) are applied to CY
2020 utilization (claims) data are equal to total payments when CY 2021
PDGM case-mix weights (developed using CY 2018 home health claims data)
are applied to CY 2020 utilization data. This produces a case-mix
budget neutrality factor for CY 2022 of 1.0344. For reasons described
previously, CY 2020 utilization data was used to calculate the case-mix
weight budget neutrality factor because it is the most recent complete
data we have at the time of this rulemaking.
We invite comments on the CY 2022 proposed case-mix weights and
proposed case-mix weight budget neutrality factor.
4. Proposed CY 2022 Home Health Payment Rate Updates
a. Proposed CY 2022 Home Health Market Basket Update for HHAs
Section 1895(b)(3)(B) of the Act requires that the standard
prospective payment amounts for home health be increased by a factor
equal to the applicable home health market basket update for those HHAs
that submit quality data as required by the Secretary. In the CY 2019
HH PPS final rule with comment period (83 FR 56425), we finalized a
rebasing of the home health market basket to reflect 2016 cost report
data. As such, based on the rebased 2016-based home health market
basket, we finalized that the labor share is 76.1 percent and the non-
labor share is 23.9 percent. A detailed description of how we rebased
the HHA market basket is available in the CY 2019 HH PPS final rule
with comment period (83 FR 56425 through 56436).
Section 1895(b)(3)(B) of the Act requires that in CY 2015 and in
subsequent calendar years, except CY 2018 (under section 411(c) of the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L.
114-10, enacted April 16, 2015)), and CY 2020 (under section 53110 of
the Bipartisan Budget Act of 2018 (BBA) (Pub. L. 115-123, enacted
February 9, 2018)), the market basket percentage under the HHA
prospective payment system, as described in section 1895(b)(3)(B) of
the Act, be annually adjusted by changes in economy-wide productivity.
Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity
adjustment to be equal to the 10-year moving average of changes in
annual economy-wide private nonfarm business multifactor productivity
(MFP) (as projected by the Secretary for the 10-year period ending with
the applicable fiscal year, calendar year, cost reporting period, or
other annual period). The Bureau of Labor Statistics (BLS) is the
agency that publishes the official measure of private nonfarm business
MFP. Please visit <a href="http://www.bls.gov/mfp">http://www.bls.gov/mfp</a>, to obtain the BLS historical
published MFP data.
The proposed home health update percentage for CY 2022 is based on
the estimated home health market basket update, specified at section
1895(b)(3)(B)(iii) of the Act, of 2.4 percent (based on IHS Global
Inc.'s first-quarter 2021 forecast with historical data through fourth-
quarter 2020). The estimated CY 2022 home health market basket update
of 2.4 percent is then reduced by a productivity adjustment, as
mandated by the section 3401 of the Patient Protection and Affordable
Care Act (the Affordable Care Act) (Pub. L. 111-148), currently
estimated to be 0.6 percentage point for CY 2022. In effect, the
proposed home health payment update percentage for CY 2022 is a 1.8
percent increase. Section 1895(b)(3)(B)(v) of the Act requires that the
home health update be decreased by 2 percentage points for those HHAs
that do not submit quality data as required by the Secretary. For HHAs
that do not submit the required quality data for CY 2022, the home
health payment update would be -0.2 percent (1.8 percent minus 2
percentage points). If more recent data becomes available after the
publication of this proposed rule and before the publication of the
final rule (for example, more recent estimates of the home health
market basket update and productivity adjustment), we would use such
data, if appropriate, to determine the home health payment update
percentage for CY 2022 in the final rule.
b. CY 2022 Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS that account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of home health
services. Since the inception of the HH PPS, we have used inpatient
hospital wage data in developing a wage index to be applied to home
payments. We propose to continue this practice for CY 2022, as we
continue to believe that, in the absence of home health-specific wage
data that accounts for area differences, using inpatient hospital wage
data is appropriate and reasonable for the HH PPS.
In the FY 2021 HH PPS final rule (85 FR 70298), we finalized the
proposal to adopt the revised OMB delineations with a 5 percent cap on
wage index decreases, where the estimated reduction in a geographic
area's wage index would be capped at 5 percent in CY 2021 only and no
cap would be applied to wage index decreases for the second year (CY
2022). Therefore, we propose to use the FY 2022 pre-floor, pre-
reclassified hospital wage index with no 5 percent cap on decreases as
the CY 2022 wage adjustment to the labor portion of the HH PPS rates.
For CY 2022, the updated wage data are for hospital cost reporting
periods beginning on or after October 1, 2017, and before October 1,
2018 (FY 2018 cost report data). We apply the appropriate wage index
value to the labor portion 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).
To address those geographic areas in which there are no inpatient
hospitals, and thus, no hospital wage data on which to base the
calculation of the CY 2022 HH PPS wage index, we propose to continue to
use the same methodology discussed in the CY 2007 HH PPS final rule (71
FR 65884) to address those geographic areas in which there are no
inpatient hospitals. For rural areas that do not have inpatient
hospitals, we propose to use the average wage index from all contiguous
Core Based Statistical Areas (CBSAs) as a reasonable proxy. Currently,
the only rural area without a hospital from which hospital wage data
could be derived is Puerto Rico. However, for rural Puerto Rico, we do
not apply this methodology due to the distinct economic circumstances
that exist there (for example, due to the close proximity to one
another of almost all of Puerto Rico's various urban and non-urban
areas, this methodology would produce a wage index for rural Puerto
Rico that is higher than that in half of its urban areas). Instead, we
propose to continue to use the most recent wage index previously
available for that area. The most recent wage index previously
available for rural Puerto Rico is 0.4047. For urban areas without
inpatient hospitals, we use the average wage index of all urban areas
within the State as a reasonable proxy for the wage index for that
CBSA. For CY 2022, the only urban area without inpatient hospital wage
data is Hinesville, GA (CBSA 25980). The CY 2022 wage index value for
Hinesville, GA is 0.8557.
On February 28, 2013, OMB issued Bulletin No. 13-01, announcing
revisions to the delineations of MSAs, Micropolitan Statistical Areas,
and CBSAs, and guidance on uses of the

[[Page 35910]]

delineation of these areas. In the CY 2015 HH PPS final rule (79 FR
66085 through 66087), we adopted OMB's area delineations using a 1-year
transition.
On August 15, 2017, OMB issued Bulletin No. 17-01 in which it
announced that one Micropolitan Statistical Area, Twin Falls, Idaho,
now qualifies as a Metropolitan Statistical Area. The new CBSA (46300)
comprises the principal city of Twin Falls, Idaho in Jerome County,
Idaho and Twin Falls County, Idaho. The CY 2022 HH PPS wage index value
for CBSA 46300, Twin Falls, Idaho, will be 0.8757. Bulletin No. 17-01
is available at <a href="https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf">https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf</a>.
On April 10, 2018 OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14,
2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10,
2018 OMB Bulletin No. 18-03. These bulletins established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of OMB Bulletin No. 18-04 may be obtained at: <a href="https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf">https://www.bls.gov/bls/omb-bulletin-18-04-revised-delineations-of-metropolitan-statistical-areas.pdf</a>.
On March 6, 2020, OMB issued Bulletin No. 20-01, which provided
updates to and superseded OMB Bulletin No. 18-04 that was issued on
September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided
detailed information on the update to statistical areas since September
14, 2018, and were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to Census
Bureau population estimates for July 1, 2017 and July 1, 2018. (For a
copy of this bulletin, we refer readers to <a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>). In OMB Bulletin No. 20-
01, OMB announced one new Micropolitan Statistical Area, one new
component of an existing Combined Statistical Are and changes to New
England City and Town Area (NECTA) delineations. In the CY 2021 HH PPS
final rule (85 FR 70298) we stated that if appropriate, we would
propose any updates from OMB Bulletin No. 20-01 in future rulemaking.
After reviewing OMB Bulletin No. 20-01, we have determined that the
changes in Bulletin 20-01 encompassed delineation changes that would
not affect the Medicare wage index for CY 2022. Specifically, the
updates consisted of changes to NECTA delineations and the
redesignation of a single rural county into a newly created
Micropolitan Statistical Area. The Medicare wage index does not utilize
NECTA definitions, and, as most recently discussed in the CY 2021 HH
PPS final rule (85 FR 70298) we include hospitals located in
Micropolitan Statistical areas in each State's rural wage index.
Therefore, while we are proposing to adopt the updates set forth in OMB
Bulletin No. 20-01 consistent with our longstanding policy of adopting
OMB delineation updates, we note that specific wage index updates would
not be necessary for CY 2022 as a result of adopting these OMB updates.
In other words, these OMB updates would not affect any geographic areas
for purposes of the wage index calculation for CY 2022.
The proposed CY 2022 wage index is available on the CMS website at:
<a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
c. CY 2022 Annual Payment Update
(1) Background
The HH PPS has been in effect since October 1, 2000. As set forth
in the July 3, 2000 final rule (65 FR 41128), the base unit of payment
under the HH PPS was a national, standardized 60-day episode payment
rate. As finalized in the CY 2019 HH PPS final rule with comment period
(83 FR 56406), and as described in the CY 2020 HH PPS final rule with
comment period (84 FR 60478), the unit of home health payment changed
from a 60-day episode to a 30-day period effective for those 30-day
periods beginning on or after January 1, 2020.
As set forth in Sec. 484.220, we adjust the national, standardized
prospective payment rates by a case-mix relative weight and a wage
index value based on the site of service for the beneficiary. To
provide appropriate adjustments to the proportion of the payment amount
under the HH PPS to account for area wage differences, we apply the
appropriate wage index value to the labor portion of the HH PPS rates.
In the CY 2019 HH PPS final rule with comment period (83 FR 56435), we
finalized rebasing the home health market basket to reflect 2016
Medicare cost report data. We also finalized a revision to the labor
share to reflect the 2016-based home health market basket compensation
(Wages and Salaries plus Benefits) cost weight. We finalized that for
CY 2019 and subsequent years, the labor share would be 76.1 percent and
the non-labor share would be 23.9 percent. The following are the steps
we take to compute the case-mix and wage-adjusted 30-day period payment
amount for CY 2021:
<bullet> Multiply the national, standardized 30-day period rate by
the patient's applicable case-mix weight.
<bullet> Divide the case-mix adjusted amount into a labor (76.1
percent) and a non-labor portion (23.9 percent).
<bullet> Multiply the labor portion by the applicable wage index
based on the site of service of the beneficiary.
<bullet> Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 30-day period payment amount,
subject to any additional applicable adjustments.
We provide annual updates of the HH PPS rate in accordance with
section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the
specific annual percentage update methodology. In accordance with
section 1895(b)(3)(B)(v) of the Act and Sec. 484.225(i), for an HHA
that does not submit home health quality data, as specified by the
Secretary, the unadjusted national prospective 30-day period rate is
equal to the rate for the previous calendar year increased by the
applicable home health payment update, minus 2 percentage points. Any
reduction of the percentage change would apply only to the calendar
year involved and would not be considered in computing the prospective
payment amount for a subsequent calendar year.
The final claim that the HHA submits for payment determines the
total payment amount for the period and whether we make an applicable
adjustment to the 30-day case-mix and wage-adjusted payment amount. The
end date of the 30-day period, as reported on the claim, determines
which calendar year rates Medicare will use to pay the claim.
We may adjust a 30-day case-mix and wage-adjusted payment based on
the information submitted on the claim to reflect the following:
<bullet> A LUPA is provided on a per-visit basis as set forth in
Sec. Sec. 484.205(d)(1) and 484.230.
<bullet> A PEP adjustment as set forth in Sec. Sec. 484.205(d)(2)
and 484.235.
<bullet> An outlier payment as set forth in Sec. Sec.
484.205(d)(3) and 484.240.
(2) CY 2022 National, Standardized 30-Day Period Payment Amount
CMS provided preliminary monitoring data for the first year of PDGM
and presented a repricing method to determine the differences between
assumed and actual behavior changes and the impact of such on estimated
aggregate expenditures, as discussed in Section III.B of this

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proposed rule. For CY 2022, we are not proposing to make any additional
permanent or temporary adjustments to the national, standardized 30-day
period payment in this proposed rule in accordance with section
1895(b)(3)(D) of the Act.
Section 1895(b)(3)(A)(i) of the Act requires that the standard
prospective payment rate and other applicable amounts be standardized
in a manner that eliminates the effects of variations in relative case-
mix and area wage adjustments among different home health agencies in a
budget-neutral manner. To determine the CY 2022 national, standardized
30-day period payment rate, we apply a case-mix weights recalibration
budget neutrality factor, a wage index budget neutrality factor and the
home health payment update percentage discussed in Section III.C.2 of
this proposed rule. As discussed previously, to ensure the changes to
the PDGM case-mix weights are implemented in a budget neutral manner,
we apply a case-mix weights budget neutrality factor to the CY 2021
national, standardized 30-day period payment rate. The proposed case-
mix weights budget neutrality factor for CY 2022 is 1.0344.
Additionally, we also apply a wage index budget neutrality to
ensure that wage index updates and revisions are implemented in a
budget neutral manner. Typically, the wage index budget neutrality
factor is calculated using the most recent, complete home health claims
data available. However, due to the COVID-19 PHE, we looked at using
the previous calendar year's home health claims data (CY 2019) to
determine if there were significant differences between utilizing 2019
and 2020 claims data. Our analysis showed that there is only a small
difference between the wage index budget neutrality factors calculated
using CY 2019 and CY 2020 home health claims data. Therefore, we have
decided to continue our practice of using the most recent, complete
home health claims data available; that is we are using CY 2020 claims
data for the CY 2022 payment rate updates.
To calculate the wage index budget neutrality factor, we simulated
total payments using CY 2020 home health claims utilization data for
non-LUPA 30-day periods using the proposed CY 2022 wage index and
compared it to our simulation of total payments for non-LUPA 30-day
periods using the CY 2021 wage index. By dividing the total payments
for non-LUPA 30-day periods using the CY 2022 wage index by the total
payments for non-LUPA 30-day periods using the CY 2021 wage index, we
obtain a wage index budget neutrality factor of 1.0013. We would apply
the wage index budget neutrality factor of 1.0013 to the 30-day period
payment rate.
Next, we would update the 30-day period payment rate by the CY 2022
home health payment update percentage of 1.8 percent. The CY 2022
national, standardized 30-day period payment rate is calculated in
Table 19.
[GRAPHIC] [TIFF OMITTED] TP07JY21.031

The CY 2022 national, standardized 30-day period payment rate for a
HHA that does not submit the required quality data is updated by the CY
2022 home health payment update of 1.8 percent minus 2 percentage
points and is shown in Table 20.
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(3) CY 2022 National Per-Visit Rates for 30-Day Periods of Care
The national per-visit rates are used to pay LUPAs and are also
used to compute imputed costs in outlier calculations. The per-visit
rates are paid by type of visit or HH discipline. The six HH
disciplines are as follows:
<bullet> Home health aide (HH aide).
<bullet> Medical Social Services (MSS).
<bullet> Occupational therapy (OT).
<bullet> Physical therapy (PT).
<bullet> Skilled nursing (SN).
<bullet> Speech-language pathology (SLP).
To calculate the CY 2022 national per-visit rates, we started with
the CY 2021 national per-visit rates. Then we applied a wage index
budget neutrality factor to ensure budget neutrality for LUPA per-

[[Page 35912]]

visit payments. We calculated the wage index budget neutrality factor
by simulating total payments for LUPA 30-day periods of care using the
CY 2022 wage index and comparing it to simulated total payments for
LUPA 30-day periods of care using the CY 2021 wage index. By dividing
the total payments for LUPA 30-day periods of care using the CY 2022
wage index by the total payments for LUPA 30-day periods of care using
the CY 2021 wage index, we obtained a wage index budget neutrality
factor of 1.0014. We apply the wage index budget neutrality factor in
order to calculate the CY 2022 national per-visit rates.
The LUPA per-visit rates are not calculated using case-mix weights.
Therefore, no case-mix weights budget neutrality factor is needed to
ensure budget neutrality for LUPA payments. Lastly, the per-visit rates
for each discipline are updated by the CY 2022 home health payment
update percentage of 1.8 percent. The national per-visit rates are
adjusted by the wage index based on the site of service of the
beneficiary. The per-visit payments for LUPAs are separate from the
LUPA add-on payment amount, which is paid for episodes that occur as
the only episode or initial episode in a sequence of adjacent episodes.
The CY 2022 national per-visit rates for HHAs that submit the required
quality data are updated by the CY 2022 home health payment update
percentage of 1.8 percent and are shown in Table 21.
[GRAPHIC] [TIFF OMITTED] TP07JY21.033

The CY 2022 per-visit payment rates for HHAs that do not submit the
required quality data are updated by the CY 2020 home health payment
update percentage of 1.8 percent minus 2 percentage points and are
shown in Table 22.
[GRAPHIC] [TIFF OMITTED] TP07JY21.034

We are reminding stakeholders of the policies finalized in the CY
2020 HH PPS final rule with comment period (84 FR 60544) and the
implementation of a new one-time Notice of Admission (NOA) process
starting in CY 2022. In that final rule, we finalized the lowering of
the up-front payment made in response to Requests for Anticipated
Payment (RAPs) to zero percent for all 30-day periods of care beginning
on or after January 1, 2021 (84 FR 60544). For CY 2021, all HHAs (both
existing and newly-enrolled HHAs) were required to submit a RAP at the
beginning of each 30-day period in order to establish the home health
period of care in the common working file and also to trigger the
consolidated billing edits. With the removal of the upfront RAP payment
for CY 2021, we relaxed the required information for submitting the RAP
for CY 2021 and also stated that the information required for
submitting an NOA for CYs 2022 and beyond would mirror that of the RAP
in CY 2021. Starting in CY 2022, HHAs will submit a one-time NOA that
establishes the home health period of care and covers all contiguous
30-day periods of care until the individual is discharged from Medicare
home health services. Also, for the one-time NOA for CYs 2022 and

[[Page 35913]]

beyond, we finalized a payment reduction if the HHA does not submit the
NOA for CYs 2022 and beyond within 5 calendar days from the start of
care. That is, if an HHA fails to submit a timely NOA for CYs 2022 and
beyond, the reduction in payment amount would be equal to a one-
thirtieth reduction to the wage and case-mix adjusted 30-day period
payment amount for each day from the home health start of care date
until the date the HHA submitted the NOA. In other words, the one-
thirtieth reduction would be to the 30-day period adjusted payment
amount, including any outlier payment, that the HHA otherwise would
have received absent any reduction. For LUPA 30-day periods of care in
which an HHA fails to submit a timely NOA, no LUPA payments would be
made for days that fall within the period of care prior to the
submission of the NOA. We stated that these days would be a provider
liability, the payment reduction could not exceed the total payment of
the claim, and that the provider may not bill the beneficiary for these
days.
We remind stakeholders that for purposes of determining if an NOA
is timely-filed, the NOA must be submitted within 5 calendar days after
the start of care for the first 30-day period of care. For example, if
the start of care for the first 30-day period is January 1, 2022, the
NOA would be considered timely-filed if it is submitted on or before
January 6, 2022.
Example
1/1/2022 = Day 0 (start of the first 30- day period of care)
1/6/2022 = Day 5 (An NOA submitted on or before this date would be
considered ``timely-filed''.)
1/7/2022 and after = Day 6 and beyond (An NOA submitted on and
after this date will trigger the penalty.) In the event that the NOA is
not timely-filed, the penalty is calculated from the first day of that
30-day period (in the example, the penalty calculation would begin with
the start of care date of January 1, 2022, counting as the first day of
the penalty) until the date of the submission of the NOA.
Also, in the CY 2020 HH PPS final rule with comment period (84 FR
60478), we finalized exceptions to the timely filing consequences of
the NOA requirements at Sec. 484.205(j)(4). Specifically, we finalized
that CMS may waive the consequences of failure to submit a timely-filed
NOA if it is determined that a circumstance encountered by a home
health agency is exceptional and qualifies for waiver of the
consequence. As finalized in the CY 2020 HH PPS final rule with comment
period and as set forth in regulation at Sec. 484.205(j)(4), an
exceptional circumstance may be due to, but is not limited to the
following:
<bullet> Fires, floods, earthquakes, or similar unusual events that
inflict extensive damage to the home health agency's ability to
operate.
<bullet> A CMS or Medicare contractor systems issue that is beyond
the control of the home health agency.
<bullet> A newly Medicare-certified home health agency that is
notified of that certification after the Medicare certification date,
or which is awaiting its user ID from its Medicare contractor.
<bullet> Other situations determined by CMS to be beyond the
control of the home health agency.
If an HHA believes that there is a circumstance that may qualify
for an exception, the HHA must fully document and furnish any requested
documentation to their MAC for a determination of exception.
For more in-depth information regarding the finalized policies
associated with the new one-time NOA process, we refer readers to the
CY 2020 HH PPS final rule with comment period (84 FR 60544) as well as
the regulations at Sec. 484.205(j).
(4) LUPA Add-On Factors
Prior to the implementation of the 30-day unit of payment, LUPA
episodes were eligible for a LUPA add-on payment if the episode of care
was the first or only episode in a sequence of adjacent episodes. As
stated in the CY 2008 HH PPS final rule, the average visit lengths in
these initial LUPAs are 16 to 18 percent higher than the average visit
lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that
occur as the only episode or as an initial episode in a sequence of
adjacent episodes are adjusted by applying an additional amount to the
LUPA payment before adjusting for area wage differences. In the CY 2014
HH PPS final rule (78 FR 72305), we changed the methodology for
calculating the LUPA add-on amount by finalizing the use of three LUPA
add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. We
multiply the per-visit payment amount for the first SN, PT, or SLP
visit in LUPA episodes that occur as the only episode or an initial
episode in a sequence of adjacent episodes by the appropriate factor to
determine the LUPA add-on payment amount.
In the CY 2019 HH PPS final rule with comment period (83 FR 56440),
in addition to finalizing a 30-day unit of payment, we finalized our
policy of continuing to multiply the per-visit payment amount for the
first skilled nursing, physical therapy, or speech-language pathology
visit in LUPA periods that occur as the only period of care or the
initial 30-day period of care in a sequence of adjacent 30-day periods
of care by the appropriate add-on factor (1.8451 for SN, 1.6700 for PT,
and 1.6266 for SLP) to determine the LUPA add-on payment amount for 30-
day periods of care under the PDGM. For example, using the proposed CY
2022 per-visit payment rates for those HHAs that submit the required
quality data, for LUPA periods that occur as the only period or an
initial period in a sequence of adjacent periods, if the first skilled
visit is SN, the payment for that visit would be $287.06 (1.8451
multiplied by $155.58), subject to area wage adjustment.
(5) Proposed Occupational Therapy LUPA Add-On Factor
In order to implement Division CC, section 115, of CAA 2021, we are
proposing conforming changes to regulations at Sec. Sec. 484.55(a)(2)
and 484.55(b)(3) that were revised to allow OTs to conduct initial and
comprehensive assessments for all Medicare beneficiaries under the home
health benefit when the plan of care does not initially include skilled
nursing care, but includes either PT or SLP. Because of this change, we
are proposing to establish a LUPA add-on factor for calculating the
LUPA add-on payment amount for the first skilled occupational therapy
visit in LUPA periods that occurs as the only period of care or the
initial 30-day period of care in a sequence of adjacent 30-day periods
of care. Currently, there are no sufficient data regarding the average
excess of minutes for the first visit in LUPA periods where the initial
and comprehensive assessments are conducted by occupational therapists.
Therefore, we propose to utilize the PT LUPA add-on factor of 1.6700 as
a proxy until we have CY 2022 data to establish a more accurate OT add-
on factor for the LUPA add-on payment amounts. We believe that the
similarity in the per-visit payment rates for both PT and OT make the
PT LUPA add-on factor the most appropriate proxy. We welcome comments
on this proposal.
d. Rural Add-On Payments for CY 2022
(1) Background
Section 421(a) of the Medicare Prescription Drug Improvement and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) required, for home
health services furnished in a rural area (as defined in section
1886(d)(2)(D) of the Act), for episodes or visits ending on or

[[Page 35914]]

after April 1, 2004, and before April 1, 2005, that the Secretary
increase the payment amount that otherwise would have been made under
section 1895 of the Act for the services by 5 percent. Section 5201 of
the Deficit Reduction Act of 2003 (DRA) (Pub. L. 108-171) amended
section 421(a) of the MMA. The amended section 421(a) of the MMA
required, for home health services furnished in a rural area (as
defined in section 1886(d)(2)(D) of the Act), on or after January 1,
2006, and before January 1, 2007, that the Secretary increase the
payment amount otherwise made under section 1895 of the Act for those
services by 5 percent.
Section 3131(c) of the Affordable Care Act amended section 421(a)
of the MMA to provide an increase of 3 percent of the payment amount
otherwise made under section 1895 of the Act for home health services
furnished in a rural area (as defined in section 1886(d)(2)(D) of the
Act), for episodes and visits ending on or after April 1, 2010, and
before January 1, 2016. Section 210 of the MACRA amended section 421(a)
of the MMA to extend the rural add-on by providing an increase of 3
percent of the payment amount otherwise made under section 1895 of the
Act for home health services provided in a rural area (as defined in
section 1886(d)(2)(D) of the Act), for episodes and visits ending
before January 1, 2018.
Section 50208(a) of the BBA of 2018 amended section 421(a) of the
MMA to extend the rural add-on by providing an increase of 3 percent of
the payment amount otherwise made under section 1895 of the Act for
home health services provided in a rural area (as defined in section
1886(d)(2)(D) of the Act), for episodes and visits ending before
January 1, 2019.
(2) Rural Add-On Payments for CYs 2019 Through CY 2022
Section 50208(a)(1)(D) of the BBA of 2018 added a new subsection
(b) to section 421 of the MMA to provide rural add-on payments for
episodes or visits ending during CYs 2019 through 2022. It also
mandated implementation of a new methodology for applying those
payments. Unlike previous rural add-ons, which were applied to all
rural areas uniformly, the extension provided varying add-on amounts
depending on the rural county (or equivalent area) classification by
classifying each rural county (or equivalent area) into one of three
distinct categories: (1) Rural counties and equivalent areas in the
highest quartile of all counties and equivalent areas based on the
number of Medicare home health episodes furnished per 100 individuals
who are entitled to, or enrolled for, benefits under Part A of Medicare
or enrolled for benefits under Part B of Medicare only, but not
enrolled in a Medicare Advantage plan under Part C of Medicare (the
``High utilization'' category); (2) rural counties and equivalent areas
with a population density of 6 individuals or fewer per square mile of
land area and are not included in the ``High utilization'' category
(the ``Low population density'' category); and (3) rural counties and
equivalent areas not in either the ``High utilization'' or ``Low
population density'' categories (the ``All other'' category).
In the CY 2019 HH PPS final rule with comment period (83 FR 56443),
CMS finalized policies for the rural add-on payments for CY 2019
through CY 2022, in accordance with section 50208 of the BBA of 2018.
The CY 2019 HH PPS proposed rule (83 FR 32373) described the provisions
of the rural add-on payments, the methodology for applying the new
payments, and outlined how we categorized rural counties (or equivalent
areas) based on claims data, the Medicare Beneficiary Summary File and
Census data. The data used to categorize each county or equivalent area
is available in the Downloads section associated with the publication
of this rule at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html</a>. In addition, an Excel file containing the
rural county or equivalent area name, their Federal Information
Processing Standards (FIPS) State and county codes, and their
designation into one of the three rural add-on categories is available
for download.
The HH PRICER module, located within CMS' claims processing system,
will increase the CY 2022 30-day base payment rates, described in
section III.C.3. of this proposed rule, by the appropriate rural add-on
percentage prior to applying any case-mix and wage index adjustments.
The CY 2019 through CY 2022 rural add-on percentages outlined in law
are shown in Table 23.
[GRAPHIC] [TIFF OMITTED] TP07JY21.035

e. Proposed Payments for High-Cost Outliers Under the HH PPS
(1) Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the home health payment amount otherwise made
in the case of outliers because of unusual variations in the type or
amount of medically necessary care. Under the HH PPS and the previous
unit of payment (that is, 60-day episodes), outlier payments were made
for 60-day episodes whose estimated costs exceed a threshold amount for
each Home Health Resource Group (HHRG). The episode's estimated cost
was established as the sum of the national wage-adjusted per visit
payment amounts delivered during the episode. The outlier threshold for
each case-mix group or PEP adjustment defined as the 60-day episode
payment or PEP adjustment for that group plus a fixed-dollar loss (FDL)
amount. For the purposes of the HH PPS, the FDL amount is calculated by
multiplying the home health FDL ratio by a case's wage-adjusted
national, standardized 60-day episode payment rate, which yields an FDL
dollar amount for the case. The outlier threshold amount is the sum of
the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL
amount. The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost that surpasses the wage-adjusted threshold. The
proportion of additional costs over the outlier

[[Page 35915]]

threshold amount paid as outlier payments is referred to as the loss-
sharing ratio.
As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act to require that the Secretary reduce the HH
PPS payment rates such that aggregate HH PPS payments were reduced by 5
percent. In addition, section 3131(b)(2) of the Affordable Care Act
amended section 1895(b)(5) of the Act by redesignating the existing
language as section 1895(b)(5)(A) of the Act and revised the language
to state that the total amount of the additional payments or payment
adjustments for outlier episodes could not exceed 2.5 percent of the
estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of
the Affordable Care Act also added section 1895(b)(5)(B) of the Act,
which capped outlier payments as a percent of total payments for each
HHA for each year at 10 percent.
As such, beginning in CY 2011, we reduced payment rates by 5
percent and targeted up to 2.5 percent of total estimated HH PPS
payments to be paid as outliers. To do so, we first returned the 2.5
percent held for the target CY 2010 outlier pool to the national,
standardized 60-day episode rates, the national per visit rates, the
LUPA add-on payment amount, and the NRS conversion factor for CY 2010.
We then reduced the rates by 5 percent as required by section
1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the
Affordable Care Act. For CY 2011 and subsequent calendar years we
targeted up to 2.5 percent of estimated total payments to be paid as
outlier payments, and apply a 10-percent agency-level outlier cap.
In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through
43742 and 81 FR 76702), we described our concerns regarding patterns
observed in home health outlier episodes. Specifically, we noted the
methodology for calculating home health outlier payments may have
created a financial incentive for providers to increase the number of
visits during an episode of care in order to surpass the outlier
threshold; and simultaneously created a disincentive for providers to
treat medically complex beneficiaries who require fewer but longer
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR
76702), we finalized changes to the methodology used to calculate
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate
payment for outlier episodes, accounting for both the number of visits
during an episode of care and the length of the visits provided. Using
this approach, we now convert the national per-visit rates into per 15-
minute unit rates. These per 15-minute unit rates are used to calculate
the estimated cost of an episode to determine whether the claim will
receive an outlier payment and the amount of payment for an episode of
care. In conjunction with our finalized policy to change to a cost-per-
unit approach to estimate episode costs and determine whether an
outlier episode should receive outlier payments, in the CY 2017 HH PPS
final rule we also finalized the implementation of a cap on the amount
of time per day that would be counted toward the estimation of an
episode's costs for outlier calculation purposes (81 FR 76725).
Specifically, we limit the amount of time per day (summed across the
six disciplines of care) to 8 hours (32 units) per day when estimating
the cost of an episode for outlier calculation purposes.
In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we
did not plan to re-estimate the average minutes per visit by discipline
every year. Additionally, the per unit rates used to estimate an
episode's cost were updated by the home health update percentage each
year, meaning we would start with the national per visit amounts for
the same calendar year when calculating the cost-per-unit used to
determine the cost of an episode of care (81 FR 76727). We will
continue to monitor the visit length by discipline as more recent data
becomes available, and may propose to update the rates as needed in the
future.
In the CY 2019 HH PPS final rule with comment period (83 FR 56521),
we finalized a policy to maintain the current methodology for payment
of high-cost outliers upon implementation of PDGM beginning in CY 2020
and calculated payment for high-cost outliers based upon 30-day period
of care. Upon implementation of the PDGM and 30-day unit of payment, we
finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020.
Given that CY 2020 was the first year of the PDGM and the change to a
30-day unit of payment, we finalized to maintain the same FDL ratio of
0.56 in CY 2021 as we did not have sufficient CY 2020 data at the time
of CY 2021 rulemaking to proposed a change to the FDL ratio for CY
2021.
(2) Fixed Dollar Loss (FDL) Ratio for CY 2022
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of periods that can receive outlier
payments, but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for qualifying outlier
periods. Alternatively, a lower FDL ratio means that more periods can
qualify for outlier payments, but outlier payments per period must be
lower.
The FDL ratio and the loss-sharing ratio are selected so that the
estimated total outlier payments do not exceed the 2.5 percent
aggregate level (as required by section 1895(b)(5)(A) of the Act).
Historically, we have used a value of 0.80 for the loss-sharing ratio,
which, we believe, preserves incentives for agencies to attempt to
provide care efficiently for outlier cases. With a loss-sharing ratio
of 0.80, Medicare pays 80 percent of the additional estimated costs
that exceed the outlier threshold amount. Using CY 2020 claims data (as
of March 30, 2021), and given the statutory requirement that total
outlier payments does not exceed 2.5 percent of the total payments
estimated to be made under the HH PPS, we are proposing a FDL ratio of
0.41 for CY 2022.
6. Conforming Regulations Text Changes Regarding Allowed Practitioners
As stated in the May 2020 COVID-19 interim final rule with comment
period (85 FR 27550), we amended the regulations at parts 409, 424, and
484 to implement section 3708 of the CARES Act. This included defining
a nurse practitioner (NP), a clinical nurse specialist (CNS), and a
physician's assistant (PA) (as such qualifications are defined at
Sec. Sec. 410.74 through 410.76) as ``allowed practitioners'' (85 FR
27572). This means that in addition to a physician, as defined at
section 1861(r) of the Act, an allowed practitioner may certify,
establish and periodically review the plan of care, as well as
supervise the provision of items and services for beneficiaries under
the Medicare home health benefit. Additionally, we amended the
regulations to reflect that we would expect the allowed practitioner to
also perform the face-to-face encounter for the patient for whom they
are certifying eligibility; however, if a face-to-face encounter is
performed by a physician or an allowed non-physician practitioner
(NPP), as set forth in Sec. 424.22(a)(1)(v)(A), in an acute or post-
acute facility, from which the patient was directly admitted to home
health, the certifying allowed practitioner may be different from the
provider physician or allowed practitioner that performed the face-to-
face encounter. These regulations text changes are not time

[[Page 35916]]

limited to the period of the COVID-19 PHE.
When implementing plan of care changes in the CY 2021 HH PPS final
rule (85 FR 70298), the term ``allowed practitioner'' was inadvertently
deleted from the regulation text at Sec. 409.43. Therefore, in this
proposed rule we are proposing conforming regulations text changes at
Sec. 409.43 to reflect that allowed practitioners, in addition to
physicians, may establish and periodically review the plan of care.

III. Home Health Value-Based Purchasing (HHVBP) Model

A. Proposal To Expand the HHVBP Model Nationwide

1. Background
As authorized by section 1115A of the Act and finalized in the CY
2016 HH PPS final rule (80 FR 68624), the CMS Center for Medicare and
Medicaid Innovation (Innovation Center) implemented the Home Health
Value-Based Purchasing Model (original Model) in nine States on January
1, 2016. The last year of data collection for the original Model ended
on December 31, 2020. The original Model design leveraged the successes
of and lessons learned from other value-based purchasing programs and
demonstrations to shift from volume-based payments to a Model designed
to promote the delivery of higher quality care to Medicare
beneficiaries. The specific goals of the original Model were to: (1)
Provide incentives for better quality care with greater efficiency; (2)
study new potential quality and efficiency measures for appropriateness
in the home health setting; and (3) enhance the current public
reporting process.
Using the randomized selection methodology finalized in the CY 2016
HH PPS final rule, we selected nine States for inclusion in the
original HHVBP Model, representing each geographic area across the
nation. All Medicare-certified home health agencies (HHAs) providing
services in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska,
North Carolina, Tennessee, and Washington were required to compete in
the original Model. We stated that requiring all Medicare-certified
HHAs in the selected States to participate in the Model ensures that
there is no selection bias, participants are representative of HHAs
nationally, and there would be sufficient participation to generate
meaningful results.
The original Model uses the waiver authority under section
1115A(d)(1) of the Act to adjust the Medicare payment amounts under
section 1895(b) of the Act based on the competing HHAs' performance on
applicable quality measures. Under the original Model, CMS adjusts fee-
for-service payments to Medicare-certified HHAs based on each HHA's
performance on a set of quality measures in a given performance year
measured against a baseline year and relative to peers in its State.
The maximum payment adjustment percentage increased incrementally,
upward or downward, over the course of the original Model in the
following manner: (1) 3 percent in CY 2018; (2) 5 percent in CY 2019;
(3) 6 percent in CY 2020; (4) 7 percent in CY 2021; and (5) 8 percent
in CY 2022. Payment adjustments are based on each HHA's Total
Performance Score (TPS) in a given performance year, which is comprised
of performance on: (1) A set of measures already reported via the
Outcome and Assessment Information Set (OASIS),\11\ completed Home
Health Consumer Assessment of Healthcare Providers and Systems
(HHCAHPS) surveys, and claims-based measures; and (2) three New
Measures for which points were achieved for reporting data. Payment
adjustments for a given year are based on the TPS calculated for
performance two years' prior; for example, the CY 2018 payment
adjustments were based on CY 2016 performance.
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\11\ OASIS is the instrument/data collection tool used to
collect and report performance data by HHAs.
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In the CY 2017 HH PPS final rule (81 FR 76741 through 76752), CY
2018 HH PPS final rule (83 FR 51701 through 51706), and CY 2019 HH PPS
final rule (83 FR 56527 through 56547), we finalized changes to the
original Model. Some of those changes included adding and removing
measures from the applicable measure set, revising our methodology for
calculating benchmarks and achievement thresholds at the State level,
creating an appeals process for recalculation requests, and revising
our methodologies for weighting measures and assigning improvement
points.
On January 8, 2021, we announced that the HHVBP Model had been
certified for expansion nationwide,\12\ as well as our intent to expand
the Model through notice and comment rulemaking beginning no sooner
than CY 2022. The original Model has resulted in an average 4.6 percent
improvement in home health agencies' quality scores as well as average
annual savings of $141 million to Medicare.\13\
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\12\ <a href="https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf">https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf</a>.
\13\ <a href="https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt">https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt</a>.
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As described in this proposed rule, we are proposing to expand the
HHVBP Model (expanded Model/Model expansion) to all 50 States, the
District of Columbia and the territories starting in CY 2022. We are
proposing to codify HHVBP Model expansion policies at Sec. Sec.
484.340; 484.345; 484.350; 484.355; 484.360; 484.365; 484.370; and
484.375, as discussed in more detail in the sections that follow.
2. Requirements for Expansion
Section 1115A(c) of the Act provides the Secretary with the
authority to expand (including implementation on a nationwide basis),
through notice and comment rulemaking, the duration and scope of a
model that is being tested under section 1115A(b) of the Act if the
following findings are made, taking into account the evaluation of the
model under section 1115A(b)(4) of the Act: (1) The Secretary
determines that the expansion is expected to either reduce spending
without reducing quality of care or improve the quality of patient care
without increasing spending; (2) the CMS Chief Actuary certifies that
the expansion would reduce (or would not result in any increase in) net
program spending; and (3) the Secretary determines that the expansion
would not deny or limit the coverage or provision of benefits.
<bullet> Improved Quality of Care without Increased Spending: As
observed in the Third Annual Evaluation Report,\14\ the HHVBP Model
resulted in improved quality of care (for example, consistently
increasing TPS scores) and a reduction in Medicare expenditures through
three performance years of the HHVBP Model (CYs 2016 to 2018). The
HHVBP Model's intervention has led to savings without evidence of
adverse risks. The evaluation also found reductions in unplanned acute
care hospitalizations and skilled nursing facility (SNF) visits,
resulting in reductions in inpatient and SNF spending. Based on these
findings, the Secretary determined that expansion of the HHVBP Model
would reduce spending and improve the quality of care.
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\14\ The HHVBP Third Annual Evaluation Report is available at
<a href="https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt">https://innovation.cms.gov/data-and-reports/2020/hhvbp-thirdann-rpt</a>.
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<bullet> Impact on Medicare Spending: The CMS Chief Actuary has
certified that expansion of the HHVBP Model would

[[Page 35917]]

produce Medicare savings if expanded to all States.\15\
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\15\ The full CMS Actuary Report is available at <a href="https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf">https://www.cms.gov/files/document/certification-home-health-value-based-purchasing-hhvbp-model.pdf</a>.
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<bullet> No Alteration in Coverage or Provision of Benefits: The
HHVBP Model did not make any changes to coverage or provision of
benefits for Medicare beneficiaries. Therefore, the Secretary has
determined that expansion of the HHVBP Model would not deny or limit
the coverage or provision of Medicare benefits for Medicare
beneficiaries.
Consistent with our statutory authority, we would continue to test
and evaluate the expanded HHVBP Model. In the future, we would assess
whether the expanded implementation of HHVBP is continuing to reduce
Medicare spending without reducing quality of care or to improve the
quality of patient care without increasing spending, and could modify
the expanded HHVBP Model as appropriate through rulemaking.
3. Overview
The proposed HHVBP Model expansion presents an opportunity to
improve the quality of care furnished to Medicare beneficiaries
nationwide through payment incentives to HHAs. If finalized, all
Medicare-certified HHAs in the 50 States, District of Columbia and the
territories would be required to participate in the expanded HHVBP
Model beginning January 1, 2022. These HHAs would compete on value
based on an array of quality measures related to the care that HHAs
furnish.
The proposed Model expansion would be tested under section 1115A of
the Act. Under section 1115A(d)(1) of the Act, the Secretary may waive
such requirements of Titles XI and XVIII and of sections 1902(a)(1),
1902(a)(13), and 1903(m)(2)(A)(iii) of the Act as may be necessary
solely for purposes of carrying out section 1115A of the Act with
respect to testing models described in section 1115A(b) of the Act. The
Secretary is not issuing any waivers of the fraud and abuse provisions
in sections 1128A, 1128B, and 1877 of the Act or any other Medicare or
Medicaid fraud and abuse laws for this Model expansion at this time. In
addition, CMS has determined that the anti-kickback statute safe harbor
for CMS-sponsored model arrangements and CMS-sponsored model patient
incentives (42 CFR 1001.952(hh)(9)(ii)) will not be available to
protect remuneration exchanged pursuant to any financial arrangements
or patient incentives permitted under the Model. Thus, notwithstanding
any other provisions of this proposed rule, all Medicare-certified HHAs
in the 50 States, District of Columbia and the territories must comply
with all applicable fraud and abuse laws and regulations.
We are proposing to use the section 1115A(d)(1) of the Act waiver
authority to apply a reduction or increase of up to 5 percent to
Medicare payments to Medicare-certified HHAs delivering care to
beneficiaries in the 50 States, District of Columbia and the
territories, depending on the HHA's performance on specified quality
measures relative to its peers. Specifically, the expanded HHVBP Model
proposes to utilize the section 1115A(d)(1) of the Act waiver authority
to adjust the Medicare payment amounts under section 1895(b) of the
Act. In accordance with the authority granted to the Secretary in
section 1115A(d)(1) of the Act, we would waive section 1895(b)(4) of
the Act only to the extent necessary to adjust payment amounts to
reflect the value-based payment adjustments under this proposed
expanded Model for Medicare-certified HHAs in the 50 States, District
of Columbia and the territories. We may make changes to the payment
adjustment percentage through rulemaking in future years of the
expansion, as additional evaluation data from the HHVBP expanded Model
become available, and we learn about performance within the Model under
the expansion. The evaluation of the expanded Model would use a time
series type approach to examine the outcomes of interest (cost or
utilization) over time prior to the start of the intervention and
follow that outcome after the start of the expansion.
a. Overview of Timing and Scope
As noted, we are proposing to begin the expanded HHVBP Model on
January 1, 2022. Under this proposal, CY 2022 would be the first
performance year and CY 2024 would be the first payment year, with
payment adjustments in CY 2024 based on an HHA's performance in CY
2022. Performance year means the calendar year during which data are
collected for the purpose of calculating a competing HHA's performance
on applicable quality measures. Payment year means the calendar year in
which the applicable percent, a maximum upward or downward adjustment,
applies.
The proposed expanded Model would apply to all Medicare-certified
HHAs in the 50 States, District of Columbia and the territories, which
means that all Medicare-certified HHAs that provide services in the 50
States, District of Columbia and the territories would be required to
compete in the expanded Model. We are proposing to codify this
requirement at Sec. 484.350. We are proposing to define a `competing
HHA' within the scope of the proposed expanded HHVBP Model as an HHA
that has a current Medicare certification and is being paid by CMS for
home health care services. We propose that all HHAs certified for
participation in Medicare before January 1, 2021 would have their CY
2022 performance assessed and would be eligible for a CY 2024 payment
adjustment. We propose to base participation in the expanded Model on
CMS Certification Numbers (CCNs), meaning that the Total Performance
Score as discussed further in section III.A.7.a. of this proposed rule
and payment adjustment would be calculated based on an HHA's CCN.\16\
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\16\ HHAs are required to report OASIS data and any other
quality measures by its own unique CMS Certification Number (CCN) as
defined under Title 42, Chapter IV, Subchapter G, Sec. 484.20
Available at URL <a href="http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title42/42cfr484_main_02.tpl">http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title42/42cfr484_main_02.tpl</a>.
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b. Overview of the Payment Adjustment
As proposed, the distribution of payment adjustments would be based
on quality performance, as measured by both achievement and
improvement, across a proposed set of quality measures constructed to
minimize burden as much as possible and improve care. Competing HHAs
that demonstrate they can deliver higher quality of care in a given
performance year measured against a baseline year relative to peers
nationwide (as defined by larger- versus smaller-volume cohorts based
upon their unique beneficiary count in the prior calendar year), could
have their HH PPS claims final payment amount adjusted higher than the
amount that otherwise would be paid. Competing HHAs that do not perform
as well as other competing HHAs in the same volume-based cohort might
have their HH PPS claims final payment amount reduced and those
competing HHAs that perform similarly to others in the same volume-
based cohort might have no payment adjustment. This operational concept
is similar in practice to what is used in the Hospital Value-Based
Purchasing (HVBP) Program (76 FR 26531).
We expect that the risk of having payments adjusted in this manner
would provide an incentive among all competing HHAs to provide
significantly better quality through improved planning, coordination,
and management of care. Under the expanded duration and scope of this
Model, we would continue to examine

[[Page 35918]]

whether the proposed adjustments to the Medicare payment amounts that
would otherwise be made to competing HHAs would result in statistically
significant improvements in the quality of care being delivered to
Medicare beneficiaries, as well as reductions in Medicare spending. The
degree of the payment adjustment would be dependent on the level of
quality achieved or improved from the baseline year, with the highest
upward performance adjustments going to competing HHAs with the highest
overall level of performance based on either achievement or improvement
in quality. The size of a competing HHA's payment adjustment for each
year under the expanded Model would be dependent upon that HHA's
performance with respect to the applicable performance year relative to
other competing HHAs in the same volume-based cohort and relative to
its own performance during the baseline year. Details are discussed in
sections III.A.4, III.A.5, and III.A.7.a of this proposed rule.
In addition, at Sec. 484.345 we propose to add the following
definitions:

<bullet> Achievement threshold
<bullet> Applicable measure
<bullet> Applicable percent
<bullet> Baseline year
<bullet> Benchmark
<bullet> Competing home health agency
<bullet> Home health prospective payment system
<bullet> Improvement threshold
<bullet> Larger-volume cohort
<bullet> Linear exchange function
<bullet> Nationwide
<bullet> Payment adjustment
<bullet> Payment year
<bullet> Performance year
<bullet> Smaller-volume cohort
<bullet> Total Performance Score
4. Defining Cohorts for Benchmarking and Competition
Under the original HHVBP Model, we grouped HHAs into cohorts by
State for setting benchmarks and achievement thresholds and by both
State and smaller- versus larger-volume HHAs when determining the
cohorts used for competing for payment adjustments, in accordance with
Sec. 484.330. For the nationwide expansion of the HHVBP Model, we are
proposing to redefine the cohort structure to account for States,
territories, and the District of Columbia with smaller numbers of HHAs,
while also allowing for the use of volume-based cohorts in determining
benchmarks, achievement thresholds, and payment adjustments.
a. Proposed Smaller- and Larger-Volume Cohorts
As discussed further in this section, we believe that separating
smaller- and larger-volume HHAs into cohorts under the expanded Model
would facilitate like comparisons by allowing for the majority of HHAs
to receive benchmarks and compete for payment against other HHAs of
similar size and based on the same set of measures. As under the
original HHVBP Model, we propose to align the larger-volume cohort with
the group of competing HHAs that administers the Home Health Care
Consumer Assessment of Healthcare Providers and Systems (HHCAHPS)
survey, in accordance with the HH QRP regulations concerning the
HHCAHPS survey in Sec. 484.245(b), and we propose to align the Model's
smaller-volume HHA cohort with the group of HHAs that are exempt from
submitting the HHCAHPS survey under HH QRP under Sec.
484.245(b)(1)(iii)(A). Under the expanded HHVBP Model, we would not
alter the HHCAHPS survey current scoring methodology or the
participation requirements in any way. Details on HHCAHPS survey
scoring methodology are available at: <a href="https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials">https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials</a>.\17\
---------------------------------------------------------------------------

\17\ Detailed scoring information is contained in the Protocols
and Guidelines manual posted on the HHCAHPS website and available at
<a href="https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials">https://homehealthcahps.org/Survey-and-Protocols/Survey-Materials</a>.
---------------------------------------------------------------------------

The HH QRP requires, in part, that an HHA submit HHCAHPS survey
data to CMS. An HHA that has fewer than 60 eligible unique HHCAHPS
survey patients must annually submit their total HHCAHPS survey patient
count to CMS to be exempt from the HHCAHPS survey reporting
requirements for a calendar year. As under the original HHVBP Model, we
propose to align with this HHCAHPS survey reporting requirement by
defining the larger-volume cohort as those HHAs that are required to
submit an HHCAHPS survey in the performance year. As under the original
Model, we also propose to set an HHCAHPS survey measure minimum of at
least 40 completed HHCAHPS surveys in the performance year for those
HHAs to receive a score on the HHCAHPS survey measure, as reflected in
proposed Sec. Sec. 484.345 and 484.360. Accordingly, because smaller-
volume HHAs are less likely to be assessed on the HHCAHPS survey
measure, which would account for 30 percent of the overall performance
score in the expanded Model, we believe that separating smaller- and
larger-volume HHAs into distinct cohorts would allow for the majority
of HHAs to compete against other HHAs of similar size and based on the
same set of measures.
b. Proposed Cohorts for the Model Expansion
As discussed, we believe that applying separate larger- and
smaller-volume cohorts within the expanded HHVBP Model would group HHAs
that are of similar size and are more likely to receive scores on the
same set of measures for purposes of setting benchmarks and achievement
thresholds and determining payment adjustments. However, a valid cohort
must have a sufficient number of HHAs to--(1) create a robust
distribution of Total Performance Scores, which allows meaningful and
reasonable translation into payment adjustments using the linear
exchange function (LEF);\18\ and (2) set stable, reliable benchmarks
and achievement thresholds that are not heavily skewed by outliers. The
LEF is designed so that the majority of the payment adjustment values
fall closer to the median and a smaller percentage of HHAs receive
adjustments at the higher and lower ends of the distribution. However,
when only a small number of HHAs fall within a cohort, one HHA's
outlier TPS could skew the payment adjustments and deviate from the
intended design of the LEF payment methodology. As a result, a key
consideration in defining the cohorts is ensuring sufficient HHA counts
within each cohort.
---------------------------------------------------------------------------

\18\ The Linear Exchange Function (LEF) is used to translate an
HHA's TPS into a percentage of the value-based payment adjustment
earned by each HHA. For a more detailed description, please see
section III.A.8. of this proposed rule.
---------------------------------------------------------------------------

Under the original Model, CMS applied a minimum of eight HHAs for
any size cohort, such that a smaller-volume cohort must have a minimum
of eight HHAs in order for the HHAs in that cohort to be compared only
against each other, and not against the HHAs in the larger-volume
cohort (81 FR 76742). This policy was based on an analysis of the
minimum number of HHAs needed in a smaller-volume cohort in order to
insulate that cohort from the effect of outliers. Expanding the HHVBP
Model beyond the nine mid- to large-sized States included in the
original Model requires us to re-examine these cohort definitions
because, certain territories and the District of Columbia would fall
short of the original Model's minimum of 8 HHAs to compose their own
cohort even where the volume-based cohorts are combined. This was not
an issue in the original Model because the nine selected States are
relatively populous as compared to the smaller States,

[[Page 35919]]

territories, and the District of Columbia that would be included in the
expanded Model. Based on CY 2019 Home Health Compare Star Ratings, we
evaluated the viability of smaller- and larger-volume cohorts, as
defined previously, for each of the 55 States, territories, and the
District of Columbia. Based on our analysis, of the 110 potential
cohorts based on both State and HHA volume for the expanded HHVBP
Model, 46 of the 110 potential cohorts had too few HHAs to reliably
meet the original Model minimum of 8 HHAs, after accounting for the
risk of attrition from the expanded Model. Under this approach, for 42
of these 46 States and territories, the smaller-volume cohorts would
need to be combined with the larger-volume cohorts in their States and
territories, while 3 territories and the District of Columbia would
need to be combined with other States or territories since they do not
meet the 8 HHA minimum after consolidating the volume-based cohorts.
See Table 24 for the counts of HHAs in each of the potential cohorts,
if we were to apply separate State- and volume-based cohorts for each
State, territory, and the District of Columbia under the expanded
Model.
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BILLING CODE 4120-01-C
As noted, under the original HHVBP Model, a minimum of eight HHAs
is required for each size cohort. For the expanded HHVBP Model, we are
proposing to establish cohorts prospectively and with sufficient HHA
counts to prevent the need to combine multiple cohorts retrospectively.
We propose to provide HHAs with their

[[Page 35920]]

applicable benchmarks and achievement thresholds prior to the start of
or during the performance year so that they can be used to set
performance targets to guide HHAs' quality improvement projects. To
reliably define cohorts prospectively and to avoid regrouping multiple
States, territories, or the District of Columbia into a single cohort
retrospectively based solely on their lower HHA counts, we estimate
that a minimum of 20 HHAs in each cohort would be necessary to ensure
that attrition and variation in episode counts do not lead to
insufficient HHA counts at the end of the performance year. Based on
the data set forth in Table 24, 61 out of the 110 potential cohorts
would have fewer than 20 HHAs in a size-based cohort, and 11 out of
those potential cohorts would not meet the 20 HHA minimum after
combining the size-based cohorts.
To allow for a sufficient number of HHAs in each volume-based
cohort, for purposes of setting benchmarks and achievement thresholds
and determining payment adjustments, we are proposing to use cohorts
based on all HHAs nationwide, rather than by State as under the
original Model. Referencing the CY 2019 data in Table 24, under this
approach, 7,084 HHAs would fall within the larger-volume cohort and 485
HHAs fall within the smaller-volume cohort. These HHA counts would
provide a sufficiently large number of values in each cohort to allow
ranking of HHA performance scores and payment adjustment percentages
across the range of -5 percent to +5 percent. Further, our analysis
found that many of the smaller-volume HHAs would not receive a score on
the HHCAHPS survey measures, which are proposed to account for
30percent of the overall TPS, while most of the larger-volume cohort
HHAs would be scored on the full set of applicable measures.
Accordingly, and as previously discussed, we believe the volume-based
cohorts would allow for competition among HHAs across similar measures.
Using nationwide rather than State/territory-based cohorts in
performance comparisons would also be consistent with the Skilled
Nursing Facility and Hospital VBP Programs, in addition to the Home
Health Compare Star Ratings. Finally, this option would be the least
operationally complex to implement.
For the reasons discussed, we believe the use of nationwide
smaller- and larger-volume-based cohorts would allow for appropriate
groupings of HHAs under the expanded Model while also providing
sufficient numbers of HHAs in each cohort for purposes of setting
stable and reliable benchmarks and achievement thresholds and allowing
for a robust distribution of payment adjustments. However, we also
considered an alternative approach of using State/territory-based
cohorts, without volume-based groupings. Applying the State, territory,
and District of Columbia-level cohorts, we found that 11 of the 55
potential cohorts would have fewer than 20 HHAs based on the CY 2019
Home Health Star Ratings data. As noted, we do not believe this would
allow for a sufficient number of HHAs to develop prospective benchmarks
and achievement thresholds. While one approach would be to exclude any
States, territories, or the District of Columbia from the expanded
Model for years in which there are fewer than 20 HHAs in the cohort, we
believe such a policy would be inconsistent with the goal of including
all eligible HHAs nationwide in the Model. Another option would be to
consolidate those States, territories, and the District of Columbia
with less than 20 HHAs in the cohort, and to calculate benchmarks,
achievement thresholds, and payment adjustments based on that
consolidated grouping of HHAs. We note that while slight differences do
exist between quality measure scores based on geographic location, we
do not believe that codifying these small differences into long-term
performance standards is necessary to appropriately determine payment
adjustments under the expanded Model.
We are proposing to establish nationwide volume-based cohorts for
the expanded HHVBP Model, such that HHAs nationwide would compete
within either the larger-volume cohort or the smaller-volume cohort. We
propose to codify this policy at Sec. 484.370, and to codify the
proposed definitions of smaller-volume cohort and larger-volume cohort
at Sec. 484.345. Under this proposal, HHAs currently participating in
the original HHVBP Model would no longer compete within just their
State. We are also requesting comment on the alternative approach of
applying State/territory-based cohorts only, without volume-based
cohorts, which we may finalize after consideration of comments
received.
We seek public comment on these proposals.
5. Proposed Payment Adjustment Percentage and Performance Assessment
and Payment Adjustment Periods
a. Proposed Payment Adjustment
Under the original Model, the payment adjustment ranges from a
minimum of 3 percent in 2018 to maximum of 8 percent in 2022. For the
expanded Model, we are proposing that the maximum payment adjustment,
upward or downward, would be 5 percent. We believe that beginning the
expansion with a 5 percent maximum payment adjustment would strike a
balance between the 3 percent maximum adjustment that applied for CY
2018, the first payment year of the original HHVBP Model, and the 7
percent maximum adjustment currently in place for CY 2021. As proposed
in section III.A.3.a. of this proposed rule, the first payment year of
the expanded HHVBP Model would be CY 2024 (January 1, 2024 through
December 31, 2024), with payment adjustments based on performance in CY
2022 (January 1, 2022 through December 31, 2022). We may consider
changes to the proposed 5 percent maximum payment adjustment percentage
through rulemaking in future years of the expansion, as additional
evaluation data from the original Model and expansion become available.
We note that the CMS Actuary certification was based on evaluation of
the Model when the maximum payment adjustment was 3 percent. However,
in their certification memo, they indicated they believe the Model
would result in savings at higher payment adjustment amounts as well.
We seek public comment on the proposed payment adjustment
percentage.
b. Proposed Baseline Year
(1) General
For the expanded HHVBP Model, due to the potentially de-stabilizing
effects of the COVID-19 public health emergency (PHE) on quality
measure data in CY 2020, we propose that the baseline year would be CY
2019 (January 1, 2019 through December 31, 2019) for the CY 2022
performance year/CY 2024 payment year and subsequent years. The data
from this baseline year would provide a basis from which each
respective HHA's performance would be measured for purposes of
calculating achievement and improvement points under the expanded
Model. We may propose to update the baseline year for subsequent years
of the expanded Model through future rulemaking. We would also propose
the applicable baseline year for any additional quality measures that
may be added to the measure set for the expanded HHVBP Model through
future rulemaking.
We seek public comment on the proposed baseline year for the
expanded Model.

[[Page 35921]]

(2) New HHAs
As noted, we are generally proposing that for the expanded Model,
the baseline year would be CY 2019 (January 1, 2019 through December
31, 2019) for the CY 2022 performance year/CY 2024 payment year and
subsequent years. For new HHAs, specifically those HHAs that are
certified by Medicare on or after January 1, 2019, we are proposing
that the baseline year under the expanded Model would be the HHA's
first full CY of services beginning after the date of Medicare
certification, with the exception of HHAs certified on January 1, 2019
through December 31, 2019, for which the baseline year would be CY
2021. Furthermore, we propose that new HHAs would begin competing under
the expanded HHVBP Model in the first full calendar year following the
full calendar year baseline year. For example, and as previously
discussed, we are proposing that all HHAs certified for participation
in Medicare before January 1, 2021 would have their CY 2022 performance
assessed and would be eligible for a CY 2024 payment adjustment. For
HHAs certified on January 1, 2020 through December 31, 2020, the
baseline year would be CY 2021, the first full CY of services beginning
after the date of Medicare certification. For those HHAs certified on
January 1, 2019 through December 31, 2019, the baseline year would also
be CY 2021, rather than CY 2020 (the first full CY of services
beginning after the date of Medicare certification), due to the
potentially destabilizing effects of the PHE on quality measure data in
CY 2020. For an HHA certified by Medicare on January 1, 2021 through
December 31, 2021, for example, the first full calendar year of
services that would establish the HHA's baseline year would be CY 2022.
The HHA's first performance year would be CY 2023 and the HHA's first
payment year, based on CY 2023 performance, would be CY 2025. Table 25
shows the proposed HHA baseline, performance and payment years based on
the HHA's Medicare-certification date through December 31, 2021.
[GRAPHIC] [TIFF OMITTED] TP07JY21.037

We also propose to codify our proposal on new HHAs at Sec.
484.350. We seek public comment on this proposal.
6. Quality Measures
a. General Considerations Used for the Selection of Quality Measures
for the Expanded HHVBP Model
We plan to apply, to the extent possible, principles from CMS'
Meaningful Measures Initiative in selecting the applicable measures as
defined at Sec. 484.345 to be included in the Model expansion. A
central driver of the proposed applicable measure set is to have a
broad, high impact on care delivery and support priorities to improve
health outcomes, quality, safety, efficiency, and experience of care
for patients. To frame the selection process, we also considered the
domains of the CMS Quality Strategy \19\ that maps to the six National
Quality Strategy (NQS) \20\ priority areas: Clinical quality of care;
Care coordination; Population/community health; efficiency and cost
reduction; safety; and, Patient and caregiver-centered experience.
---------------------------------------------------------------------------

\19\ <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy</a>.
\20\ For NQF endorsed measures see The NQF Quality Positioning
System available at <a href="http://www.qualityforum.org/QPS">http://www.qualityforum.org/QPS</a>. For non-NQF
measures using OASIS see links for data tables related to OASIS
measures at <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits</a>.
---------------------------------------------------------------------------

We believe that Medicare-certified HHAs should be evaluated using
measures designed to encompass multiple NQS domains, and provide future
flexibility to incorporate and study newly developed measures over
time. Additionally, so that measures for the expanded HHVBP Model take
a more holistic view of the patient beyond a particular disease,
functional status, State or care setting, we would prioritize outcome
measures that have the potential to follow patients across multiple
settings, reflect a multi-faceted approach, and foster the intersection
of health care delivery and population health.
The proposed expanded Model measures mostly align with those under
the HH QRP. However, we intend to consider new measures for inclusion
in subsequent years of the expanded HHVBP Model through future
rulemaking. We may consider adding new measures to the expanded HHVBP
Model measure set that address gaps within the NQS domains or the home
health service line and are good indicators of home health quality of
care. When available, NQF endorsed measures would be used. The expanded
Model's section 1115A of the Act authority also affords the opportunity
to study other measures, such as, measures developed in other care
settings or new to the home health industry, should CMS identify such
measures. A key consideration behind this approach is to use measures
that are readily available, and, in subsequent Model years, augment the
applicable measure set with innovative measures that have the potential
to be impactful and fill critical measure gap areas. This approach to
quality measure selection aims to balance the burden of collecting data
with the inclusion of new and important measures. We would carefully
consider the potential burden on HHAs to report the measure data that
is not already collected through existing quality measure data
reporting systems and reiterate that we would propose any new measures
through future rulemaking.

[[Page 35922]]

b. Proposed Measure Set Beginning With the CY 2022 Performance Year/CY
2024 Payment Year and Subsequent Years
We propose that the initial applicable measure set for the expanded
HHVBP Model for the CY 2022 performance year focus on patient outcome
and functional status, utilization, and patient experience. The
proposed measures were also used under the original Model (83 FR
56533). However, we note that no ``New Measures'' as defined in the
original Model (80 FR 68674) are being proposed for data collection
under the expanded Model beginning with the CY 2022 performance year
given there was sufficient data collected on the ``New Measures'' under
the original Model for analysis of the appropriateness for use in the
home health setting. We note that any future additional measures
proposed for the expanded HHVBP Model would not be considered ``New
Measures'' as used in the original Model.
Beginning with the CY 2022 performance year/CY 2024 payment year
and for subsequent years, we propose the following measures as detailed
in Table 26 for inclusion in the expanded Model. The measure set also
includes outcome measures, which illustrate the end result of care
delivered to HHA patients and address an important quality aim for HHA
patients. We believe the proposed measure set under the expanded HHVBP
Model, where most measures currently align with HH QRP measures,
supports enhancing quality because of the value-based incentives
provided under the expanded Model. Further, we believe that the
expanded Model measure set, as proposed, includes an array of measures
that would capture the care that HHAs furnish and incentivize quality
improvement. The measures in the proposed measure set are divided into
measure categories based on their data source as indicated in Table 26:
Claims-based, OASIS-based, and the HHCAHPS survey-based. We note that
the HHCAHPS survey-based measure has five individual components. The
term ``applicable measure'' applies to each of the five components for
which a competing HHA has submitted a minimum of 40 completed HHCAHPS
surveys (This is discussed in more detail in sections III.A.4.a.,
III.A.7.c., and III.A.7.d. of this proposed rule). That is, each
component counts as one applicable measure towards the five measure
minimum that is required for an HHA to receive a Total Performance
Score (TPS) (this is discussed in more detail in section III.A.7.d of
this proposed rule).
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[[Page 35923]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.038

[[Page 35924]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.039

Table 27 provides more granular detail on the elements of the Home
Health Care Consumer Assessment of Healthcare Providers and Systems
(HHCAHPS) Survey measure.

[[Page 35925]]

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[[Page 35926]]

[GRAPHIC] [TIFF OMITTED] TP07JY21.041

[[Page 35927]]

BILLING CODE 4120-01-C
(1) Additional Background on the Total Normalized Composite Measures
The proposed measure set includes two composite measures: Total
Normalized Composite (TNC) Self-Care and TNC Mobility, which were
included in the original HHVBP Model measure set in CY 2019, as
finalized in the CY 2019 HH PPS final rule (83 FR 56529 through 56535).
The methodology for these measures take into account patients who may
not have goals for improvement.
The proposed TNC Self-Care measure computes the magnitude of
change, either positive or negative, based on a normalized amount of
possible change on each of six OASIS-based quality outcomes. These six
outcomes are as follows:

<bullet> Improvement in Grooming (M1800)
<bullet> Improvement in Upper Body Dressing (M1810)
<bullet> Improvement in Lower Body Dressing (M1820)
<bullet> Improvement in Bathing (M1830)
<bullet> Improvement in Toileting Hygiene (M1845)
<bullet> Improvement in Eating (M1870)

The TNC Mobility measure computes the magnitude of change, either
positive or negative, based on the normalized amount of possible change
on each of three OASIS-based quality outcomes. These three outcomes are
as follows:

<bullet> Improvement in Toilet Transferring (M1840)
<bullet> Improvement in Bed Transferring (M1850)
<bullet> Improvement in Ambulation/Locomotion (M1860)

For each TNC measure, we calculate at the episode level and then
aggregate to the home health agency level using a five-step process:
Steps 1 to 3 calculate the normalized change values for each applicable
OASIS item at the episode level. Steps 4 and 5 aggregate these values
to the agency level. As composite measures, the TNC Self-Care and TNC
Mobility measures reflect multiple OASIS items, so there are no
numerators or denominators for these two measures. A detailed
description of the five steps can be found at: <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20computing%20the%20hhvbp%20composite%20measures.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20computing%20the%20hhvbp%20composite%20measures.pdf</a>. We expect
that HHAs already focus on improvement in such areas not just because
such items are included in the OASIS, but because self-care and
mobility are areas of great importance to patients and families.
Improvement in such areas may allow beneficiaries to remain in the home
setting (versus an institution) and contribute to beneficiaries'
quality of life. The risk adjustment methodology for these two measures
recalibrates the expectations for improvement by including risk factors
for a wide variety of beneficiary-level factors, including age, risk
for hospitalization, condition categories, living arrangements and
caregivers available, pain, cognitive function, baseline functional
status, and others. For instance, a beneficiary with impaired cognition
would not be expected to improve in self-care as much as a beneficiary
with intact cognition. In effect, the self-care improvement score would
shift up slightly for a beneficiary with impaired cognition relative to
a beneficiary without cognitive impairment to account for the
difference in expectations. Both TNC measures' computations can be
found at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20computing%20the%20hhvbp%20composite%20measures.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20computing%20the%20hhvbp%20composite%20measures.pdf</a>
and the technical specifications can be found at: <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20technical%20specification%20resource%20for%20composite%20outcome%20measures_4.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hhvbp%20technical%20specification%20resource%20for%20composite%20outcome%20measures_4.pdf</a>. Additional information on the predictive modeling
and methodology for the composite measures can be found in the CY 2019
HH PPS final rule (83 FR 56529 through 56535).
We note that we had considered the inclusion of stabilization
measures which are measures that identify all patients whose function
has not declined, including both those who have improved or stayed the
same in the original HHVBP Model's measure set and refer readers to the
CY 2016 HH PPS final rule (80 FR 68669 through 68670) and the CY 2019
HH PPS final rule (83 FR 56529 through 56535). In the CY 2016 final
rule, we explained that we considered using some of the stabilization
measures for the original Model and found that the average HHA
stabilization measure scores ranged from 94 to 96 percent and, with
average rates of nearly 100 percent. We do not believe these high
measure scores would allow for meaningful comparisons between
competing-HHAs on the quality of care delivered. We acknowledge that
skilled care may be necessary to improve a patient's current condition,
to maintain the patient's current condition, or to prevent or slow
further deterioration of the patient's condition. However, we believe
that the two proposed TNC measures represent a new direction in how
quality of patient care is measured in home health as patients who
receive care from an HHA may have functional limitations and may be at
risk for further decline in function because of limited mobility and
ambulation.
(2) Additional Background on the Home Health Care Consumer Assessment
of Healthcare Providers and Systems Survey Measure
The Home Health Care Consumer Assessment of Healthcare Providers
and Systems Survey (HHCAHPS) survey is part of a family of
CAHPS[supreg] surveys that asks patients to report on and rate their
experiences with health care. The HHCAHPS survey specifically presents
home health patients with a set of standardized questions about their
home health care providers and about the quality of their home health
care. The survey is designed to measure the experiences of people
receiving home health care from Medicare-certified home health care
agencies and meet the following three broad goals to: (1) Produce
comparable data on the patient's perspective that allows objective and
meaningful comparisons between HHAs on domains that are important to
consumers; (2) create incentives through public reporting of survey
results for agencies to improve their quality of care; and (3) enhance
public accountability in health care by increasing the transparency of
the quality of care provided in return for public investment through
public reporting.\21\
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\21\ <a href="https://homehealthcahps.org/General-Information/About-Home-Health-Care-CAHPS-Survey">https://homehealthcahps.org/General-Information/About-Home-Health-Care-CAHPS-Survey</a>.
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We note that the HHCAHPS survey is also part of the HH QRP's data
submission requirements, which are codified for that program at 42 CFR
484.245(b). As proposed, expanded HHVBP Model participants would not
need to submit separate HHCAHPS survey measure data already submitted
as a requirement under HH QRP, because the requirements as proposed for
the expanded Model are aligned with those currently under HH QRP. For
more details about the HHCAHPS Survey, please see <a href="https://homehealthcahps.org/">https://homehealthcahps.org/</a>.
We invite public comment on our proposed measure set.
c. Measure Modifications
During the expanded Model, we would monitor the quality measures
for lessons learned and address any needed

[[Page 35928]]

adjustments or modifications to the expanded Model measure set.
(1) Proposed Substantive vs. Non-Substantive Changes Policy
Updates to measures may result from various sources including, for
example, measure stewards and owners, new clinical guidelines, a public
health emergency, CMS-identified, a technical expert panel (TEP), or
NQF. How we incorporate those updates would depend on whether the
changes are substantive or non-substantive.
With respect to what constitutes a substantive versus a non-
substantive change, we expect to make this determination on a measure-
by-measure basis. Examples of such non-substantive changes might
include updated diagnosis or procedure codes, medication updates for
categories of medications, broadening of age ranges, and changes to
exclusions for a measure. We believe that non-substantive changes may
include updates to measures based upon changes to guidelines upon which
the measures are based. These types of maintenance changes are distinct
from more substantive changes to measures that result in what can be
considered new or different measures, and that they do not trigger the
same agency obligations under the Administrative Procedure Act.
We propose that, in the event that an update to a measure is
necessary in a manner that we consider to not substantially change the
nature of the measure, we will use a sub-regulatory process to
incorporate those updates to the measure specifications. Specifically,
we would revise the information that is posted on the CMS website so
that it clearly identifies the updates and provides links to where
additional information on the updates can be found. In addition, we
would provide sufficient lead time for HHAs to implement the changes
where changes to the data collection systems would be necessary.
We are also proposing to use notice and comment rulemaking to adopt
changes to measures that we consider to substantially change the nature
of the measure. Examples of changes that we might consider to be
substantive would be those in which the changes are so significant that
the measure is no longer the same measure, or when a standard of
performance assessed by a measure becomes more stringent, such as
changes in acceptable timing of medication, procedure/process, test
administration, or expansion of the measure to a new setting. We
believe that our proposal adequately balances the need to incorporate
changes to measures used in the expanded HHVBP Model in the most
expeditious manner possible, while preserving the public's ability to
comment on updates to measures that so fundamentally change a measure
that it is no longer the same measure originally adopted. We note that
CMS adopted a similar policy for the HH QRP in the CY 2015 HH PPS final
rule (79 FR 66079 through 66081).
We invite public comment on our proposal.
d. Measure Removals
The measure set used for the expanded Model would be subject to
change including the removal of measures during subsequent years. In
this proposed rule, for greater transparency, we propose factors we
would consider in proposing to remove a measure as well as a policy for
when immediate suspension is necessary.
(1) Proposed Removal Factors
We propose to generally use the below removal factors when
considering a quality measure for removal for use in the expanded HHVBP
Model:
<bullet> Factor 1. Measure performance among HHAs is so high and
unvarying that meaningful distinctions in improvements in performance
can no longer be made (that is, topped out). To determine ``topped-
out'' criteria, we will calculate the top distribution of HHA
performance on each measure, and if the 75th and 90th percentiles are
statistically indistinguishable, we will consider the measure topped-
out.
<bullet> Factor 2. Performance or improvement on a measure does not
result in better patient outcomes.
<bullet> Factor 3. A measure does not align with current clinical
guidelines or practice.
<bullet> Factor 4. A more broadly applicable measure (across
settings, populations, or conditions) for the particular topic is
available.
<bullet> Factor 5. A measure that is more proximal in time to
desired patient outcomes for the particular topic is available.
<bullet> Factor 6. A measure that is more strongly associated with
desired patient outcomes for the particular topic is available.
<bullet> Factor 7. Collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
<bullet> Factor 8. The costs associated with a measure outweigh the
benefit of its continued use in the program.
With respect to Factor 8, under our Meaningful Measures Initiative,
we are engaging in efforts to ensure that the expanded HHVBP Model
measure set continues to promote improved health outcomes for
beneficiaries while minimizing the overall costs associated with the
program. We believe that these costs are multifaceted and include not
only the burden associated with reporting, but also the costs
associated with implementing and maintaining the expanded HHVBP Model.
We have identified several different types of costs, including, but not
limited to the following:
<bullet> Provider and clinician information collection burden and
burden associated with the submitting/reporting of quality measures to
CMS.
<bullet> The provider and clinician cost associated with complying
with other HH programmatic requirements.
<bullet> The provider and clinician cost associated with
participating in multiple quality programs, and tracking multiple
similar or duplicative measures within or across those programs.
<bullet> The cost to CMS associated with the program oversight of
the measure, including measure maintenance and public display.
<bullet> The provider and clinician cost associated with compliance
with other Federal and State regulations (if applicable).
For example, it may be of limited benefit to retain or maintain a
measure which our analyses show no longer meaningfully supports the
expanded HHVBP Model goals (for example, no longer provides incentives
for better quality care with greater efficiency). It may also be costly
for HHAs to track confidential feedback and publicly reported
information on a measure where we use the measure in more than one
initiative, model, or program. We may also have to expend resources to
maintain the specifications for the measure, including the tools needed
to collect, validate, analyze, and publicly report the measure data.
When these costs outweigh the evidence supporting the continued use
of a measure in the expanded HHVBP Model, we believe that it may be
appropriate to remove the measure from the Model. Although we recognize
that the expanded HHVBP Model is to encourage HHAs to improve
beneficiary outcomes by incentivizing health care providers, we also
recognize that this can have limited utility where, for example, the
data is of limited use because it is not meaningful. In these cases,
removing the measure from the expanded HHVBP Model may better
accommodate the costs of expansion administration and compliance
without sacrificing improved health outcomes.

[[Page 35929]]

We propose that we would remove measures based on Factor 8 on a
case-by-case basis. For example, we may decide to retain a measure that
is burdensome for HHAs to report if we conclude that the benefit to
beneficiaries is so high that it justifies the reporting burden. Our
goal is to move the expa

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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.