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Rule2021-23993

Medicare and Medicaid Programs; CY 2022 Home Health Prospective Payment System Rate Update; Home Health Value-Based Purchasing Model Requirements and Model Expansion; Home Health and Other Quality Reporting Program Requirements; Home Infusion Therapy Services Requirements; Survey and Enforcement Requirements for Hospice Programs; Medicare Provider Enrollment Requirements; and COVID-19 Reporting Requirements for Long-Term Care Facilities

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Published

November 9, 2021

Effective

January 1, 2022

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This final rule updates 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 finalizes recalibration of the case-mix weights and updates the functional impairment levels, and comorbidity adjustment subgroups while maintaining the current low utilization payment adjustment (LUPA) thresholds for CY 2022. Additionally, this rule finalizes a policy 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 makes conforming regulations text changes to reflect that allowed practitioners are able to establish and review the plan of care. It also finalizes proposed changes to the Home Health Quality Reporting Program (QRP) including finalizing proposed measure removals and adoptions, public reporting, and modification of effective dates. It also finalizes proposed modifications to the effective date for the reporting of measures and certain standardized patient assessment data in the Inpatient Rehabilitation Facility (IRF) QRP and Long-Term Care Hospital (LTCH) QRP. In addition, this final rule codifies certain Medicare provider and supplier enrollment policies. It also makes 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 updates the home health conditions of participation regarding occupational therapists assessment completion to implement provisions of the Consolidated Appropriations Act, 2021 (CAA 2021). This final rule also finalizes proposals to expand the Home Health Value-Based Purchasing (HHVBP) Model and to end the original HHVBP Model one year early. Lastly, it establishes survey and enforcement requirements for hospice programs as set forth in the CAA 2021; and finalizes revisions to the infection control requirements for long-term care (LTC) facilities (Medicaid nursing facilities and Medicare skilled nursing facilities, also collectively known as "nursing homes") that will extend the mandatory COVID-19 reporting requirements beyond the current COVID-19 PHE until December 31, 2024.

Full Text

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[Federal Register Volume 86, Number 214 (Tuesday, November 9, 2021)]
[Rules and Regulations]
[Pages 62240-62431]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23993]

[[Page 62239]]

Vol. 86

Tuesday,

No. 214

November 9, 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, 483, et al.

Medicare and Medicaid Programs; CY 2022 Home Health Prospective Payment
System Rate Update; Home Health Value-Based Purchasing Model
Requirements and Model Expansion; Home Health and Other Quality
Reporting Program Requirements; Home Infusion Therapy Services
Requirements; Survey and Enforcement Requirements for Hospice Programs;
Medicare Provider Enrollment Requirements; and COVID-19 Reporting
Requirements for Long-Term Care Facilities; Final Rule

Federal Register / Vol. 86 , No. 214 / Tuesday, November 9, 2021 /
Rules and Regulations

[[Page 62240]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 424, 483, 484, 488, 489 and 498

[CMS-1747-F and CMS-5531-F]
RIN 0938-AU37 and 0938-AU32

Medicare and Medicaid Programs; CY 2022 Home Health Prospective
Payment System Rate Update; Home Health Value-Based Purchasing Model
Requirements and Model Expansion; Home Health and Other Quality
Reporting Program Requirements; Home Infusion Therapy Services
Requirements; Survey and Enforcement Requirements for Hospice Programs;
Medicare Provider Enrollment Requirements; and COVID-19 Reporting
Requirements for Long-Term Care Facilities

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule updates 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 finalizes recalibration of the case-mix weights and updates
the functional impairment levels, and comorbidity adjustment subgroups
while maintaining the current low utilization payment adjustment (LUPA)
thresholds for CY 2022. Additionally, this rule finalizes a policy 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 makes conforming regulations text changes to reflect that allowed
practitioners are able to establish and review the plan of care. It
also finalizes proposed changes to the Home Health Quality Reporting
Program (QRP) including finalizing proposed measure removals and
adoptions, public reporting, and modification of effective dates. It
also finalizes proposed modifications to the effective date for the
reporting of measures and certain standardized patient assessment data
in the Inpatient Rehabilitation Facility (IRF) QRP and Long-Term Care
Hospital (LTCH) QRP. In addition, this final rule codifies certain
Medicare provider and supplier enrollment policies. It also makes
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 updates
the home health conditions of participation regarding occupational
therapists assessment completion to implement provisions of the
Consolidated Appropriations Act, 2021 (CAA 2021). This final rule also
finalizes proposals to expand the Home Health Value-Based Purchasing
(HHVBP) Model and to end the original HHVBP Model one year early.
Lastly, it establishes survey and enforcement requirements for hospice
programs as set forth in the CAA 2021; and finalizes revisions to the
infection control requirements for long-term care (LTC) facilities
(Medicaid nursing facilities and Medicare skilled nursing facilities,
also collectively known as ``nursing homes'') that will extend the
mandatory COVID-19 reporting requirements beyond the current COVID-19
PHE until December 31, 2024.

DATES: These regulations are effective on January 1, 2022.

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#6f2700020a2601091a1c0600013f0003060c162f0c021c4107071c41080019">[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#793116141c311c18150d11291615101a00391a140a5711110a571e160f">[email&#160;protected]</a>.
For more information about the Home Health Value-Based Purchasing
Model, <a href="https://share.cms.gov/center/CCSQ/CSG/DIQS/LTC/LTCCOVIDReportingfinalrule/">https://share.cms.gov/center/CCSQ/CSG/DIQS/LTC/LTCCOVIDReportingfinalrule/</a> please visit the HHVBP Model Expansion
webpage at <a href="https://innovation.cms.gov/innovation-models/home-health-value-based-purchasing-model">https://innovation.cms.gov/innovation-models/home-health-value-based-purchasing-model</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#eba3a3bab9bb9a9e8e989f82848598ab888698c5838398c58c849d">[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#d8b5b9aaa1f6aab7ababb1bbb7b9b2b7ad98bbb5abf6b0b0abf6bfb7ae">[email&#160;protected]</a>, James
Cowher at <a href="/cdn-cgi/l/email-protection#0b616a666e782568647c6e794b68667825636378256c647d">[email&#160;protected]</a>, or Jeannine Cramer at
<a href="/cdn-cgi/l/email-protection#3e745b5f505057505b105d4c5f535b4c7e5d534d1056564d10595148">[email&#160;protected]</a>.
For provider and supplier enrollment process inquiries: Frank
Whelan, (410) 786-1302.
For information about the survey and enforcement requirements for
hospice programs, send your inquiry via email to
<a href="/cdn-cgi/l/email-protection#5f0e0c10180017302c2f363c3a1f3c322c7137372c71383029">[email&#160;protected]</a>.
For information about the LTC facility requirements for
participation, contact Molly Anderson at: <a href="/cdn-cgi/l/email-protection#afe2c0c3c3d681eec1cbcadddcc0c1efccc2dc81c7c7dc81c8c0d9">[email&#160;protected]</a>,
Diane Corning at <a href="/cdn-cgi/l/email-protection#d99db0b8b7bcf79ab6abb7b0b7be99bab4aaf7b1b1aaf7beb6af">[email&#160;protected]</a>, Kim Roche at
<a href="/cdn-cgi/l/email-protection#62290b0f4c300d010a0722010f114c0a0a114c050d14">[email&#160;protected]</a>, or Alpha-Banu Wilson at
<a href="/cdn-cgi/l/email-protection#51103d21393033303f247f06383d223e3f11323c227f3939227f363e27">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

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. Provisions for Payment Under the HH PPS
III. Home Health Value-Based Purchasing (HHVBP) Model
A. Expansion of the HHVBP Model Nationwide
B. 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. 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. Provisions
VII. Survey and Enforcement Requirements for Hospice Programs
A. Background
B. Provisions
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. Revised Compliance Date for Certain Inpatient Rehabilitation
Facility (IRF) QRP Reporting Requirements
B. Revised Compliance Date for Certain Long-Term Care Hospital
(LTCH) QRP Reporting Requirements
X. COVID-19 Reporting Requirements for Long Term Care Facilities
A. Background

[[Page 62241]]

B. Statutory Authority and Regulatory Background
C. Provisions of the Final Rule and Responses to Public Comments
XI. Collection of Information Requirements and Waiver of Proposed
Rulemaking
A. Statutory Requirement for Solicitation of Comments
B. Collection of Information Requirements
C. Submission of PRA-Related Comments
D. Waiver of Proposed Rulemaking
XII. 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

I. Executive Summary

A. Purpose

1. Home Health Prospective Payment System (HH PPS)
This final rule updates the payment rates for home health agencies
(HHAs) for CY 2022, as required under section 1895(b) of the Social
Security Act (the Act). This rule also finalizes recalibration of the
case-mix weights under sections 1895(b)(4)(A)(i) and 1895(b)(4)(B) of
the Act for 30-day periods of care in CY 2022 while maintaining the CY
2021 LUPA thresholds. This final rule updates 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 uses the
physical therapy (PT) add-on factor to establish the occupational
therapy (OT) LUPA add-on factor and finalizes 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 rule, we expand the Home Health Value-Based Purchasing
(HHVBP) Model to all Medicare-certified HHAs in the 50 States,
Territories, and the District of Columbia beginning January 1, 2022
with CY 2022 as a pre-implementation year. We are finalizing that CY
2023 will be the first performance year and CY 2025 the first payment
year, based on HHA performance in CY 2023. We are also finalizing our
proposal to end the original HHVBP Model one 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 rule finalizes proposals under the HH QRP, including removal
of an Outcome and Assessment Information Set (OASIS)-based measure, the
Drug Education on All Medications Provided to Patient/Caregiver During
All Episodes of Care measure, 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
rule also finalizes our proposal 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 also finalizes our
proposal to begin public reporting of 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 rule finalizes proposed revisions to certain HH QRP
reporting requirements.
This rule also finalizes similar compliance dates for certain IRF
QRP and LTCH QRP requirements.
4. Changes to the Home Health Conditions of Participation
In this rule, we are finalizing our proposed changes to make
permanent selected regulatory blanket waivers related to home health
aide supervision that we extended to Medicare participating home health
agencies during the COVID-19 PHE. Blanket waivers to Medicare
requirements were issued to provide flexibilities to make sure
beneficiaries continue to have access to the health care they need
while reducing burden to HHAs. In addition, Division CC, section 115 of
CAA 2021 requires the Secretary of Health and Human Services (the
Secretary) 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.
Therefore, we are finalizing our proposed changes: (1) To the home
health aide supervision requirements; and (2) that allow occupational
therapists to complete the initial and comprehensive assessments for
patients.
5. Medicare Coverage of Home Infusion Therapy
This final rule updates 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 this final rule, we address a number of provisions regarding
Medicare provider and supplier enrollment. Most of these provisions
involve the finalization of the proposed codification of certain
subregulatory policies. These 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. We are also finalizing two
regulatory clarifications related to HHA changes of ownership and HHA
capitalization requirements.
7. Survey and Enforcement Requirements for Hospice Programs
In this final rule, we are finalizing changes 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. We continue 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.
8. COVID-19 Reporting Requirements for Long Term Care Facilities
This final rule revises the infection control requirements that LTC
facilities must meet to participate in the Medicare and Medicaid
programs. By doing so, LTC facilities will be required to continue the
COVID-19 reporting requirements published in the Additional Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency interim final rule with comment period, published on May 8,
2020 (85 FR 27550) and the interim final rule, COVID-19 Vaccine
Requirements for Long-Term Care (LTC) Facilities and Intermediate Care
Facilities for Individuals With

[[Page 62242]]

Intellectual Disabilities (ICFs-IID) Residents, Clients, published on
May 13, 2021 (86 FR 26306). LTC facilities will be required to continue
to report on a weekly basis to the Centers for Disease Control and
Prevention (CDC) National Healthcare Safety Network (NHSN), suspected
and confirmed COVID-19 infections, total deaths and COVID-19 deaths,
personal protective equipment (PPE) and hand hygiene supplies,
ventilator capacity and supplies, resident beds and census, access to
COVID-19 testing, staffing shortages, therapeutics administered to
residents for the treatment of COVID-19 requirements until December 31,
2024, with the possibility of reduced frequency of reporting and
modified or limited data elements that are required in the future at
the discretion of the Secretary. They will also be required to report
the COVID-19 vaccination status of residents and staff, including total
numbers of residents and staff, numbers of residents and staff
vaccinated, numbers of each dose of COVID-19 vaccine received, and
COVID-19 vaccination adverse events.

B. Summary of the Provisions of This Rule

1. Home Health Prospective Payment System (HH PPS)
In the CY 2022 proposed rule (86 FR 35874) we included discussions
of preliminary Patient-Driven Groupings Model (PDGM) monitoring data
and analyses on home health utilization; LUPAs; the distribution of the
case-mix methodology as determined by clinical groupings, admission
source and timing, functional status, and comorbidities; and therapy
visits. Additionally, we provided preliminary analysis on HHA
expenditures as reported on 2019 cost reports to estimate the
difference between Medicare payments and HHAs' costs. We also provided
a description and solicited comments on a potential repricing
methodology for determining the difference between assumed versus
actual behavior change on estimated aggregate expenditures for home
health payments. In section II.B.1. and 2. of this final rule, we
provide a summary of comments on these topics.
In section II.B.3. of this rule, we are finalizing the
recalibration of the PDGM case-mix weights, functional levels, and
comorbidity adjustment subgroups while maintaining the CY 2021 LUPA
thresholds for CY 2022.
In section II.B.4. of this rule, we update the home health wage
index, and we also update the CY 2022 national, standardized 30-day
period payment rates 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 2.6 percent. Additionally, this rule
finalizes the FDL ratio at 0.40 for CY 2022, in order to ensure that
aggregate outlier payments do not exceed 2.5 percent of the total
aggregate payments, as required by section 1895(b)(5)(A) of the Act.
In section II.B.4.c.(5). of this final rule, we finalize changes to
utilize the physical therapy (PT) LUPA add-on factor to establish the
OT add-on factor for the LUPA add-on payment amounts with respect to
the initial patient assessments newly permitted under Division CC,
section 115 of CAA 2021 that revised Sec. 484.55(a)(2) and (b)(3).
Section II.B.6. of this final rule finalizes conforming regulations
text changes at Sec. 409.43 to reflect new statutory provisions that
allow practitioners in addition to physicians to establish and
periodically review the home health plan of care. These changes are 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 final rule, we are finalizing our
proposal to expand the HHVBP Model to all Medicare-certified HHAs in
the 50 States, territories, and District of Columbia beginning January
1, 2022. However, we are designating CY 2022 as a pre-implementation
year in response to a number of comments we received. CY 2023 will be
the first performance year and CY 2025 the first payment year, with a
maximum payment adjustment, upward or downward, of 5 percent. We are
finalizing 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,
2022, would be required to participate and would be eligible to receive
an annual Total Performance Score based on their CY 2023 performance.
We are finalizing 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, Home Health Consumer Assessment
of Healthcare Providers and Systems (HHCAHPS) survey-based, and claims-
based measures submission in the applicable measure set beginning CY
2022 and subsequent years. We are also finalizing our 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 final rule, we are finalizing our
proposal to end the original HHVBP Model one year early. We are
finalizing that we will 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 are finalizing that we will 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 final rule, we are finalizing the proposed
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 requirements for certain HH QRP
reporting requirements; and summarizing comments received on our
requests for information regarding digital quality measures and health
equity.
4. Changes to the Home Health Conditions of Participation
In this section IV.D. of this rule, we finalize our proposal to
make permanent selected regulatory blanket waivers related to home
health aide supervision that we extended to Medicare-participating home
health agencies during the COVID-19 PHE. In addition, we are revising
our regulations to reflect Division CC, section 115 of CAA 2021. This
provision 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 finalizing proposed changes to the home health aide
supervision requirements at Sec. 484.80(h)(1) and (2) and conforming
regulation text changes at Sec. 484.55(a)(2) and (b)(3), respectively,

[[Page 62243]]

to allow occupational therapists to complete the initial and
comprehensive assessments for patients in accordance with changes in
the law.
We are also making a technical correction at Sec. 484.50(d)(5).
5. Medicare Coverage of Home Infusion Therapy
In section V. of this final 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).
Additionally, we discuss the home infusion therapy services payment
adjustments including finalizing the proposal to update the geographic
adjustment factors (GAFs) used for wage adjustment and finalizing the
proposal to maintain the percentages finalized for the initial and
subsequent visit policy. In this section we also 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 final rule, we addressed 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 sub-regulatory policies. These are addressed in
section VI.B. of this final rule and include, for example, policies
related to: (1) The effective date of billing privileges for certain
provider and supplier types and the effective date of certain provider
enrollment transactions; and (2) the deactivation of a provider's or
supplier's billing privileges.
In addition, we finalized in section VI.C. of this final 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 final rule, there are a number of
provisions related to Division CC, section 407 of CAA 2021. These
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, we are
finalizing our proposed provisions to establish a hospice program
complaint hotline. Lastly, the finalized provisions create 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. The Special Focus Program will be considered in future
rulemaking.
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. When a CMS-approved AO program accredits a
provider, CMS ``deems'' the provider to have complied with applicable
Medicare conditions or requirements. The CAA 2021 provisions expanding
requirements for AOs will apply to AOs with CMS-approved accreditation
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 described and solicited comments on all aspects of the proposed
survey and enforcement provisions for hospice programs.
8. Inpatient Rehabilitation Facility (IRF) Quality Reporting Program
In section IX.A. of this final rule, we are finalizing our proposal
to modify the compliance date for certain reporting requirements in the
IRF QRP.
9. Long Term Care Hospital (LTCH) Quality Reporting Program
In section IX.B. of this final rule, we are finalizing our proposal
to modify the compliance date for certain reporting requirements in the
LTCH QRP.
10. COVID-19 Reporting Requirements for Long-Term Care (LTC) Facilities
In section X.C of this final rule, we finalize our COVID-19
reporting requirements with the following modifications:
<bullet> Reporting frequency is modified to no more than weekly,
and may be reduced, at the discretion of the Secretary;
<bullet> The possibility of modified or limited data elements that
are required in the future, contingent on the state of the pandemic and
at the discretion of the Secretary.
<bullet> The addition of a sunset date of December 31, 2024, for
all reporting requirements, with the exclusion of the reporting
requirements at Sec. [thinsp]483.80(g)(1)(viii).

C. Summary of Costs, Transfers, and Benefits

[[Page 62244]]

[GRAPHIC] [TIFF OMITTED] TR09NO21.000

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, 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, 41214).
Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L.

[[Page 62245]]

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, section 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 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

[[Page 62246]]

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, 70305).
[GRAPHIC] [TIFF OMITTED] TR09NO21.075

B. Provisions of the Final Rule

1. PDGM Monitoring
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
2022 HH PPS proposed rule (86 FR 35880), we provided preliminary data
analyses on the PDGM including: Overall home health utilization,
clinical groupings and comorbidities, admission source and timing,
functional impairment levels, and therapy visits. We also provided data
analysis on the 2019 HHA Medicare cost reports. We solicited comments
on the preliminary PDGM data and cost analyses, along with other
factors CMS should be monitoring. These comments and our responses are
summarized in this section of the rule.
Comment: Many commenters viewed the overall decrease in utilization
as more likely related to the COVID-19 PHE, rather than the
implementation of the PDGM. One industry association stated that the
COVID-19 PHE brought extensive changes in patient mix, home health
patient census, significant practice changes and changes in admission
source referrals. Commenters also stated because of the COVID-19 PHE,
patients were often unwilling to allow home health clinicians into
their

[[Page 62247]]

homes to receive needed care. Commenters also indicated that half of
HHAs provided services to actively infected COVID-19 patients. We
received several comments regarding the increase of LUPAs in CY 2020.
Commenters remarked that the increase of LUPAs is more attributable to
pandemic-related factors rather than HHAs taking advantage of the PDGM.
Commenters also stated that the use of telehealth for the provision of
home health visits contributed to the increase in LUPAs in CY 2020
because of safety concerns and patient refusal to allow for in-person
visits. Other commenters stated because telehealth services are not
reported as home health visits, utilization of home health services is
not fully captured. Additionally, several commenters recommended that
CMS examine CY 2020 data at a more granular level due to the COVID-19
PHE, including, but not limited to, geographical differences and
seasonal trends.
Response: CMS appreciates all of the comments received regarding CY
2020 utilization trends and the impact of the COVID-19 PHE on the
provision of home health services. We acknowledge commenter statements
and concerns as to how the COVID-19 PHE affected the types of home
health patients served and how HHAs had to adjust care practices in
response. We also understand that the COVID-19 PHE has presented unique
challenges for all providers who have had to develop and institute new
protocols and processes to ensure the health and safety of home health
staff and beneficiaries. CMS instituted maximum flexibilities and
implemented waivers to assist providers in navigating the COVID-19 PHE
and to safeguard the continued provision of Medicare home health
services.\1\
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\1\ Coronavirus waivers & flexibilities. <a href="https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers">https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers</a>.
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In the CY 2021 HH PPS final rule (85 FR 70298), CMS finalized
changes to Sec. 409.43(a) as implemented in the March, 2020 COVID-19
interim final rule with comment (IFC) (85 FR 19230), to allow the use
of telecommunications technology more broadly, even outside of the
COVID-19 PHE. If HHAs use telecommunications technology in the
provision of home health care, the regulations state that the plan of
care must include any provision of remote patient monitoring or other
services furnished via a telecommunications system and that these
services cannot substitute for a home visit ordered as part of the plan
of care and cannot be considered a home visit for the purposes of
patient eligibility or payment, in accordance with section
1895(e)(1)(A) of the Act. Such changes were made to provide flexibility
in the provision of care during the COVID-19 PHE and beyond as we
recognize telecommunication services, at times, may be in the best
interest of the patient and support the overall care of beneficiaries.
However, since the law does not consider services furnished via a
telecommunications system a home visit, these encounters, while
allowed, are not included in utilization analysis.
We also understand the interest in monitoring the impact of the
COVID-19 PHE on home health services. While we continue to conduct
analyses on home health utilization and other metrics, including the
effects of COVID-19, we note that the PHE is ongoing and as such,
patterns and trends may change over time. We will continue to examine
the effects of the ongoing COVID-19 PHE on home health utilization and
will determine when and how best to provide this information. We note
that CMS does publish COVID-19 data and statistics, which provides
information on how the COVID-19 PHE is affecting the Medicare
population and aims to better inform individual and public policy
healthcare decisions to address the impact of COVID-19.\2\
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\2\ Preliminary Medicare COVID-19 Data Snapshot. <a href="https://www.cms.gov/research-statistics-data-systems/preliminary-medicare-covid-19-data-snapshot">https://www.cms.gov/research-statistics-data-systems/preliminary-medicare-covid-19-data-snapshot</a>.
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Comment: Several commenters requested additional detailed analyses
of the impact of the PDGM on home health utilization. Some examples of
suggested additional analyses included demographic data, social
determinants of health, Program for Evaluating Payment Patterns
Electronic Report (PEPPER reports), and HHA provider types, such as
profit versus non-profit. A commenter recommended that CMS should
supplement its analysis of utilization data with additional data and
monitoring tools, such as survey data. Another commenter supports CMS'
plans to assess the relationship of the OASIS GG items to resource use
and their correlation to the current OASIS M1800-1860 items that
address functional status. We received several comments stating that
the level of data provided in the proposed rule did not reflect whether
the home health services furnished were appropriate. Commenters also
suggested that CMS examine patient outcomes and patient experiences in
future rulemaking. Other commenters raised concerns about HHA admission
practices. Commenters expressed concern that some HHAs exclude eligible
beneficiaries with longer-term, chronic conditions, prematurely
discharge patients, ``cherry-pick'' patients to admit to home health,
and decrease necessary home health aide services. Several commenters
requested that CMS continue to closely review and monitor therapy
utilization data under the PDGM to evaluate for unintended
consequences, and if, appropriate implement safeguards as needed.
Specifically, commenters stated that the removal of therapy thresholds
for payment have resulted in decreases in therapy utilization,
termination of therapy staff, and increased use of algorithms, rather
than clinical judgment, to determine the appropriate number of therapy
visits.
Response: We thank commenters for the additional suggestions for
more detailed analyses on home health utilization and other relevant
trends and will consider such suggestions for future analyses. We
appreciate the concerns by commenters regarding potential aberrant
practices and quality of care issues. As we continue to analyze home
health utilization, we will monitor for any emerging trends that may
warrant any program integrity actions.
Regarding the concerns related to the removal of therapy
thresholds, beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act,
as added by section 51001 of the Bipartisan Budget Act of 2018 (BBA
2018) eliminated the use of therapy thresholds in calculating payments
for CY 2020 and subsequent years. However, as with analysis of overall
home health utilization, we will continue to monitor the provision of
therapy visits, including by subspecialty. We remind commenters that
all home health services, including therapy, must be provided in
accordance with the Conditions of Participation at 42 CFR 484.60.
Specifically, the individualized plan of care must specify the care and
services necessary to meet the patient-specific needs as identified in
the comprehensive assessment, including identification of the
responsible discipline(s), and the measurable outcomes that the HHA
anticipates will occur as a result of implementing and coordinating the
plan of care. The individualized plan of care must also specify the
patient and caregiver education and training. Services must be
furnished in accordance with accepted standards of practice.
Comment: We received several comments regarding our analysis on the
CY 2019 Medicare home health cost reports. Specifically, commenters
expressed concerns over the accuracy of

[[Page 62248]]

cost report data. Commenters stated that the home health agency cost
report data may not adequately reflect the home health industries'
costs as providers vary in complexity, sophistication, size and
resources.
Response: We appreciate the commenters' feedback on the CY 2019
cost report analysis provided in the proposed rule. We recognize that
with the COVID-19 PHE, the CY 2019 data on the Medicare cost reports
may not reflect the most recent changes such as increased
telecommunications technology costs, increased PPE costs, and hazard
pay. As we stated in the CY 2022 HH PPS proposed rule (86 FR 35884),
when the CY 2020 cost reports become available, we will update the
estimated 30-day period of care costs in CY 2020 in future rulemaking.
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
In the CY 2019 HH PPS final rule with comment period (83 FR 56455),
we finalized the use of three behavior assumptions in order to
calculate a 30-day budget-neutral payment amount for CY 2020 as
required by section 1895(b)(3)(A)(iv) of the Act. These included the
clinical coding, the comorbidity, and the LUPA behavior assumptions. 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, assuming
that these behaviors would happen half as frequently during the first
year of implementation of the PDGM and 30-day unit of payment. 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 with comment
period (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. In the CY 2022 proposed rule (86 FR 35889), we solicited
comments on a possible methodology where we would use actual CY 2020
30-day period claims data to simulate 60-day episodes to determine what
CY 2020 payments would have been under the 153-group case-mix system
and 60-day unit of payment. We also solicited comments on any potential
alternative methods for determining the difference between assumed and
actual behavior changes on estimated aggregate expenditures. We
received comments on the methodology described in the proposed rule,
comments regarding potential alternative methods, and comments on the
previously finalized behavior assumptions which are summarized in this
section of the rule.
Comment: We received several comments stating that an independent
analysis of the actual versus assumed behavior changes show that CMS'
assumptions on two of the three previously finalized behavior
assumptions were inaccurate. These commenters stated that CMS
overestimated the clinical group assumption and the LUPA assumption.
These commenters stated that the magnitude of coding the highest paying
clinical diagnosis was overstated and the actual change in coding
practices did not manifest as CMS assumed. Commenters also stated that
there was a significant increase in the frequency of LUPA periods of
care, indicating that the LUPA assumption also was overestimated. That
is, commenters stated that HHAs did not make 1-2 extra visits to meet
or exceed the LUPA threshold to receive a full, case-mix adjusted 30-
day period payment. Commenters recommended that we remove these
behavior assumptions and the -4.36 percent payment adjustment for rate
setting in CY 2022. Other comments stated that not only should the -
4.36 percent adjustment be removed, but that we should further increase
the 30-day payment in CY 2022.
A few commenters stated CMS does not have the authority to
institute budget neutrality adjustments beyond those related to
behavior changes. In addition, a few commenters stated we must utilize
a PDGM budget neutrality methodology that is solely focused on assumed
behavior changes that were incorporated into the original 2020 rate
setting.
Many commenters noted, as projected, the reported comorbidity
levels have increased. Some commenters state this change may be because
HHAs are now comprehensively recording these secondary diagnoses on
home health claims, thereby more accurately reflecting patient acuity.
However, other commenters disagreed and believe there is a change in
aggregate patient acuity due to the COVID-19 PHE. Several commenters
stated that there have been noted increases in the functional
impairment level. Many stated that an increase of patients into the
high functional impairment category and a decrease in the low
functional impairment category could be a direct result of the COVID-19
PHE, because HHAs had to accept higher acuity and more functionally
impaired patients while elective surgeries were canceled and decreased
the utilization in patients with lower functional impairment scores.
The majority of commenters were supportive of foregoing any payment
adjustment in CY 2022 based on the difference between assumed versus
actual behavior change.
Response: We appreciate the commenters feedback and would like to
remind commenters that section 1895(b)(3)(a)(iv) of the Act required
CMS to make behavioral assumptions when calculating the budget-neutral
30-day payment rate. Section 1895(b)(3)(D) of the Act also requires CMS
to annually determine the impact of differences between assumed
behavior changes and actual behavior changes on estimated aggregate
expenditures beginning with CY 2020 and ending with CY 2026. Therefore,
we cannot simply remove a behavior change assumption; rather, we are
required by law to annually determine the effects of behavior change on
estimated aggregate expenditures. Furthermore, we stated in the CY 2019
HH PPS final rule with comment period (53 FR 56455), the CY 2020 HH PPS
final rule with comment period (84 FR 60513), and the CY 2022 HH PPS
proposed rule (86 FR 35890), 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 amount for CY 2020 was
determined.
The law gives CMS the discretion to make temporary and permanent
payment adjustments at a time and in a manner determined, by the
Secretary, to be appropriate. As such, we did not propose any
adjustment to the national, standardized 30-day payment rate in the CY
2022 HH PPS proposed rule based on any behavior assumptions. The law
requires that we make any temporary and permanent payment adjustment
based on the difference between assumed versus actual behavior change
on estimated aggregate expenditures through notice and comment
rulemaking.
Given some of the comments stating that CMS overestimated the
behavior change, we wish to remind commenters that the CYs 2020 and
2021 LDS files

[[Page 62249]]

included two separate datasets; one uses claims with a ``full''
behavior assumption applied, using the initial proposed -8.389 percent
adjustment, and the other uses claims with a ``no'' behavior assumption
applied (no adjustment for changes in behavior). As stated previously
in the CY 2020 HH PPS final rule with comment period (84 FR 60512), CMS
applied the three behavioral assumptions to only half of the 30-day
periods of care, randomly selected. The -4.36 percent behavior
adjustment is not included in the CYs 2020 and 2021 LDS files given the
30-day periods to which the assumptions were applied were done so
randomly. Therefore, any independent analysis conducted would need to
include application of the behavior assumptions to only half of the 30-
day periods in the LDS files.
Comment: The majority of commenters disagreed with the methodology
set out in the proposed rule. Their concerns related to: The exclusions
we applied to the data when simulating 60-day episodes claims from 30-
day periods; the impact of the COVID-19 PHE; the lack of comparability
between case-mix models (for example, the assertion that a case-mix of
1.0 is not the same across two systems); and the removal of payment
incentives for therapy visits leading to a decline in therapy services
furnished in CY 2020. Many commenters offered an alternative approach
to compare CY 2018 60-day episodes converted to 30-day periods used for
CY 2020 rate setting to actual CY 2020 30-day periods. Commenters
stated such approach would more accurately determine the differences
between assumed versus actual behavior changes on estimated aggregate
expenditures, would be less biased, would eliminate the need to model
other changes that occurred due to the implementation of the PDGM, and
would avoid the impact of the COVID-19 PHE on therapy utilization. A
few commenters also recommended to incorporate some analysis of
evaluating ``real'' and ``nominal'' changes in the average case-mix
weight.
However, MedPAC supported the method presented in the proposed rule
for computing the budget-neutral amount stating the method was
reasonable and would satisfy the requirement to reconcile payments
based on the differences between assumed versus actual behavior change
on estimated aggregate expenditures, as required by section
1895(a)(3)(D) of the Act.
Response: We appreciate the commenters' comprehensive review of the
methodology described in the CY 2022 HH PPS proposed rule. We will
consider all alternative approaches as we continue to develop and
refine a methodology for annually determining the difference between
assumed versus actual behavior changes on estimated aggregate
expenditures. As stated previously, the methodology and any associated
payment adjustment based on the difference between assumed versus
actual behavior change on estimated aggregate expenditures will be made
through future notice and comment rulemaking.
3. CY 2022 PDGM LUPA Thresholds and PDGM Case-Mix Weights
a. 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 with comment period (83 FR 56492), we finalized
our policy 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 is 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 final 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, we proposed to update the case-mix weights for CY 2022 using
CY 2020 data as 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
COVID-19 PHE would have impacted utilization within all case-mix groups
similarly. Therefore, the impact of any reduction in resource use
caused by the COVID-19 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 COVID-19 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 had
proposed to set the LUPA thresholds 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 proposed 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
was 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 COVID-19 PHE. The public comments on
our proposal to maintain the CY 2021 LUPA thresholds for CY 2022
payment purposes and our responses are summarized in this section of
the rule.

[[Page 62250]]

Comment: Some commenters expressed their support for the policy to
maintain the CY 2020 LUPA thresholds for CY 2022 in order to mitigate
potential fluctuations in the thresholds caused by changing visit
patterns in CY 2020 potentially due to the COVID-19 PHE. One commenter
recommended that CMS allow telehealth visits to be counted toward
meeting LUPA thresholds. This commenter stated that in situations where
virtual care visits can be equally as efficacious as an in-person
meeting, and CMS should allow these visits to count within this payment
framework.
Response: We thank the commenters for their support. As noted
previously, the goal of maintaining the LUPA thresholds for CY 2022 is
to mitigate any potential fluctuations in the thresholds resulting from
any changes in visit patterns resulting from the COVID-19 PHE. While we
understand that there are ways in which technology can be further
utilized to improve patient care, better leverage advanced practice
clinicians, and improve outcomes while potentially making the provision
of home health care more efficient, we remind stakeholders that under
current law, services furnished via a telecommunications system cannot
be considered a home health visit for purposes of eligibility or
payment. Section 1895(e)(1)(A) of the Act prohibits payment for
services furnished via a telecommunications system if such services
substitute for in-person home health services ordered as part of a plan
of care.
Final Decision: We are finalizing the proposal to maintain the LUPA
thresholds for CY 2022. The LUPA thresholds for CY 2022 are located on
the HHA Center webpage.\3\
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\3\ Home Health Agency Center webpage. <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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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 \1/3\ of home health periods from each of the
clinical groups fall within each level. 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 proposed 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 Home Health
Groupings Model (HHGM) technical report from December 2016 \4\ provide
a more detailed explanation as to the construction of these functional
impairment levels using the OASIS items. We proposed 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 functional impairment levels by clinical group for CY 2022 are
listed in Tables 2 and 3, respectively.
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\4\ Overview of the Home Health Groupings Model Technical
Report. November 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>.
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The following is a summary of the comments received and our
responses to comments on the proposal to update the functional points
and the functional impairment levels by clinical group.
Comment: MedPAC was supportive of the proposal to update the
functional points and functional impairment levels for CY 2022 and
recommended that CMS to continue to update the functional categories in
this manner in future payment years. MedPAC stated that the re-
weighting CMS proposed for CY 2022 would reset the payment categories
based on 2020 data, so that periods will again be evenly distributed
across the three functional payment categories. MedPAC believes that
maintaining this distribution helps to ensure the accuracy of Medicare
payments.
Response: We thank the Commission for its support.
Final Decision: We are finalizing the proposal to update the
functional points and functional impairment levels for CY 2022.
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 diagnosis
subgroups 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 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 so that payments align with the actual costs of
providing care. For CY 2022, we proposed 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 proposed to update the comorbidity subgroups to
include 20 low comorbidity adjustment subgroups and 85 high comorbidity
adjustment interaction subgroups. To generate the final comorbidity
subgroups, we used CY 2020 home health claims data with linked OASIS
data (as of July 12, 2021). The tables later in this section have been
revised to reflect the results using the updated data. The final
comorbidity subgroups include 20 low comorbidity adjustment subgroups
as identified in Table 4 and 87 high comorbidity subgroups as
identified in Table 5.
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In this section of the rule is a summary of the comments received
and our response to those comments on the proposed updates to the low
comorbidity adjustment subgroups and the high comorbidity adjustment
subgroups for CY 2022.
Comment: A commenter requested that CMS reassign diseases and
disorders, as well as specific ICD-10 CM diagnosis codes, to different
clinical groups or comorbidity subgroups to align with codes
representing either similar conditions or similar clinical
manifestations. The commenter requested the following reassignments:

(1) Reassign dementia codes currently listed in the Behavioral
Health clinical group to the Neuro Rehabilitation clinical group,
due to the clinical similarities of Alzheimer's Disease and
dementia, and to mirror the current classification of dementia
within the neurological comorbidity subgroup
(2) Add musculoskeletal pain, M25.5XX codes to the
Musculoskeletal Rehabilitation (MS-Rehab) clinical group when listed
as a primary diagnosis, as 14 of 17 M25.5XX codes are included in
the Musculoskeletal 3 comorbidity subgroup;
(3) Add the ``specified by organism'' sepsis codes A40.0 through
A40.9 and A41.01 through A41.89 to the Infectious 1 comorbidity
subgroup to align with current coding practices including A41.9
sepsis unspecified;
(4) Assign leukemia in relapse diagnosis subgroup codes, C92.4X,
C92.5X, C92.6X, C92.AX to the Neoplasm 22 comorbidity subgroup,
consistent with similar leukemia codes included in this comorbidity
subgroup;
(5) Reassign the diagnosis subgroup diabetes with mononeuropathy
codes, EXX.41, and the diagnosis subgroup diabetes with autonomic
(poly)neuropathy, EXX.43, codes to the Neurological 10 comorbidity
subgroup, as neuropathy is a neurological condition and the
Neurological 10 comorbidity subgroup already contains diabetic
polyneuropathy codes;
(6) Review the Neurological 11 comorbidity subgroup for a
potential error since almost all the codes are related to vision
issues except for the neuropathy diagnosis subgroup G62 codes. In
addition, the commenter noted other types of hereditary and
idiopathic neuropathy diagnosis subgroup G60 codes and inflammatory
neuropathy diagnosis subgroup G61 codes are not assigned to a
comorbidity subgroup when listed as a secondary diagnosis. The
commenter requested reassigning the neuropathy diagnosis subgroup
codes G60, G61, and G62 to the Neurological 10 comorbidity subgroup,
which currently includes diabetic neuropathy;
(7) Assign rheumatic tricuspid valve disease diagnosis codes I08
to the Heart 9 comorbidity subgroup to align with other nonrheumatic
valve disorders.

Response: We appreciate the commenter's review of these codes and
suggested reassignments. As we stated in the CY 2020 final rule with
comment period (84 FR 60510), and as described in the technical report
``Overview of the Home Health Groupings Model'',\5\ the home health-
specific comorbidity list is based on the principles of patient
assessment by body systems and their associated diseases, conditions,
and injuries. We used this process to develop categories of conditions
that identify clinically relevant relationships associated with
increased resource use. We understand the magnitude of clinical
conditions and comorbidities, and the interactions that exist between
them, in the Medicare home health population; however, we remind
commenters that only those subgroups of diagnoses that represent more
than 0.1 percent of periods of care and that have at least as high as
the median resource use will receive a low comorbidity adjustment. We
describe this method for determining statistical significance in the CY
2020 final rule with comment period (84 FR 60510). This is based on the
knowledge that the average number of comorbidities in the aggregate
becomes the standard within that population for the purpose of payment.
However, because we still expect HHAs to report all secondary diagnoses
that affect care planning, there will be comorbidity subgroups included
in the home health-specific list that don't meet the criteria to
receive an adjustment.
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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>.
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We reviewed each of the requested coding changes to determine if
the reassignment to a certain clinical group or comorbidity subgroup
was warranted.
1. Request for Dementia Codes To Be Reassigned From the Behavioral
Health Clinical Group to the Neuro Rehabilitation Clinical Group
We determined there are only two dementia codes listed in the
Behavioral Health clinical group with a Neurological 3 comorbidity
subgroup; both of which are unspecified dementia codes. Because the
commenter stated that reclassifying the dementia codes to a different
clinical group would align with the current comorbidity subgroup
Neurological 3, we expanded our review to include all ICD-10 CM
diagnosis codes in the Neurological 3 comorbidity subgroup. Table 6
lists these codes, their

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description, their current assigned clinical group, and current
assigned comorbidity subgroup.
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Our clinical advisors determined that because the two dementia
codes (F03.90 and F03.91) listed in the Behavioral Health clinical
group are unspecified and the etiology is unknown, they are clinically
appropriate to be in the Behavioral Health clinical group and would not
warrant a change in clinical group assignment. Upon review of the
comorbidity subgroup codes in Table 6, we determined that these codes
are more appropriate in a behavioral health comorbidity subgroup.
Additionally, assigning these codes to the Behavioral 4 comorbidity
subgroup does not result in a change in the comorbidity adjustment for
these codes.
2. Request for Musculoskeletal Pain Diagnosis Subgroup, M25.5X Codes To
Be Reassigned to Musculoskeletal Rehab Clinical Group
We reviewed the ICD-10 CM diagnoses codes M25.5XX indicating
musculoskeletal pain. Table 7 lists these codes, their description,
their current assigned clinical group and current assigned comorbidity
subgroup.
[GRAPHIC] [TIFF OMITTED] TR09NO21.010

Our clinical advisors reviewed the ICD-10 CM diagnoses codes
M25.5XX for musculoskeletal pain and have determined that these codes
lack the specificity to clearly support a rationale for skilled
services. In the CY 2019 HH

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PPS final rule with comment period (83 FR 56473), we stated that many
of the codes that indicate pain or contractures as the primary
diagnosis, for example M54.5 (low back pain) or M62.422 (contracture of
muscle, right hand), although site specific, do not indicate the cause
of the pain or contracture. We stated that we would expect a more
definitive diagnosis indicating the cause of the pain or contracture,
as the reason for the skilled care, in order to appropriately group the
home health period. While we believe that codes that describe signs and
symptoms (as opposed to diagnoses) are not appropriate as principal
diagnosis codes for grouping home health periods into clinical groups,
we recognize that pain can significantly impact the patient's recovery
and plan of care. Therefore, when musculoskeletal pain with a specific
location is indicated as a secondary diagnosis, we believe these codes
are appropriate to remain in the Musculoskeletal 3 comorbidity
subgroup. We disagree with the comment that the ICD-10 CM diagnoses
codes M25.5XX should be reassigned to the MS-Rehab clinical group.
3. Request for Sepsis, Specified by Organism Codes To Be Assigned to
the Infectious 1 Comorbidity Subgroup
We reviewed sepsis, specified by organism, codes A40.0 through
A40.9 and A41.01 through A41.89. Table 8 lists these codes, their
description, their current assigned clinical group, and current
assigned comorbidity subgroup.
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Our clinical advisors reviewed the ICD-10-CM codes A40.0 through
A40.9 and A41.01 through A41.89 and concur that clinically these codes
are appropriate for inclusion in the Infectious 1 comorbidity subgroup
when listed as a secondary diagnosis. We remind readers that ICD-10 CM
codes A40.0 through A40.9 and A41.01 through A41.89 require the
etiology code to be coded as primary, when applicable. When we
reassigned the codes listed in Table 8 to Infectious 1, there was no
change to the comorbidity adjustment for these codes (for example, no
change in payment).

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5. Request for Leukemia in Relapse Codes To Be Reassigned to the
Neoplasm 22 Comorbidity Subgroup
We reviewed the ICD-10 CM codes indicating leukemia or
histiocytosis with no comorbidity subgroup when listed as a secondary
diagnosis. Table 9 lists these codes, their description, their current
assigned clinical group, and current assigned comorbidity subgroup.
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Our clinical advisors reviewed the leukemia and histiocytosis codes
listed in Table 9 and concur that these codes are appropriate for
inclusion in the Neoplasm 22 comorbidity subgroup when listed as a
secondary diagnosis code. When we reassigned the codes listed in Table
9 to Neoplasm 22, there was no change to the comorbidity adjustment for
these codes (for example, no change in payment).
5. Request for Subgroup of Diabetes With Mononeuropathy and Autonomic
(Poly) Neuropathy Be Reassigned to the Neurological 10 Comorbidity
Subgroup
We reviewed the ICD-10 CM diagnosis codes, diabetes with
mononeuropathy, EXX.41, and diabetes with autonomic (poly)neuropathy,
EXX.43. Table 10 lists these codes, their description, their current
assigned clinical group, and current assigned comorbidity subgroup.

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Our clinical advisors first reviewed all of the current ICD-10 CM
diagnoses currently listed in the Neurological 10 comorbidity subgroup.
We determined that all of the codes listed in the Neurological 10
comorbidity subgroup are specific to diabetic unspecified neuropathy or
diabetic polyneuropathy. The ICD-10 CM diagnosis codes EXX.41, diabetes
with mononeuropathy, are different from diabetes with unspecified
neuropathy or diabetic polyneuropathy in terms of clinical effects on
the body system as a whole. Therefore, we disagree that the ICD-10 CM
diagnosis codes EXX.41 should be reassigned to the Neurological 10
comorbidity subgroup. However, our clinical advisors agree that ICD-10
CM diagnosis subgroup EXX.43, diabetes with autonomic (poly)neuropathy,
should be reassigned to the Neurological 10 comorbidity subgroup. The
Endocrine 2 and Endocrine 3 comorbidity subgroups currently receive no
comorbidity adjustment; whereas the Neurological 10 comorbidity
subgroup currently receives a low comorbidity adjustment. Reassignment
of the ICD-10 CM diagnosis subgroup EXX.43, diabetes with autonomic
(poly)neuropathy, to Neurological 10 results in these codes receiving a
low comorbidity adjustment when listed as a secondary diagnosis.
6. Request for Neuropathy Diagnosis Subgroup G60, G61, and G62 Codes To
Be Reassigned to the Neurological 10 Comorbidity Subgroup
We reviewed the Neurological 11 comorbidity subgroup and concur
with the commenter that almost all of the ICD-10 CM diagnosis codes
listed are primarily related to eye diseases and disorders (for
example, retinopathy and macular degeneration). As the commenter also
noted that there are other types of hereditary, idiopathic, and
inflammatory neuropathies with no neurological comorbidity subgroup
assigned, we reviewed the diagnosis subgroup G codes indicating a
specified neuropathy (mono or poly) or unspecified polyneuropathy.
Table 11 lists these codes, their description, their current assigned
clinical group, and comorbidity subgroup.

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We determined that all of the codes listed in the Neurological 10
comorbidity subgroup are specific to diabetic unspecified neuropathy or
diabetic polyneuropathy and therefore disagree that the neuropathy
diagnosis subgroup G60, G61, and G62 codes should be reassigned. Our
clinical advisors reviewed all the current neurological comorbidity
subgroups and determined that the Neurological 11 comorbidity subgroup
clinically remains the most appropriate comorbidity subgroup for codes
G60, G61, and G62. However, we may consider additional neurological
comorbidity subgroups in the future and, if appropriate, will reassign
ICD-10 CM diagnosis codes if needed.
7. Request for Rheumatic Tricuspid Valve Disease Diagnoses Subgroup,
I08.- Codes To Be Assigned to the Heart 9 Comorbidity Subgroup
We reviewed the ICD-10 CM diagnosis subgroup I08.X, related to
rheumatic disorders involving valves. Table 12 lists these codes, their
description, their current assigned clinical group, and comorbidity
subgroup.
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Our clinical advisors agree that these codes are clinically
appropriate for inclusion in the Heart 9 comorbidity subgroup when
listed as a secondary diagnosis. When we reassigned the codes listed in
Table 12 to Heart 9, there was no change to the comorbidity adjustment
for these codes (for example, no change in payment).
Final Decision: After reviewing the requested diseases and
disorders for a clinical group or comorbidity subgroup reassignment, we
are finalizing the reassignments of the following ICD-10 CM diagnosis
codes: The ICD-10 CM diagnosis codes in the Neurological 3 comorbidity
subgroup will be reassigned to the Behavioral 4 comorbidity subgroup;
Sepsis, specified by organism, ICD-10 CM codes A40.0 through A40.9 and
A41.01 through A41.89 will be assigned to the Infectious 1 comorbidity
subgroup (note that while these codes will now be a part of the
Infectious 1 comorbidity subgroup, we remind stakeholders that category
A40 ``streptococcal sepsis'' and category A41 ``other sepsis'' have a
code first note. If both the principal and secondary

[[Page 62265]]

diagnoses are from category A40 and A41, there will not be a
comorbidity adjustment, as both are listed from the same diagnosis
subchapter); Leukemia in relapse and histiocytosis ICD-10 CM diagnosis
codes will be assigned to the Neoplasm 22 comorbidity subgroup; The
EXX.43 ICD-10 CM diagnosis codes will be reassigned to the Neurological
10 comorbidity subgroup; The I08.X ICD-10 CM diagnosis codes will be
assigned to the Heart 9 comorbidity subgroup. Table 13 in this section
of the rule shows the final ICD-10 CM diagnosis code comorbidity
subgroup reassignments. We did not reassign any clinical group for any
ICD-10 CM diagnosis code. The final CY 2022 Clinical Group and
Comorbidity Adjustment Diagnosis List is posted on the HHA Center
webpage.\6\
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\6\ HHA Center webpage: <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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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). In the CY 2019 HH PPS final rule
with comment period (83 FR 56515), we finalized a policy 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). To generate the final recalibrated CY 2022 case-mix weights, we
used CY 2020 home health claims data with linked OASIS data (as of July
12, 2021). These data are the most current and complete data available
at this time. The tables later in this section have been revised to
reflect the results using the updated data.
In the CY 2022 HH PPS proposed rule (86 FR 35874), we stated that
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 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 13 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 HHA 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
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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 the 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 14 shows the coefficients
of the payment regression used to generate the weights, and the
coefficients divided by average resource use.
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The case-mix weights finalized for CY 2022 are listed in Table 15
and is posted on the HHA Center webpage.\7\
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\7\ HHA Center Webpage: <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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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 noted that CY 2020 is the first year of actual
PDGM utilization data, therefore, if we were to use CY 2019 data due to
the COVID-19 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
(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 1.0396. 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 invited comments on the CY 2022 proposed case-mix weights and
proposed case-mix weight budget neutrality factor and comments are
summarized later in this section.
Comment: MedPAC supports CMS' proposal to use CY 2020 data to
recalibrate the PDGM case-mix weights for CY 2022.
Response: We thank MedPAC for its support.
Comment: Many commenters were generally opposed to the proposal to
recalibrate the PDGM case-mix weights for CY 2022. These commenters
expressed concerns about the influence of the COVID-19 PHE on the types
of patients receiving home health care, and the use of CY 2020 data.
These commenters believe that CY 2020 utilization will likely not be
representative of utilization patterns in CY 2022. One commenter stated
that the trends seen in 2020 and 2021 will not hold permanently, and
therefore data from these periods would be skewed if used in modifying
the PDGM rate structure or case-mix weight recalibration. Another
commenter cautioned against the use of CY 2020 data for recalibration
and stated that the COVID-19 PHE directly led to shifts in referral
sources, and increases in the severity of cases. One commenter
expressed concern by what they describe as ``the inconsistency in the
usage of CY 2020 data, when both case-mix weights and LUPAs rates are
dependent upon utilization and care patterns.'' Another commenter
stated that while annual recalibration of case-mix weights is generally
appropriate to ensure that that case-mix weights reflect recent trends
in utilization and resource, the COVID-19 PHE has had significant
effects on home health utilization and overall case-mix severity in CY
2020. Several commenters recommended that CMS maintain the structure
and design of the PDGM for CY 2022.
Response: We acknowledge commenter statements and concerns as to
how the COVID-19 PHE affected home health utilization in CY 2020 as
well as potential impact to CY 2021 utilization. However, we continue
to believe that it is important to base the PDGM case-mix weights on
actual PDGM utilization data and patient resource and shift away from
the use of data prior to the implementation of the PDGM, where
utilization was influenced by different incentives, such as the therapy
thresholds used in case-mix adjustment prior to the PDGM. As stated in
the CY 2022 HH PPS proposed rule (86 FR 35892), 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 COVID-19 PHE would have
impacted utilization within all case-mix groups similarly. Therefore,
the impact of any reduction in resource use caused by the COVID-19 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, 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). Finally, we note that if we
chose not to recalibrate for CY 2022, it would be the third calendar
year without an update to the case-mix weights. We believe that
prolonging recalibration could lead to more significant variation in
the case-mix weights than what is observed using CY 2020 utilization
data.
Comment: One commenter expressed concern with the frequency of
case-mix weight recalibration. This commenter

[[Page 62281]]

believes that CMS should not recalibrate the case-mix weights for CY
2022 because annual changes are too frequent. This commenter
recommended that CMS change the frequency of recalibration from
annually to no more often than every three years.
Response: We thank the commenter for the recommendation. In the CY
2019 HH PPS final rule, we finalized our proposal to annually
recalibrate the PDGM case-mix weights (83 FR 56515) to reflect the most
recent utilization data available at the time of rulemaking. We stated
that annual recalibration of the HH PPS case-mix weights ensures that
the case-mix weights reflect, as accurately as possible, current home
health resource use and changes in utilization patterns. Any changes to
the frequency of the recalibration of the case-mix weights would need
to be proposed through notice and comment rulemaking.
Final Decision: We are finalizing the recalibration of the HH PPS
case-mix weights as proposed for CY 2022. We are also finalizing the
proposal to implement the changes to the PDGM case-mix weights in a
budget neutral manner by applying a case-mix budget neutrality factor
to the CY 2022 national, standardized 30-day period payment rate. As
stated previously, the final case-mix budget neutrality factor for CY
2022 will be 1.0396.
4. CY 2022 Home Health Payment Rate Updates
a. 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 our policy 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, 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 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. In the CY 2022 HH PPS proposed rule, we
proposed a market basket update of 2.4 percent (based on IHS Global
Inc.'s first-quarter 2021 forecast with historical data through fourth-
quarter 2020) (86 FR 35909). The CY 2022 proposed home health market
basket update of 2.4 percent was 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), of
0.6 percentage point for CY 2022. In effect, the proposed home health
payment update percentage for CY 2022 was 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 proposed home health
payment update was -0.2 percent (1.8 percent minus 2 percentage
points). We also proposed that if more recent data became available
after the publication of the 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 (86 FR 35909).
Comment: Several commenters had concerns with the market basket
update factor. The commenters noted that the HH PPS market basket
update factor has recently declined from 3.0 percent in CY 2019 to 2.4
percent in CY 2022. They stated this is likely because the market
basket price indices do not reflect the pandemic-driven inflation in
large part because the market basket composite index is determined on a
4-quarter rolling average basis and reflect general cost changes across
the healthcare industry--failing to account for home health specific
price changes on a real-time and industry specific basis.
They also stated that the COVID-19 PHE in CY 2020 has in some part
affected the supply of and demand for certain inputs, including home
health labor leading to a general increase in labor and other input
prices. For example, the pandemic intensified staffing shortages for
HHAs as home health workers left their jobs due to fear of exposure to
the virus. As such, HHAs had to raise wages to attract adequate staff.
Additionally, the commenters stated that the CMS HH PPS market basket
price indexes and cost weight categories may not capture increased
telehealth and personal protective equipment (PPE) costs that HHAs
faced as a result of the pandemic. The commenters provided an example
of data from a Partnership for Quality Home Healthcare (PQHH) member
HHA that suggested that in March and April of CY 2020, average pricing
for masks and gowns approximately increased 8 and 6 times,
respectively.
The commenters also noted that in CY 2020, some portion of home
health visits were shifted to telehealth during the COVID-19 PHE. The
commenters stated that HHAs can report costs of telehealth on the HHA
cost report, but incompletely, which implies that cost weights and
price proxies in CY 2020 and future years fail to accurately account
for telehealth use.
One commenter also constructed an estimated market basket index
using results from the 2021 PQHH Labor Cost Survey related to the three
largest components of the market basket index (wages and salaries,
benefits, and administrative and general expenses). Based on this
analysis, the commenter determined that the home health specific market
basket update factor should have increased by approximately 1.1
percentage points between CY 2019 and CY 2020 and by approximately 1.2
percentage points between CY 2020 and CY 2021. The commenter noted that
these results were in stark contrast to CMS HH PPS market basket update
factors that decreased by 0.1 percentage point between CY 2019 and CY
2020, and further by 0.6 percentage point between CY 2020 to CY 2021.

[[Page 62282]]

The commenter noted that CMS' indicated in the CY 2021 final rule
that the lower update (2.3 percent) for CY 2021 was ``primarily driven
by slower anticipated compensation growth for both health-related and
other occupations as labor markets were expected to be significantly
impacted during the recession that started in February 2020 and
throughout the anticipated recovery.'' In contrast, their results
showed that HHA wages grew at a slightly higher rate between 2019 and
2021, although underlying data shows that therapy professions primarily
those in urban areas experienced a decline in wage growth in 2020. In
addition, the commenter stated that the significant increase in
benefits costs and administrative, general, and other costs seem to
influence a large part of their increase in the estimated market basket
constructed from the survey data. The commenter noted that these
results reflect that the COVID-19 pandemic in 2020 likely resulted in
price inflation for most HHA inputs as opposed to a recession and
highlight the need for CMS to consider using price proxies that
accurately reflect trends in the home health industry.
Response: We appreciate the comment and the commenter's analysis of
home health agency costs. The 2016-based home health market basket is a
fixed-weight, Laspeyres-type price index that measures the change in
price, over time, of the same mix of goods and services purchased in
the base period. The effects on total costs resulting from changes in
the mix of goods and services purchased subsequent to the base period
are not measured.
Any increase in costs as a result of the COVID-19 PHE (to the
extent they differ from the price increase of the 2016-based home
health market basket) would not be reflected in the market basket
update factor. Changes in costs would be reflected when the market
basket cost weights are updated to incorporate more recent home health
agency cost data.
The current HHA market basket cost weights are based on Medicare
cost report data from 2016. Typically, a market basket is rebased every
four to five years. However, we continually monitor the cost weights in
the market baskets to ensure they are reflecting the mix of inputs used
in providing services. We do not yet have cost report data available to
determine the impact of the COVID-19 PHE on HHA cost structures. When
the data becomes available, we will review the 2020 Medicare cost
report data to evaluate the impact of the COVID-19 PHE as well as
implementation of the PDGM and determine whether a rebasing of the
market basket cost weights is appropriate. Any future rebasing or
revising of the HHA market basket will be proposed and subject to
public comments in future rulemaking.
We disagree with the commenter that the price proxies used in the
HHA market basket do not accurately reflect trends in the home health
industry. The price proxies used in the market basket represent the
price indices that correspond with the relevant cost categories (which
were determined using HHA Medicare cost report data and Bureau of
Economic Analysis Benchmark Input-Output data for NAICS 621600, Home
Health Care Services), capturing the overall inflation of these
products or services. Specifically, the aggregate compensation price
proxy reflects the occupational composition of the home health industry
(healthcare and nonhealthcare) published by the BLS Office of
Occupational Employment Statistics. About 25 percent of the home health
market basket is proxied by the Employment Cost Index (ECI) for Wages
and Salaries and ECI for Benefits for civilian hospital workers,
reflecting the price increases for compensation for skilled healthcare
workers that are also employed by HHAs. Another 27 percent of the home
health market basket is proxied by the ECI for Wages and Salaries and
ECI for Benefits for healthcare social assistance workers, reflecting
the price increases for compensation for overall healthcare workers
such as home health aides and nursing aides. A description of the
detailed methodology used to develop the 2016-based HHA market basket
can be found in the CY 2019 final rule (83 FR 56427).
For this final rule, based on IHS Global Inc.'s (IGI's) third
quarter 2021 forecast, the CY 2022 increase in the 2016-based home
health market basket is 3.1 percent (compared to the proposed rule of
2.4 percent), which is primarily due to forecasted higher compensation
prices. The revised higher forecast for compensation prices for CY 2022
reflects the recent faster historical trends, lower projected labor-
force participation, and higher anticipated overall inflation as
compared to IGI's first quarter 2021 forecast.
We understand the commenter's concern for adequate price increase
and payment for Medicare services. As noted in the previous comment by
the Medicare Payment Advisory Commission, Medicare margins are
estimated to be roughly 15 percent in 2019. In addition, we would note
that the increase in the home health market basket used for the HHS PPS
(that is based on a forecast) over the CY 2010 to CY 2020 time period
has exceeded the resulting actual increase in the home health market
basket by an average of 0.5 percentage point each year.
Comment: Several commenters supported CMS' proposal to increase
aggregate payments in CY 2022 by 1.8 percent; however, they stated that
due to the increased demand on the home health industry as a result of
the COVID-19 PHE as well as the lack of coverage for home health
services delivered remotely, they strongly encouraged CMS to implement
a larger increase.
The commenters stated that annual increases to the home health
payment rates have not kept pace with recent increases in home health
providers' staffing and other costs, and that CMS should consider
rising labor costs in particular when finalizing rates for CY 2022.
They noted that patients are safest at home during a pandemic, and home
health providers risk their own safety to ensure that these patients
continue to receive quality care with minimum exposure. Therefore, they
believed HHAs should be adequately reimbursed.
Several commenters recommended that CMS establish a process and
methodology to modify home health agency payment systems and rates
during a PHE to address new costs triggered by the COVID-19 PHE or
unpredicted limitations in payment models. They stated that CMS
modified both the market basket increase and productivity adjustment in
other sectors in final rules that take effect on October 1, 2021;
however, they believe neither those changes in other sectors, nor the
proposed 2022 rate adjustment in home health services adequately
accounts for the increased costs of care in 2021 that are highly likely
to continue in 2022.
The commenters stated that foremost among the cost increases not
adequately represented in the market basket increase are personal
protective equipment and other infection control costs. They stated
that the market basket index reflects increases in the cost of goods
and labor, but it does not address new costs or volume increases in the
use of such items as PPE. While the end of the COVID-19 PHE is
unfortunately not known, commenters stated that they believe it is
reasonable and fair to conclude that the use of PPE will be maintained
at levels comparable to 2020 throughout 2021 and into 2022. As such,
the commenters stated that the increased cost of care, as experienced
in 2020-2021, as it relates to PPE will continue in 2022. They stated
that CMS could include a PPE cost add-on to the

[[Page 62283]]

2022 payment episodic and per visit payment rates. The commenters
stated that conceptually, an add-on has been used in Medicare home
health services previously to reflect the administrative costs of OASIS
and other administrative activities for LUPA-only patient care.
Response: We appreciate the commenters' support for the use of the
productivity-adjusted market basket to annually update HH PPS payments.
As proposed, we are using the latest available data to determine the CY
2022 home health market basket update and productivity adjustment for
this final rule.
We recognize the unique challenges and market conditions as a
result of the COVID-19 PHE, but based on the data available we continue
to believe that the home health market basket adequately captures
changes in prices associated with providing home health services. As
described in the CY 2019 Home Health PPS final rule with comment period
(83 FR 56427), the cost weights were calculated using the 2016 Medicare
cost report data, which is provided directly by freestanding home
health agencies. The price proxies used in the market basket reflect a
projection of the expected price pressures for each category of
expenses.
We contract with IHS Global Inc. (IGI) to purchase their quarterly
forecasts of the price proxies that are used in the market baskets and
multifactor productivity (MFP) that is used to determine the
productivity adjustment, to ensure independence of the projections.
Consistent with our proposal to use more recent data as they become
available, for this final rule we have incorporated more current
historical data and revised forecasts provided by IGI that factor in
expected price and wage pressures. By incorporating the most recent
estimates available of the market basket update and productivity
adjustment, we believe these data reflect the best available projection
of input price inflation faced by HHAs for CY 2022, adjusted for
economy-wide productivity, which is required by statute.
We understand the commenters' concerns that the COVID-19 PHE had
unexpected effects on operating costs for healthcare providers,
including additional expenses related to PPE costs and services
furnished remotely, for which HHAs are not paid directly. Section
1895(e)(1)(A) of the Act prohibits payment for home health services
furnished via a telecommunications system, if such services substitute
for in-person home health services ordered as part of a plan of care.
These remote services also cannot be considered a home health visit for
purposes of eligibility or payment; however, we do acknowledge the
importance of these services during a PHE and beyond. In the CY 2021
final rule (85 FR 70323), we modified the language at Sec. 409.46(e)
allowing a broader use of telecommunications technology to be reported
as allowable administrative costs on the home health cost report,
recognizing that these services have the potential to improve
efficiencies, expand the reach of healthcare providers, allow more
specialized care in the home, and allow HHAs to see more patients or to
communicate with patients more often.
We disagree that the market basket methodology should be modified
from the current methodology to account for the incorporation of costs
during this or future PHEs. The market baskets account for changes in
provider input expenses in two ways: (1) Through the base year cost
weights; and (2) through the projected price pressures for each cost
category as measured by each of the price proxies.
As previously explained, the CMS market baskets are Laspeyres-type
price indexes where relative cost weights are established for a base
year. The major cost weights for the home health market basket are
currently based on the reported expenses for the universe of home
health agencies for 2016 on the Medicare Cost Report, and we
periodically rebase the cost weights for each of the CMS market baskets
to update the relative cost shares. Generally, these base year weights
are updated within a five-year timeframe during a rebasing and revising
of the market basket; this allows for the market baskets to reflect
changes in the spending patterns of providers across the various cost
categories. We have found that these cost weights typically do not
change substantially from year to year. The Medicare Cost Report data
are available with a time lag (for example, the most recent complete
data available for home health agencies would reflect 2019 experience).
We did not propose to rebase or revise the HHA market basket for CY
2022; however, as stated previously, we plan to review the 2020
Medicare cost report data when they become available to determine
whether the distribution of costs faced by HHAs is different when
compare to prior years. Any future rebasing or revising of the HHA
market basket will be proposed and subject to public comments in future
rulemaking.
Consistent with our proposal to use more recent data, the HHA CY
2022 market basket increase factor is 2.6 percent (3.1 percent market
basket update reduced by 0.5 percentage point productivity adjustment)
reflecting IGI's 2021 third quarter forecast. The proposed HHA CY 2022
market basket increase factor based on IGI's 2021 first quarter
forecast was 1.8 percent.
Comment: MedPAC recognized that CMS must provide the statutorily
mandated payment update, but they stated that this increase is not
warranted based on their analysis of payment adequacy. In their March
2021 report to the Congress, the Commission found positive access,
quality, and financial indicators for the sector, with margins of 15.8
percent for freestanding HHAs in 2019. Though consistent with statute,
they believe that a payment update of 1.8 percent will keep payments
higher than necessary for adequate access to quality care. They noted
that the Commission recommended that the Congress reduce the 2021
Medicare base payment rate for HHAs by 5 percent for the 2021 payment
year.
Response: We appreciate MedPAC's concern regarding the payment
increase for HHAs; however, we do not have the statutory authority to
implement its recommendation.
Final Decision: As proposed, we are finalizing our policy to use
more recent data to determine the home health payment update percentage
for CY 2022 in this final rule. Based on IHS Global Inc.'s third-
quarter 2021 forecast with historical data through second-quarter 2021,
the home health market basket update is 3.1 percent. The CY 2022 home
health market basket update of 3.1 percent is then reduced by a
productivity adjustment of 0.5 percentage point for CY 2022. For HHAs
that submit the required quality data for CY 2022, the home health
payment update is a 2.6 percent increase. For HHAs that do not submit
the required quality data for CY 2022, the home health payment update
is 0.6 percent (2.6 percent minus 2 percentage points).
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 proposed 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

[[Page 62284]]

differences, using inpatient hospital wage data is appropriate and
reasonable for the HH PPS.
In the CY 2021 HH PPS final rule (85 FR 70298), we finalized the
proposal to adopt the revised Office of Management and Budget (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 proposed 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 proposed 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 proposed 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 proposed 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 0.8539.
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 delineation of these areas. In
the CY 2015 HH PPS final rule (79 FR 66085,66087), 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 0.8738. 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 proposed 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.
We received several comments on the CY 2022 home health wage index
proposals. A summary of these comments and our responses are as
follows:
Comment: A few commenters recommended overarching changes to the
home health wage index including the creation of a home health specific
wage index, allowing home health agencies to appeal their wage index
values or utilize geographic reclassification, and establishing a home
health floor of 0.80 similar to the hospice floor.
Response: While we thank the commenters for their recommendations,
these comments are outside the scope of the proposed rule. Any changes
to the way we adjust home health payments to account for geographic
wage differences, beyond the wage index proposals discussed in the CY
2022 HH PPS proposed rule (86 FR 35874), would have to go through
notice and comment rulemaking. While CMS and other stakeholders have
explored potential alternatives to using OMB's statistical area
definitions, CMS continues to explore potential alternatives to explore
alternatives to using OMB's delineations but we continue to believe
that in the absence of home health specific wage data, using the pre-
floor, pre-reclassified hospital wage data is appropriate and
reasonable for home health payments. The reclassification provision at
section 1886(d)(10)(C)(i) of the Act states that the Board shall
consider the application of any subsection (d) hospital requesting the
Secretary change the hospital's

[[Page 62285]]

geographic classification. The reclassification provision found in
section 1886(d)(10) of the Act is specific to hospital inpatient
prospective payment system (IPPS) hospitals only.
Additionally, the application of the hospice floor is specific to
hospices and does not apply to HHAs. The hospice floor was developed
through a negotiated rulemaking advisory committee, under the process
established by the Negotiated Rulemaking Act of 1990 (Pub. L. 101-648).
Committee members included representatives of national hospice
associations; rural, urban, large, and small hospices; multi-site
hospices; consumer groups; and a government representative. The
Committee reached consensus on a methodology that resulted in the
hospice wage index. Because the reclassification provision applies only
to hospitals, and the hospice floor applies only to hospices, we
continue to believe the use of the pre-floor and pre-reclassified
hospital wage index results in the most appropriate adjustment to the
labor portion of the home health payment rates. This position is
longstanding and consistent with other Medicare payment systems (for
example, SNF PPS, IRF PPS, and Hospice).
Comment: A commenter stated that the pre-floor, pre-reclassified
hospital wage index is inadequate for adjusting home health costs,
particularly in States like New York which has among the nation's
highest labor costs now greatly exacerbated by the States'
implementation of a phased in $15 per hour minimum wage hike, the
balance of which is unfunded by Medicare''.
Response: Regarding minimum wage standards, we note that such
increases would be reflected in future data used to create the hospital
wage index to the extent that these changes to State minimum wage
standards are reflected in increased wages to hospital staff.
Comment: A few commenters recommended that CMS reconsider its
decision to apply the new OMB geographic designations for CBSAs in the
annual wage index update. Specifically, commenters had concerns with
wages index decreases for counties in New Jersey that moved from the
New York City Metropolitan CBSA and now make up the newly created New
Brunswick-Lakewood, NJ, CBSA as well as Franklin County, Massachusetts,
that moved from rural to urban status.
Response: We remind commenters that the revised OMB delineations
were finalized in the CY 2021 HH PPS final rule (85 FR 70306).
Additionally, we continue to believe it is important for the home
health wage index to use the latest OMB delineations available in order
to maintain an accurate and up-to-date payment system that reflects the
reality of population shifts and labor market conditions. We note that
the wage-index value is applied to home health payments are based on
where the individual is receiving home health services and not the
location of the home health agency. For example, if a home health
agency in New Jersey is servicing a patient in the New York City
Metropolitan CBSA, the wage index for New York City would apply to the
payment.
Comment: A few commenters stated that providers should be protected
against substantial payment reductions due to dramatic reductions in
wage index values from 1 year to the next and recommended that CMS
maintain the 5 percent cap that was put in place for CY 2021. A
commenter recommended that CMS should implement a 2 percent cap on wage
index decreases for CY 2022. Other commenters recommended that CMS
adopt a transition policy for home health providers that mirrors the 5-
percent cap on annual wage index reductions included in the FY 2022
IPPS/LTCH PPS final rule.
Response: We appreciate the suggestions for improving the HH PPS
wage index. We did not propose changes to the HH PPS wage index
methodology for CY 2022, and therefore we are not finalizing any
changes to that methodology in this final rule. However, we will take
these comments into consideration to potentially inform future
rulemaking.
Comment: A commenter stated that rural areas are disproportionately
affected by what the commenter artificially reduced rural hospital wage
indices. This commenter believes that in areas with lower population
densities, travel costs are increased because of the time and mileage
involved in traveling from patient to patient to provide services, and
the current method of adjusting labor costs using the hospital wage
index does not accurately account for increased travel costs and lost
productivity in serving rural areas.
Response: As discussed in the CY 2017 HH PPS final rule (81 FR
76721), we do not believe that a population density adjustment is
appropriate at this time. Rural HHAs continually cite the added cost of
traveling from one patient to the next. However, urban HHAs cite the
added costs associated with needed security measures and traffic
congestion. The home health wage index values in rural areas are not
necessarily lower than the home health wage index values in urban
areas. The home health wage index reflects the wages that inpatient
hospitals pay in their local geographic areas.
Final Decision: After considering the comments received in response
to the CY 2022 HH PPS proposed rule, we are finalizing our proposal to
continue to use the pre-floor, pre-reclassified hospital inpatient wage
index with no 5 percent cap on wage index decreases as the wage
adjustment to the labor portion of the HH PPS rates. For CY 2022, the
updated wage data are for the hospital cost reporting periods beginning
on or after October 1, 2017 and before October 1, 2018 (FY 2018 cost
report data).
The final CY 2022 HH PPS 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 our policy
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 2022:
<bullet> Multiply the national, standardized 30-day period rate by
the patient's applicable case-mix weight.

[[Page 62286]]

<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
In the CY 2022 HH PPS proposed rule (86 FR 35880), CMS provided
preliminary monitoring data for the first year of the 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. For CY 2022, we did not propose to make any
additional permanent or temporary adjustments to the national,
standardized 30-day period payment 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 final 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 final case-mix
weights budget neutrality factor for CY 2022 is 1.0396.
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
decided to continue our practice of using the most recent and complete
home health claims data available; that is why we used CY 2020 claims
data for the CY 2022 payment rate updates.
To calculate the wage index budget neutrality factor, we first
determine the payment rate needed for non-LUPA 30-day periods using the
CY 2022 wage index so those total payments are equivalent to the total
payments for non-LUPA 30-day periods using the CY 2021 wage index and
the CY 2021 national standardized 30-day period payment rate adjusted
by the case-mix weights recalibration neutrality factor. Then, by
dividing the payment rate for non-LUPA 30-day periods using the CY 2022
wage index by the payment rate for non-LUPA 30-day periods using the CY
2021 wage index, we obtain a wage index budget neutrality factor of
1.0019. We then apply the wage index budget neutrality factor of 1.0019
to the 30-day period payment rate.
Next, we update the 30-day period payment rate by the CY 2022 home
health payment update percentage of 2.6 percent. The CY 2022 national,
standardized 30-day period payment rate is calculated in Table 16.
[GRAPHIC] [TIFF OMITTED] TR09NO21.030

The CY 2022 national, standardized 30-day period payment rate for
an HHA that does not submit the required quality data is updated by the
CY 2022 home health payment update of 2.6 percent minus 2 percentage
points and is shown in Table 17.

[[Page 62287]]

[GRAPHIC] [TIFF OMITTED] TR09NO21.031

(3) CY 2022 National Per-Visit Rates for 30-day Periods of Care
The national per-visit rates are used to pay LUPAs and to compute
imputed costs in outlier calculations. The per-visit rates are paid by
type of visit or home health 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-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
payment rates for LUPA 30-day periods of care using the CY 2022 wage
index by the payment rates for LUPA 30-day periods of care using the CY
2021 wage index, we obtained a wage index budget neutrality factor of
1.0019. 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 2.6 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 2.6 percent and are shown in Table 18.
[GRAPHIC] [TIFF OMITTED] TR09NO21.032

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 2.6 percent minus 2 percentage points and are
shown in Table 19.

[[Page 62288]]

[GRAPHIC] [TIFF OMITTED] TR09NO21.033

The following is a summary of the public comments received about
the CY 2022 payment update and our response.
Comment: Several commenters stated their support for the CY 2022
home health payment update. However, many stated that with the
increasing demand of the home health industry because of the COVID-19
PHE, CMS should consider increasing Medicare payments to ensure that
HHAs are able to provide quality care. MedPAC mentioned that though CMS
was updating payment rates according to statute, they believe that
payments were higher than necessary and should be reduced.
Additionally, several commenters recommended that CMS establish a
process and methodology to modify HHA payment systems and rates when an
extreme and uncontrollable circumstance (for example, PHE) occurs to
accurately account for new costs triggered by the emergency, such as
personal protective equipment (PPE).
Response: We thank commenters for expressing their concerns. CMS is
statutorily required to update the payment rates under the prospective
payment system by the home health percentage in accordance with section
1895(b)(3)(B) of the Act. We understand commenters' request to
establish a process to modify payments during an unforeseen
circumstance, such as a PHE. However, we do not have the statutory
authority to modify the HH PPS methodology, in the event of an extreme
and uncontrollable circumstance.
Final Decision: For CY 2022, we are finalizing the national,
standardized 30-day payment rates, the per-visit payment rates, and the
home health payment update percentage of 2.6 percent for providers
submitting quality data and 0.6 percent for those not submitting
quality data.
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 subsequent years 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 subsequent years, we finalized a payment reduction if the HHA
does not submit the NOA within 5 calendar days from the start of care.
That is, if an HHA fails to submit a timely NOA for CYs 2022 and
subsequent years, the reduction in payment amount would be equal to a
1/30 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 1/30 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 subsequent days (An NOA submitted on
and after this date would 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
our policy that CMS may waive the consequences

[[Page 62289]]

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.
Though we did not solicit comments on the previously finalized NOA
process for CY 2022, we did receive several comments on various
components of the finalized policy. However, these comments were out of
scope of the proposed rule because we did not propose to make any
changes to the finalized policy. 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 final 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 $289.50 (1.8451
multiplied by $156.90), subject to area wage adjustment.
(5) Occupational Therapy LUPA Add-On Factor
In order to implement Division CC, section 115, of CAA 2021, we
proposed conforming changes to regulations at Sec. 484.55(a)(2) and
(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
proposed 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 is no sufficient data regarding the average excess of
minutes for the first visit in LUPA periods when the initial and
comprehensive assessments are conducted by occupational therapists.
Therefore, we proposed 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 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 solicited comments
on this proposal.
Comment: Commenters were in support of CMS creating an OT add-on
factor for the OT LUPA add-on payments. Additionally, there was support
utilizing the PT LUPA add-on factor as a proxy until there is enough CY
2022 data to create an OT add-on factor for the OT LUPA add-on
payments.
Response: We thank commenters for their support of the OT add-on
factor.
Final Decision: We are finalizing our proposal to use the PT add-on
factor as a proxy for the OT add-on factor, until we have sufficient CY
2022 data to create an OT add-on factor.
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 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

[[Page 62290]]

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">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices</a>.html. 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,
would increase the CY 2022 30-day base payment rates, described in
section III.C.3. of this final 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 20.
[GRAPHIC] [TIFF OMITTED] TR09NO21.034

Though we did not make any proposals regarding the rural add-on
percentages in the CY 2022 HH PPS proposed rule, we did receive some
comments as summarized in this section of this final rule.
Comment: While commenters understood the rural add-on payments
decrease has been mandated by the BBA of 2018, many expressed continued
concern and frustration of the reduction in support for access to rural
beneficiaries. Commenters stated that providers in rural areas face
higher overhead expenses due to increased travel time between patients
as well as demands for extra staff in areas where workforce challenges
already exist. A few commenters suggested that CMS should work with
Congress to provide immediate relief to rural home health providers
that face increased costs responding to patient's during the COVID-19
PHE and to maintain the rural add-on payment at 3 percent in order to
protect Medicare beneficiaries' access to home health in rural
communities.
Response: We thank commenters for their recommendations. We
understand commenter concerns about the phase-out of rural add-on
payments and potential effects on rural HHAs. However, because the
current rural add-on policy is statutory, we have no regulatory
discretion to modify or extend it. CMS will continue to monitor patient
access to home health services and the costs associated with providing
home health care in rural versus urban areas.
Final Decision: Policies for the provision of rural add-on payments
for CY 2019 through CY 2022 were finalized in the CY 2019 HH PPS final
rule with comment period (83 FR 56443), in accordance with section
50208 of the BBA of 2018. The data used to categorize each county or
equivalent area are 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">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices</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.
e. 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

[[Page 62291]]

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 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, 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, 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 the 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 propose 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. For the proposed rule, with
CY 2020 claims data (as of March 30, 2021), we proposed an FDL ratio of
0.41. Using CY 2020 claims data (as of July 12, 2021) showed that for
CY 2022 the final FDL ratio would need to be 0.40 to pay up to, but no
more than, 2.5 percent of the total payment as outlier payments in CY
2022.
For this final rule, simulating payments using preliminary CY 2020
claims data (as of July 12, 2021) and the CY 2021 HH PPS payment rates
(85 FR 70316), we estimate that outlier payments in CY 2021 would
comprise 2.1 percent of total payments. Based on simulations using CY
2020 claims data (as of July 12, 2021) and the proposed CY 2022 payment
rates presented in Section III.C.2 of this final rule, we estimate that
outlier payments would constitute approximately 1.8 percent of

[[Page 62292]]

total HH PPS payments in CY 2022. Our simulations showed that the FDL
ratio would need to be changed from 0.56 to 0.40 to pay up to, but no
more than, 2.5 percent of total payments as outlier payments in CY
2022.
Comment: A commenter recommended ending the outlier provision and
restore the 5 percent to fund the outlier payments into regular
Medicare payments.
Response: The HH PPS allows for outlier payments to be made to
providers for episodes that have unusually large amounts of cost
because of a patient's home health care needs. Nevertheless, we believe
that section 1895(b)(5)(A) of the Act allows the Secretary the
discretion as to whether or not to have an outlier policy under the HH
PPS. CMS believes the outlier provision is beneficial since it
addresses any additional or unpredictable cost that is medically
necessary for a patient. In addition, we believe outlier payments are
beneficial in helping to mitigate the incentive for HHAs to avoid
patients that need higher levels of medical care.
Final Decision: We are finalizing the fixed-dollar loss ratio of
0.40 for CY 2022 so the estimated total outlier payments are up to, but
not more than, 2.5 percent of the payments estimated to be made under
the HH PPS.
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
physician or allowed practitioner that performed the face-to-face
encounter. These regulations text changes are not time 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 the CY
2022 HH PPS proposed rule (86 FR 35915), we proposed 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.
Comment: Commenters were supportive of the proposed conforming
regulations text changes at Sec. 409.43 and noted that they are
appreciative of CMS' attention to updating the regulations to prevent
confusion regarding who is authorized to establish and review the home
health plan of care. Additional commenters requested changes to the
regulations at 42 CFR 424.22.
Response: We thank commenters for their review of the rule and
support of the changes at Sec. 409.43, and note that the suggested
changes at 42 CFR 424.22 are out of scope of this final rule and would
require a notice of proposed rulemaking.
Final Decision: We are finalizing the conforming regulations at
Sec. 409.43, consistent with section 3708 of the CARES Act to allow
``allowed practitioners'' to establish and periodically review the home
health plan of care.

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

A. Expansion of 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),\8\ 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 2 years' prior; for example, the CY 2018 payment
adjustments were based on CY 2016 performance.
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\8\ OASIS is the instrument/data collection tool used to collect
and report performance data by HHAs.

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[[Page 62293]]

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,\9\ 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.\10\
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\9\ <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>.
\10\ <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 final rule, we proposed 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 proposed 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<ls-thn-eq> Improved Quality of Care without Increased
Spending: As observed in the Third Annual Evaluation Report,\11\ 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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\11\ 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<ls-thn-eq> Impact on Medicare Spending: The CMS Chief
Actuary has certified that expansion of the HHVBP Model would produce
Medicare savings if expanded to all States.\12\
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\12\ 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<ls-thn-eq> 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 stated in the proposed
rule that 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.
We summarize in this section of this rule comments received
regarding the requirements for expansion and our responses.
Comment: Commenters disagreed that CMS has met the statutory
requirement that expansion of the HHVBP Model would not deny or limit
the coverage or provision of Medicare benefits for Medicare
beneficiaries and stated that while incremental improvements in quality
performance and cost-savings are encouraging, they questioned whether
those numbers are sufficient to justify ending the original model early
during a pandemic and expanding it nationwide. Commenters asserted that
access under the original Model was negatively impacted and expansion
of HHVBP will exponentially worsen access to care.
Response: We disagree that expansion of the HHVBP Model should be
suspended or the Model not expanded, or that the Model denies coverage
to people who are not expected to improve. As stated previously, the
original HHVBP Model did not make any changes to coverage or provision
of benefits for Medicare beneficiaries. We further note that evaluation
findings to date show that the implementation of the original HHVBP
Model did not adversely impact home health utilization or market
entries and exits differentially in HHVBP states relative to non-HHVBP
states. We refer readers to Section 3, pages 25-36 in the Evaluation of
the Home Health Value-Based Purchasing (HHVBP) Model Third Annual
Report \13\ for our full analysis on beneficiary access to home health
care covering the post-implementation period 2016-2018 and to Section
3, pages 25-50 in the Evaluation of the Home Health Value-Based
Purchasing (HHVBP) Model Fourth Annual Report \14\ for an updated
analysis covering the post-implementation period 2016-2019. As
previously summarized, the CMS Chief Actuary's certification and the
Secretary's determination were based on evaluation findings.
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\13\ 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>.
\14\ <a href="https://innovation.cms.gov/data-and-reports/2021/hhvbp-fourthann-rpt">https://innovation.cms.gov/data-and-reports/2021/hhvbp-fourthann-rpt</a>.
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3. Overview
We stated in the proposed rule that the proposed HHVBP Model
expansion presents an opportunity to improve the quality of care
furnished to Medicare beneficiaries nationwide through payment
incentives to HHAs. We stated that 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.
We stated in the proposed rule that 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

[[Page 62294]]

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 final 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 proposed 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. We stated in the proposed rule that 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
further stated that 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 proposed 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.
We proposed that the 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 proposed to
codify this requirement at Sec. 484.350. We proposed 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 proposed 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 proposed 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 final rule and payment adjustment would be calculated based on an
HHA's CCN.\15\
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\15\ 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="https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-484?toc=1">https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-484?toc=1</a>.
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We summarize in this section of this rule comments received on the
proposed timing and scope of the expanded model and our responses.
Comment: The majority of commenters supported a home health value-
based purchasing payment model, but were opposed to expansion beginning
in CY 2022 as the first performance year. Commenters expressed concern
that HHAs continue to contend with challenges of the PHE and that
expansion should be postponed until CY 2023 or the calendar year that
is 1 year post the public health emergency which they stated would be a
more stable time in the trajectory of health care delivery. Commenters
expressed that HHAs need more time to prepare, institute operational
reforms, and learn about the Model and encouraged CMS to provide
technical assistance and training to support HHAs in preparing for the
Model. Commenters stated that CMS should allow for more study time/data
gathering and extend the original HHVBP Model for another year to
collect data that is more reflective of the current state of care
before expanding nationwide. A commenter recommended CMS carefully
evaluate the impact of the HHVBP Model on hospital-operated HHAs as
part of its overall evaluation of the Model before scaling it on a
national level and seek broad stakeholder input on the design of the
HHVBP expanded model in future rulemaking. Commenters requested that
CMS develop a comprehensive plan for implementing the HHVBP model
nationwide in CY 2023 after the conclusion of the original model. A
commenter recommends that CMS make the first year of expansion
voluntary and move to mandatory in CY 2023. We received a few comments
that supported a CY 2022 start date for expansion.
Response: We thank the commenters for their support for a value-
based purchasing payment model in the home health setting. However, we
disagree that additional study time or an extension of the original
Model to collect additional data is needed prior to expansion. The
original Model was tested for four years, CYs 2016-2019. The original
Model has met statutory requirements based on the CMS Chief Actuary's
certification and evaluation findings in the Third Annual Evaluation
Report covering the implementation period 2016-2018 that showed the
Model improved quality of care without increased spending. Updated
analysis of the original Model in the Fourth Annual Evaluation Report,
covering the implementation period 2016-2019, continues to indicate
improved quality of care without increased spending or adverse impacts
on home health utilization, or market entries and exits. We note that
the Fourth Annual Evaluation Report includes evaluation of the impacts
to hospital-operated HHAs, and found that hospital based HHAs (in both
HHVBP and non-HHVBP states) do care for higher risk patients. The model
payment and the primary evaluation impact estimation use risk
adjustment to account for such differences. The evaluation did not
specifically analyze the outcomes by free-standing vs hospital-based
entities in HHVBP and non-HHVBP states. However, we examined whether
there is a pattern of the Model limiting admissions for more medically
complex patients and do not find that to be the

[[Page 62295]]

case. We continued to observe a pattern of increasing clinical severity
over time among all home health patients based on multiple measures of
medical complexity or severity, and the trends were generally similar
in HHVBP and non-HHVBP states. In addition, the CMS Chief Actuary
concluded in its certification that since the selection of the states
was random and participation by HHAs in the selected states was
mandatory, it is unlikely that these evaluation results were biased.
We understand the PHE, declared in January 2020, has had an impact
on HHAs. We also believe that technical assistance and training may
help those HHAs not part of the original Model to prepare for
successful participation in the expanded HHVBP Model.
After consideration of the comments received, we are therefore
finalizing that CY 2022 will be a pre-implementation year, with CY 2023
as the first performance year and CY 2025 as the first payment year, as
we discuss further in this section and later in this rule.
Comment: A commenter stated that expansion should be delayed until
a payment framework is built to adequately account for the differences
in healthcare systems, such as Medicaid safety-net hospitals, that by
definition provide a disproportionate share of charity and other forms
of uncompensated care to individuals who have a high level of social
need, beyond their medical treatment. The commenter also stated that
nationwide implementation of the HHVBP model should be delayed until
the evaluation of appropriate risk adjustment for types of Social
D

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