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Proposed Rule2022-13376

Medicare Program; Calendar Year (CY) 2023 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Program Requirements; Home Health Value-Based Purchasing Expanded Model Requirements; and Home Infusion Therapy Services Requirements

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Published

June 23, 2022

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule would set forth routine updates to the Medicare home health and home infusion therapy services payment rates for calendar year (CY) 2023 in accordance with existing statutory and regulatory requirements. This proposed rule discusses home health utilization; proposes a methodology for determining the difference between assumed versus actual behavior change on estimated aggregate expenditures for home health payments as result of the change in the unit of payment to 30 days and the implementation of the Patient Driven Groupings Model (PDGM) case-mix adjustment methodology; and proposes a temporary retrospective and permanent prospective adjustment to the CY 2023 home health payment rates. This rule proposes reassignment of certain diagnosis codes under the PDGM. and proposes to establish a permanent mitigation policy to smooth the impact of year-to-year changes in home health payments related to changes in the home health wage index. This rule also proposes recalibration of the PDGM case-mix weights and updates the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, comorbidity adjustment subgroups for CY 2023 and the fixed-dollar loss ratio (FDL) used for outlier payments. Additionally, this rule discusses the future collection of data regarding the use of telecommunications technology during a 30-day home health period of care on home health claims. In addition, this rule proposes changes to the Home Health Quality Reporting Program (HH QRP) requirements; changes to the expanded Home Health Value-Based Purchasing (HHVBP) Model; and updates to the home infusion therapy services payment rates for CY 2023.

Full Text

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<title>Federal Register, Volume 87 Issue 120 (Thursday, June 23, 2022)</title>
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[Federal Register Volume 87, Number 120 (Thursday, June 23, 2022)]
[Proposed Rules]
[Pages 37600-37683]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-13376]

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Vol. 87

Thursday,

No. 120

June 23, 2022

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 484

Medicare Program; Calendar Year (CY) 2023 Home Health Prospective
Payment System Rate Update; Home Health Quality Reporting Program
Requirements; Home Health Value-Based Purchasing Expanded Model
Requirements; and Home Infusion Therapy Services Requirements; Proposed
Rule

Federal Register / Vol. 87, No. 120 / Thursday, June 23, 2022 /
Proposed Rules

[[Page 37600]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 484

[CMS-1766-P]
RIN 0938-AU77

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth routine updates to the
Medicare home health and home infusion therapy services payment rates
for calendar year (CY) 2023 in accordance with existing statutory and
regulatory requirements. This proposed rule discusses home health
utilization; proposes a methodology for determining the difference
between assumed versus actual behavior change on estimated aggregate
expenditures for home health payments as result of the change in the
unit of payment to 30 days and the implementation of the Patient Driven
Groupings Model (PDGM) case-mix adjustment methodology; and proposes a
temporary retrospective and permanent prospective adjustment to the CY
2023 home health payment rates. This rule proposes reassignment of
certain diagnosis codes under the PDGM. and proposes to establish a
permanent mitigation policy to smooth the impact of year-to-year
changes in home health payments related to changes in the home health
wage index. This rule also proposes recalibration of the PDGM case-mix
weights and updates the low utilization payment adjustment (LUPA)
thresholds, functional impairment levels, comorbidity adjustment
subgroups for CY 2023 and the fixed-dollar loss ratio (FDL) used for
outlier payments. Additionally, this rule discusses the future
collection of data regarding the use of telecommunications technology
during a 30-day home health period of care on home health claims. In
addition, this rule proposes changes to the Home Health Quality
Reporting Program (HH QRP) requirements; changes to the expanded Home
Health Value-Based Purchasing (HHVBP) Model; and updates to the home
infusion therapy services payment rates for CY 2023.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 16, 2022.

ADDRESSES: In commenting, please refer to file code CMS-1766-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1766-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1766-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Brian Slater, (410) 786-5229, for home
health and home infusion therapy payment inquiries.
For general information about home infusion payment, send your
inquiry via email to <a href="/cdn-cgi/l/email-protection#793116141c30171f0c0a101617291615101a00391a140a5711110a571e160f">[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#662e090b032e03070a120e36090a0f051f26050b15480e0e1548010910">[email&#160;protected]</a>.
For information about the Home Health Quality Reporting Program (HH
QRP), send your inquiry via email to <a href="/cdn-cgi/l/email-protection#1058584142406165756364797f7e6350737d633e7878633e777f66">[email&#160;protected]</a>.
For more information about the expanded Home Health Value-Based
Purchasing Model, please visit the Expanded HHVBP Model web page at
<a href="https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model">https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model</a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Advancing Health Information Exchange

A. Executive Summary

1. Purpose and Legal Authority
a. Home Health Prospective Payment System (HH PPS)
As required under section 1895(b) of the Social Security Act (the
Act), this proposed rule would update the payment rates for HHAs for CY
2023. In addition, the rule would: recalibrate the case-mix weights
under section 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day
periods of care in CY 2023; determine the impact of differences between
assumed behavior changes and actual behavior changes on estimated
aggregate expenditures for CYs 2020-2021 in accordance with section
1895(b)(3)(D)(i) of the Act; propose a permanent payment adjustment to
the CY 2023 30-day payment rate and solicit comments on a temporary
payment adjustment to the 30-day payment rate in accordance with
section 1895(b)(3)(D)(ii) and (iii) of the Act; update the LUPA
thresholds, functional impairment levels, and comorbidity subgroups for
CY 2023; and update the CY 2023 fixed-dollar loss ratio (FDL) for
outlier payments (so that 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). This proposed rule also includes a
solicitation of comments on the collection of data on the use of
telecommunications technology on home health claims.
b. Home Health (HH) Quality Reporting Program (QRP)
This proposed rule proposes to end the suspension of the collection
of Outcome and Assessment Information Set (OASIS) data on non-Medicare
and non-Medicaid patients under section 704 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, and to
require HHAs to report all-payer OASIS data for purposes of the HH QRP,
beginning with the CY 2025 program year. We are proposing to amend the
regulatory text to make a technical change that consolidates the
statutory references to data submission. We also propose to codify in
our regulations the factors we adopted in the CY 2019 HH PPS final rule
as the factors we will consider when determining whether to remove
measures from the HH QRP measure set. Finally, we are requesting
feedback on a Request for Information on Health Equity in the HH QRP.

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c. Expanded Home Health Value Based Purchasing (HHVBP) Model
In accordance with the statutory authority at section 1115A of the
Act, we are proposing updated policies, new definitions and modifying
existing definitions, and conforming regulation text changes for the
expanded Home Health Value-Based Purchasing (HHVBP) expanded Model and
requesting comment on a potential future approach to health equity in
the expanded HHVBP Model.
d. Medicare Coverage of Home Infusion Therapy
This proposed rule discusses updates to the home infusion therapy
services payment rates for CY 2023 under section 1834(u) of the Act.
2. Summary of the Provisions of This Rule
a. Home Health Prospective Payment System (HH PPS)
In section II.B.1. of this proposed rule, we provide monitoring and
data analysis on PDGM utilization for CYs 2020 and 2021. In section
II.B.2. of this rule, we propose payment adjustments to reflect the
impact of differences between assumed behavior changes and actual
behavior changes on estimated aggregate payment expenditures under the
HH PPS. In section II.B.3 of this rule, we discuss the proposal to
reassign certain ICD-10-CM codes related to the PDGM clinical groups
and comorbidity subgroups.
In section II.B.4. of this rule, we are proposing the recalibration
of the PDGM case-mix weights, LUPA thresholds, functional levels, and
comorbidity adjustment subgroups for CY 2023.
In section II.B.5. of this rule, we propose to update the home
health wage index, the CY 2023 national, standardized 30-day period
payment rates and the CY 2023 national per-visit payment amounts by the
home health payment update percentage. The proposed home health payment
update percentage for CY 2023 would be 2.9 percent. This rule also
proposes a permanent 5-percent cap on HHA's applicable wage index
reductions from their wage index from the prior year, regardless of the
circumstances causing the decline. Additionally, this rule proposes the
FDL ratio 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.6. of this proposed rule, we include a comment
solicitation on the collection of data on the use of telecommunications
technology on home health claims.
b. HH QRP
In section III.D. of this proposed rule, we are proposing to end
the temporary suspension of non-Medicare/non-Medicaid data under
section 704 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 and, in accordance with section
1895(b)(3)(B)(v) of the Act, to require HHAs to report all-payer OASIS
data for purposes of the HH QRP, beginning with the CY 2025 program
year. In section III.E. of this rule, we are proposing technical
changes in Sec. 484.245(b)(1). In section III.F. of this rule, we are
proposing to codify in our regulations the factors we adopted in the CY
2019 HH PPS final rule as the factors we will consider when determining
whether to remove measures from the HH QRP measure set. Lastly, in
section III.G. of this rule, we are requesting feedback on a Request
for Information on Health Equity in the HH QRP.
c. Expanded Home Health Value Based Purchasing (HHVBP) Model
In section IV. of this proposed rule, we are proposing to change
the HHA baseline year to CY 2022 for all HHAs that were certified prior
to January 1, 2022 starting in the CY 2023 performance year. We would
make conforming regulation text changes at Sec. 484.350(b) and (c). We
are also proposing to amend the Model baseline year from CY 2019 to CY
2022 starting in the CY 2023 performance year to enable CMS to measure
competing HHAs performance on benchmarks and achievement thresholds
that are more current. We are making conforming amendments to
definitions in Sec. 484.345. In section IV.C. of this proposed rule,
we have included an RFI related to a potential future approach to
health equity in the expanded HHVBP Model.
d. Medicare Coverage of Home Infusion Therapy
In section V. of this proposed rule, we discuss updates to the home
infusion therapy services payment rates for CY 2023, under section
1834(u) of the Act.
3. Summary of Costs, Transfers, and Benefits

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[GRAPHIC] [TIFF OMITTED] TP23JN22.001

B. Advancing Health Information Exchange

The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care and patient access
to their digital health information.
To further interoperability in post-acute care settings, CMS and
the Office of the National Coordinator for Health Information
Technology (ONC) participate in the Post-Acute Care Interoperability
Workgroup (PACIO) to facilitate collaboration with industry
stakeholders to develop Health Level Seven International[supreg] (HL7)
Fast Healthcare Interoperability Resources[supreg] (FHIR) standards.\1\
These standards could support the exchange and reuse of patient
assessment data derived from the Minimum Data Set (MDS), Inpatient
Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI), Long-
term Care Hospital (LTCH) Continuity Assessment Record and Evaluation
(CARE) Data Set (LCDS), Outcome and Assessment Information Set (OASIS),
and other sources. The PACIO Project has focused on HL7 FHIR
implementation guides for functional status, cognitive status and new
use cases on advance directives, re-assessment timepoints, and Speech,
Language, Swallowing, Cognitive communication and Hearing (SPLASCH)
pathology. We encourage PAC provider and health information technology
(IT) vendor participation as the efforts advance.
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\1\ <a href="http://pacioproject.org/">http://pacioproject.org/</a>.
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The CMS Data Element Library (DEL) continues to be updated and
serves as a resource for PAC assessment data elements and their
associated mappings to health IT standards, such as Logical Observation
Identifiers Names and Codes (LOINC) and Systematized Nomenclature of
Medicine Clinical Terms (SNOMED). The DEL furthers CMS' goal of data
standardization and interoperability. Standards in the DEL (<a href="https://del.cms.gov/DELWeb/pubHome">https://del.cms.gov/DELWeb/pubHome</a>) can be referenced on the CMS website and in
the ONC Interoperability Standards Advisory (ISA). The 2022 ISA is
available at <a href="https://www.healthit.gov/isa">https://www.healthit.gov/isa</a>.
The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted
December 13, 2016) required HHS and ONC to take steps to further

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interoperability for providers in settings across the care continuum.
Section 4003(b) of the Cures Act required ONC to take steps to advance
interoperability through the development of a trusted exchange
framework and common agreement aimed at establishing a universal floor
of interoperability across the country. On January 18, 2022, ONC
announced a significant milestone by releasing the Trusted Exchange
Framework \2\ and Common Agreement Version 1.\3\ The Trusted Exchange
Framework is a set of non-binding principles for health information
exchange, and the Common Agreement is a contract that advances those
principles. The Common Agreement and the Qualified Health Information
Network Technical Framework Version 1 \4\ (incorporated by reference
into the Common Agreement) establish the technical infrastructure model
and governing approach for different health information networks and
their users to securely share clinical information with each other--all
under commonly agreed to terms. The technical and policy architecture
of how exchange occurs under the Trusted Exchange Framework and the
Common Agreement follows a network-of-networks structure, which allows
for connections at different levels and is inclusive of many different
types of entities at those different levels, such as health information
networks, healthcare practices, hospitals, public health agencies, and
Individual Access Services (IAS) Providers.\5\ For more information, we
refer readers to <a href="https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement">https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement</a>.
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\2\ The Trusted Exchange Framework (TEF): Principles for Trusted
Exchange (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf</a>.
\3\ Common Agreement for Nationwide Health Information
Interoperability Version 1 (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.
\4\ Qualified Health Information Network (QHIN) Technical
Framework (QTF) Version 1.0 (Jan. 2022), <a href="https://rce.sequoiaproject.org/wp-content/uploads/2022/01/QTF_0122.pdf">https://rce.sequoiaproject.org/wp-content/uploads/2022/01/QTF_0122.pdf</a>.
\5\ The Common Agreement defines Individual Access Services
(IAS) as ``with respect to the Exchange Purposes definition, the
services provided utilizing the Connectivity Services, to the extent
consistent with Applicable Law, to an Individual with whom the QHIN,
Participant, or Subparticipant has a Direct Relationship to satisfy
that Individual's ability to access, inspect, or obtain a copy of
that Individual's Required Information that is then maintained by or
for any QHIN, Participant, or Subparticipant.'' The Common Agreement
defines ``IAS Provider'' as: ``Each QHIN, Participant, and
Subparticipant that offers Individual Access Services.'' See Common
Agreement for Nationwide Health Information Interoperability Version
1, at 7 (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.
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We invite readers to learn more about these important developments
and how they are likely to affect HHAs.

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
requires 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 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub.
L.109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v)
to the Act, requiring home health agencies (HHAs) to submit data for
purposes of measuring health care quality, and linking the quality data
submission to the annual applicable payment percentage increase. This
data submission requirement is applicable for CY 2007 and each
subsequent year. If an HHA does not submit quality data, the home
health market basket percentage increase is reduced by 2 percentage
points. In the November 9, 2006 Federal Register (71 FR 65935), we
published a final rule to implement the pay-for-reporting requirement
of the DRA, which was codified at Sec. 484.225(h) and (i) in
accordance with the statute. The pay-for-reporting requirement was
implemented on January 1, 2007.
Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of
2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a
change to the home health unit of payment to 30-day periods beginning
January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new
subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the
Secretary to calculate a standard prospective payment amount (or
amounts) for 30-day units of service furnished that end during the 12-
month period beginning January 1, 2020, in a budget neutral manner,
such that estimated aggregate expenditures under the HH PPS during CY
2020 are equal to the estimated aggregate expenditures that otherwise
would have been made under the HH PPS during CY 2020 in the absence of
the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of
the Act requires that the calculation of the standard prospective
payment amount (or amounts) for CY 2020 be made before the application
of the annual update to the standard prospective payment amount as
required by section 1895(b)(3)(B) of the Act.
Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in
calculating the standard prospective payment amount (or amounts), the
Secretary must make assumptions about behavior changes that could occur
as a result of the implementation of the 30-day unit of service under
section 1895(b)(2)(B) of the Act and case-mix adjustment factors
established under section 1895(b)(4)(B) of the Act. Section
1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide
a description of the behavior assumptions made in notice and comment
rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH
PPS final rule with comment period (83 FR 56461).
Section 51001(a)(2)(B) of the BBA of 2018 also added a new
subparagraph (D) to section 1895(b)(3) of the Act. Section
1895(b)(3)(D)(i) of the Act requires the Secretary to annually
determine the impact of differences between assumed behavior changes,
as described in section 1895(b)(3)(A)(iv) of the Act, and actual
behavior changes on estimated aggregate expenditures under the HH PPS
with respect to years beginning with 2020 and ending with 2026. Section
1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a
manner determined appropriate, through notice and comment rulemaking,
to provide for one or more permanent increases or decreases to the
standard prospective payment amount (or amounts) for applicable years,
on a prospective basis, to offset for such increases or decreases in
estimated aggregate expenditures, as determined under section
1895(b)(3)(D)(i) of the Act. Additionally, 1895(b)(3)(D)(iii) of the
Act requires the Secretary, at a time and in a manner determined
appropriate, through notice and comment rulemaking, to provide for one
or more temporary increases or decreases to the payment amount for a
unit of home

[[Page 37604]]

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
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 also part of the
national, standardized 30-day period rate. Durable medical equipment
(DME) 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. Additionally, the
30-day period payment rate does not include payment for certain
injectable osteoporosis drugs and negative pressure wound therapy
(NPWT) using a disposable device, but such drug and services must be
billed by the HHA while a patient is under a home health plan of care,
as the law requires consolidated billing of osteoporosis drugs and NPWT
using a disposable device.
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 B1. 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
threshold, an outlier adjustment may also be available.
Under this case-mix methodology, case-mix weights are generated for
each of the different PDGM payment groups by regressing resource use
for each of the five categories (admission source, timing, clinical
grouping, functional impairment level, and comorbidity adjustment)
using a fixed effects model. A detailed description of each of the
case-mix variables under the PDGM have been described previously, and
we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through
70305).

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[GRAPHIC] [TIFF OMITTED] TP23JN22.002

B. Proposed Provisions for CY 2023 Payment Under the HH PPS

1. Monitoring the Effects of the Implementation of PDGM
a. Routine PDGM Monitoring
CMS routinely analyzes Medicare home health benefit utilization,
including but not limited to, overall total 30-day periods of care and
average periods of care per HHA user; distribution of the type of
visits in a 30-day period of care; the percentage of periods that
receive the LUPA; estimated costs; the percentage of 30-day periods of
care by clinical group, comorbidity adjustment, admission source,
timing, and functional impairment level; GG items by response type; and
the proportion of 30-day periods of care with and without any therapy
visits, nursing visits, and/or aide/social worker visits. For the
monitoring included in this rule, we examine simulated CY 2018 and CY
2019 data and actual CY 2020 and CY 2021 data for 30-day periods of
care. We provide interpretation of results for CY 2020 and CY 2021. We
refer readers to the CY 2022 HH PPS final rule (86 FR 35881) for
discussion about simulated data for CYs 2018 and 2019.
(1) Utilization
Table B2 shows the overall utilization of home health and Table B3
shows the average utilization of visits per 30-day period of care by
home health discipline. This data indicates the average number of 30-
day periods of care per unique HHA user is similar per 30-day period of
care between CY 2020 and CY 2021. Table B3 shows utilization of visits
per 30-day period of care by home health discipline over time. The data
indicates that the number of 30-day periods of care decreased between
CY 2018 and CY 2021. Table B4 shows the proportion of 30-day periods of
care that are LUPAs and the average number of visits per discipline of
those LUPA 30-day periods of care over time.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
(2) Analysis of 2020 Cost Report Data for 30-Day Periods of Care
In the CY 2020 HH PPS final rule with comment period (84 FR 60483),
we provided a summary of analysis on FY 2017 HHA cost report data and
how such data, if used, would impact our estimate of the percentage
difference between the CY 2020 30-day payment amount and estimated,
average HHA costs for a 30-day period of care. In that rule, we
utilized FY 2017 cost reports and CY 2017 home health claims to
estimate the costs of both 60-day episodes of care and 30-day periods
of care. We then updated the estimated CY 2017 60-day episode costs and
30-day period of care costs by the home health market basket update,
reduced by the productivity adjustment for CYs 2018, 2019, and 2020 to
calculate the 2020 estimated 60-day episode costs and 30-day period of
care costs. As stated in the CY 2020 HH PPS final rule with comment
period (84 FR 60485), we estimated that the CY 2020 30-day payment
amount was approximately 16 percent higher than the average costs for a
30-day period of care. In MedPAC's March 2020 Report to Congress,\6\
their review of home health payment adequacy found that ``access is
more than adequate in most areas and that Medicare payments are
substantially in excess of costs''.
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\6\ <a href="http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch9_sec.pdf?sfvrsn=0">http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch9_sec.pdf?sfvrsn=0</a>.
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In this proposed rule, we examined 2020 HHA Medicare cost reports,
as this is the most recent and complete cost report data at the time of
rulemaking, and CY 2021 home health claims, to estimate 30-day period
of care costs. We excluded LUPAs and PEPs in the average number of
visits. The 2020 average NRS costs per visit is $4.53. To update the
estimated 30-day period of care costs, we begin with the 2020 average
costs per visit with NRS for each discipline and multiply that amount
by the CY 2021 home health payment update percentage of 2.0 percent.
That amount for each discipline is then multiplied by the 2021 average
number of visits by discipline to determine the 2021 Estimated 30-day
Period Costs. Table B5 shows the estimated average costs for 30-day
periods of care by discipline with NRS and the total 30-day period of
care costs with NRS for CY 2021.

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The CY 2021 national, standardized 30-day period payment rate was
$1,901.12, which is approximately 34 percent more than the estimated CY
2021 30-day period average facility cost of $1,420.35. Note that in the
CY 2020 HH PPS final rule with comment period (84 FR 60484), the
average number of visits for a 30-day period of care in 2017 was
estimated to be 10.5 visits for non-LUPA, non-PEP 30-day periods of
care. Using actual CY 2021 claims data, the average number of visits in
a non-LUPA-non-PEP 30-day period of care was 8.81 visits--a decrease of
approximately 16 percent. We recognize that with the COVID-19 public
health emergency (PHE), the 2020 data on the Medicare cost reports may
not reflect the most recent changes such as increased
telecommunications technology costs, increased personal protective
equipment (PPE) costs, and hazard pay. In its March 2022 Report to
Congress, MedPAC assumed a cost growth of 3.47 percent for both CY 2021
and CY 2027.\7\ Furthermore, MedPAC noted that for more than a decade,
payments under the HH PPS have significantly exceeded HHAs' costs
primarily due to two factors. First, agencies have reduced the average
number of visits per episode to reduce episode costs. Second, cost
growth in recent years has been lower than the annual payment updates.
As shown in Table B3 in this proposed rule, HHAs have reduced visits
under the PDGM in CY 2021.
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\7\ <a href="https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch8_SEC.pdf">https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch8_SEC.pdf</a>.
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(3) Clinical Groupings and Comorbidities
Each 30-day period of care is grouped into one of 12 clinical
groups, which describe the primary reason for which a patient is
receiving home health services under the Medicare home health benefit.
The clinical grouping is based on the principal diagnosis reported on
the home health claim. Table B6 shows the distribution of the 12
clinical groups over time.

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Thirty-day periods of care will receive a comorbidity adjustment
category based on the presence of certain secondary diagnoses reported
on home health claims. These diagnoses are based on a home health
specific list of clinically and statistically significant secondary
diagnosis subgroups with similar resource use. We refer readers to
section II.B.4.c. of this proposed rule and the CY 2020 final rule with
comment period (84 FR 60493) for further information on the comorbidity
adjustment categories. Home health 30-day periods of care can receive a
low or a high comorbidity adjustment, or no comorbidity adjustment.
Table B7 shows the distribution of 30-day periods of care by
comorbidity adjustment category for all 30-day periods.
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(4) Admission Source and Timing
Each 30-day period of care is classified into one of two admission
source categories--community or institutional--depending on what
healthcare setting was utilized in the 14 days prior to receiving home
health care. Thirty-day periods of care for beneficiaries with any
inpatient acute care hospitalizations, inpatient psychiatric facility
(IPF) stays, skilled nursing facility (SNF) stays, inpatient
rehabilitation facility (IRF) stays, or long-term care hospital (LTCH)
stays within 14-days prior to a home health admission will be
designated as institutional admissions. The institutional admission
source category will also include patients that had an acute care
hospital stay during a previous 30-day period of care and within 14
days prior to the subsequent, contiguous 30-day period of care and for
which the patient was not discharged from home health and readmitted.
Thirty-day periods of care are classified as ``early'' or ``late''
depending

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on when they occur within a sequence of 30-day periods of care. The
first 30-day period of care is classified as early and all subsequent
30-day periods of care in the sequence (second or later) are classified
as late. A subsequent 30-day period of care would not be considered
early unless there is a gap of more than 60 days between the end of one
previous period of care and the start of another. Information regarding
the timing of a 30-day period of care comes from Medicare home health
claims data and not the OASIS assessment to determine if a 30-day
period of care is ``early'' or ``late''. Table B8 shows the
distribution of 30-day periods of care by admission source and timing.
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(5) Functional Impairment Level
Each 30-day period of care is placed into one of three functional
impairment levels (low, medium, or high) based on responses to certain
OASIS functional items associated with grooming, bathing, dressing,
ambulating, transferring, and risk for hospitalization. The specific
OASIS items that are used for the functional impairment level are found
in Table B7 in the CY 2020 HH PPS final rule with comment period (84 FR
60490). Responses to these OASIS items are grouped together into
response categories with similar resource use and each response
category has associated points. A more detailed description as to how
these response categories were established can be found in the
technical report, ``Overview of the Home Health Groupings Model''
posted on the HHA web page.\8\ The sum of these points results in a
functional impairment score used to group 30-day periods of care into a
functional impairment level with similar resource use. The scores
associated with the functional impairment levels vary by clinical group
to account for differences in resource utilization. A patient's
functional impairment level will remain the same for the first and
second 30-day periods of care unless there is a significant change in
condition that warrants an ``other follow-up'' assessment prior to the
second 30-day period of care. For each 30-day period of care, the
Medicare claims processing system will look for occurrence code 50 on
the claim to correspond to the M0090 date of the applicable assessment.
Table B9 shows the distribution of 30-day periods by functional
impairment level.
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\8\ <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM</a>.
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(6) CY 2023 Discussion and Analysis of GG Items
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185, enacted on October 6, 2014) amended
Title XVIII of the Act to include new data reporting requirements for
certain post-acute care (PAC) providers, such as HHAs. Section
1899B(b)(1)(A) of the Act requires that HHAs report standardized
patient assessment data beginning no later than January 1, 2019. Since
the standardized patient assessment data categories included functional
status, such as mobility and self-care at admission and discharge, in
accordance with section 1899B(b)(1)(B)(i) of the Act, CMS finalized
adding the functional items, Section GG, ``Functional Abilities and
Goals'', to the OASIS data set, effective January 1, 2019, in order to
measure functional status across PAC providers. However, for payment
purposes under the PDGM, CMS did not have the data to determine the
effect, if any, of these newly added items on resource costs during a
home health period of care. Therefore, the GG functional items are not
currently used to determine the functional impairment level under the
PDGM. CMS continues to use the M1800-1860 items to determine functional
impairment level for case-mix purposes. As such, the purpose of the
following analysis is to explore the relationship between the M1800-
1860 items used in the PDGM and the analogous GG items. The analysis of
the M1800 functional items and the analogous GG items shows there was a
small decline in the percentage of individuals who were associated with
the ``most independent'' responses with a large percentage of the
responses using the ``Activity not Attempted'' (ANA) response option.
If the activity was not attempted, there are various codes that explain
the reason for this response, such as ``Not attempted due to medical or
safety concerns,'' and ``Not applicable.''
To conduct this analysis, we reviewed OASIS data from January 1,
2019, to December 31, 2021, that was linked to 30-day home health
periods. Responses for each of the M1800 functional items used in the
PDGM functional scores were compared to the responses of the analogous
GG items. There is a correlation between the current responses to the
M1800-1860 items and the GG items; however, certain information in the
M1800 items is collected at follow--up, but is not collected at follow-
up for the GG items (for example, the M1800 items associated with upper
and lower body dressing are collected at follow up, but the analogous
GG item is not collected at follow-up). Additionally, ongoing analysis
of the GG items shows a significant amount of ANA responses, making it
difficult to map to the corresponding M1800-1860 item responses. Figure
B2 demonstrates the frequencies by response type in CY 2021 of the
OASIS GG items.
BILLING CODE 4120-01-P
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(7) Therapy Visits
Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act
eliminated the use of therapy thresholds in calculating payments for CY
2020 and subsequent years. Prior to implementation of the PDGM, HHAs
could receive an adjustment to payment based on the number of therapy
visits provided during a 60-day episode of care. We examined the
proportion of actual 30-day periods of care with and without therapy
visits. To be covered as skilled therapy, the services must require the
skills of a qualified therapist (that is, physical therapy (PT),
occupational therapy (OT), or speech-language pathology (SLP)) or
qualified therapist assistant and must be reasonable and necessary for
the treatment of the patient's illness or injury.\9\ As shown in Table
B2, we monitor the number of visits per 30-day period of care by each
home health discipline. Any 30-day period of care can include both
therapy and non-therapy visits. If any 30-day period of care consisted
of only visits for PT, OT, and/or SLP, then this 30-day period of care
is considered ``therapy only''. If any 30-day period of care consisted
of only visits for skilled nursing, home health aide, or social worker,
then this 30-day period of care is considered ``no therapy''. If any
30-day period of care consisted of at least one therapy visit and one
non-therapy, then this 30-day period of care is considered ``therapy +
non-therapy''. Table B10 shows the proportion of 30-day periods of care
with only therapy visits, at least one therapy visit and one non-
therapy visit, and no therapy visits. Figure B3 shows the proportion of
30-day periods of care by the number of therapy visits (excluding zero)
provided during 30-day periods of care.
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\9\ Medicare Benefit Policy Manual, Chapter 7 Home Health
Services, Section 40.2 Skilled Therapy Services <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf</a>.
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Both Table B10 and Figure B3, as previously discussed, indicate
there have been changes in the distribution of both therapy and non-
therapy visits in CY 2021 compared to CY 2020. For example, the percent
of 30-day periods with seven or less therapy visits during a 30-day
period increased in CY 2021 compared to CY 2020.
In addition, we also examined the proportion of 30-day periods of
care with and without skilled nursing, social work, or home health aide
visits. Table B11 shows the number of 30-day periods of care with only
skilled nursing visits, at least one skilled nursing visit and one
other visit type (therapy or non-therapy), and no skilled nursing
visits. Table B12 shows the number of 30-day periods of care with and
without home health aide and/or social worker visits.
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BILLING CODE 4120-01-C
We will continue to monitor the provision of home health services,
including any changes in the number and duration of home health visits,
composition of the disciplines providing such services, and overall
home health payments to determine if refinements to the case-mix
adjustment methodology may be needed in the future.
2. Proposed Methodology for Behavioral Assumptions and Adjustments
Under the HH PPS,
a. Background and Comment Solicitation From the CY 2022 HH PPS Proposed
Rule
(1) Background
As discussed in section II.A.1. of this rule, starting in CY 2020,
the Secretary was statutorily required to change the unit of payment
under the HH PPS from a 60-day episode of care to a 30-day period of
care. CMS was also required to make assumptions about behavior changes
that could occur as a result of the implementation of the 30-day unit
of payment and the case-mix adjustment factors that eliminated the use
of therapy thresholds, when calculating the standard prospective
payment amount for CY 2020. In the CY 2019 HH PPS final rule with
comment period (83 FR 56455), we finalized the following three behavior
assumptions:
<bullet<ls-thn-eq> Clinical Group Coding: The clinical group is
determined by the principal diagnosis code for the patient as reported
by the HHA on the home health claim. This behavior assumption assumes
that HHAs will change their documentation and coding practices and put
the highest paying diagnosis code as the principal diagnosis code in
order to have a 30-day period be placed into a higher-paying clinical
group.
<bullet<ls-thn-eq> Comorbidity Coding: The PDGM further adjusts
payments based on patients' secondary diagnoses as reported by the HHA
on the home health claim. The OASIS only allows HHAs to designate 1
principal diagnosis and 5 secondary diagnoses while the home health
claim allows HHAs to designate 1 principal diagnosis and up to 24
secondary diagnoses. This behavior assumption assumes that by
considering additional ICD-10- CM diagnosis codes listed on the home
health claim (beyond the 6 allowed on the OASIS), more 30-day periods
of care will receive a comorbidity adjustment.
<bullet<ls-thn-eq> LUPA Threshold: This behavior assumption assumes
that for one-third of LUPAs that are 1 to 2 visits away from the LUPA
threshold HHAs will provide 1 to 2 extra visits to receive a full 30-
day payment.
As described in the CY 2020 final rule with comment period (84 FR
60512), in order to calculate the CY 2020 budget neutral 30-day payment
amounts both with and without behavior assumptions, we first calculated
the total, aggregate amount of expenditures that would occur under the
pre-PDGM case-mix adjustment methodology (60-day episodes under 153
case-mix groups). We then calculated what the 30-day payment amount
would need to be set at in order for CMS to pay the same total
expenditures in CY 2020 with the application of a 30-day unit of
payment under the PDGM.
We initially determined a negative 8.39 percent behavior change
adjustment to the base payment rate would be needed in order to ensure
that the payment rate in CY 2020 would be budget neutral, as required
by law. However, based on the comments received and reconsideration as
to the frequency of the assumed behaviors during the first year of the
transition to a new unit of payment and case-mix adjustment
methodology, we finalized in the CY 2020 HH PPS final rule with comment
period (84 FR 60519) a negative 4.36 percent behavior change assumption
adjustment (``assumed behaviors'') in order to calculate the 30-day
payment rate in a budget-neutral manner for CY 2020. After applying the
wage index budget neutrality factor and the home health payment update,
the CY 2020 30-day payment rate was set at $1,864.03.
Our data analysis in section II.B.1. of this proposed rule compares
the 2018 simulated 30-day periods with behavior assumptions applied and
actual 30-day periods. Specifically, Tables B4, B6, and B7 indicate
that the three assumed behavior changes did occur as a result of the
implementation of the PDGM. Additionally, this monitoring shows that
other behaviors, such as changes in the provision of therapy and
changes in functional impairment levels also occurred. Overall, the
actual 30-day periods are similar to the simulated 30-day periods,
which is supporting evidence that HHAs did make behavioral changes.
However, we remind readers that by law we are required to ensure 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 payment. Regardless of the magnitude and frequency
of individual behavior change (for example, LUPAs, therapy, etc.), the
occurrence of any behavior change is captured by the methodology to
determine the impact on aggregate expenditures.
We remind readers that in the CY 2020 HH PPS final rule (84 FR
60513), we stated that we interpret actual behavior changes to
encompass both behavior changes that were previously outlined as
assumed by CMS, and other behavior changes not identified at the

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time the budget-neutral 30-day payment rate for CY 2020 was
established. Subsequently, our analysis resulted in the identification
of other behavior changes that occurred after the implementation of the
PDGM. For example, Table B10 and Figure B3 in section II.B.1. of this
proposed rule indicates the number of therapy visits declined in CYs
2020 and 2021. However, the data, as depicted in Figure B3, also
indicates a slight decline in therapy visits began in CY 2019 after the
finalization of the removal of therapy thresholds, but prior to
implementation of the PDGM. This suggests HHAs were already beginning
to decrease their therapy provision. Although not originally one of the
three finalized behavior assumptions, the decline in therapy
utilization is indicative of an additional behavior change.
Each Health Insurance Prospective Payment System (HIPPS) code is
assigned a case-mix weight and the case-mix weight determines the base
payment of non-LUPA claims prior to any other adjustments (for example
outlier). Prior to the PDGM, the first position of the HIPPS code was a
numeric value that represented the interaction of episode timing and
number of therapy visits (grouping step). The second, third, and fourth
positions of the pre-PDGM HIPPS code reflected clinical severity,
functional severity, and service utilization respectively. Therefore,
to evaluate how the decrease in therapy visits related to payments, we
compared the average case mix weights of CY 2018 actual 60-day episodes
and CY 2021 simulated 60-day episodes. Prior to the PDGM, the average
case-mix weight for CY 2018 60-day episodes was 1.0176. When we set
therapy levels at the pre-PDGM (that is, CY 2018) level and kept the
clinical and functional levels at the PDGM levels (that is, CY 2021)
the average case-mix weight was 1.0389. After the PDGM, the average
case-mix weight for CY 2021 simulated 60-day episodes was 0.9664. When
we kept therapy levels at the PDGM (that is, CY 2021) level and set the
clinical and functional levels at the pre-PDGM levels (that is, CY
2018) the average case-mix weight was 0.9361. By controlling for
therapy levels, we were able to determine the change in 60-day episode
case-mix weights were largely driven by therapy utilization. The
decrease in therapy visits led to a decrease in case-mix weight, and
therefore a decrease in aggregate expenditures under the pre-PDGM HH
PPS.
(2) Summary of Comment Solicitation From the CY 2022 Proposed Rule
As required by section 1895(b)(3)(D)(i) of the Act, CMS must
annually determine the impact of differences between assumed 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) and (iii) of the Act requires that CMS make permanent
and temporary adjustments to the payment rate to offset for such
increases or decreases in estimated aggregate expenditures through
notice and comment rulemaking. Therefore, to evaluate the impact of
assumed versus actual behavior changes for CYs 2020 through 2026, we
developed a methodology that uses actual claims data for 30-day periods
under the 432-group case-mix model (PDGM claims) to simulate 60-day
episodes under the 153-group case-mix model (representing pre-PDGM HH
PPS claims) in order to estimate what aggregate expenditures would have
been in the absence of the PDGM. This methodology mirrors the initial
approach used to calculate the CY 2020 30-day period payment amount for
the PDGM, where we used a single year of claims data (that is, CY 2018
claims data for 60-day episodes of care under the 153-group case-mix
model) and simulated payments for 30-day periods of care with the
application of the PDGM case-mix adjustment methodology. We then
compared actual aggregate expenditures under the existing system (that
is, 60-day episodes of care under the 153-group case-mix model) to
simulated payments under the PDGM for 30-day periods of care with
assumed behavior changes, and used the difference between the two
amounts to construct the budget neutrality factor. We described this
methodology in the CY 2022 HH PPS proposed rule (86 FR 35889 through
35892). For determining the impact of the difference between assumed
and actual behavior changes on overall expenditures for CY 2020 and CY
2021, we analyzed a single year of claims data (for example, CY 2020
claims data for 30-day periods of care under the 432-group PDGM case-
mix model) and simulated payments for 60-day episodes of care under the
153-group case-mix model. We then compared the actual aggregate
expenditures under the PDGM to what aggregate expenditures would have
been pre-PDGM.
In the CY 2022 HH PPS proposed rule (86 FR 35892), we solicited
comments on this approach (86 FR 35892). Commenters raised concerns
about this methodology, most notably about the elimination of therapy
thresholds, the onset of the COVID-19 PHE, interpretation of section
1895(b)(3)(D)(i) of the Act, the differing case-mix weight systems (153
vs 432 case-mix groups), and inappropriate data exclusions and
assumptions when creating the simulated 60-day episodes.
Commenters stated that there has been a large decrease in therapy
utilization since the implementation of the PDGM. Commenters stated
several possible reasons for the decrease in therapy utilization,
including that the PDGM resulted in significant differences in payment
incentives. Specifically, commenters noted that HHAs could have
received higher payments if certain therapy volume thresholds were met
pre-PDGM; whereas that incentive no longer exists under the PDGM.
Therefore, many commenters indicated the estimated aggregate
expenditures calculated with simulated 60-day episodes (pre PDGM) is
inaccurate because it does not control for the payment incentives which
would have been present under the old system. However, we stated in the
CY 2019 HH PPS final rule with comment period (83 FR 56481), that the
PDGM is not limiting or prohibiting the provision of therapy services
or the number of home health periods of care. In addition, we believe
that regardless of the case-mix system in place, HHAs should continue
to provide the most appropriate care to Medicare home health
beneficiaries, in accordance with the home health CoP requirements at
Sec. 484.60.
While overall utilization may have decreased in the early months of
CY 2020 due to the onset of the COVID-19 PHE, the methodology described
in the CY 2022 HH PPS proposed rule used the same claims dataset (for
example, CY 2020) to compare aggregate expenditures under the two
payment systems. Any effect of the COVID-19 PHE is included in the
estimated aggregate expenditures for both simulated 60-day episodes and
actual 30-day periods, and therefore this methodology ensures that any
differences between the two calculated amounts is not attributable to
the COVID-19 PHE. In other words, any potential changes due to the
COVID-19 PHE (for example, decreased utilization) in the 30-day periods
would also be present in the simulated 60-day episodes, making the two
datasets comparable.
However, we recognize that the COVID-19 PHE presented unique
challenges for all healthcare settings, including HHAs. For example, we
understand elective procedures were

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cancelled or postponed and some beneficiaries decreased the care in
their home, including potentially both the number of care providers
furnishing services inside their homes and the frequency of services to
avoid exposure to COVID-19. While we believe the proposed methodology
presented best controls for the effects of the COVID-19 PHE, we are
soliciting comments on how the COVID-19 PHE may have impacted service
provision in a manner not reflected in the proposed methodology
described above. We expect that such comments will include empirical
evidence to support the commenter's position on how the COVID-19 PHE
affected provider behavior.
Commenters stated that the statute requires CMS to analyze solely
the differences between the three assumed behavior changes (clinical
group coding, comorbidity coding, LUPA threshold) that were
incorporated into the original CY 2020 rate setting and what the actual
behavior change was for just those three assumptions. Commenters stated
that any adjustments to the 30-day payment amount must be related to
the impact of those three assumed behavior changes and the actual
behavior changes for those same three assumptions on estimated
aggregate expenditures; rather than other behavior changes that
occurred that impacted aggregate expenditures. As such, commenters
presented an alternative method that compares aggregate expenditures
between the CY 2018 simulated 30-day periods with the three behavior
assumptions applied to the CY 2020 actual 30-day periods. As we have
stated previously in the CY 2020 HH PPS final rule with comment period
and in the CY 2022 HH PPS final rule (84 FR 60513, 86 FR 62248), 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. We use claims data to
calculate estimated aggregate expenditures under the HH PPS, regardless
of methodology. All claims data are products of behavior changes,
(whether or not acknowledged in previous rules), as well as
interactions between behaviors. Therefore, any behavior changes
observed under the PDGM are considered when determining an adjustment.
A few commenters also proposed determining the extent to which
nominal case-mix changes affected aggregate expenditures under the PDGM
versus the old payment system as an alternative methodology to evaluate
the behavior change assumptions. In order to evaluate case-mix changes,
CMS previously utilized a regression model that estimated whether
changes in case-mix were due to changes in agency coding practices or
other nominal factors, versus real changes in patient characteristics
or acuity. While changes in nominal case-mix may be supplemental to our
findings, the law requires CMS to determine the effect of the
difference between assumed versus actual behavioral changes on
estimated aggregate expenditures, which are not factored into our
calculations of case-mix adjustment authority. Section
1895(b)(3)(B)(iv) of the Act states that CMS has the authority to
adjust for case-mix changes that are a result of changes in the coding
or classification of different units of services that do not reflect
real changes in case mix. Therefore, at this time we do not believe
analyses of nominal case-mix change is the most accurate method to
evaluate what aggregate expenditures would have been in absence of the
PDGM. Upon continued review of what the law requires us to do in
regards to determining the difference between assumed versus actual
behaviors on estimated aggregate expenditures, we continue to believe
that the best reading of the law requires us to retrospectively
determine if the 30-day payment amount in CY 2020 resulted in the same
estimated aggregate expenditures that would have been made if the
change in the unit of payment and the PDGM case-mix adjustment
methodology had not been implemented.
Furthermore, if the estimated aggregate expenditures are determined
not to be equal, we are required, by law, to make permanent and
temporary adjustments to the PDGM payment rate so that the expenditures
across the two payments systems would be equal. We believe using the
methodology described previously in the CY 2022 HH PPS proposed rule
(85 FR 35890 through 35892 and in this proposed rule, best satisfies
our interpretation of section 1895(b)(3)(D)(i) of the Act.
Lastly, commenters raised concerns about the differing case-mix
weight systems and that the data exclusions and assumptions made when
creating the simulated 60-day episodes introduced some level of bias.
Commenters stated that each case-mix system are unique to each payment
system as they are dependent on the underlying variables used to
describe clinical characteristics or resource use. For this reason,
commenters had concerns that the two case-mix weight systems (153 vs
432 case-mix groups) are not comparable. We recognize that the
underlying variables in the payment regression are different, but a
case-mix of 1.0 is interpreted the same way under both systems. For
example, a case-mix of 1.000 means the predicted resource use for a
particular home health 60-day episode or 30-day period is equal to
overall average resource use. Therefore, we disagree with commenters
that comparing the two case-mix systems is flawed. We note there may be
some selection bias present due to the data exclusions and assumptions
described in section II.B.2.b. of this proposed rule, but we believe
this is minimal and does not significantly affect the overall
calculation of estimated aggregate expenditures. For example, when we
dropped fewer claims we got approximately the same results. Therefore,
if we did not exclude claims (for example, there was no linked OASIS
data available in the CCW VRDC) or make assumptions about which two 30-
day periods to combine, we would further introduce informational and
analytical bias.
We reiterate that this methodology uses simulated 60-day episodes
priced using the pre-PDGM payment system parameters to determine what
the estimated aggregate expenditures would have been in the absence of
the PDGM and a 30-day unit of payment. The resulting estimated
aggregate expenditures from the pre-PDGM payment system are compared to
actual aggregate expenditures from the PDGM 30-day periods to
determine, if a permanent prospective adjustment and/or a temporary
retrospective adjustment are needed to offset the difference in
estimated aggregate expenditures. We propose to use this methodology,
as described in this section of this rule, for CYs 2020 through 2026.
We refer readers to sections II.B.2.d and II.B.2.e of this proposed
rule for our preliminary results of our analysis for CYs 2020 and 2021,
respectively.
b. Proposed Method To Annually Determine the Impact of Differences
Between Assumed Behavior Changes and Actual Behavior Changes on
Estimated Aggregate Expenditures
We analyzed data to determine if the CY 2020 30-day payment amount
resulted in the same estimated aggregate expenditures that would have
been paid if the PDGM and change in the unit of payment had not been
implemented. To evaluate if the 30-day budget neutral payment amount
for CY 2020 maintained budget neutrality given the change to a 30-day
unit of payment and the implementation of a new case-mix adjustment
methodology without

[[Page 37617]]

therapy thresholds was accurate, we used actual CY 2020 30-day period
claims data to simulate 60-day episodes, and we determined what CY 2020
payments would have been under the 153-group case-mix system and 60-day
unit of payment. To do this, we used the following steps:
The first step in repricing CY 2020 PDGM claims was to calculate
estimated aggregate expenditures under the pre-PDGM, 153-group case-mix
system and 60-day unit of payment, by determining which PDGM 30-day
periods of care could be grouped together to form simulated 60-day
episodes of care. To facilitate grouping, we made some exclusions and
assumptions as described later in this section prior to pricing out the
simulated 60-day episodes of care. We note in the early months of CY
2020, there were 60-day episodes which started in 2019 and ended in
2020 and therefore, some of these exclusions and assumptions may be
specific to the first year of the PDGM. We identify, through footnotes,
if an exclusion or assumption is specific to CY 2020 only. The
following describes the steps in determining the annual estimated
aggregate expenditures including the exclusions and assumptions made
when simulating 60-day episodes from actual 30-day periods.
(1) Exclusions
<bullet> Claims where the claim occurrence code 50 date (OASIS
assessment date) occurred on or after October 31 of that year. This
exclusion was applied to ensure the simulated 60-day episodes contained
both 30-day periods from the same year and would not overlap into the
following year (for example, 2021, 2022, 2023). This is done because
any 30-day periods with an OASIS assessment date in November or
December might be part of a simulated 60-day episode that would
continue into the following year and where payment would have been made
based on the ``through'' date. For CYs 2021 through 2026, we also
excluded claims with an OASIS assessment date before January 1 of that
year. \10\ Again, this is to ensure a simulated 60-day episode
(simulated from two 30-day periods) does not overlap years.
---------------------------------------------------------------------------

\10\ There are no 30-day PDGM claims which started in CY 2019
and ended in CY 2020, and therefore this exclusion would not apply
to the CY 2020 dataset.
---------------------------------------------------------------------------

<bullet> Beneficiaries and all of their claims if they have
overlapping claims from the same provider (as identified by CMS
Certification Number (CCN)).\11\
---------------------------------------------------------------------------

\11\ All of a beneficiary's claims are dropped so as not to
create problems with assigning episode timing if only a subset of
claims is dropped.
---------------------------------------------------------------------------

<bullet> Beneficiaries and all of their claims if three or more
claims from the same provider are linked to the same occurrence code 50
date.\12\
---------------------------------------------------------------------------

\12\ This is done because if three or more claims link to the
same OASIS it would not be clear which claims should be joined to
simulate a 60-day episode.
---------------------------------------------------------------------------

(2) Assumptions
<bullet> If two 30-day periods of care from the same provider
reference the same OASIS assessment date (using occurrence code 50),
then we assume those two 30-day periods of care would have been billed
as a 60-day episode of care under the 153-group system.
<bullet> If two 30 day-periods of care reference different OASIS
assessment dates and each of those assessment dates is referenced by a
single 30-day period of care, and those two 30-day periods of care
occur together close in time (that is, the ``from'' date of the later
30-day period of care is between 0 to 14 days after the ``through''
date of the earlier 30-day period of care), then we assume those two
30-day periods of care also would have been billed as a 60-day episode
of care under the 153-group system.
<bullet> For all other 30-day periods of care, we assume that they
would not be combined with another 30-day period of care and would have
been billed as a single 30-day period.
(3) Calculating Estimated Aggregate Expenditures--Pricing Simulated 60-
Day Episode Claims
After application of the exclusions and assumptions described
previously we have the simulated the 60-day episode datasets for each
year. Starting with CY 2020, we assign each 60-day episode of care as a
normal episode, PEP, LUPA, or outlier based on the payment parameters
established in the CY 2020 final rule with comment period (84 FR 60478)
for 60-day episodes of care. Next, using the October 2019 3M Home
Health Grouper (v8219) \13\ we assign a HIPPS code to each simulated
60-day episode of care using the 153-group methodology. Finally, we
price the CY 2020 simulated 60-day episodes of care using the payment
parameters described in the CY 2020 final rule with comment period (84
FR 60537) for 60-day episodes of care. For CYs 2021 through 2026, we
would adjust the simulated 60-day base payment rate to align with
current payments for the analysis year (that is, wage index budget
neutrality factor, HH payment update). For example, to calculate the CY
2021 simulated 60-day episode base payment rate, we would start with
the final CY 2020 60-day base payment rate ($3,220.79) and multiply by
the final CY 2021 wage index budget neutrality factor (0.9999) and the
CY 2021 HH payment update (1.020) to get an adjusted 60-day base
payment rate ($3,284.88) for CY 2021. We would use the 60-day base
payment rate ($3,284.88) to price the CY 2021 simulated 60-day claims
under the pre-PDGM HH PPS (60-day episodes under 153 case-mix groups)
based on actual behaviors. Once each claim is priced under the pre-PDGM
HH PPS, we calculate the estimated aggregate expenditures for all
simulated 60-day episodes in CY 2021. This method would be used to
reprice claims to simulated 60-day episodes for each subsequent year
(that is, through CY 2026).
---------------------------------------------------------------------------

\13\ <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/CaseMixGrouperSoftware">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/CaseMixGrouperSoftware</a>.
---------------------------------------------------------------------------

Next, we calculated the PDGM aggregate expenditures for CY 2020
using those specific 30-day periods that were used to create the
simulated 60-day episodes. Therefore, both the actual CY 2020 PDGM
expenditures and the simulated pre-PDGM CY 2020 aggregate expenditures
are based on the same claims for the permanent adjustment calculation.
c. Calculating Permanent and Temporary Payment Adjustments
To offset for such increases or decreases in estimated aggregate
expenditures as a result of the impact of differences between assumed
behavior changes and actual behavior changes, in any given year, we
calculate a permanent prospective adjustment by determining what the 30
day base payment amount should have been in order to achieve the same
estimated aggregate expenditures as obtained from the simulated 60-day
episodes. This would be our recalculated base payment rate. The percent
change between the actual 30-day base payment rate and the recalculated
30-day base payment rate would be the permanent prospective adjustment.
To calculate a temporary retrospective adjustment for each year we
would determine the dollar amount difference between the estimated
aggregate expenditures from all 30-day periods using the recalculated
30-day base payment rate, and the aggregate expenditures for all 30-day
periods using the actual 30-day base payment rate for the same year. In
determining the temporary retrospective dollar

[[Page 37618]]

amount, we use the full dataset of actual 30-day periods using both the
actual and recalculated base payment rates to ensure utilization and
distribution of claims are the same. In accordance with section
1895(b)(3)(D)(iii) of the Act, the temporary adjustment is to be
applied on a prospective basis and shall apply only with respect to the
year for which such temporary increase or decrease is made. Therefore,
after we determine the dollar amount to be reconciled in any given
year, we calculate a temporary adjustment factor to be applied to the
base payment rate. The temporary adjustment factor is based on an
estimated number of 30-day periods in the next year using historical
data trends, and as applicable, we control for a permanent adjustment
factor, case-mix weight recalibration neutrality factor, wage index
budget neutrality factor, and the home health payment update. The
temporary adjustment factor is applied last.
d. CY 2020 Results
Using the methodology described previously, we simulated 60-day
episodes using actual CY 2020 30-day periods to determine what the CY
2020 permanent and temporary payment adjustments should be to offset
for such increases or decreases in estimated aggregate expenditures.
For CY 2020, we began with 8,423,688 30-day periods and dropped 603,157
30-day periods that had a claim occurrence code 50 date after October
31, 2020. We also eliminated 79,328 30-day periods that didn't appear
to group with another 30-day period to form a 60-day episode if the 30-
day period had a ``from date'' before January 15, 2020 or a ``through
date'' after November 30, 2020. This was done to ensure a 30-day period
would not have been part of a 60-day episode that would have overlapped
into CY 2021. Applying the additional exclusions and assumptions as
described previously, an additional 14,062 30-day periods were excluded
from this analysis. Additionally, we excluded 66,469 simulated 60-day
episodes of care where no OASIS information was available in the CCW
VRDC or could not be grouped to a HIPPS due to a missing primary
diagnosis or other reason. Our simulated 60-day episodes of care
produced a distribution of two 30-day periods of care (70.6 percent)
and single 30-day periods of care (29.4 percent). This distribution is
similar to what we found when we simulated 30-day periods of care for
implementation of the PDGM. After all exclusions and assumptions were
applied, the final dataset included 7,618,061 actual 30-day periods of
care and 4,463,549 simulated 60-day episodes of care for CY 2020.
Using the final dataset for CY 2020 (7,618,061 actual 30-day
periods which made up the 4,463,549 simulated 60-day episodes) we
determined the estimated aggregate expenditures under the pre-PDGM HH
PPS was lower than the actual estimated aggregate expenditures under
the PDGM HH PPS (see Table B13). This indicates that aggregate
expenditures under the PDGM were higher than if the 153-group payment
system was still in place in CY 2020. As described previously, we
recalculated what the CY 2020 30-day base payment rate should have been
to equal aggregate expenditures that we calculated using the simulated
CY 2020 60-day episodes. The percent change between the two payment
rates would be the permanent adjustment. Next, we calculated the
difference in aggregate expenditures for all CY 2020 PDGM 30-day claims
using the actual and recalculated payment rates. This difference is the
retrospective dollar amount needed to offset payment. Our results are
shown in Table B13.
[GRAPHIC] [TIFF OMITTED] TP23JN22.016

As shown in Table B13, a permanent prospective adjustment of -6.52
percent to the CY 2023 30-day payment rate would be required to offset
for such increases in estimated aggregate expenditures in future years.
Additionally, we determined that our initial estimate of base payment
rates required to achieve budget neutrality resulted in excess
expenditures of HHAs of approximately $873 million in CY 2020. This
would require a temporary adjustment to offset for such increase in
estimated aggregate expenditures for CY 2020.
e. CY 2021 Preliminary Results
We will continue the practice of using the most recent complete
home health claims data at the time of rulemaking. The CY 2021 analysis
presented in this proposed rule is considered preliminary and as more
data become available from the latter half of CY 2021, we will update
our results in the final rule. Using the methodology described
previously, we simulated 60-day episodes using actual CY 2021 30-day
periods to determine what the permanent and temporary payment
adjustments should be to offset for such increases or decreases in
estimated aggregate expenditures as a result of the impact of
differences between assumed behavior changes and actual behavior
changes. For CY 2021, we began with 8,962,690 30-day periods of care
and dropped 478,105 30-day periods of care that had claim occurrence
code 50 date after October 31, 2021. We also excluded 968,361 30-day
periods of care that had claim occurrence code 50 date before January
1, 2021 to ensure the 30-day period would not be part of a simulated
60-day episode that began in

[[Page 37619]]

CY 2020. Applying the additional exclusions and assumptions as
described previously, an additional 4,853 30-day periods were excluded.
Additionally, we excluded 11,143 simulated 60-day episodes of care
where no OASIS information was available in the CCW VRDC or could not
be grouped to a HIPPS due to a missing primary diagnosis or other
reason. Our simulated 60-day episodes of care produced a distribution
of two 30-day periods of care (69.1 percent) and single 30-day periods
of care (30.9 percent) that was similar to what we found when we
simulated two 30-day periods of care for implementation of the PDGM.
After all exclusions and assumptions were applied, the final dataset
included 7,494,836 actual 30-day periods of care and 4,431,238
simulated 60-day episodes of care for CY 2021.
Using the final dataset for CY 2021 (7,494,836 actual 30-day
periods which made up the 4,431,238 simulated 60-day episodes) we
determined the estimated aggregate expenditures under the pre-PDGM HH
PPS was lower than the actual estimated aggregate expenditures under
the PDGM HH PPS. This indicates that aggregate expenditures under the
PDGM were higher than if the 153-group payment system was still in
place in CY 2021. As described previously, we recalculated what the CY
2021 30-day base payment rate should have been to equal aggregate
expenditures that we calculated using the simulated CY 2021 60-day
episodes. We note, the actual CY 2021 base payment rate of $1,901.12
does not account for any adjustments previously made for CY 2020 and
therefore to evaluate changes for only CY 2021 we need to control for
the -6.52 percent prospective adjustment that we determined for CY
2020. Therefore, using the recalculated CY 2020 base payment rate of
$1,742.52, multiplied by the CY 2021 wage index budget neutrality
factor (0.9999) and the CY 2021 HH payment update (1.020), the CY 2021
base payment rate for assumed behavior would have been $1,777.19. The
percent change between the two payment rates would be the permanent
adjustment. Next, we calculated the difference in aggregate
expenditures for all CY 2021 PDGM 30-day claims using the actual and
recalculated payment rates. This difference is the retrospective dollar
amount needed to offset payment. Our results are shown in Table B14.
[GRAPHIC] [TIFF OMITTED] TP23JN22.017

As shown in Table B14, a permanent prospective adjustment of -1.26
percent and would be required to offset for such increases in estimated
aggregate expenditures in future years. Additionally, we determined
that our initial estimate of base payment rates required to achieve
budget neutrality resulted in excess expenditures of approximately $1.1
billion in CY 2021. This would require a one-time temporary adjustment
factor to offset for such increases in estimated aggregate expenditures
for CY 2021.
f. Proposed CY 2023 Permanent and Temporary Adjustments
The percent change between the actual CY 2021 base payment rate of
$1,901.12 and the CY 2021 recalculated base payment rate of $1,754.88
is the total permanent adjustment for CYs 2020 and 2021, because no
previous adjustments were applied to the CY 2020 rate to reset the CY
2021 rate. The summation of the dollar amount for CYs 2020 and 2021 is
the amount that represents the temporary payment adjustment to offset
for increased aggregate expenditures in both CYs 2020 and 2021. Our
results are shown in Table B15 and B16.

[[Page 37620]]

[GRAPHIC] [TIFF OMITTED] TP23JN22.018

[GRAPHIC] [TIFF OMITTED] TP23JN22.019

To offset the increase in estimated aggregate expenditures for CYs
2020 and 2021 based on the impact of the differences between assumed
and actual behavior changes, CMS would need to apply a -7.69 percent
permanent adjustment to the CY 2023 base payment rate as well as
implement a temporary adjustment of approximately $2.0 billion to
reconcile retrospective overpayments in CYs 2020 and 2021. We recognize
that applying the full permanent and temporary adjustment immediately
would result in a significant negative adjustment in a single year.
However, if the PDGM base 30-day payment rate remains higher than it
should be, then there would likely be a compounding effect potentially
creating the need for a larger reduction in future years. Therefore, we
propose initially to apply only the permanent adjustment of -7.69
percent to the CY 2023 base payment rate. We believe this could
mitigate the need for a larger permanent adjustment and could reduce
the amount of any additional temporary adjustments in future years. We
are soliciting comments on the application of only the permanent
payment adjustment to the CY 2023 30-day payment rate. Additionally, we
solicit comments on how best to collect the temporary payment
adjustment of approximately $2.0 billion for CYs 2020 and 2021. As
noted previously, we will update these permanent and temporary
adjustments in the final rule to reflect more complete claims data for
CY 2021.
3. Proposed Reassignment of Specific ICD-10-CM Codes Under the PDGM
a. Background
The 2009 final rule, ``HIPAA Administrative Simplification:
Modifications to Medical Data Code Set Standards To Adopt ICD-10-CM and
ICD-10-PCS'' \14\ (74 FR 3328, January 16, 2009), set October 1, 2013,
as the compliance date for all covered entities under the Health
Insurance Portability and Accountability Act of 1996 (HIPAA) to use the
International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) and the International Classification of
Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) medical
data code sets. The ICD-10-CM diagnosis codes are granular and
specific, and provide HHAs a better opportunity to report codes that
best reflect the patient's conditions that support the need for home
health services. However, as stated in the CY 2019 HH PPS final rule
with comment period (83 FR 56473), because the ICD-10-CM is
comprehensive, it also contains many codes that may not support the
need for home health services. For example, diagnosis codes that
indicate death as the outcome are Medicare covered codes, but are not
relevant to home health. In addition, diagnosis and procedure coding
guidelines may specify the sequence of ICD-10-CM coding conventions.
For example, the underlying condition must be listed first (for
example, Parkinson's disease must be listed prior to Dementia if both
codes were listed on a claim). Therefore, not all the ICD-10-CM
diagnosis codes are appropriate as principal diagnosis codes for
grouping home health periods into clinical groups or to be placed into
a comorbidity subgroup when listed as a secondary diagnosis. As such,
each ICD-10-CM diagnosis code is assigned, including those diagnosis
codes designated as ``not assigned'' (NA), to a clinical group and
comorbidity subgroup within the HH PPS grouper software (HHGS). We
remind commenters the ICD-10-CM diagnosis code list is updated each
fiscal year with an effective date of October 1st and therefore, the HH
PPS is generally subject to a minimum of two HHGS releases, one in
October and one in January of each year, to ensure that claims are
submitted with the most current code set available. Likewise, there may
be new ICD-10-CM diagnosis codes created (for example, codes for
emergency use) or a new or revised edit in the Medicare Code Editor
(MCE) so an update to the HHGS may occur on the first of each quarter
(January, April, July, October).
---------------------------------------------------------------------------

\14\ <a href="https://www.federalregister.gov/documents/2009/01/16/E9-743/hipaa-administrative-simplification-modifications-to-medical-data-code-set-standards-to-adopt">https://www.federalregister.gov/documents/2009/01/16/E9-743/hipaa-administrative-simplification-modifications-to-medical-data-code-set-standards-to-adopt</a>.
---------------------------------------------------------------------------

b. Methodology for ICD-10-CM Diagnosis Code Assignments
Although it is not our intent to review all ICD-10-CM diagnosis
codes each year, we recognize that occasionally some ICD-10-CM
diagnosis codes may require changes to their assigned clinical group
and/or comorbidity subgroup. For example, there may be an update to the
MCE unacceptable principal diagnosis list, or we receive public
comments from interested parties requesting specific changes. Any
addition or removal of a specific diagnosis code to the ICD-10-CM code
set (for example, three new diagnosis codes, Z28.310, Z28.311 and
Z28.39, for

[[Page 37621]]

reporting COVID-19 vaccination status were effective April 1, 2022) or
minor tweaks to a descriptor of an existing ICD-10-CM diagnosis code
generally would not require rulemaking, and may occur at any time.
However, if an ICD-10-CM diagnosis code is to be reassigned from one
clinical group and/or a comorbidity subgroup to another, which may
affect payment, then we believe it is appropriate to propose these
changes through notice and comment rulemaking.
We rely on the expert opinion of our clinical reviewers (for
example, nurse consultants and medical officers) and current ICD-10-CM
coding guidelines to determine if the ICD-10-CM diagnosis codes under
review for reassignment are significantly similar or different to the
existing clinical group and/or comorbidity subgroup assignment. As we
stated in the CY 2018 proposed rule (82 FR 35313), the intent of the
clinical groups is to reflect the reported principal diagnosis,
clinical relevance, and coding guidelines and conventions. Therefore,
for the purposes of assignment of ICD-10-CM diagnosis codes into the
PDGM clinical groups we would not conduct additional statistical
analysis as such decisions are clinically based and the clinical groups
are part of the overall case-mix weights.
In the CY 2019 final rule with comment period (83 FR 56486), we
stated the home health-specific comorbidity list is based on the
principles of patient assessment by body systems and their associated
diseases, conditions, and injuries to develop larger categories of
conditions that identified clinically relevant relationships associated
with increased resource use meaning the diagnoses have at least as high
as the median resource use and are reported in more than 0.1 percent of
30-day periods of care. If specific ICD-10-CM diagnosis codes are to be
reassigned to a different comorbidity subgroup (including NA), we will
first evaluate the clinical characteristics (as discussed previously
for clinical groups) and if the ICD-10-CM diagnosis code does not meet
the clinical criteria, then no reassignment will occur. However, if an
ICD-10-CM diagnosis code does meet the clinical criteria for a
comorbidity subgroup reassignment, then we will evaluate the resource
consumption associated with the ICD-10-CM diagnosis codes, the current
assigned comorbidity subgroup, and the proposed (reassigned)
comorbidity subgroup. This analysis is to ensure that any reassignment
of an ICD-10-CM diagnosis code (if reported as secondary) in any given
year would not significantly alter the overall resource use of a
specific comorbidity subgroup. For resource consumption, we use non-
LUPA 30-day periods to evaluate the total number of 30-day periods for
the comorbidity subgroup(s) and the ICD-10-CM diagnosis code, the
average number of visits per 30-day periods for the comorbidity
subgroup(s) and the ICD-10-CM diagnosis code, and the average resource
use for the comorbidity subgroup(s) and the ICD-10-CM diagnosis code.
The average resource use measures the costs associated with visits
performed during a home health period, and was previously described in
the CY 2019 final rule with comment period (83 FR 56450).
c. Proposed ICD-10-CM Diagnosis Code Reassignments to a PDGM Clinical
Group or Comorbidity Subgroup
The following section proposes reassignment of 320 diagnosis codes
to a different clinical group when listed as a principal diagnosis,
reassignment of 37 diagnosis codes to a different comorbidity subgroup
when listed as a secondary diagnosis, and the establishment of a new
comorbidity subgroup for certain neurological conditions and disorders.
Due to the amount of diagnosis codes proposed for reassignment this
year, we have posted the ``CY 2023 Proposed Reassignment of ICD-10-CM
Diagnosis Codes for HH PDGM Clinical Groups and Comorbidity Subgroups''
supplemental file on the Home Health Prospective Payment System
Regulations and Notices web page.\15\ The supplemental file can be
accessed through the CY 2023 Home Health Prospective Payment System
Rate Update; Home Health Quality Reporting Requirements; and Home
Infusion Therapy Requirements link. The following tables are included
in the supplemental file:
---------------------------------------------------------------------------

\15\ Home Health Prospective Payment System Regulations and
Notices web page. <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>.
[GRAPHIC] [TIFF OMITTED] TP23JN22.020

(1) Proposed Clinical Group Reassignment of Certain Unspecified
Diagnosis Codes
We remind readers that in the CY 2019 final rule with comment
period (83 FR 56473) we stated that whenever possible, the most
specific code that describes a medical disease, condition, or injury
should be used. Generally, ``unspecified'' codes are used when there is
lack of information about location or severity of medical conditions in
the medical record. However, we would expect a provider to use a
precise code whenever more specific codes are available. Furthermore,
if additional information regarding the diagnosis is needed, we would
expect the HHA to follow-up with the referring provider in order to
ensure the care plan is sufficient in

[[Page 37622]]

meeting the needs of the patient. For example, T14.90 ``Injury,
unspecified'' does not provide sufficient information (for example, the
type and extent of the injury) that would be necessary in care planning
for home health services. The ICD-10-CM code set also includes
laterality. We believe a home health clinician should not report an
``unspecified'' code if that clinician can identify the side or site of
a condition. For example, a home health clinician should be able to
state whether a fracture of the arm is on the right or left arm. In the
FY 2022 Inpatient Prospective Payment System/Long-Term Care Hospital
Prospective Payment System (IPPS/LTCH PPS) final rule (86 FR 44940
through 44943), CMS finalized the implementation of a new MCE to expand
the list of unacceptable principal diagnoses for ``unspecified'' ICD-
10-CM diagnosis codes when there are other diagnosis codes available in
that diagnosis code subcategory that further specify the anatomic site.
As such, we reviewed the ICD-10-CM diagnosis codes where
``unspecified'' is used. We identified 159 ICD-10-CM diagnosis codes
currently accepted as a principal diagnosis that have more specific
codes available for such medical conditions that would more accurately
identify the primary reason for home health services. For example,
S59.109A (Unspecified physeal fracture of upper end of radius,
unspecified arm, initial encounter for closed fracture) does not
specify which arm has the fracture; whereas, S59.101A (Unspecified
physeal fracture of upper end of radius, right arm, initial encounter
for closed fracture) does indicate the fracture is on the right arm and
therefore more accurately identifies the primary reason for home health
services. Therefore, in accordance with our expectation that the most
precise code be used, we believe these 159 ICD-10 CM diagnosis codes
are not acceptable as principal diagnoses and we propose to reassign
them to ``no clinical group'' (NA). We refer readers to Table 1.A of
the CY 2023 Proposed Reassignment of ICD-10-CM Diagnosis Codes
supplemental file \16\ for the list of the 159 unspecified diagnosis
codes.
---------------------------------------------------------------------------

\16\ Home Health Prospective Payment System Regulations and
Notices web page. <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>.
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We also determined that B78.9 strongyloidiasis, unspecified was
assigned to clinical group C (Wounds), and should be reassigned to
clinical group K (MMTA--Infectious Disease, Neoplasms, and Blood-
Forming Diseases) because it would be consistent with the assignment of
the other strongyloidiasis codes. We also identified that N83.201
unspecified ovarian cyst, right side was assigned to clinical group A
(MMTA-Other) and should be reassigned to clinical group J (MMTA--
Gastrointestinal Tract and Genitourinary System) because it would be
consistent with the assignment of other ovarian cyst codes. We propose
to reassign these two ICD-10-CM diagnosis codes' clinical groups as
shown in Table B17.
[GRAPHIC] [TIFF OMITTED] TP23JN22.021

(2) Proposed Clinical Group Reassignment of Gout-Related Codes
We identified that certain groups of gout-related ICD-10-CM
diagnosis codes, such as idiopathic gout and drug-induced gout, were
assigned to clinical group E (musculoskeletal rehabilitation) when
listed as a principal diagnosis. However, other groups of gout related
ICD-10-CM diagnosis codes, such as gout due to renal impairment, were
assigned to ``no clinical group'' (NA). Therefore, we reviewed all
gout-related codes and determined there are 144 gout related codes with
an anatomical site specified, not currently assigned to a clinical
group that should be moved to clinical group E (musculoskeletal
rehabilitation) for consistency with the aforementioned gout codes. In
the ICD-10-CM code set, gout codes and osteoarthritis codes are found
in chapter 13 Diseases of the Musculoskeletal System and Connective
Tissue (M00-M99). Gout and osteoarthritis affect similar joints such as
the fingers, toes, and knees and they can initially be treated with
medications. However, generally, as a part of a treatment program, once
the initial inflammation is reduced, physical therapy can be started to
stretch and strengthen the affected joint to restore flexibility and
joint function. Because those cases may require therapy, we believe
gout codes are more appropriately placed into MS rehab along with other
codes affecting the musculoskeletal system. We refer readers to Table
1.B of the CY 2023 Proposed Reassignment of ICD-10-CM Diagnosis Codes
supplemental file for the list of the 144 gout related codes. We
propose to reassign these 144 gout-related ICD-10-CM diagnosis codes to
clinical group E (musculoskeletal rehabilitation).
(3) Proposed Clinical Group Reassignment of Crushing Injury-Related
Codes
We identified 12 ICD-10-CM diagnosis codes related to crushing
injury of the face, skull, and head that warrant reassignment. These
codes are listed in Table B18.

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Our clinical advisors reviewed the 12 ICD-10-CM diagnosis codes
related to crushing injury of the face, skull, and head and determined
that reassignment of these codes to clinical group B (Neurological
Rehabilitation) is clinically appropriate because they are consistent
with other diagnosis codes in clinical group E that describe injuries
requiring neurological rehabilitation. Therefore, we propose to
reassign the ICD-10-CM diagnosis codes listed in Table B18 from
clinical group A (MMTA-Other) to clinical group B (Neurological
Rehabilitation).
(4) Proposed Clinical Group Reassignment of Lymphedema-Related Codes
We received questions from interested parties regarding three
lymphedema codes with conflicting clinical group assignments when
listed as a principal diagnosis. These codes are listed in Table B19.
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Our clinical advisors reviewed the three ICD-10-CM diagnosis codes
related to lymphedema and determined that assessing and treating
lymphedema is similar to the assessment and staging of wounds. It
requires the assessment of pulses, evaluation of the color and amount
of drainage, and measurement. In addition, some lymphedema can require
compression bandaging, similar to wound care. Because of these
similarities, we determined the reassignment of the three ICD-10-CM
diagnosis codes related to lymphedema to clinical group C (Wounds) is
clinically appropriate. Therefore, we propose to reassign the ICD-10-CM
diagnosis codes listed in Table B19 from clinical group E
(Musculoskeletal Rehabilitation) and clinical group A (MMTA-Other) to
clinical group C (Wounds).
(5) Proposed Behavioral Health Comorbidity Subgroups
Our clinical advisors reviewed the ICD-10-CM diagnosis code F60.5

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(obsessive-compulsive personality disorder) which is currently assigned
to the comorbidity subgroup behavioral 6 (Schizotypal, Persistent Mood,
and Adult Personality Disorders). However, they noted that behavioral 5
(Phobias, Other Anxiety and Obsessive-Compulsive Disorders) contains
other obsessive-compulsive disorders (for example, F42.8 and F42.9) and
clinically F60.5 should be reassigned to the comorbidity subgroup
behavioral 5. In addition, we evaluated resource consumption related to
the comorbidity subgroup behavioral 5, the comorbidity subgroup
behavioral 6, and F60.5 and found no significant variations negating a
reassignment, meaning the reassignment is still in alignment with the
actual costs of providing care. Therefore, we propose to reassign
diagnosis code F60.5 to behavioral 5 when listed as a secondary
diagnosis.
(6) Proposed Circulatory Comorbidity Subgroups
We reviewed Q82.0 (hereditary lymphedema) for clinical group
reassignment, as described in section II.B.3.4. of this rule. During
this review, we discovered Q82.0 is not currently assigned to a
comorbidity subgroup when listed as a secondary diagnosis. The
comorbidity subgroup circulatory 10 includes ICD-10-CM diagnosis codes
related to varicose veins and lymphedema and our clinical advisors
determined that Q82.0 should be assigned to the comorbidity subgroup
circulatory 10 similar to other lymphedema diagnosis codes. In
addition, we evaluated resource consumption related to the comorbidity
subgroup circulatory 10 and Q82.0 and found no significant variations
negating a reassignment. Therefore, we propose to assign diagnosis code
Q82.0 to circulatory 10 (varicose veins and lymphedema) when listed as
a secondary diagnosis.
(7) Proposed Neoplasm Comorbidity Subgroups
(i) Malignant Neoplasm of Upper Respiratory
In response to interested parties' questions regarding upper
respiratory malignant neoplasms, we reviewed 14 ICD-10-CM diagnosis
codes related to malignant neoplasms of the upper respiratory tract
currently assigned to the comorbidity subgroup neoplasm 6 (malignant
neoplasms of trachea, bronchus, lung, and mediastinum). These 14 codes
are listed in Table B20.
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Our clinical advisors reviewed the codes listed in Table B20 and
determined that C32.3, C32.8, and C32.9 are currently assigned to the
most clinically appropriate neoplasm comorbidity subgroup (neoplasm 6),
and therefore no further analysis was conducted for these three ICD-10
CM diagnosis codes. However, upon review of all the neoplasm
comorbidity subgroups, they determined that the remaining 11 codes
listed in Table B20 should be reassigned to neoplasm 1 (malignant
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cancers) in alignment with clinically similar diagnosis codes already
assigned (for example, C11.0 malignant neoplasm of superior wall of
nasopharynx). In addition, we evaluated resource consumption related to
the comorbidity subgroup, neoplasm 1, as well as diagnosis codes,
C30.0, C30.1, C31.0, C31.1, C31.2, C31.3, C31.8, C31.9, C32.0, C32.1,
or C32.2 and found no significant variations negating a reassignment.
Therefore, we propose to reassign diagnosis codes C30.0, C30.1,
C31.0, C31.1, C31.2, C31.3, C31.8, C31.9, C32.0, C32.1, or C32.2 from
neoplasm 6 to neoplasm 1 when listed as a secondary diagnosis.
(ii) Malignant Neoplasm of Unspecified Adrenal Gland
While reviewing unspecified codes for a change in clinical group,
we noticed that ICD-10-CM diagnosis codes C74.00 (malignant neoplasm of
cortex of unspecified adrenal gland) and C74.90 (malignant neoplasm of
unspecified part of unspecified adrenal gland) were coded as ``N/A''
instead of placed in a comorbidity subgroup. The comorbidity subgroup
neoplasm 15 currently includes ICD-10-CM diagnosis codes related to
malignant neoplasm of adrenal gland, endocrine glands and related
structures; specifically, C74.10 (malignant neoplasm of medulla of
unspecified adrenal gland). At this time, we believe that C74.00 and
C74.90 should be reassigned to neoplasm 15 based on clinical
similarities of other codes currently assigned. In addition, we
evaluated resource consumption related to the comorbidity subgroup
neoplasm 15, as well as diagnosis codes C74.00, and C74.90 and found no
significant variations negating a reassignment. Therefore, we propose
to reassign diagnosis codes C74.00 and C74.90 from ``NA'' to neoplasm
15 (malignant neoplasm of adrenal gland, endocrine glands and related
structures) when listed as secondary diagnoses.
(8) Proposed New Neurological Comorbidity Subgroup
In response to a comment received, we discussed in the CY 2022
final rule (86 FR 62263, 62264) our review of ICD-10-CM diagnosis codes
related to specified neuropathy or unspecified polyneuropathy. These
include specific ICD-10-CM G-codes. We stated that the codes were
assigned to the most clinically appropriate subgroup at the time.
However, upon further clinical review we believe a new neurological
comorbidity subgroup to include ICD-10-CM diagnosis codes related to
nondiabetic neuropathy is warranted. We identified 18 ICD-10-CM
diagnosis codes for potential reassignment to a proposed new
comorbidity subgroup, neurological 12. We refer readers to Table 1.C of
the CY 2023 Proposed Reassignment of ICD-10-CM Diagnosis Codes
supplemental file for a list of the G-codes related to specified
neuropathy or unspecified polyneuropathy. Of the 18 codes, 11 diagnosis
codes were not currently assigned a comorbidity group and seven
diagnosis codes were assigned to neurological 11 comorbidity subgroup.
Using claims data from the CY 2021 HH PPS analytical file, we
identified that the 18 diagnosis G-codes related to specified
neuropathy or unspecified polyneuropathy would have sufficient claims
(>400,000) for a new comorbidity subgroup. The removal of the seven
codes from the neurological 11 comorbidity subgroup, would still allow
for sufficient claims (>250,000) and include the remaining 146
diagnosis codes currently listed in the neurological 11 comorbidity
subgroup. We evaluated resource consumption related to the comorbidity
subgroup neurological 11, the 18 diagnosis G-codes, and the proposed
comorbidity subgroup neurological 12 and found no significant
variations negating a reassignment. A new neurological comorbidity
subgroup allows more clinically similar codes, nondiabetic neuropathy,
to be grouped together. Therefore, we propose to reassign the 18
diagnosis codes listed in Table 1.C of the CY 2023 Proposed
Reassignment of ICD-10 CM Diagnosis Codes supplemental file, to the new
comorbidity subgroup neurological 12 (nondiabetic neuropathy) when
listed as secondary diagnoses. In conjunction with the proposed new
comorbidity subgroup, we propose to change the description of the
current comorbidity subgroup, neurological 11, from ``Diabetic
Retinopathy and Macular Edema'' to ``Disease of the Macula and
Blindness/Low Vision''.
(9) Proposed Respiratory Comorbidity Subgroups
(i) J18.2 Hypostatic Pneumonia, Unspecified Organism
Our clinical advisors reviewed the ICD-10-CM diagnosis code J18.2
(hypostatic pneumonia, unspecified organism) which is currently
assigned to the comorbidity subgroup respiratory 4 (bronchitis,
emphysema, and interstitial lung disease). However, respiratory 2
(whooping cough and pneumonia) contains other pneumonia with
unspecified organism (for example, J18.1 and J18.8). Clinically, J18.2
is similar to the other pneumonias in respiratory 2 and therefore,
should be reassigned from comorbidity subgroup respiratory 4 to
comorbidity subgroup respiratory 2. In addition, we evaluated resource
consumption related to the comorbidity subgroups respiratory 2 and
respiratory 4, and J18.2 and found no significant variations negating a
reassignment.
Therefore, we propose to reassign diagnosis code J18.2 (hypostatic
pneumonia, unspecified organism) to respiratory 2 when listed as a
secondary diagnosis.
(ii) J98.2 Interstitial Emphysema and J98.3 Compensatory Emphysema
Our clinical advisors reviewed the ICD-10-CM diagnosis codes J98.2,
interstitial emphysema and J98.3, compensatory emphysema, which are
currently assigned to the comorbidity subgroup respiratory 9
(respiratory failure and atelectasis). However, respiratory 4
(bronchitis, emphysema, and interstitial lung disease) contains other
emphysema codes (for example, J43.0 through J43.9) and therefore
clinically we believe it is appropriate to reassign J98.2 and J98.3 to
the comorbidity subgroup respiratory 9. In addition, we evaluated
resource consumption related to the comorbidity subgroups respiratory 4
and respiratory 9, as well as diagnosis codes J98.2, and J98.3 and
found no significant variations negating a reassignment. Therefore, we
propose to reassign diagnosis codes J98.2 and J98.3 to respiratory 4
when listed as a secondary diagnosis.
(iii) U09.9 Post COVID-19 Condition, Unspecified
Our clinical advisors reviewed the ICD-10-CM diagnosis code U09.9
(post COVID-19 condition, unspecified), which is currently assigned to
the comorbidity subgroup, respiratory 2 (whooping cough and pneumonia).
However, respiratory 10 (2019 novel Coronavirus) contains other COVID-
19 codes (for example, U07.1). Therefore, we believe clinically that
U09.9 should be reassigned to the comorbidity subgroup, respiratory 10.
In addition, we evaluated resource consumption related to the
comorbidity subgroups respiratory 2 and respiratory 10, and diagnosis
codes U09.9 and found no significant variations negating a
reassignment.
Therefore, we propose to reassign diagnosis code U09.9 to
respiratory 10 when listed as a secondary diagnosis.
We solicit comments on all of the proposed clinical group and

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comorbidity subgroup reassignments described in this section.
4. Proposed CY 2023 PDGM LUPA Thresholds and PDGM Case-Mix Weights
a. Proposed CY 2023 PDGM LUPA Thresholds
Under the HH PPS, LUPAs are paid when a certain visit threshold for
a payment group during a 30-day period of care is not met. In the CY
2019 HH PPS final rule (83 FR 56492), we finalized that the LUPA
thresholds would be set at the 10th percentile of visits or 2 visits,
whichever is higher, for each payment group. This means the LUPA
threshold for each 30 day period of care varies depending on the PDGM
payment group to which it is assigned. If the LUPA threshold for the
payment group is met under the PDGM, the 30-day period of care will be
paid the full 30-day period case-mix adjusted payment amount (subject
to any PEP or outlier adjustments). If a 30-day period of care does not
meet the PDGM LUPA visit threshold, then payment will be made using the
CY 2023 per-visit payment amounts as described in Section II.B.5.c. of
this proposed rule. For example, if the LUPA visit threshold is four,
and a 30-day period of care has four or more visits, it is paid the
full 30-day period payment amount; if the period of care has three or
less visits, payment is made using the per-visit payment amounts.
In the CY 2019 HH PPS final rule with comment period (83 FR 56492),
we finalized our policy that the LUPA thresholds for each PDGM payment
group would be reevaluated every year based on the most current
utilization data available at the time of rulemaking. However, as CY
2020 was the first year of the new case-mix adjustment methodology, we
stated in the CY 2021 final rule (85 FR 70305, 70306) that 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. We stated that at that time, we did not have
sufficient CY 2020 data to reevaluate the LUPA thresholds for CY 2021.
In the CY 2022 HH PPS final rule (86 FR 62249), we finalized the
proposal to recalibrate the PDGM case-mix weights, functional
impairment levels, and comorbidity subgroups while maintaining the LUPA
thresholds for CY 2022. We stated that because 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, we believe the PHE would have impacted
utilization within all case-mix groups similarly. Therefore, the impact
of any reduction in resource use caused by the PHE on the calculation
of the case-mix weight would be minimized since the impact would be
accounted for both in the numerator and denominator of the formula used
to calculate the case-mix weight. However, in contrast, the LUPA
thresholds are based on the number of overall visits in a particular
case-mix group (the threshold is the 10th percentile of visits or 2
visits, whichever is greater) instead of a relative value (like what is
used to generate the case-mix weight) that would control for the
impacts of the PHE. We noted that visit patterns and some of the
decrease in overall visits in CY 2020 may not be representative of
visit patterns in CY 2022. Therefore, to mitigate any potential future
and significant short-term variability in the LUPA thresholds due to
the COVID-19 PHE, we finalized the proposal 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.
For CY 2023, we are proposing to update the LUPA thresholds using
CY 2021 Medicare home health claims (as of March 21, 2022) linked to
OASIS assessment data. After reviewing the CY 2021 home health claims
utilization data we determined that visit patterns have stabilized. Our
data analysis indicates that visits in 2021 were similar to visits in
2020. We believe that CY 2021 data will be more indicative of visit
patterns in CY 2023 rather than continuing to use the LUPA thresholds
derived from the CY 2018 data pre-PDGM. Therefore, we are proposing to
update the LUPA thresholds for CY 2023 using data from CY 2021. In
general, there is not much variation in the updated LUPA thresholds;
280 case-mix groups had no change in their LUPA threshold. There are
120 case-mix groups that had their LUPA threshold go down by one visit
and 18 case-mix groups that have their LUPA threshold go up by a visit.
There are 12 case-mix groups that had their LUPA threshold go down by
two visits and 2 case-mix groups that had their LUPA threshold go down
by three visits.
The proposed LUPA thresholds for the CY 2023 PDGM payment groups
with the corresponding Health Insurance Prospective Payment System
(HIPPS) codes and the case-mix weights are listed in Table B26. We
solicit public comments on the proposed updates to the LUPA thresholds
for CY 2023.
b. CY 2023 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 M1033. A home health period of care receives points
based on each of the responses associated with these functional OASIS
items, which are then converted into a table of points corresponding to
increased resource use. The sum of all of these points results in a
functional score which is used to group home health periods into a
functional level with similar resource use. That is, the higher the
points, the higher the response is associated with increased resource
use. The sum of all of these points results in a functional impairment
score which is used to group home health periods into one of three
functional impairment levels with similar resource use. The three
functional impairment levels of low, medium, and high were designed so
that approximately one-third of home health periods from each of the
clinical groups fall within each level. This means home health periods
in the low impairment level have responses for the functional OASIS
items that are associated with the lowest resource use, on average.
Home health periods in the high impairment level have responses for the
functional OASIS items that are associated with the highest resource
use on average.
For CY 2023, we propose to use CY 2021 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 technical report
from December 2016, posted on the Home Health PPS Archive webpage
located at: <a href="https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive">https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive</a>, provide a more detailed explanation as to the construction
of these functional impairment levels using the OASIS items. We are
proposing to use this same methodology previously finalized to update
the functional impairment levels for CY 2023. The updated OASIS
functional points table and the table of functional impairment levels
by clinical group for CY 2023 are listed in Tables B21 and B22,
respectively. We solicit public comments on the updates to

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functional points and the functional impairment levels by clinical
group.
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c. CY 2023 Comorbidity Subgroups
Thirty-day periods of care receive a comorbidity adjustment
category based on the presence of certain secondary diagnoses reported
on home health claims. These diagnoses are based on a home-health
specific list of clinically and statistically significant secondary
diagnosis subgroups with similar resource use, meaning the diagnoses
have at least as high as the median resource use and are reported in
more than 0.1 percent of 30-day periods of care. Home health 30-day
periods of care can receive a comorbidity adjustment under the
following circumstances:
<bullet> Low comorbidity adjustment: There is a reported secondary
diagnosis on the home health-specific comorbidity subgroup list that is
associated with higher resource use.
<bullet> High comorbidity adjustment: There are two or more
secondary diagnoses on the home health-specific comorbidity subgroup
interaction list that are associated with higher resource use when both
are reported together compared to when they are 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
do not meet the criteria for a low or high comorbidity adjustment.
In the CY 2019 HH PPS final rule with comment period (83 FR 56406),
we stated that we would continue to examine the relationship of
reported comorbidities on resource utilization and make the appropriate
payment refinements to help ensure that payment is in alignment with
the actual costs of providing care. For CY 2023, we propose to use the
same methodology used to establish the comorbidity subgroups to update
the comorbidity subgroups using CY 2021 home health data.
For CY 2023, we propose to update the comorbidity subgroups to
include 23 low comorbidity adjustment subgroups as identified in Table
B23 and 94 high comorbidity adjustment interaction subgroups as
identified in Table B24. The proposed 23 low comorbidity adjustment
subgroups and 94 high comorbidity adjustment interactions reflect the
proposed coding changes detailed in section II.B.3.c. of this proposed
rule. The proposed CY 2023 low comorbidity adjustment subgroups and the
high comorbidity adjustment interaction subgroups including those
diagnoses within each of these comorbidity adjustments will also be
posted on the HHA Center webpage at <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.
We invite comments on the proposed updates to the low comorbidity
adjustment subgroups and the high comorbidity adjustment interactions
for CY 2023.
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d. CY 2023 PDGM Case-Mix Weights
As finalized in the CY 2019 HH PPS final rule with comment period
(83 FR 56502), the PDGM places patients into meaningful payment
categories based on patient and other characteristics, such as timing,
admission source, clinical grouping using the reported principal
diagnosis, functional impairment level, and comorbid conditions. The
PDGM case-mix methodology results in 432 unique case-mix groups called
home health resource groups (HHRGs). We also finalized a policy in the
CY 2019 HH PPS final rule with comment period (83 FR 56515) to
recalibrate annually 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 2023 case-mix
weights, we used CY 2021 home health claims data with linked OASIS data
(as of March 21, 2021). These data are the most current and complete
data available at this time. We believe that recalibrating the case-mix
weights using data from CY 2021 would be reflective of PDGM utilization
and patient resource use for CY 2023. The proposed recalibrated case-
mix weights will be updated based on more complete CY 2021 claims data
for the final rule.
The claims data provide visit-level data and data on whether non-
routine supplies (NRS) were 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 B21 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 2020
home health cost reports. We use 2020 home health cost report data
because it is the most complete cost report data available at the time
of rulemaking. Other variables in the regression model include the 30-
day period's admission source, clinical group, and 30-day period
timing. We also include home health agency level fixed effects in the
regression model. After estimating the regression model using 30-day
periods, we divide the coefficients that correspond to the functional
status and risk of hospitalization items by 10 and round to the nearest
whole number. Those rounded numbers are used to compute a functional
score for each 30-day period by summing together the rounded numbers
for the functional status and risk of hospitalization items that are
applicable to each 30-day period. Next, each 30-day period is assigned
to a functional impairment level (low, medium, or high) depending on
the 30-day period's total functional score. Each clinical group has a
separate set of functional thresholds used to assign 30-day periods
into a low, medium or high functional impairment level. We set those
thresholds so that we assign roughly a third of 30-day periods within
each clinical group to each functional impairment level (low, medium,
or high).
Step 2: A second regression model estimates the relationship
between a 30-day period's resource use and indicator variables for the
presence of any of the comorbidities and comorbidity interactions that
were originally examined for inclusion in the PDGM. Like the first
regression model, this model also includes home health agency level
fixed effects and includes control variables for each 30-day period's
admission source, clinical group, timing, and functional impairment
level. After we estimate the model, we assign comorbidities to the low
comorbidity adjustment if any comorbidities have a coefficient that is
statistically significant (p-value of 0.05 or less) and which have a
coefficient that is larger than the 50th percentile of positive and
statistically significant comorbidity coefficients. If two
comorbidities in the model and their interaction term have coefficients
that sum together to exceed $150 and the interaction term is
statistically significant (p-value of 0.05 or less), we assign the two
comorbidities together to the high comorbidity adjustment.
Step 3: After Step 2, each 30-day period is assigned to a clinical
group, admission source category, episode timing category, functional
impairment level, and comorbidity adjustment category. For each
combination of those variables (which represent the 432 different
payment groups that comprise the PDGM), we then calculate the 10th
percentile of visits across all 30-day periods within a particular
payment group. If a 30-day period's number of visits is less than the
10th percentile for their payment group, the 30-day period is
classified as a Low Utilization Payment Adjustment (LUPA). If a payment
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LUPA threshold for that payment group to be equal to two. That means if
a 30-day period has one visit, it is classified as a LUPA and if it has
two or more visits, it is not classified as a LUPA.
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 B25 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 proposed for CY 2023 are listed in Table B26
and will also be posted on the HHA Center web-page \17\ upon display of
this proposed rule.
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\17\ HHA Center web page: <a href="https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center">https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center</a>.

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BILLING CODE 4120-01-C
For CY 2023, there are 238 groups that experience a -5% to 0%
change in case-mix weights and 183 groups that experience a 0% to +5%
change in weights compared to their CY 2022 case-mix weights. There are
10 groups that experience a change between +5% and +10% and one group
that experiences a 10% to 12% increase in weights compared to the CY
2022 case-mix weights. Changes to the PDGM case-mix weights are
implemented in a budget neutral manner by multiplying the CY 2023
national standardized 30-day period payment rate by a case-mix budget
neutrality factor. Typically, the case-mix weight budget neutrality
factor

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is also calculated using the most recent, complete home health claims
data available. However, in the CY 2022 HH PPS proposed rule (86 FR
35908), due to the COVID-19 PHE, we discussed 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 was the first year of actual PDGM
utilization data, therefore, if we were to use CY 2019 data due to the
PHE we would need to simulate 30-day periods from 60-day episodes under
the old system. We determined that using CY 2020 utilization data was
more appropriate than using CY 2019 utilization data, as it is actual
PDGM utilization data. For CY 2023, we will continue the practice of
using the most recent complete home health claims data at the time of
rulemaking, which is CY 2021 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 2023 PDGM case mix weights (developed
using CY 2021 home health claims data) are applied to CY 2021
utilization (claims) data are equal to total payments when CY 2022 PDGM
case-mix weights (developed using CY 2020 home health claims data) are
applied to CY 2021 utilization data. This produces a case-mix budget
neutrality factor for CY 2023 of 0.9895.
We invite comments on the CY 2023 proposed case-mix weights and
proposed case-mix weight budget neutrality factor.
5. Proposed CY 2023 Home Health Payment Rate Updates
a. Proposed CY 2023 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. A detailed description of how we rebased the HHA market basket is
available in the CY 2019 HH PPS final rule with comment period (83 FR
56425 through 56436).
Section 1895(b)(3)(B) of the Act requires that in CY 2015 and in
subsequent calendar years, except CY 2018 (under section 411(c) of the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L.
114-10, enacted April 16, 2015)), and CY 2020 (under section 53110 of
the Bipartisan Budget Act of 2018 (BBA) (Pub. L. 115-123, enacted
February 9, 2018)), the market basket percentage under the HHA
prospective payment system, as described in section 1895(b)(3)(B) of
the Act, be annually adjusted by changes in economy-wide productivity.
Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity
adjustment to be equal to the 10-year moving average of changes in
annual economy-wide private nonfarm business multifactor productivity
(MFP) (as projected by the Secretary for the 10-year period ending with
the applicable fiscal year, calendar year, cost reporting period, or
other annual period). The United States Department of Labor's Bureau of
Labor Statistics (BLS) publishes the official measures of productivity
for the United States economy. We note that previously the productivity
measure referenced in section 1886(b)(3)(B)(xi)(II) was published by
BLS as private nonfarm business multifactor productivity. Beginning
with the November 18, 2021 release of productivity data, BLS replaced
the term ``multifactor productivity'' with ``total factor
productivity'' (TFP). BLS noted that this is a change in terminology
only and will not affect the data or methodology. As a result of the
BLS name change, the productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as ``private
nonfarm business total factor productivity''. We refer readers to
<a href="https://www.bls.gov">https://www.bls.gov</a> for the BLS historical published TFP data. A
complete description of IGI's TFP projection methodology is available
on the CMS website at <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch">https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch</a>.
The proposed home health update percentage for CY 2023 is based on
the estimated home health market basket update, specified at section
1895(b)(3)(B)(iii) of the Act, of 3.3 percent (based on IHS Global
Inc.'s first-quarter 2022 forecast with historical data through fourth-
quarter 2021). The estimated CY 2023 home health market basket update
of 3.3 percent is then reduced by a productivity adjustment, as
mandated by the section 3401 of the Patient Protection and Affordable
Care Act (the Affordable Care Act) (Pub. L. 111-148), currently
estimated to be 0.4 percentage point for CY 2023. In effect, the
proposed home health payment update percentage for CY 2023 is a 2.9
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 2023, the home
health payment update would be 0.9 percent (2.9 percent minus 2
percentage points). If more recent data become available after the
publication of this proposed rule and before the publication of the
final rule (for example, more recent estimates of the home health
market basket update and productivity adjustment), we would use such
data, if appropriate, to determine the home health payment update
percentage for CY 2023 in the final rule.
b. CY 2023 Home Health Wage Index
(1) Proposed CY 2023 Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS that account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of home health
services. Since the inception of the HH PPS, we have used inpatient
hospital wage data in developing a wage index to be applied to home
payments. We propose to continue this practice for CY 2023, as we
continue to believe that, in the absence of home health-specific wage
data that accounts for area differences, using inpatient hospital wage
data is appropriate and reasonable for the HH PPS.
In the CY 2021 HH PPS final rule (85 FR 70298), we finalized our
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, meaning no cap would be applied to wage
index decreases for the second year (CY 2022). Therefore, we proposed
and finalized the use of 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 (86 FR 62285).
For CY 2023, we propose to base the HH PPS wage index on the FY 2023
hospital pre-floor, pre-reclassified wage index for hospital cost
reporting periods beginning on or after October 1, 2018, and before
October 1, 2019 (FY 2019 cost report data). The proposed CY 2023 HH PPS
wage index would not take into

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account any geographic reclassification of hospitals, including those
in accordance with section 1886(d)(8)(B) or 1886(d)(10) of the Act. We
also propose that the CY 2023 HH PPS wage index would include a 5-
percent cap on wage index decreases as discussed later in this section.
If finalized, we will 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 2023 HH PPS wage index, we propose to continue to
use the same methodology discussed in the CY 2007 HH PPS final rule (71
FR 65884) to address those geographic areas in which there are no
inpatient hospitals. For rural areas that do not have inpatient
hospitals, we propose to use the average wage index from all contiguous
Core Based Statistical Areas (CBSAs) as a reasonable proxy. Currently,
the only rural area without a hospital from which hospital wage data
could be derived is Puerto Rico. However, for rural Puerto Rico, we do
not apply this methodology due to the distinct economic circumstances
that exist there (for example, due to the close proximity to one
another of almost all of Puerto Rico's various urban and non-urban
areas, this methodology would produce a wage index for rural Puerto
Rico that is higher than that in half of its urban areas). Instead, we
propose to continue to use the most recent wage index previously
available for that area. The most recent wage index previously
available for rural Puerto Rico is 0.4047, which is what we propose to
use. 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 2023, the only urban area
without inpatient hospital wage data is Hinesville, GA (CBSA 25980).
Using the average wage index of all urban areas in Georgia as proxy, we
propose the CY 2023 wage index value for Hinesville, GA to be 0.8535.
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 through 66087), we adopted
OMB's area delineations using a 1-year transition.
On August 15, 2017, OMB issued Bulletin No. 17-01 in which it
announced that one Micropolitan Statistical Area, Twin Falls, Idaho,
now qualifies as a Metropolitan Statistical Area. The new CBSA (46300)
comprises the principal city of Twin Falls, Idaho in Jerome County,
Idaho and Twin Falls County, Idaho. The CY 2022 HH PPS wage index value
for CBSA 46300, Twin Falls, Idaho, will be 0.8803. Bulletin No. 17-01
is available at <a href="https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2017/b-17-01.pdf">https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_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 home health wage index for CY 2022.
Specifically, the updates consisted of changes to NECTA delineations
and the re-designation of a single rural county into a newly created
Micropolitan Statistical Area. The Medicare home health 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. In
other words, these OMB updates did not affect any geographic areas for
purposes of the wage index calculation for CY 2022.
The proposed CY 2023 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>.
(2) Proposed Permanent Cap on Wage Index Decreases
As discussed in section II.B.5.b.1 of this proposed rule, we have
proposed and finalized temporary transition policies in the past to
mitigate significant changes to payments due to changes to the home
health wage index. Specifically, in the CY 2015 HH PPS final rule (79
FR 66086), we implemented a 50/50 blend for all geographic areas
consisting of the wage index values using the then-current OMB area
delineations and the wage index values using OMB's new area
delineations based on OMB Bulletin No. 13-01. In the CY 2021 HH PPS
final rule (85 FR 73100), we adopted the revised OMB delineations with
a 5-percent cap on wage index decreases, where the estimated reduction
in a geographic area's wage index would be capped at 5-percent in CY
2021. We explained that we believed the 5-percent cap would provide
greater transparency and would be administratively less complex than
the prior methodology of applying a 50/50 blended wage index. We noted
that this transition approach struck an appropriate balance by
providing a transition period to mitigate the resulting short-term
instability and negative impacts on providers and time for them to
adjust to their new labor market area delineations and wage index
values.
In the CY 2022 HH PPS final rule (86 FR 62285), a few commenters
stated that providers should be protected against substantial payment
reductions due to dramatic reductions in wage index values from one
year to the next. Because we did not propose any transition policy in
the CY 2022 proposed rule, we did not extend the transition period for
CY 2022. In the CY 2022 HH PPS final rule, we stated that we continued
to believe that applying the 5-percent cap transition policy in year
one provided an adequate safeguard against any significant payment
reductions associated with the adoption of the revised CBSA
delineations in CY 2021, allowed for sufficient time to make
operational

[[Page 37653]]

changes for future calendar years, and provided a reasonable balance
between mitigating some short-term instability in home health payments
and improving the accuracy of the payment adjustment for differences in
area wage levels. However, we acknowledged that certain changes to wage
index policy may significantly affect Medicare payments. In addition,
we reiterated that our policy principles with regard to the wage index
include generally using the most current data and information available
and providing that data and information, as well as any approaches to
addressing any significant effects on Medicare payments resulting from
these potential scenarios, in notice and comment rulemaking. With these
policy principles in mind, we considered for this CY 2023 HH PPS
proposed rule how best to address the potential scenarios, which
commenters raised concerns; that is, scenarios in which changes to wage
index policy may significantly affect Medicare home health payments.
In the past, we have established transition policies of limited
duration to phase in significant changes to labor market areas. In
taking this approach in the past, we sought to mitigate short-term
instability and fluctuations that can negatively impact providers due
to wage index changes. Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the
Act requires 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. We have previously stated that, because the wage
index is a relative measure of the value of labor in prescribed labor
market areas, we believe it is important to implement new labor market
area delineations with as minimal a transition as is reasonably
possible. However, we recognize that changes to the wage index have the
potential to create instability and significant negative impacts on
certain providers even when labor market areas do not change. In
addition, year-to-year fluctuations in an area's wage index can occur
due to external factors beyond a provider's control, such as the COVID-
19 PHE, and for an individual provider, these fluctuations can be
difficult to predict. We also recognize that predictability in Medicare
payments is important to enable providers to budget and plan their
operations.
In light of these considerations, we are proposing a permanent
approach to smooth year-to-year changes in providers' wage indexes. We
are proposing a policy that increases the predictability of home health
payments for providers and mitigates instability and significant
negative impacts to providers resulting from changes to the wage index.
As previously discussed, we believe that applying a 5-percent cap
on wage index decreases for CY 2021 provided greater transparency and
was administratively less complex than prior transition methodologies.
In addition, we believe this methodology mitigates short-term
instability and fluctuations that can negatively impact providers due
to wage index changes. Lastly, we note that we believe the 5-percent
cap we applied to all wage index decreases for CY 2021 provided an
adequate safeguard against significant payment reductions related to
the adoption of the revised CBSAs. However, as discussed earlier in
this section of this proposed rule, we recognize there are
circumstances that a one-year mitigation policy would not effectively
address future years in which providers continue to be negatively
affected by significant wage index decreases.
Typical year-to-year variation in the home health wage index has
historically been within 5-percent, and we expect this will continue to
be the case in future years. Therefore, we believe that applying a 5-
percent cap on all wage index decreases in future years, regardless of
the reason for the decrease, would effectively mitigate instability in
home health payments due to any significant wage index decreases that
may affect providers in any year that commenters raised in the CY 2022
HH PPS final rule. Additionally, we believe that applying a 5-percent
cap on all wage index decreases would increase the predictability of
home health payments for providers, enabling them to more effectively
budget and plan their operations. Lastly, we believe that applying a 5-
percent cap on all wage index decreases, from the prior year, would
have a small overall impact on the labor market area wage index system.
As discussed in further detail in section VII.C. of this proposed rule,
we estimate that applying a 5-percent cap on all wage index decreases,
from the prior year, will have a very small effect on the wage index
budget neutrality factors for CY 2023. Because the wage index is a
measure of the value of labor (wage and wage-related costs) in a
prescribed labor market area relative to the national average, we
anticipate that most providers will not experience year-to-year wage
index declines greater than 5-percent in any given year. We believe
that applying a 5-percent cap on all wage index decreases, from the
prior year, would continue to maintain the accuracy of the overall
labor market area wage index system.
Therefore, for CY 2023 and subsequent years, we are proposing to
apply a permanent 5 percent cap on any decrease to a geographic area's
wage index from its wage index in the prior year, regardless of the
circumstances causing the decline. That is, we are proposing that a
geographic area's wage index for CY 2023 would not be less than 95
percent of its final wage index for CY 2022, regardless of whether the
geographic area is part of an updated CBSA, and that for subsequent
years, a geographic area's wage index would not be less than 95 percent
of its wage index calculated in the prior CY. We further propose that
if a geographic area's prior CY wage index is calculated based on the
5-percent cap, then the following year's wage index would not be less
than 95 percent of the geographic area's capped wage index. For
example, if a geographic area's wage index for CY 2023 is calculated
with the application of the 5-percent cap, then its wage index for CY
2024 would not be less than 95 percent of its capped wage index in CY
2023. Likewise, we are proposing to make the corresponding regulations
text changes at Sec. 484.220(c) as follows: Beginning on January 1,
2023, CMS will apply a cap on decreases to the home health wage index
such that the wage index applied to a geographic area is not less than
95 percent of the wage index applied to that geographic area in the
prior CY. This 5-percent cap on negative wage index changes would be
implemented in a budget neutral manner through the use of wage index
budget neutrality factors.
In section VII.C. of this proposed rule, we estimate the impact to
payments for providers in CY 2023 based on this proposed policy. We
also note that we would examine the effects of this policy on an
ongoing basis in the future in order to assess its appropriateness.
c. CY 2023 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-

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day periods beginning on or after January 1, 2020.
As set forth in Sec. 484.220, we adjust the national, standardized
prospective payment rates by a case-mix relative weight and a wage
index value based on the site of service for the beneficiary. To
provide appropriate adjustments to the proportion of the payment amount
under the HH PPS to account for area wage differences, we apply the
appropriate wage index value to the labor portion of the HH PPS rates.
In the CY 2019 HH PPS final rule with comment period (83 FR 56435), we
finalized rebasing the home health market basket to reflect 2016
Medicare cost report data. We also finalized a revision to the labor
share to reflect the 2016-based home health market basket compensation
(Wages and Salaries plus Benefits) cost weight. We finalized that for
CY 2019 and subsequent years, the labor share would be 76.1 percent and
the non-labor share would be 23.9 percent. The following are the steps
we take to compute the case-mix and wage-adjusted 30-day period payment
amount for CY 2023:
<bullet> Multiply the national, standardized 30-day period rate by
the patient's applicable case mix weight.
<bullet> Divide the case-mix adjusted amount into a labor (76.1
percent) and a non labor portion (23.9 percent).
<bullet> Multiply the labor portion by the applicable wage index
based on the site of service of the beneficiary.
<bullet> Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 30-day period payment amount,
subject to any additional applicable adjustments.
We provide annual updates of the HH PPS rate in accordance with
section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the
specific annual percentage update methodology. In accordance with
section 1895(b)(3)(B)(v) of the Act and Sec. 484.225(i), for an HHA
that does not submit home health quality data, as specified by the
Secretary, the unadjusted national prospective 30-day period rate is
equal to the rate for the previous calendar year increased by the
applicable home health payment update, minus 2 percentage points. Any
reduction of the percentage change would apply only to the calendar
year involved and would not be considered in computing the prospective
payment amount for a subsequent calendar year.
The final claim that the HHA submits for payment determines the
total payment amount for the period and whether we make an applicable
adjustment to the 30-day case-mix and wage-adjusted payment amount. The
end date of the 30-day period, as reported on the claim, determines
which calendar year rates Medicare will use to pay the claim.
We may adjust a 30-day case-mix and wage-adjusted payment based on
the information submitted on the claim to reflect the following:
<bullet> A LUPA is provided on a per-visit basis as set forth in
Sec. Sec. 484.205(d)(1) and 484.230.
<bullet> A PEP adjustment as set forth in Sec. Sec. 484.205(d)(2)
and 484.235.
<bullet> An outlier payment as set forth in Sec. Sec.
484.205(d)(3) and 484.240.
(2) CY 2023 National, Standardized 30-Day Period Payment Amount
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 2023 national, standardized
30-day period payment rate, we apply a permanent behavioral adjustment
factor, a case-mix weights recalibration budget neutrality factor, a
wage index budget neutrality factor and the home health payment update
percentage discussed in section II.C.2. of this proposed rule. As
discussed in section II.B.2.f. of this proposed rule, we are
implementing a permanent behavior adjustment of -7.69 percent to
prevent further overpayments. The permanent behavior adjustment factor
is 0.9231 (1-0.0769). 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 2022
national, standardized 30-day period payment rate. The proposed case-
mix weights budget neutrality factor for CY 2023 is 0.9895.
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, in the CY 2022 HH PPS final rule 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 was only a small difference between the wage index
budget neutrality factors calculated using CY 2019 and CY 2020 home
health claims data. Therefore, for CY 2022 we decided to continue our
practice of using the most recent, complete home health claims data
available; that is, we used CY 2020 claims data for the CY 2022 payment
rate updates. For CY 2023 rate setting, we do not anticipate
significant differences between using pre COVID-19 PHE data (CY 2019
claims) and the most recent claims data at the time of rulemaking (CY
2021 claims). Therefore, we will continue our practice of using the
most recent, complete utilization data at the time of rulemaking; that
is, we are using CY 2021 claims data for CY 2023 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 2023 wage index so those total payments are equivalent to the total
payments for non-LUPA 30-day periods using the CY 2022 wage index and
the CY 2022 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 2023
wage index with a 5-percent cap on wage index decreases by the payment
rate for non-LUPA 30-day periods using the CY 2022 wage index, we
obtain a wage index budget neutrality factor of 0.9975. We then apply
the wage index budget neutrality factor of 0.9975 to the 30-day period
payment rate.
Next, we would update the 30-day period payment rate by the CY 2023
home health payment update percentage of 2.9 percent. The CY 2023
national, standardized 30-day period payment rate is calculated in
Table B27.

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[GRAPHIC] [TIFF OMITTED] TP23JN22.049

The CY 2023 national, standardized 30-day period payment rate for a
HHA that does not submit the required quality data is updated by the CY
2023 home health payment update of 2.9 percent minus 2 percentage
points and is shown in Table B28.
[GRAPHIC] [TIFF OMITTED] TP23JN22.050

(3) CY 2023 National Per-Visit Rates for 30-Day Periods of Care
The national per-visit rates are used to pay LUPAs and are also
used to compute imputed costs in outlier calculations. The per-visit
rates are paid by type of visit or HH discipline. The six HH
disciplines are as follows:
<bullet> Home health aide (HH aide).
<bullet> Medical Social Services (MSS).
<bullet> Occupational therapy (OT).
<bullet> Physical therapy (PT).
<bullet> Skilled nursing (SN).
<bullet> Speech-language pathology (SLP).

To calculate the CY 2023 national per-visit rates, we started with
the CY 2022 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
2023 wage index with a 5-percent cap on wage index decreases and
comparing it to simulated total payments for LUPA 30-day periods of
care using the CY 2022 wage index (with no 5-percent cap). By dividing
the total payments for LUPA 30-day periods of care using the CY 2023
wage index by the total payments for LUPA 30-day periods of care using
the CY 2022 wage index, we obtained a wage index budget neutrality
factor of 0.9992. 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. Additionally, we are not
applying the permanent adjustment to the per visit payment rates but
only the case-mix adjusted payment rate. Lastly, the per-visit rates
for each discipline are updated by the CY 2023 home health payment
update percentage of 2.9 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 2023 national per visit rates for HHAs that submit the required
quality data are updated by the CY 2023 home health payment update
percentage of 2.9 percent and are shown in Table B29.

[[Page 37656]]

[GRAPHIC] [TIFF OMITTED] TP23JN22.051

The CY 2023 per-visit payment rates for HHAs that do not submit the
required quality data are updated by the CY 2023 home health payment
update percentage of 2.9 percent minus 2 percentage points and are
shown in Table B30.
[GRAPHIC] [TIFF OMITTED] TP23JN22.052

(4) LUPA Add-On Factors
Prior to the implementation of the 30-day unit of payment, LUPA
episodes were eligible for a LUPA add-on payment if the episode of care
was the first or only episode in a sequence of adjacent episodes. As
stated in the CY 2008 HH PPS final rule, the average visit lengths in
these initial LUPAs are 16 to 18 percent higher than the average visit
lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that
occur as the only episode or as an initial episode in a sequence of
adjacent episodes are adjusted by applying an additional amount to the
LUPA payment before adjusting for area wage differences. In the CY 2014
HH PPS final rule (78 FR 72305), we changed the methodology for
calculating the LUPA add-on amount by finalizing the use of three LUPA
add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. We
multiply the per-visit payment amount for the first SN, PT, or SLP
visit in LUPA episodes that occur as the only episode or an initial
episode in a sequence of adjacent episodes by the appropriate factor to
determine the LUPA add-on payment amount.
In the CY 2019 HH PPS final rule with comment period (83 FR 56440),
in addition to finalizing a 30-day unit of payment, we finalized our
policy of continuing to multiply the per-visit payment amount for the
first skilled nursing, physical therapy, or speech-language pathology
visit in LUPA periods that occur as the only period of care or the
initial 30-day period of care in a sequence of adjacent 30-day periods
of care by the appropriate add-on factor (1.8451 for SN, 1.6700 for PT,
and 1.6266 for SLP) to determine the LUPA add-on payment amount for 30-
day periods of care under the PDGM. For example, using the proposed CY
2023 per-visit payment rates for 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 $297.65 (1.8451 multiplied by
$161.32), subject to area wage adjustment.
(5) Occupational Therapy LUPA Add-On Factor
In order to implement Division CC, section 115, of CAA 2021, CMS
finalized changes to regulations at Sec. 484.55(a)(2) and (b)(3) that
allowed occupational therapists 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 either PT or SLP (86 FR 62351). This change, led to
us

[[Page 37657]]

establishing a LUPA add-on factor for calculating the LUPA add-on
payment amount for the first skilled occupational therapy (OT) 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.
As stated in the CY 2022 HH PPS final rule with comment period (86
FR 62289) since there was not 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
we finalized the use of the PT LUPA add-on factor of 1.6700 as a proxy.
We also stated that we would use the PT LUPA add-on factor 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 (86 FR 62289). Therefore, we
continue to 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 until we have CY 2022 data to propose a LUPA add-on factor
specific to OT in future rulemaking.
d. Proposed Payments for High-Cost Outliers Under the HH PPS
(1) Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the home health payment amount otherwise made
in the case of outliers because of unusual variations in the type or
amount of medically necessary care. Under the HH PPS and the previous
unit of payment (that is, 60-day episodes), outlier payments were made
for 60-day episodes whose estimated costs exceed a threshold amount for
each 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 through
70399), section 3131(b)(1) of the Affordable Care Act amended section
1895(b)(3)(C) of the Act to require that the Secretary reduce the HH
PPS payment rates such that aggregate HH PPS payments were reduced by 5
percent. In addition, section 3131(b)(2) of the Affordable Care Act
amended section 1895(b)(5) of the Act by redesignating the existing
language as section 1895(b)(5)(A) of the Act and revised the language
to state that the total amount of the additional payments or payment
adjustments for outlier episodes could not exceed 2.5 percent of the
estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of
the Affordable Care Act also added section 1895(b)(5)(B) of the Act,
which capped outlier payments as a percent of total payments for each
HHA for each year at 10 percent.
As such, beginning in CY 2011, we reduced payment rates by 5
percent and targeted up to 2.5 percent of total estimated HH PPS
payments to be paid as outliers. To do so, we first returned the 2.5
percent held for the target CY 2010 outlier pool to the national,
standardized 60-day episode rates, the national per visit rates, the
LUPA add-on payment amount, and the NRS conversion factor for CY 2010.
We then reduced the rates by 5 percent as required by section
1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the
Affordable Care Act. For CY 2011 and subsequent calendar years we
targeted up to 2.5 percent of estimated total payments to be paid as
outlier payments, and apply a 10 percent agency-level outlier cap.
In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through
43742 and 81 FR 76702), we described our concerns regarding patterns
observed in home health outlier episodes. Specifically, we noted the
methodology for calculating home health outlier payments may have
created a financial incentive for providers to increase the number of
visits during an episode of care in order to surpass the outlier
threshold; and simultaneously created a disincentive for providers to
treat medically complex beneficiaries who require fewer but longer
visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR
76702), we finalized changes to the methodology used to calculate
outlier payments, using a cost-per-unit approach rather than a cost-
per-visit approach. This change in methodology allows for more accurate
payment for outlier episodes, accounting for both the number of visits
during an episode of care and the length of the visits provided. Using
this approach, we now convert the national per-visit rates into per 15-
minute unit rates. These per 15-minute unit rates are used to calculate
the estimated cost of an episode to determine whether the claim will
receive an outlier payment and the amount of payment for an episode of
care. In conjunction with our finalized policy to change to a cost-per-
unit approach to estimate episode costs and determine whether an
outlier episode should receive outlier payments, in the CY 2017 HH PPS
final rule we also finalized the implementation of a cap on the amount
of time per day that would be counted toward the estimation of an
episode's costs for outlier calculation purposes (81 FR 76725).
Specifically, we limit the amount of time per day (summed across the
six disciplines of care) to 8 hours (32 units) per day when estimating
the cost of an episode for outlier calculation purposes.
In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we
did not plan to re-estimate the average minutes per visit by discipline
every year. Additionally, the per unit rates used to estimate an
episode's cost were updated by the home health update percentage each
year, meaning we would start with the national per visit amounts for
the same calendar year when calculating the cost-per-unit used to
determine the cost of an episode of care (81 FR 76727). We will
continue to monitor the visit length by discipline as more recent data
becomes available, and may propose to update the rates as needed in the
future.
In the CY 2019 HH PPS final rule with comment period (83 FR 56521),
we finalized a policy to maintain the current methodology for payment
of high-cost outliers upon implementation of PDGM beginning in CY 2020
and calculated payment for high-cost outliers based upon 30-day period
of care. Upon implementation of the PDGM and 30-day unit of payment, we
finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020.
Given that CY 2020 was the first year of the PDGM and the change to a
30-day unit of payment, we finalized to maintain the same FDL ratio of
0.56 in CY 2021 as we did not have sufficient CY 2020 data at the time
of CY 2021 rulemaking to proposed a change to the FDL ratio for CY
2021. In the CY 2022 HH PPS final rule with comment period (86 FR
62292), we estimated that outlier payments would be approximately 1.8
percent of total HH PPS final rule payments if we maintained an FDL of
0.56 in CY 2022. Therefore, in order to

[[Page 37658]]

pay up to, but no more than, 2.5 percent of total payments as outlier
payments we finalized an FDL of 0.40 for CY 2022.
(2) FDL Ratio for CY 2023
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of periods that can receive outlier
payments, but makes it possible to select a higher loss-sharing ratio,
and therefore, increase outlier payments for qualifying outlier
periods. Alternatively, a lower FDL ratio means that more periods can
qualify for outlier payments, but outlier payments per period must be
lower.
The FDL ratio and the loss-sharing ratio are selected so that the
estimated total outlier payments do not exceed the 2.5 percent
aggregate level (as required by section 1895(b)(5)(A) of the Act).
Historically, we have used a value of 0.80 for the loss-sharing ratio,
which, we believe, preserves incentives for agencies to attempt to
provide care efficiently for outlier cases. With a loss-sharing ratio
of 0.80, Medicare pays 80 percent of the additional estimated costs
that exceed the outlier threshold amount. Using CY 2021 claims data (as
of March 21, 2022) and given the statutory requirement that total
outlier payments do not exceed 2.5 percent of the total payments
estimated to be made under the HH PPS, we are proposing an FDL ratio of
0.44 for CY 2023. CMS will update the FDL, if needed, once we have more
complete CY 2021 claims data.

K. Comment Solicitation on the Collection of Data on the Use of
Telecommunications Technology Under the Medicare Home Health Benefit

Even prior to the COVID-19 PHE, CMS acknowledged the importance of
technology in allowing HHAs the flexibility of furnishing services
remotely. In the CY 2019 HH PPS final rule with comment (83 FR 56406),
for purposes of the Medicare home health benefit, we finalized the
definition of ``remote patient monitoring'' in regulation at 42 CFR
409.46(e) as the collection of physiologic data (for example,
electrocardiogram (ECG), blood pressure, glucose monitoring) digitally
stored and/or transmitted by the patient and/or caregiver to the HHA.
In the CY 2019 HH PPS final rule with comment, we also finalized in
regulation at Sec. 409.46(e) that the costs of remote patient
monitoring are considered allowable administrative costs (operating
expenses) if remote patient monitoring is used by the HHA to augment
the care planning process (83 FR 56527).
With the declaration of the COVID-19 PHE in early 2020, the use of
telecommunications technology has become more prominent in the delivery
of healthcare in the United States. Anecdotally, many beneficiaries
preferred to stay home than go to physician's offices and outpatient
centers to seek care, while also limiting the number and frequency of
care providers furnishing services inside their homes to avoid exposure
to COVID-19. Accordingly, CMS implemented additional policies under the
HH PPS to make providing and receiving services via telecommunications
technology easier. In the first COVID-19 PHE interim final rule with
comment period (IFC) (85 FR 19230), we changed the plan of care
requirements at Sec. 409.43(a) on an interim basis, for the purposes
of Medicare payment, to state that the plan of care must include any
provision of remote patient monitoring or other services furnished via
a telecommunications system. The plan of care must also describe how
the use of such technology is tied to the patient-specific needs as
identified in the comprehensive assessment and will help to achieve the
goals outlined on the plan of care. The amended plan of care
requirements at Sec. 409.43(a) also state 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) and
(B) of the Act. The CY 2021 HH PPS final rule with comment period (85
FR 70298) finalized these changes on a permanent basis, as well as
amended Sec. 409.46(e) to include not only remote patient monitoring,
but other communication or monitoring services consistent with the plan
of care for the individual, on the home health cost report as allowable
administrative costs.
Sections 1895(e)(1)(A) and (B) of the Act specify that
telecommunications services cannot substitute for in-person home health
services ordered as part of the plan of care certified by a physician
and are not considered a home health visit for purposes of eligibility
or payment under Medicare. Though the use of telecommunications
technology is not to be used as a substitute for in-person home health
services, as ordered on the plan of care, and services provided through
the use of telecommunications technology (rather than in-person) are
not considered a home health visit, anecdotally we have heard that HHAs
are using telecommunication services during the course of a 30-day
period of care and as a result of the COVID-19 PHE, as described
previously. In the first COVID-19 PHE IFC, we provided an example
describing a situation where the use of technology is not a substitute
for the provision of in-person visits as ordered on the plan of care,
rather the plan of care is updated to reflect a change in the frequency
of the in-person visits and to include ``virtual visits'' as part of
the management of the home health patient (85 FR 19248).
Currently, the collection of data on the use of telecommunications
technology is limited to overall cost data on a broad category of
telecommunications services as a part of an HHA's administrative costs
on line 5 of the HHA Medicare cost reports.\18\ As we noted in the CY
2019 HH PPS proposed rule, these costs would then be factored into the
costs per visit. Factoring the costs associated with telecommunications
systems into the costs per visit has important implications for
assessing home health costs relevant to payment, including HHA Medicare
margin calculations (83 FR 32426). Data on the use of
telecommunications technology during a 30-day period of care at the
beneficiary level is not currently collected on the home health claim.
While the provision of services furnished via a telecommunications
system must be included on the patient's plan of care, CMS does not
routinely review plans of care to determine the extent to which these
services are actually being furnished.
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\18\ Found in Ch47 of the Provider Reimbursement Manual at
<a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935</a>.
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Collecting data on the use of telecommunications technology on home
health claims would allow CMS to analyze the characteristics of the
beneficiaries utilizing services furnished remotely, and will give us a
broader understanding of the social determinants that affect who
benefits most from these services, including what barriers may
potentially exist for certain subsets of beneficiaries. Furthermore, in
their March 2022 Report to the Congress: Medicare's Payment Policy,
MedPAC recommended tracking the use of telehealth in the home health
care benefit on home health claims in order to improve payment
accuracy.\19\ As such, to collect

[[Page 37659]]

more complete data on the use of telecommunications technology in the
provision of home health services, we are soliciting comments on the
collection of such data on home health claims, which we aim to begin
collecting by January 1, 2023 on a voluntary basis by HHAs, and will
begin to require this information be reported on claims by July of
2023. Specifically, we are soliciting comments on the use of three new
G-codes identifying when home health services are furnished using
synchronous telemedicine rendered via a real-time two-way audio and
video telecommunications system; synchronous telemedicine rendered via
telephone or other real-time interactive audio-only telecommunications
system; and the collection of physiologic data digitally stored and/or
transmitted by the patient to the home health agency, that is, remote
patient monitoring. We would capture the utilization of remote patient
monitoring through the inclusion of the start date of the remote
patient monitoring and the number of units indicated on the claim. This
may help us understand in general how long remote monitoring is used
for individual patients and for which conditions. Although we plan to
begin collecting this information beginning with these three G-codes on
January 1, 2023, we are interested in comments on whether there are
other common uses of telecommunications technology under the home
health benefit that would warrant additional G-codes that would be
helpful in tracking the use of such technology in the provision of
care.
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\19\ Medicare Payment Advisory Commission (MedPAC), Report to
the Congress: Medicare Payment Policy. March 2022, P. 271. found at
<a href="https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_SEC.pdf">https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_SEC.pdf</a>.
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In accordance with section 40.2 in Chapter 10 of the Medicare
Claims Processing Manual (Pub. 100-04), we plan to issue instructions
that these forthcoming G-codes are to be used to report services in
line item detail and each service must be reported as a separate line
under the appropriate revenue code (04x--Physical Therapy, 043x--
Occupational Therapy, 044x--Speech-Language Pathology, 055x--Skilled
Nursing, 056x--Medical Social Services, or 057x--Home Health Aide).
While we do not plan on limiting the use of these G-codes to any
particular discipline, we would not anticipate use of such technology
would be reported under certain revenue codes such as 027x or 0623--
Medical Supplies, or revenue code 057x--Home Health Aide. We are
interested in comments from the public on our belief that, due to the
hands-on nature of home health aide services, the use of
telecommunications technology would generally not be appropriate for
such services. We remind interested parties that if there is a service
that cannot be provided through telecommunications technology (for
example, wound care that requires in-person, hands-on care from a
skilled nurse), the HHA must make an in-person visit to furnish such
services (85 FR 39428). We are also requesting comments regarding the
appropriateness of such technology for particular services in order to
more clearly delineate when the use of such technology is appropriate.
This may help inform how we use this analysis, for instance, connecting
how such technology is impacting the provision of care to certain
beneficiaries, costs, quality, and outcomes, and determine if further
requirements surrounding the use of telecommunications technology are
needed.
We are also soliciting comments on future refinement of these G-
codes beginning July 1, 2023. Specifically whether the codes should
differentiate the type of clinician performing the service via
telecommunications technology, such as a therapist versus therapist
assistant; and whether new G-codes should differentiate the type of
service being performed through the use of telecommunications
technology, such as: skilled nursing services performed for care plan
oversight (for example, management and evaluation or observation and
assessment) versus teaching; or physical therapy services performed for
the establishment or performance of a maintenance program versus other
restorative physical therapy services.
We will issue program instruction outlining the use of new codes
for the purposes of tracking the use of telecommunications technology
under the home health benefit with sufficient notice to enable HHAs to
make the necessary changes in their electronic health records and
billing systems. As stated previously, we will begin collecting this
information on home health claims by January 1, 2023, on a voluntary
basis by HHAs, and will require this information be reported on home
health claims beginning in July, 2023. We would issue further program
instruction prior to July 1, 2023, if the G-code description changes
between January 1, 2023, and July 1, 2023, based on comments in this
proposed rule. However, we reiterate that the collection of information
on the use of telecommunications technology does not mean that such
services are considered ``visits'' for purposes of eligibility or
payment. In accordance with section 1895(e)(1)(A) and (B) of the Act,
such data will not be used or factored into case-mix weights, or count
towards outlier payments or the LUPA threshold per payment period.

III. Home Health Quality Reporting Program (HH QRP)

A. Background and Statutory Authority

The HH QRP is authorized by section 1895(b)(3)(B)(v) of the Act.
Section 1895(b)(3)(B)(v)(II) of the Act requires that, for 2007 and
subsequent years, each home health agency (HHA) submit to the Secretary
in a form and manner, and at a time, specified by the Secretary, such
data that the Secretary determines are appropriate for the measurement
of health care quality. To the extent that an HHA does not submit data
in accordance with this clause, the Secretary shall reduce the home
health market basket percentage increase applicable to the HHA for such
year by 2 percentage points. As provided at section 1895(b)(3)(B)(vi)
of the Act, depending on the market basket percentage increase
applicable for a particular year, as further reduced by the
productivity adjustment (except in 2018 and 2020) described in section
1886(b)(3)(B)(xi)(II) of the Act, the reduction of that increase by 2
percentage points for failure to comply with the requirements of the HH
QRP may result in the home health market basket percentage increase
being less than 0.0 percent for a year, and may result in payment rates
under the Home Health PPS for a year being less than payment rates for
the preceding year. The HH QRP regulations can be found at 42 CFR
484.245 and 484.250.

B. General Considerations Used for the Selection of Quality Measures
for the HH QRP

For a detailed discussion of the considerations we historically use
for measure selection for the HH QRP quality, resource use, and other
measures, we refer readers to the CY 2016 HH PPS final rule (80 FR
68695 through 68696). In the CY 2019 HH PPS final rule with comment
period (83 FR 56548 through 56550), we finalized the factors we
consider for removing previously adopted HH QRP measures.

C. Quality Measures Currently Adopted for the CY 2023 HH QRP

The HH QRP currently includes 20 measures for the CY 2023 program
year, as described in Table C1.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP23JN22.054

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[[Page 37662]]

D. Proposal To End the Suspension of OASIS Data Collection on Non-
Medicare/Medicaid HHA Patients To Require HHAs To Submit All-Payer
OASIS Data for Purposes of the HH QRP, Beginning With the CY 2025
Program Year

In 1987, Congress added a new section 1891(d) to the Act (section
4021(b) of Pub. L. 100-203 (December 22, 1987)). The statute required
the Secretary to develop a comprehensive assessment for Medicare-
participating HHAs. In 1993, CMS (then known as HCFA) developed an
assessment instrument that identified each patient's need for home care
and that meets the patient's medical, nursing, rehabilitative, social
and discharge planning needs. As part of this assessment, Medicare-
certified HHAs were required to use a standard core assessment data
set, the ``Outcome and Assessment Information Set'' (``OASIS'').
Section 1891(d) of the Act requires, as part of the home health
assessment, a survey of the quality of care and services furnished by
the agency as measured by indicators of medical, nursing, and
rehabilitative care provided by the HHA. OASIS is the designated
assessment instrument (or instruments) for use by an HHA in complying
with the requirement. In the January 25, 1999, final rule titled,
``Medicare and Medicaid Programs: Comprehensive Assessment and Use of
the OASIS as Part of the Conditions of Participation for Home Health
Agencies,'' we also required HHAs to submit the data collected by the
OASIS assessment to HCFA as an HHA condition of participation (64 FR
3772).
Early on, privacy concerns were raised by HHAs around the
collection of all-payer data and the release of personal health
information. As we indicated in the study, any new collection
requirements such as this raise concerns and this was no exception. In
response to the privacy concerns, CMS took steps to mask the personal
health information before the data was transmitted to the Quality
Improvement and Evaluation System (QIES). In the study, we collected
information from HHAs and the industry including the surveying of
Agencies by one of the trade organizations and note that the privacy
concerns initially raised were not raised as an ongoing concern. Based
upon this feedback, we conclude that the privacy issues raised
initially are no longer a concern.
Subsequently, Congress enacted section 704 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA),
which suspended the legal authority of the Secretary to require HHAs to
report OASIS information on non-Medicare/non-Medicaid patients until at
least 2 months after the Secretary published final regulations on CMS's
collection and use of those data following the submission of a report
to Congress on the study required under section 704(c) of the MMA. This
study required the Secretary to examine the use of non-Medicare/non-
Medicaid OASIS data by large HHAs, including whether there were unique
benefits from the analysis of that information that CMS could not
obtain from other sources, and the value of collecting such data by
small HHAs versus the administrative burden of collection. In
conducting the study, the Secretary was also required to obtain
recommendations from quality assessment experts on the use of such
information and the necessity of HHAs collecting such information.\20\
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\20\ <a href="https://www.govinfo.gov/content/pkg/PLAW-108publ173/pdf/PLAW-108publ173.pdf">https://www.govinfo.gov/content/pkg/PLAW-108publ173/pdf/PLAW-108publ173.pdf</a>.
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The Secretary conducted the study required under section 704 of the
MMA in 2004 to 2005 and submitted it to Congress in December 2006
(<a href="https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf">https://www.cms.gov/files/document/cms-oasis-study-all-payer-data-submission-2006.pdf</a>). The study made the following key findings:
<bullet> There are significant differences between private pay and
Medicare/Medicaid patients in terms of diagnosis, patient
characteristics, and patient outcomes. Within-agency correlation
between Medicare/Medicaid and private pay patient outcomes was low,
indicating that outcomes based on Medicare/Medicaid patient data cannot
be generalized to serve as a proxy for private pay patients.
<bullet> Risk adjustment models at the time did not account for all
of the sources of variation in outcomes across different payer groups
and as a result, measures could produce misleading information.
<bullet> Requiring OASIS data collection on private pay patients at
Medicare-certified HHAs could increase staff and patient burden and
would require CMS to develop a mechanism for these agencies to receive
reports from CMS on their private pay patients.
<bullet> A change to all-payer assessment data collection would
strengthen CMS's ability to assess and report indicators of the quality
of care furnished by HHAs to their entire patient population.
After considering the study's findings, the Secretary noted that
the suspension of OASIS collection from non-Medicare patients would
continue because ``it would be unfair to burden the providers with the
collection of OASIS at this time since the case mix and outcomes
reports are not designed to include private pay patients.'' The
Secretary also noted that it would be inappropriate for CMS to collect
the private pay OASIS data and not use it. The Secretary further stated
that ``if funding for the development of HHA patient outcome and case
mix reports for private pay patients is identified as a priority
function, CMS would not hesitate to call for the removal of the
suspension of OASIS for private pay patients.''
In the November 9, 2006, final rule, ``Medicare Program; Home
Health Prospective Payment System Rate Update for Calendar Year 2007
and Deficit Reduction Act of 2005 Changes to Medicare Payment for
Oxygen Equipment and Capped Rental Durable Medical Equipment'', we
finalized our policy that the agency would continue to suspend
collection of OASIS all payer data (71 FR 65883 and 65889).
Since 2006, CMS has laid the groundwork for the resumption of all-
payer data submission because we want to represent overall care being
provided to all patients in an HHA. CMS implemented the QIES and iQIES
provider data reporting systems to securely transfer and manage
assessment data across QRPs, including HH. These systems can now
support an extensive range of provider reports, including case-mix
reports for private pay patients. The HH QRP program expanded quality
domains to include patient reported outcome measures and new assessment
and claims-based quality measures. We sought and received public
comment on several occasions regarding data reporting on all HHA
patients, regardless of payer type. In February 2012, the NQF-convened
MAP also issued a report that encouraged establishing a data collection
and transmission infrastructure for all payers that would work across
PAC settings.\21\ In the July 28, 2017, and November 7, 2017, ``Home
Health Prospective Payment System Rate Update and CY 2018 Case-Mix
Adjustment Methodology Refinements; Home Health Value-Based Purchasing
Model; and Home Health Quality Reporting Requirements'' proposed and
final rules (at 82 FR 35372 through 35373 and 82 FR 51736 through
51737, respectively) and in the July 18, 2019,

[[Page 37663]]

and November 8, 2019, ``Medicare and Medicaid Programs; CY 2020 Home
Health Prospective Payment System Rate Update'' proposed and final
rules (at 84 FR 34686 and 84 FR 60478, respectively), we sought and
responded to input on whether we should require quality data reporting
on all HHA patients, regardless of payer source, to ensure
representation of the quality of the services provided to the entire
HHA population. In the ``CY 2018 Home Health Prospective Payment System
Rate Update and CY 2019 Case-Mix Adjustment Methodology Refinements;
Home Health Value-Based Purchasing Model; and Home Health Quality
Reporting Requirements'' final rule, some commenters shared that there
would be increased burden from requiring all-payer data submissions (82
FR 51676). A few commenters also raised the issue of whether it would
be appropriate to collect and report private pay data, given that
private payors may have different care pathways, approval, and
authorization processes. In the CY 2020 HH PPS proposed rule, we also
sought input on whether collection of quality data used in the HH QRP
should include all HHA patients, regardless of their payer source (84
FR 60478). Several commenters supported expanding the HH QRP to include
collection of data on all patients regardless of payer. Several
commenters noted that this expanded data collection would not be overly
burdensome because the majority of HHAs already complete the OASIS on
all patients, regardless of payer status. Commenters were concerned
that the usefulness of all-payer data collection to CMS's health policy
development would not outweigh the additional reporting burden. Several
commenters supporting all-payer data collection stated that expansion
of the data collection would align the HH QRP's data collection policy
with that of Hospices and Long-Term Care Hospitals (LTCHs), as well as
the data collection policy under the Merit-based Incentive Payment
System. Other reasons cited by commenters who supported the expanded
data collection included more accurate representation of the quality of
care furnished by HHAs to the entire HH population, the ability of such
data to better guide quality improvement activities, and the reduction
of current administrative efforts made by HHAs to ensure that only
OASIS data for Medicare and Medicaid patients are reported to CMS.
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