MIR-20007-1AB, January 2007

Medicare Home Health Prospective Payment System (HH PPS) Rate Update for Calendar Year (CY) 2007

Provider Types Affected
The Deficit Reduction Act (DRA; Section 5201) provides that Medicare home health payments be updated by the applicable home health market basket percentage increase for CY 2007, and the DRA requires that home health agencies (HHAs) report such quality data as determined by the Secretary. HHAs that do not report the required quality data receive a two percent reduction to the home health market basket percentage increase. For CY 2007, the applicable home health market basket percentage increase is 3.3 percent.

The one-year transition policy of using 50 percent of the metropolitan statistical area (MSA) based and 50 percent of the CBSA-based wage index expires at the end of CY 2006. For CY 2007, the Centers for Medicare & Medicaid Services (CMS) is using the core based statistical area (CBSA) wage index only. CMS is also revising the fixed dollar loss ratio, which is used in the calculation of outlier payments, from 0.65 in CY 2006 to 0.67 for CY 2007.

The labor adjustment to the Prospective Payment System (PPS) rates will continue to be based on the site of service of the beneficiary as set forth in the 42 CFR at 484.220 and 484.230 ( http://www.gpoaccess.gov/cfr/retrieve.html) . The case mix adjustment is applied to 60-day episode payments, and the labor adjustment is applied to both 60-day episode and per-visit payments.

The CY 2007 payment rates apply to episodes that end on or after January 1, 2007, and before January 1, 2008.

The following four tables show the payments to HHAs that do report the required quality data.

The national standardized per-visit amounts are used to calculate low utilization payment adjustments (LUPAs) and outlier payments. The national per-visit amounts are as follows:

Section 5201 of the DRA provides for a five percent payment increase for home health services furnished in a rural (non-CBSA) area for episodes and visits that begin on or after January 1, 2006 and before January 1, 2007. While the rural add-on primarily affects those episodes paid based on CY 2006 rates, it also affects a number of CY 2007 episodes.

The per-visit amounts applied to LUPA and outlier payments for services furnished in rural areas are as follows:

The following tables show the payments to HHAs that do not report the required quality data.

The DRA provides that if the required quality data is not submitted by an HHA, then the home health market basket percentage increase applicable to that provider’s payments will be reduced by two percent. Therefore, the increase that is applied to CY 2007 payments to HHAs that do not report the report the required quality data is 1.3 percent (CY 2007 market basket update of 3.3 percent minus two percent). The rural add-on also applies to payments for services furnished in rural (non-CBSA) areas to HHAs that do not report the quality data. Again, the rural add-on applies to episodes that begin on or after January 1, 2006 and before January 1, 2007.

The per-visit amounts applied to LUPA and outlier payments to HHAs that do not report the quality data are as follows:

Additional Information
For complete details, please see the official instruction, CR5423, issued to your FI, RHHI, or A/B MAC regarding this change. That instruction may be viewed at http://www.cms.hhs.gov/Transmittals/downloads/R253OTN.pdf on the CMS Web site.

If you have any questions, please contact your FI, RHHI, or A/B MAC at their toll-free number, which may be found on the CMS Web site at http://www.cms.hhs.gov/MLNProducts/downloads/CallCenterTollNumDirectory.zip.

Disclaimer
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.

MLN Matters Number: MM5423
Related Change Request (CR) #: 5423
Related CR Release Date: December 15, 2006
Effective Date: January 1, 2007
Related CR Transmittal #: R253OTN
Implementation Date: January 2, 2007

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