VNAA - Visiting Nurse Associations of America
VNAA The Voice of Home Healthcare

Member Update - Operational

VNAA Member Update

For the week of 03/20/2006

Details Begin to Emerge On Revisions to PPS System 

The second meeting of the ABT Associates Technical Expert Panel (TEP) on revisions to the Medicare home health prospective payment system was held on March 14th at CMS.  

VNAs were represented by Nancy Roberts (VNA of Care New England), Lynn Jones (Christiana Care VNA), Bob Rosati (VNS of New York) and Bob Wardwell of the VNAA staff.  The TEP was established to provide input on questions arising in the development of potential changes to the home health PPS system.  While none of the things discussed in these meetings can be assumed to be a part of the final system, the areas under consideration do give a window into the likely direction of PPS refinement.

At this second meeting the outline of several of the changes to the PPS system began to take shape, based on the research data presented by ABT Associates, the contractor CMS used in the development of the original PPS and for this first major revision of PPS.  From a timing perspective, CMS is still hoping to publish a formal Proposed Rule reflecting the refinements to the PPS system in late 2006.  While legally CMS could put the new system in place shortly after the end of a 60-day comment period, it’s likely that the new system will not be implemented earlier than January 2008 due to the need to publish a final rule and the significant systems changes involved.

While the potential changes and the data being developed to support them are too detailed and numerous to capture in a short space afforded by MU, we will be discussing them in greater detail at the VNAA Annual Meeting both at the Legislative-Regulatory Luncheon and the Financial Manager’s Group Meeting.  There is every reason to believe CMS is seriously considering most of the changes discussed by ABT, since the model now under consideration boosts the predictive power of the PPS model from the current .21 level to over .40 as compared to the .32 level of the PPS model as it was put in place in 2000.  In other words, the changes discussed with the TEP will correct the deterioration in how well the PPS distributes money from its current deteriorated state to a level twice as good as we now have and even better than when the program started in 2000.

A “four leg model” seems to be the leading contender for change.  In this model, rates would differ based on four key variables:  services in the 1st or 2nd episode vs., services in the 3rd our subsequent episodes; and episodes with 13 or fewer therapy visits vs. episodes with 14 or more therapy visits. Payments will tend to be higher, all other things being equal, in the 3 plus episode and 14 therapy visit leg.

Under the 4-leg model, the current 10-therapy threshold is replaced with a higher, probably 14 therapy threshold built into the basic payment structure as discussed above.  But recognizing the payment premium and resulting provider behavior surrounding the single 10 visit threshold, there will likely be a therapy add-on payment for 6 therapy visits but less than 14 as well as an add-on for therapy visits over 20.  Thus the dollars going toward therapy cases will be distributed more evenly.  It’s also possible that incremental add-ons will be given for each additional therapy visit between 7 and 13 and between 15 and 19.  Since this latter alternative would bring the PPS very close to a pay-per-visit system for therapy cases, this feature is still under intense investigation.

As anticipated, the current PPS scoring based on OASIS variables will be completely restructured with those current variables that are no longer statistically significant or that contribute little to predicting cost likely to disappear.  In their place are likely to be a significant number on new scoring points based on primary and secondary diagnosis.  Note that because V-codes have not been found to be useful as yet, agencies will need to code home health primary and secondary diagnoses separately with numeric ICD-9 codes for PPS purposes to assure proper scoring credit.  

It also seems likely that supply costs will be distributed based upon scoring of diagnoses and specific procedures associated with high supply cost rather that the current across-the-board distribution.  While the dollars awarded are still unlikely to match actual non-routine supply costs, they will be much closer than under the current system in which every episode gets roughly the same small payment for supplies.

ABT is also examining the impact of the elimination of SCIC adjustment, increasing the PEP proration and better compensating LUPA episodes.  Of course whether it is improving these payment adjustments or improving the case mix weights discussed above, CMS indicates it is required to do so in a budget neutral manner.  This means that the total payments under the refined PPS system must be equal to the payments that would have been made under the old system.  So the good news is that CMS has indicated it will not try to squeeze budget savings out of PPS refinement but the bad news is that for every improvement in payment for cases currently underpaid, there will be a reduction in payment for some other type of case in the system which is seen as overpaid.  But since VNAs, in general, are more likely to see the full range of cases in their case loads, a more equitable distribution of dollars is likely to improve the revenue picture for our members relative to the rest of the home health community, so long as budget neutrality is accurately achieved.

VNAA Provides Congress Testimony on Medicare Payment Policies 

Last week, VNAA submitted written testimony for inclusion in the Ways and Means Health Subcommittee record.  The Subcommittee held a hearing on Medicare Payment Policies early in March in response to MedPAC's March Report, which included a recommendation to freeze the home health inflation update in 2007.  

VNAA provided this testimony to ensure that the Subcommittee's record reflects some of the basic flaws in the MedPAC recommendation, and contains our warning that additional freezes could adversely impact beneficiary access to home health.  The testimony also refutes MedPAC's data analysis and recommends that MedPAC 1) include hospital based home health agencies in the margin analysis, and 2) discontinue their use of "weighted averages" and instead give all agencies equal weight to ensure a more accurate analysis.  

VNAA's testimony will be part of the official Health Subcommittee record and distributed to Members and Staff of the Subcomittee.  A copy of the testimony is attached to this article.


2006 Medicare Immunization Administration Rates  

VNAA has been working with CMS to produce a listing of the 2006 Medicare Immunization Administration Rates priced under the physician fee schedule.  These rates are available to VNAs who bill Medicare for influenza, Pneumoccal and Hepatitis B immunization as Mass Immunization Suppliers rather than home health agencies.  (Home health agencies may bill Medicare immunization administration for their non-PPS patients but are paid an interim rate equal to a percentage of their charges and a final payment equal to their Medicare reasonable cost per their Medicare cost report.)  Any VNA who wishes to bill as Mass Immunization Supplier rather than a home health agency may do so, but must apply for this separate Medicare supplier status and be issued a separate supplier number.

Since "Mass Immunization Supplier" rates are based on the same fee schedule used for physicians, these rates for 2006 reflect the restoration of the cut in rates that would have taken place in the physician fee schedule had the Deficit Reduction Act of 2005 not eliminated that cut.  Therefore the 2006 rates are very close to the rates for 2005, with positive and negative changes measured in cents rather than dollars.

VNAA has produced a table of the 2006 rates by merging data from the CMS website based on advice from CMS.

 This table shows the 2006 rates by geographic location.

VNA of Somerset Hills Awarded $300,000 Challenge Grant From Kresge Foundation 

(BERNARDSVILLE, NJ)  The Visiting Nurse Association of Somerset Hills (VNA) was awarded a $300,000 challenge grant from The Kresge Foundation in support of their Centennial Campaign to raise $7.75 million needed to purchase property and construct a new headquarters in Basking Ridge.  The VNA was one of a select group of 217 applicants chosen by The Kresge Foundation to receive a 2005 challenge grant.    

“We are deeply honored that the VNA of Somerset Hills was selected by The Kresge Foundation to receive this esteemed award,” stated Evelyn K. Savage, chief executive officer, VNA. “It demonstrates that they have recognized our long-standing and future commitment to serving the home and community healthcare needs of our communities, as well as being a fiscally sound organization.”

John E. Marshall, III, president and CEO of The Kresge Foundation, indicated, “In this cycle of grant making, our Trustees were pleased to support a range of organizations reflecting almost the entire breadth of the nonprofit sector. This diverse group is responding to the new challenges presented by their communities or sustaining activities that have demonstrated their effectiveness.  ”

The VNA’s Centennial Campaign is co-chaired by Joseph Frelinghuysen, Jr. and Grania Allport.  The Honorable Thomas Kean serves as Honorary Chair. After operating for the past 100 years from their original facility in Bernardsville, a new facility is needed to accommodate their growth and to meet the needs of an expanding elderly population.


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