Medicare and Medicaid Programs; Home Health Prospective Payment System Rate Update for CY 2014, Home Health Quality Reporting Requirements, and Cost…
Federal Information & News Dispatch, Inc. |
Final rule.
CFR Part: "42 CFR Part 431"
RIN Number: "RIN 0938-AR52"
Citation: "78 FR 72256"
Document Number: "CMS-1450-F"
"Rules and Regulations"
SUMMARY: This final rule will update the Home Health Prospective Payment System (HH PPS) rates, including the national, standardized 60-day episode payment rates, the national per-visit rates, the low-utilization payment adjustment (LUPA) add-on, and the non-routine medical supply (NRS) conversion factor under the
   DATES: These regulations are effective on
   FOR FURTHER INFORMATION CONTACT:
   Joan Proctor, (410) 786-0949, for information about the HH PPS Grouper and ICD-10 Conversion.
   Kristine Chu, (410) 786-8953, for information about rebasing and the HH payment reform study and report.
   Mollie Knight, (410) 786-7948, for information about the HH market basket.
   Kim Roche, (410) 786-3524, for information about the HH quality reporting program.
   Lori Teichman, (410) 786-6684, for information about HH CAHPS(R).
   Jenny Filipovits, (410) 786-8141, for information about cost allocation of survey expenses.
   SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
   A. Purpose
   B. Summary of the Major Provisions
   C. Summary of Costs and Benefits
II. Background
   A. Statutory Background
   B. System for Payment of
   C. Updates to the HH PPS
III. Summary of the Provisions of the Proposed Rule
   A. ICD-9-CM Grouper Refinements, Effective
   B. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion and Diagnosis Reporting on Home Health Claims
   C. Adjustment to the HH PPS Case-Mix Weights
   D. Rebasing the National, Standardized 60-day Episode Payment Amount, LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion Factor
   1. Rebasing the National, Standardized 60-day Episode Payment Amount
   2. Rebasing the Low-Utilization Payment Adjustment (LUPA) Per-Visit Payment Amounts
   3. Rebasing the Nonroutine Medical Supply (NRS) Conversion Factor
   E. CY 2014 Home Health Payment Rate Update
   1. CY 2014 HH PPS Payment Update Percentage
   2. Home Health Care Quality Reporting Program
   3. Home Health Wage Index
   4. CY 2014 Annual Payment Update
   F. Outlier Policy
   G. Payment Reform: Home Health Study and Report
   H. Cost Allocation of Survey Expenses
IV. Analysis and Responses to Public Comment
   A. ICD-9-CM Grouper Refinements, Effective
   B. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion and Diagnosis Reporting on Home Health Claims
   1. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion y
   2. Diagnosis Reporting on Home Health Claims
   C. Adjustment to the HH PPS Case-Mix Weights
   D. Rebasing the National, Standardized 60-day Episode Payment Amount, LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion Factor
   1. Rebasing the National, Standardized 60-day Episode Payment Amount
   2. Rebasing the Low-Utilization Payment Adjustment (LUPA) Per-Visit Payment Amounts
   3. Rebasing the Nonroutine Medical Supply (NRS) Conversion Factor
   E. CY 2014 Rate Update
   1. CY 2014 HH PPS Payment Update Percentage
   2. Home Health Care Quality Reporting Program
   3. Home Health Wage Index
   4. CY 2014 Annual Payment Update
   a. National, Standardized 60-Day Episode Payment Rate
   b. CY 2014 National, Standardized 60-Day Episode Payment Rate
   c. CY 2014 National Per-Visit Rates
   d. CY 2014 Low-Utilization Payment Adjustment (LUPA) Add-On Factor
   e. CY 2014 Nonroutine Medical Supply (NRS) Conversion Factor and Relative Weights
   5. Rural Add-On
   F. Outlier Policy
   1. Background
   2. Regulatory Updates
   3. Statutory Updates
   4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
   5. Outlier Relationship to the Home Health Study and Report
   G. Payment Reform: Home Health Study and Report
   H. Cost Allocation of Survey Expenses
   V. Collection of Information Requirements
   VI. Waiver of Delay in Effective Date
   VII. Regulatory Impact Analysis
   VIII. Federalism Analysis
   Regulations Text
Acronyms
   In addition, because of the many terms to which we refer by abbreviation in this final rule, we are listing these abbreviations and their corresponding terms in alphabetical order below:
ACA The Affordable Care Act.
ACH LOS Acute care hospital length of stay.
ADL Activities of daily living.
APU Annual payment update.
BBA Balanced Budget Act of 1997 (Pub. L. 105-33, enacted
BBRA Medicare,
CAD Coronary artery disease.
CAGR Compound Annual Growth Rate.
CAH Critical access hospital.
CAHPS(R) Consumer assessment of healthcare providers and systems.
CBSA Core-based statistical area.
CASPER Certification and survey provider enhanced reports.
CHF Congestive heart failure.
CMI Case-mix index.
CMP Civil monetary penalties.
CoPs Conditions of participation.
COPD Chronic obstructive pulmonary disease.
CVD Cardiovascular disease.
CY Calendar year.
DG Diagnostic group.
DM Diabetes mellitus.
DME Durable medical equipment.
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted
FDL Fixed dollar loss.
FFP Federal financial participation.
FI Fiscal intermediaries.
FR
FY Fiscal year.
GEM General equivalency mapping.
HAVEN Home assessment validation and entry system.
HCC Hierarchical condition categories.
HH Home health.
HHAs Home health agencies.
HHCAHPS(R) Home Health Care Consumer Assessment of
HH PPS Home health prospective payment system.
HHQRP Home Health Quality Reporting Program.
HHRG Home health resource group.
HIPAA Health Insurance Portability Accountability Act of 1996 (Pub. L. 104-191, enacted
ICD-9 International Classification of Diseases, 9th Edition.
ICD-9-CM International Classification of Diseases, 9th Edition, Clinical Modification.
ICD-10 International Classification of Diseases, 10th Edition.
ICD-10-CM International Classification of Diseases, 10th Edition, Clinical Modification.
ICF-IID Intermediate care facilities for individuals with intellectual disabilities.
IH Inpatient hospitalization.
IPPS Acute Inpatient Prospective Payment System
IRF Inpatient rehabilitation facility.
LTCH Long-term care hospital.
LUPA Low-utilization payment adjustment.
MAC Medicare Administrative Contractor.
MAP Measure applications partnership.
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173, enacted
MSA Metropolitan statistical areas.
NF Nursing facility.
NRS Non-routine supply.
OASIS Outcome & Assessment Information Set.
OBRA Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-2-3, enacted
OCESAA Omnibus Consolidated and Emergency Supplemental Appropriations Act (Pub. L. 105-277, enacted
OES Occupational employment statistics.
OIG
OT Occupational therapy.
P4R Pay-for-reporting.
PAC-PRD Post-Acute Care Payment Reform Demonstration.
PEP Partial episode payment [Adjustment].
POC Plan of care.
PT Physical therapy.
QAP Quality assurance plan.
QIES CMS Health Care Quality Improvement System.
RAP Request for anticipated payment.
RF Renal failure.
RFA Regulatory Flexibility Act (Pub. L. 96-354, enacted on
RIA Regulatory impact analysis.
SCHIP State Children's Health Insurance Program
SLP Speech-language pathology.
SN Skilled nursing.
SNF Skilled nursing facility.
UMRA Unfunded Mandates Reform Act of 1995 (Pub. L. 104-04, enacted on
I. Executive Summary
A. Purpose
   This rule updates the payment rates for home health agencies (HHAs) for calendar year (CY) 2014, as required under section 1895(b) of the Social Security Act (the Act), including the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit rates, and the NRS conversion factor, required under section 3131(a) of the Patient Protection and Affordable Care Act of 2010 (Pub. L 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L 111-152) (collectively referred to as the "Affordable Care Act"). This rule will also address: International Classification of Diseases, 9th Edition (ICD-9) Grouper refinements; implementation of the International Classification of Diseases, 10th Edition (ICD-10); a budget neutral adjustment to the case-mix weights; updates to the payment rates by the HH payment update percentage (for this final rule, the HH market basket); adjustments for geographic differences in wage levels; outlier payments; the submission of quality data; and additional payments for services provided in rural areas. This rule also clarifies state
B. Summary of the Major Provisions
   In this final rule, we will remove 170 diagnosis codes from assignment to diagnosis groups within the HH PPS Grouper, effective
   For CY 2014, we are adjusting the case-mix weights in order to reduce the average case-mix weight for CY 2012 from 1.3464 to 1.0000, in a budget neutral manner. As required by section 3131(a) of the Affordable Care Act, we are rebasing the national, standardized 60-day episode payment amount, the national per-visit rates and the NRS conversion factor. The rebasing adjustments will occur over the next four years. The rebasing adjustments will reduce the national, standardized 60-day episode payment amount in each year from CY 2014 to CY 2017 by
   We will continue work on the home health study required by section 3131(d) of the Affordable Care Act, which will assess the costs associated with providing access to care to patients with high severity of illness, low income patients, and/or patients in medically underserved areas. Additionally, we will continue to use Outcome & Assessment Information Set (OASIS) data, claims data, and patient experience of care data, as forms of quality data to meet the requirement that HHAs submit data appropriate for the measurement of HH care quality for the annual payment update (APU) for 2014. We will implement two claims-based measures of quality for HH patients who were recently hospitalized, as these patients are at an increased risk of additional acute care hospital use. We are also reducing the number of HH quality measures currently reported to HHAs.
   Lastly, we will review each state's allocation of costs for HHA surveys for compliance with OMB Circular A-87 principles and the statutes in 2014 with the goal of ensuring full compliance no later than
C. Summary of Costs and Benefits
Table IV.B.4-2--Standard Distribution Assumptions Used in Estimating Total Renewable Fuel Volume for 2014 Ethanol that could reasonably be consumed Half-normal. Available volumes of non-ethanol cellulosic biofuel Combined. *a Available volumes of biomass-based diesel Half-normal. Available volumes of non-ethanol advanced biofuel Normal. Available volumes of non-ethanol non-advanced renewable Normal. fuel *a As described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce non-ethanol cellulosic biofuel using the sameMonte Carlo process.
II. Background
A. Statutory Background of the Home Health PPS
   The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted
   Section 1895 of the Act entitled "
   Section 1895(b)(3)(A) of the Act requires the following: (1) The computation of a standard prospective payment amount that includes all costs for HH services that would have been covered and paid for on a reasonable cost basis had the HH PPS not been in effect and that such amounts be initially based on the most recent audited cost report data available to the Secretary; and (2) adjustment of the standardized prospective payment amount to account for the effects of case-mix and wage levels among HHAs.
   Section 1895(b)(3)(B) of the Act addresses the annual update to the standard prospective payment amounts by the HH applicable percentage increase. Section 1895(b)(4) of the Act governs the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the standard prospective payment amount to be adjusted for case-mix and geographic differences in wage levels. Section 1895(b)(4)(B) of the Act requires the establishment of an appropriate case-mix change adjustment factor for significant variation in costs among different units of services.
   Similarly, section 1895(b)(4)(C) of the Act requires the establishment of wage adjustment factors that reflect the relative level of wages, and wage-related costs applicable to HH services furnished in a geographic area compared to the applicable national average level. Under section 1895(b)(4)(C) of the Act, the wage-adjustment factors used by the Secretary may be the factors used under section 1886(d)(3)(E) of the Act.
   Section 1895(b)(5) of the Act gives the Secretary the option to make additions or adjustments to the payment amount otherwise paid in the case of outliers due to unusual variations in the type or amount of medically necessary care. Section 3131(b)(2) of the Affordable Care Act, amended section 1895(b)(5) of the Act, so that if the Secretary provides for an outlier policy, total outlier payments in a given year would not exceed 2.5 percent of total payments projected or estimated and that the standard prospective payment (or amounts) are reduced by 5 percent. The provision also made permanent a 10 percent agency-level outlier payment cap.
   In accordance with the statute, we published a final rule in the
   Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted
   The Affordable Care Act made additional changes to the HH PPS. Section 3131(c) of the Affordable Care Act amended section 421(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on
   Section 3131(a) of the Affordable Care Act mandates that, starting in CY 2014, the Secretary must apply an adjustment to the national, standardized 60-day episode payment amount and other amounts applicable under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. In addition, section 3131(a) of the Affordable Care Act mandates that this rebasing adjustment must be phased-in over a 4-year period in equal increments, not to exceed 3.5 percent of the payment amount (or amounts) as of the date of enactment (
B. System for Payment of
   Generally,
   For episodes with four or fewer visits,
C. Updates to the HH PPS
   As required by section 1895(b)(3)(B) of the Act, we have historically updated the HH PPS rates annually in the
   To account for the changes in case-mix that were not related to an underlying change in patient health status, we implemented a reduction, over 4 years, to the national, standardized 60-day episode payment rates. That reduction was to be 2.75 percent per year for 3 years beginning in CY 2008 and 2.71 percent for the fourth year in CY 2011. In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses of case-mix change and finalized a reduction of 3.79 percent, instead of 2.71 percent, for CY 2011 and deferred finalizing a payment reduction for CY 2012 until further study of the case-mix change data and methodology was completed.
   In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-day national episode rates and the national per-visit rates. In addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528), our analysis indicated that there was a 22.59 percent increase in overall case-mix from 2000 to 2009 and that only 15.76 percent of that overall observed case-mix percentage increase was due to real case-mix change. As a result of our analysis, we identified a 19.03 percent nominal increase in case-mix. To fully account for the 19.03 percent nominal case-mix growth, which was identified from 2000 to 2009, we finalized a 3.79 percent payment reduction in CY 2012 and a 1.32 percent payment reduction for CY 2013.
   In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a 1.32 percent reduction to the payment rates for CY 2013 to account for nominal case-mix growth from 2000 through 2010. When taking into account the total measure of case-mix change (23.90 percent) and the 15.97 percent of total case-mix change estimated as real from 2000 to 2010, we obtained a final nominal case-mix change measure of 20.08 percent from 2000 to 2010 (0.2390 * (1--0.1597) = 0.2008). To fully account for the remainder of the 20.08 percent increase in nominal case-mix beyond that which was accounted for in previous payment reductions, we estimated that the percentage reduction to the national, standardized 60-day episode rates for nominal case-mix change would be 2.18 percent. We considered proposing a 2.18 percent reduction to account for the remaining increase in measured nominal case-mix; however, we moved forward with the 1.32 percent payment reduction to the national, standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 FR 68532).
III. Summary of the Provisions of the Proposed Rule
   The CY 2014 HH PPS proposed rule (78 FR 40272) included the following proposals and updates:
A. ICD-9-CM Grouper Refinements, Effective
    * We proposed to remove 170 ICD-9-CM diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper, effective
B. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion and Diagnosis Reporting on Home Health Claims
    * We notified the home health industry that on
    * We notified HHAs that to ensure additional compliance with ICD-10-CM Coding Guidelines, we will be adopting additional claims processing edits for all HH claims effective
C. Adjustment to the HH PPS Case-Mix Weights
    * We analyzed preliminary 2012 claims data, which showed an average case-mix weight for 2012 of 1.3517. We proposed to reduce the average case-mix weight for 2014 from 1.3517 to 1.0000. We proposed that the decrease in the weights from 1.3517 to 1.0000 would be added back into the national, standardized 60-day episode payment amount and serve as the starting point for the rebasing adjustment calculation.
D. Rebasing the National, Standardized 60-day Episode Payment Rate, LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion Factor
1. Rebasing the National, Standardized 60-Day Episode Payment Amount
   In the proposed rule, we estimated that the 2013 average cost per episode was
2. Rebasing the Low-Utilization Payment Adjustment (LUPA) Per-Visit Payment Amounts
   In the proposed rule, when comparing 2013 estimated average costs per-visit to 2013 payments per-visit for each of six disciplines, we obtained differences ranging from +19.48 percent for skilled nursing up to +33.11 percent for physical therapy. If the increases were phased-in over four years in equal increments using a CAGR formula, the annual increases would range from +4.55 percent for skilled nursing to +7.41 percent for physical therapy. Since the Affordable Care Act states that the adjustment(s) may be no more than 3.5 percent in a given year, we proposed an increase to each of the six per-visit payment rates of 3.50 percent in each year from CY 2014 through CY 2017.
3. Rebasing the Nonroutine Medical Supply (NRS) Conversion Factor
   In the proposed rule, when comparing the 2013 estimated average NRS payment per episode of
   We proposed to continue to use OASIS data, claims data, and patient experience of care data as forms of quality data to meet the reporting requirement that HHAs submit data appropriate for the measurement of home health care quality for CY 2014 and each subsequent year thereafter until further notice. We proposed that the measures reported on Home Health Compare continue to meet the requirement to make data available to the public until further notice; we proposed to add two new claims-based measures: (1) Re-hospitalization During the First 30 Days of a Home Health Stay, and (2) Home Health Emergency Department Use Without Readmission; and to reduce the number of home health quality measures currently reported to HHAs individually. We stated that we plan to include information regarding the requirements of the HH Conditions of Participation (CoPs) related to submission of OASIS assessments and the necessity of submitting both start of episode and end of episode assessments in order to calculate quality measures. We did not propose changes to HH CAHPS and we stated that we plan to continue this requirement and data collection activities.
   In the proposed rule, we stated that we would update the HH PPS payment rates by the HH PPS payment update percentage of 2.4 percent and we proposed, consistent with long-standing policy, to update the home health wage index using the pre-floor, pre-reclassified hospital wage index for 2014. We also proposed to offset the overall impact from the use of the updated wage index on the national, standardized 60-day episode payment rate and the national per-visit rates using a standardization factor. Finally, we proposed to create three LUPA add-on factors, rather than a single LUPA add-on amount.
F. Outlier Policy
   We did not propose changes to our outlier policy.
G. Payment Reform: Home Health Study and Report
   Section 3131(d) of the Affordable Care Act requires the Secretary to assess costs associated with providing access to care for patients with high severity of illness, low income patients, and/or patients in medically underserved areas. It also gives the Secretary the authority to analyze other factors in the HH PPS and allows for demonstration authority to test the PPS changes. Finally, it requires the Secretary to make recommendations for legislation or administrative action, if needed, in a Report to
H. Cost Allocation of Survey Expenses
   We proposed that
IV. Provisions of the Proposed Rule and Response to Comments
   We received approximately 84 timely responses, many of which contained multiple comments on the CY 2014 HH PPS proposed rule (78 FR 40272) from the public. We received comments from various trade associations, HHAs, individual registered nurses, physicians, clinicians, health care industry organizations, and health care consulting firms. The following sections, arranged by subject area, include a summary of the public comments received, and out responses.
A. ICD-9-CM Grouper Refinements, Effective
   As stated in the CY 2014 HH PPS proposed rule, CMS clinical staff (along with clinical and coding staff from
Table IV.B.4-3--Potential Approaches To Determining the Total Renewable Fuel Volume Requirement [Million ethanol-equivalent gallons] Mean 15,207 Mode 15,059 25th percentile 15,084 50th percentile 15,183 75th percentile 15,297
   Analysis of the most current, complete CY 2012 claims data (a full year of CY 2012 claims data versus the preliminary data from the first half of CY 2012 used for the CY 2014 HH PPS proposed rule) shows that the average case-mix weight before the removal of the codes in Table 2 was 1.3555. It is estimated that the removal of the 170 codes in Table 2 results in an average case-mix weight for CY 2012 of 1.3464. As described above, clinical judgment is that these codes are "too acute," meaning that this condition could not be appropriately cared for in a HH setting (Category 1) or would not impact the HH POC or result in additional resource use (Category 2). Therefore, the inclusion of these diagnosis codes in the Grouper was producing inaccurate overpayments.
   The following is a summary of the comments we received regarding the proposed ICD-9-CM Grouper Refinements.
   Comment: A few commenters agreed with our assessment that many of the conditions that we proposed to remove are too acute to be treated in a home health setting (category 1 codes from Table 2).
   Response: We thank the commenters for their support in our efforts to remove conditions that are "too acute" to be treated the HH setting from assignment to one of our diagnosis groups within the HH PPS Grouper.
   Comment: There were several commenters who believed that the removal of the category 1 ICD-9-CM codes ("too acute") from our diagnosis groups would limit the scope of physician/medical practice in the home. Other commenters stated that removal of category 1 codes from assignment to one of our diagnosis groups could lead to increased hospital length of stay and could limit access to home health care, especially for patients living in rural areas. Other commenters believed that removal of category 1 diagnoses would mean a reduction of the accuracy of the information reported for payment and that physicians would be compelled to change the diagnosis codes upon hospital discharge for the post-acute management of the patient.
   Response: We recognize the valuable services being provided to
   We proposed to remove category 1 ICD-9-CM diagnosis codes from our diagnosis groups to ensure greater compliance with ICD-9-CM Coding Guidelines and to assure home health providers are accurately describing the patient characteristics that impact the home health plan of care. Per the ICD-9-CM Coding Guidelines, "list first the ICD-9-CM code for the diagnosis, condition, problem, or other reason for the encounter/visit shown in the medical record to be chiefly responsible for the services provided." For home health services, the diagnosis coding should reflect the reason the patient requires home health services and interventions.
   In the CY 2014 HH PPS proposed rule, the category 1 codes proposed to be removed from assignment to one of our diagnosis groups within the HH PPS Grouper are not conditions that would be treated in an individual's home. For example, ICD-9-CM code, 447.2, Rupture of Artery, would be an emergency situation and treatment for such a condition could not be safely treated in the home environment. One commenter provided the following scenario: "your average COPDer has chronic obstructive asthma, they catch an infection and go into status asthmaticus and go to the hospital for treatment. After a couple of days, they are sent home with a home care referral. Wouldn't the diagnosis be 493.21 (chronic obstructive asthma with status asthmaticus)?" We agree that the staticus asthmaticus is a condition a hospital would treat during the hospital stay because it refers to a patient's failure to respond to therapy administered during an asthmatic episode and is a life threatening complication that requires emergency care. However, once the patient is discharged from the hospital, the staticus asthmaticus is no longer active and the patient could be safely discharged back into the community. Clinically, a patient with active staticus asthmaticus could not be safely treated in the home environment, as is the case with all of the category 1 conditions. However, this is not to say that patients who have had these conditions, were treated for the acute presentation, exacerbation or complication, and have been discharged with a home health referral, are not eligible for home health services. In referring to the commenter's clinical scenario above, an appropriate diagnostic code for a home care intervention could be reported as: COPD (496.0) or chronic obstructive asthma (493.2). In fact, patients who have had these conditions and have been treated in the inpatient or outpatient setting may benefit from home health services in treating the sequelae or aftercare that is needed for these conditions.
   It is our expectation that home health agencies, who receive referrals for patients who have been treated for these acute conditions, will continue to provide the aftercare services required. The home health care that is required by these patients is the aftercare services and interventions to help reduce any post-acute complications and readmissions. Home health providers are in the ideal position to help in the recovery of the individuals who have suffered from these acute conditions. Therefore, we do not expect that the removal of these proposed ICD-9-CM codes from one of our diagnosis groups will limit access to needed home health care services for those living in either urban or rural areas. We also do not believe that the scope of physician/medical practice in the home environment will be limited by this proposal. We believe that a physician, using his or her best clinical judgment, would not make a home health care referral for the initial treatment of the listed conditions as these conditions would usually warrant more intensive interventions at presentation. We do believe that a physician would make a home health referral for the aftercare treatment that would be required as a result of these conditions or as a result of the initial treatment of these conditions. Many of the clinical scenarios provided by commenters addressed the home health interventions that were being provided for patients who had been treated in an inpatient or outpatient setting for these conditions. The referral for the home health services and interventions were actually for the aftercare services needed for these conditions.
   We do not support physicians changing diagnoses at hospital discharge but we do expect that they will continue to use their clinical expertise and judgment when making home health care referrals to meet the medically necessary aftercare needs of their patients. Additionally, it is the responsibility of the home health providers to contact, as necessary, any referring physician for clarification of all conditions that the prompted the home health referral and the services being requested for the post-acute management of these patients.
   Comment: We received a few comments expressing the concern for the increased administrative costs associated with the ICD-9-CM coding requirements. Other commenters were concerned that the removal of these codes would affect Part B claims and believed that denial rates would increase as a result. A few commenters believed that the only reason to remove these codes from assignment to one of our diagnosis groups within the HH PPS Grouper is to further reduce reimbursement.
   Response: We disagree that there are increased administrative costs or that this policy would impact Part B claims and result in claims denials. The basis for removal of these codes is to encourage compliance with ICD-9-CM coding guidelines and ensures that conditions that are either too acute to be treated in a home health setting or do not represent the resources assigned to a diagnosis group are removed to ensure appropriate reimbursement for home health services and not to simply reduce reimbursement. We recognize that by removing these ICD-9-CM codes from assignment to one of our diagnosis groups within the HH PPS Grouper some home health providers may have to change coding practices. However, compliance with the ICD-9-CM Coding Guidelines has been a longstanding policy. In our regulations at 45 CFR 162.1002, the Secretary adopted the ICD-9-CM code set, including The Official ICD-9-CM Guidelines for Coding and Reporting. We believe there are ample, available resources in regards to the ICD-9-CM Coding Guidelines to support home health providers to determine the appropriate ICD-9-CM diagnosis codes for all healthcare documentation requirements. These free resources are available at the following links: http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/ICD9ProviderDiagnosticCodes/, http://www.cms.gov/medicare-coverage-database/staticpages/icd-9-code-lookup.aspx, or on the CDC's Web site at: http://www.cdc.gov/nchs/data/icd9/icd9cm_guidelines_2011.pdf.
   While physicians use their clinical judgment to determine the principal diagnosis (or diagnoses) of their patients, we do not require them to determine the actual codes associated with those diagnoses for inclusion on the OASIS assessment of home health claims. Our intent in removing category 1 conditions is to ensure that all healthcare providers, including home health care providers, are following the ICD-9-CM Coding Guidelines to paint the most accurate picture of their patient population, as well as the services they are providing in the home health environment. We do not expect that there will be an increase in any denial of claims for appropriate, medically necessary, home care services.
   Comment: Several commenters stated that there is "no clinical evidence" to support the removal of some of the 170 diagnosis codes. Most notably, some commenters believed that post-hemorrhagic anemia, acute pancreatitis, abscess of the liver, and gastrointestinal disorders were appropriate diagnoses to treat in the home environment. These commenters stated patients with these diagnoses require ongoing home care for services such as home infusion of antibiotics and total parenteral nutrition, wound care, drain care, lab work, and symptom management. Other commenters stated the esophageal reflux and restless leg syndrome should remain in the HH PPS Grouper as these two conditions require increased nursing interventions for evaluation and monitoring, such as nutritional status and side effects from medications.
   Response: In the CY 2014 HH PPS proposed rule, we did state that the review of these ICD-9-CM diagnosis codes (those under Category 1 on Table 2,) included CMS clinical staff (including doctors and nurses) as well as with the clinicians and certified coding staff from
Ethanol 5-25 Non-ethanol 0-9 Total 8-30
   Furthermore, the National Guideline Clearinghouse, a public resource for evidence-based clinical practice guidelines, was also consulted to determine the most current standards of practice regarding these conditions. The evidence-based practice guidelines further lend support that the proposed category 1 diagnosis codes, including those mentioned by the commenters, are conditions that typically warrant initial acute care interventions either in the inpatient, outpatient or emergency department setting. Clinical practice guidelines for a variety of conditions can be found at the National Clearinghouse Guidelines Web site at the following: http://www.guideline.gov/browse/by-topic-detail.aspx?id=11560&ct=1.
   We are in agreement with the commenters who stated that patients with these acute diagnoses require ongoing home care for services such as home infusion of antibiotics and total parenteral nutrition, wound care, drain care, lab work, and symptom management. These are aftercare services that are required by patients who have been diagnosed and initially treated for the listed diseases or diagnoses. These aftercare services are ideally provided by home health providers and these services can be safely administered in the home environment as long as
   As for the ICD-9-CM diagnosis codes mentioned by the commenters, "esophageal reflux" and "restless leg syndrome", that are classified as Category 2 in Table 2 (meaning these codes that would not require HH intervention, would not impact the HH plan of care, or would not result in additional resource use when providing HH services to the patient), these two codes listed as the primary diagnosis alone do not necessarily warrant home health interventions. The fact that an individual has been diagnosed with either of these chronic conditions does not provide sufficient cause for an increase in home health resource use. They can be listed on the OASIS assessment to more fully describe the home health patient, but the expectation is that a stable, chronic condition would not be listed as the primary reason for the home health referral or the need for home health interventions. However, for acute exacerbations or complications from these two conditions, there are other ICD-9-CM diagnosis codes within the HH PPS Grouper that more specifically identify the need for home health services and the interventions that would be required for their management. We are stating that providers should first list those appropriate ICD-9-CM diagnosis codes if they are the primary reason for home health services, have an impact on the home health plan of care or would result in additional home health resources.
   Comment: Some commenters made the recommendation that CMS should form a workgroup with other home health stakeholders to further determine whether these ICD-9-CM diagnosis codes should be removed from the HH PPS Grouper. A few commenters believed that we should delay removing these diagnosis codes until the implementation of ICD-10-CM on
   Response: We believe that sufficient analysis and discussion has been conducted regarding the removal of these 170 ICD-9-CM diagnosis codes. In the CY 2014 HH PPS proposed rule, we noted that the review of these ICD-9-CM diagnosis codes included CMS clinical staff (including doctors and nurses) as well as with the clinicians and certified coding staff from
   Comment: A few commenters believed that removal of these 170 ICD-9-CM diagnosis codes would have a detrimental impact on
   Response: We disagree that the removal of these diagnosis codes would have a detrimental impact on current demonstration programs. For participation in IAH demonstration programs eligibility requirements are as stated: "Eligibility criteria are designed to target the most costly beneficiaries with advanced chronic illnesses and substantial disabilities. Beneficiaries must be entitled to Part A and enrolled in Part B, not enrolled in a
   FOOTNOTE 1 https://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/Downloads/IAH_Solicitation.pdf END FOOTNOTE
   Comment: A few commenters stated that the removal of these 170 diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper goes against the technological advancements of telemedicine and telehealth. Other commenters believed that this change could create a potential professional liability risk issue.
   Response: We do not believe the removal of these seldom used diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper would impede any advances in technology or innovations in the delivery of care. Home health delivers care to those
   In addition, we do not believe that by removing the proposed ICD-9-CM diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper that there will be any increased liability risks on providers. We do believe that referring physicians will continue to use their best clinical judgment to diagnose, to make treatment recommendations, and to determine the appropriate services and resources needed for the delivery of quality, safe care for their patients. Collaboration and communication between referring physicians and home health providers are two factors to help minimize risk when caring for
   Comment: A couple of commenters stated that our removal of the 170 codes from assignment to one of our diagnosis groups within the HH PPS Grouper serves only to reduce overall payments by 0.5 percent, reducing overall payments by
   Response: As outlined in the CY 2014 HH PPS proposed rule, the removal of the 170 codes encourages compliance with ICD-9-CM coding guidelines and ensures that conditions that are either too acute to be treated in a home health setting or do not represent the resources assigned to a diagnosis group are removed from assignment to one of our diagnosis groups within the HH PPS Grouper. We contend that the removal of these codes is appropriate, either because these conditions cannot be appropriately treated in a home health setting, or because these conditions do not impact the home health plan of care and result in overpayments to HHAs.
   Comment: A few commenters stated that the removal of these diagnosis codes may impact the accuracy of the HH PPS case-mix model.
   Response: We proposed to remove the 170 codes from assignment to one of our diagnosis groups within the HH PPS Grouper because we concluded that the codes were not reflecting actual conditions being treated or that the condition had no impact on resource use. We note that the HH PPS case-mix model was originally designed with general code categories. Since the basis for proposing to remove the 170 diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper was that either (a) they were not reflecting the actual condition being treated in home health, or (b) the condition would not impact resource use, eliminating them should have minimal impact on the accuracy of the HH PPS case-mix model. The impact of any single diagnosis on a case mix assignment depends on the accumulation of points from other conditions. It is often the case that the clinical component in the case-mix model does not change because of the removal of one source of points. Those agencies that are treating patients with conditions in category 2, will no longer receive additional reimbursement for conditions that do not require the same level of resources as other conditions within that diagnosis group (see Table 4).
Average import volumes from 2003-2012 223 ISU Staff Report--biodiesel tax credit in place 310 Ethanol exported fromBrazil to the U.S. when ethanol production 490 was at its historical maximum (2010) FAPRI Biofuel Baseline 496 Production Outlook Reports 510 Historical maximum ethanol imported into the U.S. fromBrazil 560 (2006) AEO2013 719 Projection fromBrazilian Ministry of Mines and Energy 800 ISU Staff Report--biodiesel tax credit not in place 820 FAPRI 2012 World Agricultural Outlook--total Brazilian exports in 1,259 2014 Historical maximum ethanol exported fromBrazil (2008) 1,350
   Comment: A commenter stated that CMS should delay the removal of codes until after ICD-10-CM implementation similar to the delay granted to Inpatient Rehabilitation Facilities because the full cost ramifications cannot be predicted without a crosswalk of codes and values from ICD-9-CM to ICD-10-CM. Commenters also requested that the removal of the 170 diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper be done in a budget neutral manner.
   Response: To prevent additional inaccurate overpayments and because the payment impact has been analyzed, we do not agree that a delay in removing these codes until after ICD-10-CM implementation is warranted. As we stated above, we contend that the removal of these codes from assignment to one of our diagnosis groups within the HH PPS Grouper is appropriate either because these conditions cannot be appropriately treated in a home health setting, or because these conditions would not impact the home health plan of care and result in overpayments to HHAs. We will provide the ICD-10-CM codes and the diagnostic group to which the codes are assigned in the ICD-10-CM Grouper, which will be posted to our Web site in
   Comment: A couple of commenters stated that their analysis of the impact showed a greater impact and contended that this demonstrates common use of these codes.
   Response: We based our payment impact analysis upon 2012 claims data and assumptions were included in our analysis whereby for certain conditions we believe that coding behavior adjustments would result in the assignment of another diagnosis code within the same diagnosis group leading to the same case-mix weight as what is currently awarded.
   Comment: A commenter stated that in 2000, when the HH PPS was created, costs and revenues were based on appropriately identified ICD-9-CM codes, including the 170 proposed for deletion.
   Response: In 2000, the HH PPS identified ICD-9-CM codes and awarded points specific to orthopedic, neurologic and diabetes. A majority of these 170 codes were not included in the 2000 HH PPS. In addition, most of the diagnosis codes included in the 2000 HH PPS were assigned at the code category level with the exception of certain orthopedic, neurologic and diabetic conditions within a particular code category which based upon clinical judgment and coding practices were inappropriate for home care. In the 2008 refinement, we added additional diagnosis groups and specified the appropriate four and five digit diagnosis codes. In our review of the current diagnosis codes in preparation for transition to ICD-10-CM reporting, we found that these 170 codes were mistakenly included.
   Comment: A commenter agreed with our assessment that many of the conditions were too acute or did not impact the plan of care but requested additional guidance from CMS in reducing coding errors by educating home health agencies on common coding errors, publish frequently asked questions and open door forums on this issue.
   Response: It is our intent to provide ongoing communication, collaboration and education with home health providers to ensure that adequate guidance is provided. This communication will not be limited to the release of Change Requests, which can be found on our home health Web site at http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/index.html. Additionally, we encourage all interested stakeholders to participate in the
   Final Decision: We are finalizing the removal of 170 ICD-9-CM diagnosis codes from assignment to one of our diagnosis groups within the HH PPS Grouper as proposed, effective
B. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion and Diagnosis Reporting on Home Health Claims
1. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion
   The compliance date for adoption of the ICD-10-CM and ICD-10-PCS Medical Data Code Set is
   3M produced a translation list using the General Equivalency Mappings (GEMs) tool. That translation list, produced by the GEMs tool, was then reviewed and revised to ensure the included codes are appropriate for use in the HH setting, based upon ICD-10-CM coding guidance. Modifications included:
    * Elimination of codes with "initial encounter" extensions listed in the GEMs translation. ICD-10-CM codes that begin with S and T are used for reporting traumatic injuries, such as fractures and burns. These codes have a 7th character that indicates whether the treatment is for an initial encounter, subsequent encounter or a sequela (a residual effect (condition produced) after the acute phase of an illness or injury has terminated). The GEMs translation mapped ICD-9-CM traumatic injury codes to ICD-10-CM codes with the 7th character for an initial encounter. This extension is intended to be used when the patient is receiving active treatment such as surgical treatment, an emergency department encounter, or evaluation and treatment by a new physician. These initial encounter extension codes are not appropriate for care in the HH setting and were deleted. Code extensions D, E, F, G, H, J,
    * Elimination of codes for non-specific conditions when the clinician should be able to identify a more specific diagnosis based on clinical assessment. The initial GEMs translation included non-specific codes, for example, ICD-10-CM code L02.519 "cutaneous abscess of unspecified hand". These have been deleted from the translation list whenever a more specific diagnosis could be identified by the clinician performing the initial assessment. The example code above (L02.519) was deleted because the clinician should be able to identify which hand had the abscess, and therefore, would report the injury using the code that specifies the right or left hand.
    * The diagnostic group (DG) assignment of ICD-10-CM codes in the translation replicates the ICD-9-CM assignment whenever possible. Since ICD-9-CM to ICD-10-CM translation is not a 1-to-1 mapping process, there were cases where the DG assignment was ambiguous. When there was a conflict (such as two ICD-9-CM codes being translated to a single ICD-10-CM code that covered both conditions), DG assignment was based on clinical appropriateness and comparisons of relative resource use data (when available), such that the code was assigned to single DG that included other codes with similar resource use.
   A draft list of ICD-10-CM codes to be included in the HH PPS Grouper was developed based upon the process outlined above, and
   The following is a summary of the comments we received regarding the adoption of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) Conversion.
   Comment: One commenter suggested that CMS consider providing additional lead time for software vendors and agencies to test and make the systems changes necessary to submit ICD-10-CM claims on
   Response: In consultation with our support contractor a timeline was built for implementation of an ICD-10-CM Grouper. The timeline requires a translation list and final decisions on logic to be completed prior to the release of a draft Grouper. The translation list and final decisions on logic will not be completed early enough for us to commit to an earlier delivery date than
   Comment: One commenter stated that they are not able to fully assess the cost impact of the transition from ICD-9-CM to ICD-10-CM reporting without a crosswalk of codes and code values.
   Response: The diagnostic group assignment of ICD-10-CM codes in our draft list of codes replicates the ICD-9-CM assignment where possible. Because there is not a 1-to-1 mapping process, we cannot always directly and succinctly crosswalk ICD-9-CM codes to ICD-10-CM codes. However, we have provided the ICD-10-CM codes and the diagnostic group to which the codes were assigned. We plan to have the ICD-10-CM Grouper posted to our Web site in
   Comment: One commenter expressed concern that the elimination of certain non-specific ICD-10-CM codes would increase the administrative burden on home health agencies by requiring a higher level of expertise in coding and one commenter expressed concern about the administrative costs associated with the implementation of the ICD-10-CM reporting.
   Response: The only non-specific ICD-10-CM codes that were not included in our translation were those where the clinician could identify a more specific diagnosis during the initial assessment. We believe that requiring more specific coding does not increase administrative burden but rather encourages the reporting of a specific, more accurate, diagnosis based upon the assessment performed in compliance with ICD-10-CM coding guidelines that requires coding to the highest level of specificity. We note that transition to ICD-10-CM is required for entities covered by the Health Insurance Portability and Accountability Act of 1996 and the compliance date for adoption of the ICD-10-CM and ICD-10-PCS Medical Data Code Set is
2. Diagnosis Reporting on Home Health Claims
   Adherence to ICD-9-CM and ICD-10-CM coding guidelines when assigning diagnosis codes is required under HIPAA.
   Finally, effective
   No comments were received regarding the clarification on Diagnosis Reporting on Home Health Claims.
C. Adjustment to the HH PPS Case-Mix Weights
   As described in section IV.D. of this rule, we are rebasing the national, standardized 60-day episode payment rate. In the CY 2014 proposed rule, we stated that a goal of rebasing is to reset the base payments under the HH PPS. When the HH PPS was created, we expected that the average case-mix weight would be around 1.0000, but analysis has shown that it has consistently been above 1.0000 since the start of the HH PPS. Therefore, as part of rebasing, for CY 2014, we proposed to use the 2012 case-mix weights, but lower them to an average case-mix weight of 1.0000. We also proposed to increase the national, standardized 60-day episode payment rate by the same factor used to lower the rates to 1.0000, making the downward adjustment to the weights budget neutral. As we noted in the proposed rule, in applying the same reduction factor to each weight we are still maintaining the relative values in the weight set. Preliminary CY 2012 claims data on non-LUPA episodes starting from
   The following is a summary of the comments we received regarding the proposed adjustment to the HH PPS case-mix weights.
   Comment: One commenter supported the case-mix update reset, particularly given the proposed changes to rebase the HH payments
   Response: We thank the commenter for the comment.
   Comment: Commenters stated that CMS did not account for the removal of the ICD-9-CM codes from the case-mix system, which is estimated to drop the average case-mix weight from 1.3517 to 1.3417, in either the adjustment to the case-mix weights or the payment rates.
   Response: We find these comments compelling and we plan to change the adjustment to the weights so that it reflects the estimated average case-mix after the removal of the ICD-9-CM codes from assignment to one of our diagnosis groups within the HH PPS Grouper. See also section IV.D. where we discuss how using the average case-mix in CY 2012, after the removal of the ICD-9-CM codes from assignment to one of our diagnosis groups within the HH PPS Grouper, is used in the national, standardized 60-day episode payment rate rebasing adjustment calculation.
   Comment: One commenter stated that the approach does not account for genuine increases in case-mix due to real increases in the severity of need since the inception of the HH PPS which are caused by earlier and sicker hospital discharges, technology improvements which allow for complex cases to be cared for at the home, improvements in accuracy of OASIS, and increased therapy needs which indicate a higher level of patient acuity. Other commenters stated that the 1.0000 level set at the beginning of the HH PPS should have been higher and that patients' severity, as well as their resource needs have changed since the HH PPS.
   Response: As we stated in the proposed rule, we are lowering the weights to an average of 1.0000 (by dividing each weight using the same divisor) so that the national, standardized 60-day episode payment rate is the average payment per episode. The lowering of the weights to 1.0000 is a way to reset the system. We note that in lowering the weights to average 1.0000, we correspondingly inflate the national, standardized 60-day episode payment rate, of which the inflation includes both real and nominal case-mix. The adjustment to the case-mix weights is therefore budget neutral. In other words, we are completely offsetting the reduction in the weights (to average value of 1.0000) by increasing the national, standardized 60-day episode payment rate. Increases in the costs of patient care since the inception of the HH PPS, which would reflect treating patients with a higher average level of severity, are reflected in the FY 2011 cost data used in the rebasing calculation and accounted for in the rebasing adjustments. The data and methodology for calculating the rebasing adjustments are described in section IV.D. of this final rule.
   Comment: One commenter stated that while the proposed case-mix weight adjustments might be budget neutral in the aggregate, it would not be so on a weight-by-weight basis, and the impact on many agencies would be additional reductions in reimbursements, beyond the rebasing reductions. In addition, one commenter stated that the proposal to reduce each of the 153 Home Health Resource Groups (HHRGs) was arbitrary in its attempt to achieve an aggregate case-mix benchmark without regard for the impact of rebasing on specific clinical scenarios. Another commenter stated that CMS should either abandon or delay the case-mix weight adjustments and rebasing approach and spend the next year performing a realistic analysis of true HHA costs and beneficiary needs for home health services. Similarly, a commenter stated that CMS has not assessed whether the number of HHRGs is appropriate or whether the payment for each is adequate. Several commenters stated that CMS should complete an analysis of the adequacy of the case-mix weights this year and encouraged CMS to undertake a comprehensive review of the case-mix weights during the coming year for the CY 2015 rule.
   Response: The adjustment to the case-mix weights was performed in a budget neutral way. We increased the national, standardized 60-day episode payment rate by the same factor used to lower the case-mix weights to 1.0000 to determine the starting point for rebasing, so the average payment for agencies is the same with the case-mix weights decreased as the average payment for agencies if the weights were not decreased to 1.0000 and the national, standardized 60-day episode payment was not increased. In the CY 2012 HH PPS final rule (76 FR 68526), we recalibrated the case-mix weights. We plan to examine the effects of the CY 2012 recalibration as cost report data become available. In addition, we are currently in the process of reassessing the entire case-mix system. We recently awarded a new research and technical assistance contract to
   Final Decision: Since the CY 2014 proposed rule, we analyzed a full year of CY 2012 claims data (the most current, complete data available), rather than claims data from the first six months of CY 2012, and the results indicate that the average case-mix weight for non-LUPA episodes in 2012 was 1.3547. However, since we are finalizing the removal of 170 ICD-9-CM diagnosis codes from the HH PPS grouper, effective
   As noted in the CY 2014 proposed rule, we plan to continue to evaluate and potentially revise the case-mix weights relative to one another as more recent utilization and cost report data become available. We also plan to continue to monitor case-mix growth (both real and nominal case-mix growth), and address it accordingly in the future.
Table IV.C.1.e-1--Volume Ranges for Estimating Advanced Biofuel Availability for 2014 [Million ethanol-equivalent gallons] Available volumes of 0-9 Skewed. non-ethanol cellulosic biofuel Available volumes of 5-25 Combination. *a ethanol cellulosic biofuel Available volumes of *b Half-normal. biomass-based diesel 1,920-2,400 Available volumes of 24-132 Normal. domestic non-ethanol advanced biofuel Available volumes of 28-142 Normal. domestic ethanol advanced biofuel Available volumes of 300-800 Normal. imported sugarcane ethanol *a As described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce non-ethanol cellulosic biofuel. *b Represents a physical volume range of 1.28-1.6 bill gal.
D. Rebasing the National, Standardized 60-day Episode Payment Amount, LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion Factor
1. Rebasing the National, Standardized 60-Day Episode Payment Amount
   Section 3131(a) of the Affordable Care Act requires that starting in CY 2014, the Secretary must apply an adjustment to the national, standardized 60-day episode payment amount and other amounts applicable under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. In addition, section 3131(a) of the Affordable Care Act requires that this rebasing must be phased-in over a 4-year period in equal increments, not to exceed 3.5 percent of the payment amount (or amounts) as of the date of enactment (
   In the CY 2014 HH PPS proposed rule, we described our extensive analysis of cost report and claims data and proposed rebasing adjustments to the national, standardized 60-day episode payment amount, the LUPA per-visit payment amounts, and the NRS conversion factor. We used FY 2011 cost report data as of
a. Trimming Methodology, Audit Results and Weighting
   In the CY 2014 HH PPS proposed rule, we described the trimming methodology used to obtain a more robust estimate of costs, which consisted of longitudinal and cross-sectional trims. After applying the trimming methodology, 6,252 cost reports were left in the 2011 sample, out of 10,327 cost reports. These cost reports were then used to estimate the average cost per visit and average cost per episode for 2011.
   In addition, we described the results of the audits of 100 FY 2010 HHA Medicare cost reports. We stated that when comparing the pre-audit sample data to the post-audit sample data, we observed an average reduction of 8 to 9 percent in the costs per visit across all disciplines, except medical social services which averaged a 5 percent reduction in the allowable costs per visit. These audited costs per visit across the disciplines reduced the average cost per episode by 7.8 percent when comparing the pre-audit data to the post-audit adjusted data. The results of the audits indicate that the trimmed sample used for this rule likely over-estimates the average cost per visit and average cost per episode for providers.
   After applying the trimming methodology to the 2011
Table IV.C.2.b--Impact on Other Advanced Biofuel of Reducing the Advanced Biofuel Requirement by an Amount Equal to the Reduction in Cellulosic Biofuel [Million ethanol-equivalent gallons] Required Required volumes volumes with without a a reduction reduction in in advanced cellulosic biofuel equal biofuel or to reduction advanced in cellulosic biofuel Cellulosic biofuel 1,750 17 Biomass-based diesel *a 1,920 1,920 Other advanced biofuel *b 80 80 Total advanced biofuel 3,750 2,017 *a Represents a physical volume of 1.28 bill gal biodiesel. *b Can include biomass-based diesel with a D code of 4 that is in excess of that required to meet the biomass-based diesel requirement of 1.28 bill gal, as well as any other forms of advanced biofuel with a D code of 5 such as renewable diesel, heating oil, biogas, and imported sugarcane ethanol.
b. Calculating the Estimated Average Cost per Episode
   In the CY 2014 HH PPS proposed rule, to determine the rebasing adjustment to the 60-day national, standardized episode payment amount, we compared the 2013 estimated average payment per episode to the 2013 estimated average cost per episode. To calculate the 2013 estimated average cost per episode, we first applied an adjustment to account for the visit distribution change observed in claims data from 2011 to 2012. We compared the 2011 estimated cost per episode using the 2011 visit distribution to the 2011 estimated cost per episode using the 2012 visit distribution. In the CY 2014 HH PPS proposed rule, we stated that the 2011 estimated cost per episode is
Proposed requirement for 8-30 Combined. *a cellulosic biofuel Proposed requirement for *b 1,920 n/a. biomass-based diesel Available volumes of excess *c 0-480 Half-normal. biomass-based diesel Available volumes of 24-132 Normal. domestic non-ethanol advanced biofuel *a As described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce cellulosic biofuel. *b Represents a physical volume of 1.28 bill gal. *c Represents a physical volume range of 0-320 mill gal.
   After applying the adjustment to account for the visit distribution change between 2011 and 2012, we calculate the estimated average cost per episode for CY 2013 by multiplying the estimated, average cost per episode by the HH market basket for 2012 and by the HH market basket for 2013 (Table 8). When setting the 60-day episode base rate for the HH PPS in 2000, we also updated costs from cost reports by the HH market basket to reflect expected inflation. We note that the 2013 estimated cost per episode shown in Table 8 reflects the updated 2012 visit profile, and therefore numbers have changed slightly from the CY 2014 HH PPS proposed rule.
Mean 2,202 Mode 2,099 25th percentile 2,086 50th percentile 2,178 75th percentile 2,289
c. Calculating the Estimated Average Payment per Episode
   To develop the 2013 estimated average payment per episode, in our updated analyses for this final rule, we start with the CY 2012 national, standardized 60-day episode payment rate and apply a number of factors. In the CY 2014 HH PPS proposed rule, we proposed to reset the average case-mix weight from 1.3517 to 1.0000 and increased the CY 2012 60-day episode payment rate by 1.3517. Since we are resetting the average case-mix weight from 1.3464 to 1.0000 (see section IV.C. of this rule), we increase the CY 2012 60-day episode payment rate by 1.3464. As such, the numbers in Table 9 are different from the numbers in the CY 2014 HH PPS proposed rule. The 60-day episode payment rate in CY 2012 was
Table IV.D-1--Proposed Volumes for 2014 [Billion gallons] Proposed volume Statutory Range Mean volume Advanced biofuel 3.75 2.00-2.51 2.20 Total renewable fuel 18.15 15.00-15.52 15.21
d. Calculating the Rebasing Adjustment to the National, Standardized 60-day Episode Payment Amount
   In the CY 2014 HH PPS proposed rule, we compared the 2013 estimated average payment per episode to the 2013 estimated average cost per episode and obtained a difference of -13.63 percent ((
Table V.A-1--Proposed Volumes for Use in Setting the Applicable Percentage Standards for 2014 *a Cellulosic biofuel 17 mill gal. Biomass-based diesel 1.28 bill gal. Advanced biofuel 2.20 bill gal. Renewable fuel 15.21 bill gal. *a Due to the manner in which the percentage standards are calculated, all volumes are given in terms of ethanol-equivalent except for biomass-based diesel which is given in terms of physical volume.
   In order to align episode payments with costs, we would implement a -3.45 percent rebasing adjustment to the national, standardized 60-day episode payment rate each year from 2014 through 2017. Our initial interpretation of section 3131(a) of the Affordable Care Act for the CY 2014 HH PPS proposed rule reflects how one would ideally rebase a payment system and supports a -3.45 percent rebasing adjustment to the national, standardized 60-day episode payment rate. However, commenters stated that since the statute specifies that the rebasing adjustments "may not exceed 3.5 percent of the amount (or amounts) applicable under clause (i)(III) as of the date of enactment of the Patient Protection and Affordable Care Act", the maximum adjustment of 3.5 percent should be calculated using the CY 2010 payment rates. Upon further review of the specific language in the statute, we agree with the commenters. Therefore, as specified by statute, the rebasing adjustment is limited to 3.5 percent of the CY 2010 national, standardized 60-day episode payment rate of
   The -3.45 percent rebasing adjustment to the 2013 national, standardized 60-day payment rate described above exceeds the maximum adjustment specified by statute of
2. Rebasing the Low Utilization Payment Adjustment (LUPA) Per-Visit Payment Amounts
   For episodes with four or fewer visits,
a. Calculating the Rebasing Adjustment to the LUPA Per-Visit Amounts
   As stated in the CY 2014 HH PPS proposed rule, to determine the rebasing adjustment for the national per-visit payment rates, we compared the current national per-visit payment rates to the estimated cost per visit, per discipline. The 2013 estimated per-visit costs per discipline are shown in Table 11. The 2011 per-visit costs per discipline are the same as those derived for the rebasing of the national, standardized 60-day episode payment rate (see Table 6). The average cost per-visit for NRS from the cost report sample is added to the 2011 estimated per-visit costs per discipline (see section IV.D.3. of this rule for more information on the calculation of the average NRS cost per visit). The per-visit costs are then increased by the HH market basket in 2012 and 2013 to obtain an estimate of the 2013 costs per visit, per discipline.
Table V.B.3-1--Values for Terms in Calculation of the Standards(121M) [bill gal] Term Value RFV0.017 RFV 1.28 RFV 2.20 RFV 15.21 G<2014> 132.65 D<2014> 47.12 RG<2014> 13.12 RD<2014> 1.38
   Similar to the methodology used to determine the rebasing adjustment to the national, standardized 60-day episode payment rate, we took the current 2013 national per-visit payment rates and, for comparison purposes only, put the dollars from the 2.5 percent outlier pool back into the payment rates (see Table 12). This allows us to compare the CY 2013 cost per-visit, per-discipline on the
Table V.B.3-2--Proposed Percentage Standards for 2014 Cellulosic biofuel 0.010% Biomass-based diesel 1.16% Advanced biofuel 1.33% Renewable fuel 9.20%
   When comparing the national per-visit payment rate, per discipline for LUPA episodes to the 2013 estimated average cost per-visit, per-discipline, we observe that costs per visit are higher than the 2013 national per-visit payment rates (see Table 13), ranging from +19.5 percent to +33.1 percent.
20-Year Cost for Final Rule Door Removable Panels or Windows, and Bi-Parting Doors$4,399,223 Emergency Lighting 2,450,213 Emergency Egress and Rescue Access Marking and Instructions 4,730,631 Low-Location Emergency Exit Path Markings 1,377,615 Debriefing and Critique N/A Inspection, Testing, and Recordkeeping 405,296 Total$13,362,979 Dollars are discounted at a present value rate of 7 percent.
   We stated that phasing-in the adjustments, ranging from + 19.48 percent to + 33.11 percent in Table 13 above, over 4 years in equal increments, would result in annual increases ranging from 4.55 to 7.41 percent, determined using a compound annual growth rate (CAGR) formula. Given the 3.5 percent limit set in statute, we proposed to increase the per-visit payment rates by 3.5 percent every year from 2014 to 2017 in order to better align the national per-visit payment amounts with costs. However, the statute limits the rebasing adjustment that can be applied. As explained in more detail below, several commenters stated that since the statute specifies that the rebasing adjustments "may not exceed 3.5 percent of the amount (or amounts) applicable under clause (i)(III) as of the date of enactment of the Patient Protection and Affordable Care Act", the maximum adjustment of 3.5 percent should be calculated using the CY 2010 payment rates. Upon further review of the specific language in the statute, we agree with the commenters. Therefore, because of the language in the statute, we are limited to increasing the national per-visit payment amounts by no more than the amounts outlined in Table 14 below.
Standard title Previous standard No. New standard No. Standard for Emergency SS-E-013-99 PR-E-S-013-99 Lighting System Design for Passenger Cars, Rev. 1, October 2007 Standard for Emergency Signage SS-PS-002-98 PR-PS-S-002-98 for Egress/Access of Passenger Rail Equipment, Rev. 3, October 2007 Standard for Low-Location Exit SS-PS-004-99 PR-PS-S-004-99 Path Marking, Rev. 2, October 2007
   The annual increases ranging from 4.55 to 7.41 percent determined using a CAGR formula and the percentage changes in Table 13 above would exceed the maximum adjustments allowed under statute for CY 2014 through 2017 (see Table 15 below). In addition, increasing the national per-visit payment rates by 3.5 percent each year, as proposed, would also exceed the maximum adjustments allowed under statute given that the rebasing adjustments cannot be more than 3.5 percent of the CY 2010 national per-visit rates in any given year (see Table 15 below). Therefore, we are limited to implementing the dollar amount increases to the national per-visit payment rates outlined in Table 14 above each year, CY 2014 through CY 2017.
CFR Section Respondent Total annual Average time Total annual universe responses per response burden hours 238.112--Door emergency egress and rescue access systems (New requirements): --Conspicuously 30 railroads 45,804 15 minutes 11,451 hours. marking/posting markings/ instructions on instructions emergency egress doors --Marking/posting 30 railroads 30,536 15 minutes 7,634 hours. instructions on markings emergency responder access doors --Marking/posting 30 railroads 1,340 panel 15 minutes 335 hours. instructions on markings removable panels/windows in car vestibule and other interior passageway doors --Periodic testing: 30 railroads 17 tested 90 minutes 26 hours. representative cars sample--removable panels/windows/etc 238.113--Emergency window exits: --Markings (Current 30 railroads 662 markings 60 minutes, 964 hours. requirement) 90 minutes --Periodic testing: 30 railroads 17 tested 120 minutes, 9 hours. representative sample cars 30 minutes of emergency window exits on passenger cars (Current requirement) 238.114--Rescue access windows: -- 30 railroads 1,092 45 minutes 819 hours. Markings/instructions markings on each access window (Current requirement) 238.121--Emergency communications: intercom system: --Posting 30 railroads 116 marked 5 minutes 10 hours. legible/understandabl intercoms e operating instructions at/near each intercom (Current requirement) 238.123--Emergency roof access: -- 30 railroads 232 marked 30 minutes 116 hours. Marking/instructions locations of each emergency roof access location (Current requirement) 238.303--Exterior calendar day mechanical inspection of passenger equipment: --Replacement 30 railroads 150 markings 20 minutes 50 hours. markings of rescue access related exterior markings, signs, instructions (Current requirement) 238.303--Records of 30 railroads 150 records 2 minutes 5 hours. non-complying conditions (Current requirement) 238.305--(Current requirements) Interior calendar day inspection of passenger cars: --Non-complying 30 railroads 260 written 1 minute 9 hours. end/side doors-- notifications written notification + 260 notices to crew of condition + notice on door --Non-complying 30 railroads 300 1 minute 5 hours. public notifications address/intercom written systems: written notification to crews --Records of public 30 railroads 300 records 2 minutes 10 hours. address/intercom system non-complying conditions New requirements: --Written procedure 30 railroads 30 written 40 hours 1,200 hours. for mitigating procedures hazards of non- complying conditions relating to removable panels/windows in vestibule and other interior passageway doors --Written 30 railroads 458 notices 2 minutes 15 hours. notification to train crew of non-complying condition relating to panels/windows in vestibule and other interior passageway doors 238.307--Periodic mechanical inspection of passenger cars: --Records of the 30 railroads 7,634 car 5 minutes 636 hours. inspection, testing, inspections/ and maintenance of records emergency window exits (Current requirement) --Emergency roof 30 railroads 32 markings 20 minutes 11 hours. markings and instructions-- replacements (Current requirement) 238.311--Single car test: --Copies of APTA 30 railroads 30 copies 15 minutes 8 hours. Standard SS-M-005-98 to railroad head training person (Current requirement) --Copies to other 30 railroads 360 copies 2 minutes 12 hours. railroad personnel
3. Rebasing the Nonroutine Medical Supply (NRS) Conversion Factor
   Payments for NRS are currently paid for by multiplying one of six severity levels by the NRS conversion factor. When the HH PPS was implemented on
   As stated in our CY 2008 HH PPS proposed rule, after the HH PPS went into effect, we received comments and correspondence expressing concern about the cost of supplies for certain patients with "high" supply costs (72 FR 25427,
a. Calculating the Rebasing Adjustment to the NRS Conversion Factor
   In rebasing the NRS conversion factor as described in the CY 2014 HH PPS proposed rule, we used the trimmed sample of 6,252 cost reports from FY 2011, as described in section IV.D.1. of this rule, to calculate a visit-weighted estimate of NRS costs per visit. We additionally weight these estimates to be nationally representative based on the same factors described in section IV.D.1. of this rule (that is, facility type, urban/rural status, and facility size). The 2011 average NRS cost per visit was calculated to be
   To calculate a 2011 estimated average NRS cost per episode for the CY 2014 HH PPS proposed rule, we multiplied the average NRS costs per visit of
[TB] Table 16--2013 Estimated Average NRS Cost per Episode 2011 Estimated Adjustment for 2012 Market 2013 Market 2013 Estimated average NRS change in basket update basket update average NRS cost per average (2.4) (2.3) cost per episode episode visits episode (2011 to 2012)
   To compare the 2013 estimated average NRS cost per episode to 2013 estimated average NRS payment per episode, for the CY 2014 HH PPS proposed rule we used preliminary 2012 claims data for non-LUPA episodes and the CY 2013 NRS conversion factor of
Section Violation Willful violation * * * * * * * SUBPART B--SAFETY PLANNING AND GENERAL REQUIREMENTS * * * * * * * 238.112 Door emergency egress and rescue accesssystems 2,500 5,000 * * * * * * * 238.125 Marking and instructions for emergency egress and 2,500 5,000 rescue access * * * * * * * 238.127 Low-location emergency exit pathmarking 2,500 5,000 * * * * * * * *1 A penalty may be assessed against an individual only for a willful violation. Generally when two or more violations of these regulations are discovered with respect to a single unit of passenger equipment that is placed or continued in service by a railroad, the appropriate penalties set forth above are aggregated up to a maximum of$16,000 per day. However, failure to perform, with respect to a particular unit of passenger equipment, any of the inspections and tests required under subparts D and F of this part will be treated as a violation separate and distinct from, and in addition to, any substantive violative conditions found on that unit of passenger equipment. Moreover, the Administrator reserves the right to assess a penalty of up to$105,000 for any violation where circumstances warrant. See 49 CFR Part 209, appendix A. Failure to observe any condition for movement of defective equipment set forth in S. 238.17 will deprive the railroad of the benefit of the movement-for-repair provision and make the railroad and any responsible individuals liable for penalty under the particular regulatory section(s) concerning the substantive defect(s) present on the unit of passenger equipment at the time of movement. Failure to observe any condition for the movement of passenger equipment containing defective safety appliances, other than power brakes, set forth in S. 238.17(e) will deprive the railroad of the movement-for-repair provision and make the railroad and any responsible individuals liable for penalty under the particular regulatory section(s) contained in part 231 of this chapter or S. 238.429 concerning the substantive defective condition. The penalties listed for failure to perform the exterior and interior mechanical inspections and tests required under S. 238.303 and S. 238.305 may be assessed for each unit of passenger equipment contained in a train that is not properly inspected. Whereas, the penalties listed for failure to perform the brake inspections and tests under S. 238.313 through S. 238.319 may be assessed for each train that is not properly inspected. *2 The penalty schedule uses section numbers from 49 CFR Part 238. If more than one item is listed as a type of violation of a given section, each item is also designated by a "penalty code," which is used to facilitate assessment of civil penalties, and which may or may not correspond to any subsection designation(s). For convenience, penalty citations will cite the CFR section and the penalty code, if any. FRA reserves the right, should litigation become necessary, to substitute in its complaint the CFR citation in place of the combined CFR and penalty code citation, should they differ.
   In the proposed rule, when comparing the 2013 estimated average NRS payment per episode of
   The following is a summary of the comments we received regarding the proposed rebasing adjustments to the National, Standardized 60-day Episode Payment Amount, LUPA Per-Visit Payment Amounts, and the (NRS) Conversion Factor.
   Comment: Commenters stated that the maximum allowable rebasing reduction should be calculated from the CY 2010 standardized base amount, not the CY 2013 average payment. The commenters stated that the Affordable Care Act refers to "the date of enactment" and since the Affordable Care Act was enacted on
   Response: While we interpreted the statutory language differently for the CY 2014 HH PPS proposed rule and believe that the proposed rule reflects the how one would ideally rebase a payment system, upon further review, we agree with the commenters regarding the date of enactment and will use the CY 2010 payment rates to determine whether any of the rebasing adjustments exceed 3.5 percent.
   Comment: MedPAC was supportive of the proposed adjustments to the payment amounts, but expressed concerns that the proposed rebasing adjustment to the national, standardized 60 day episode amount of -3.5 percent will be too modest and leave agencies with substantial profit opportunities. MedPAC stated that much of the annual rebasing reductions will be offset by the payment update for each year in 2014 to 2017 and estimates that the cumulative net payment reduction to the national, standardized 60-day episode payment amount after four years will equal approximately 4 percent. MedPAC noted that the rebasing reductions are smaller than the net reductions implemented in 2010 through 2013, a period when the base rate was reduced by 7.6 percent, and noted that the four-year cumulative net effect of the rebasing reductions is smaller than the 4.89 percent estimated one-year payment reduction for CY 2011. MedPAC stated that they recommended to the
   Response: We thank MedPAC for their comments. As MedPAC noted, we proposed a 3.5 percent reduction to the CY 2013 national, standardized 60-day episode payment rate for CY 2014 and an additional 3.5 percent in each year 2015 through CY 2017. However, we do not have the statutory authority to either shorten the 4-year phase-in period or eliminate the annual payment updates. As brought to our attention by commenters, the maximum rebasing adjustment amounts are now calculated using 3.5 percent of the CY 2010 payment rates. Consequently, for this final rule that requirement results in a
   FOOTNOTE 2
   Comment: Several commenters stated that CMS should not implement the proposed payment reductions. Commenters stated that the proposed payment reductions may impact quality of care and diminish health care system efficiency, as well as limit provider's ability to participate in broader delivery system reform efforts. Specifically, commenters stated that home health care prevents hospital readmissions and is less costly than other post-acute settings, and that the rebasing adjustments may increase the use of more costly institutional care, like hospitals, which is against the goal of health care reform to improve outcomes and care coordination, prevent hospitalizations and re-hospitalizations, and reduce costs. A commenter stated that patient outcomes have improved and that spending in FY 2011 is similar to FY 1996, indicating that reductions are not needed. Another commenter stated that CMS should ensure that the final rebasing policy reflects the goals to improve patient care and outcomes, encourage coordination among providers, and appropriately manage the cost of care without harming patient affordability, quality, or access.
   Response: Section 3131(a) of the Affordable Care Act requires that the HH PPS payment amount(s) "shall be adjusted by a percentage determined appropriate by the Secretary to reflect factors such as the changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other factors that the Secretary considers to be relevant." In their 2013 Report to
   FOOTNOTE 3 MedPAC. "Chapter 2: Assessing payment adequacy and updating payments in fee-for-service
   Comment: One commenter stated that the differences between cost and payment may be related to fraud and abuse and that targeted efforts to address fraud or examination of
   Response: Section 3131(a) of the Affordable Care Act requires a four year phase-in of rebasing, in equal increments, to start in CY 2014 and be fully implemented in CY 2017. Therefore, based on statutory requirements, rebasing cannot be delayed or eliminated once we have determined that rebasing is necessary. Differences between estimated episode costs and payments indicate a need to better align payment with costs and therefore, rebasing of the HH PPS payment amounts is needed. We intend to explore these commenters' concerns in ongoing research. We recently awarded a contract to
   Comment: Commenters stated that the proposed reductions puts the nation's economic recovery at risk since it targets the home health sector and the home health care community has been a primary driver of job growth.
   Response: The impact of the rebasing adjustments for CY 2014 is estimated to be approximately -2.7 percent as described in section VII. However, the net impact for CY 2014, given all the payment changes for CY 2014, including the payment update percentage, is estimated at -1.05 percent. This net reduction over the four years is much smaller than some previous net reductions implemented in single payment years, such as the net reduction finalized in CY 2011. In CY 2011, CMS estimated that the net impact of the payment policies for that year to be -4.89 percent. Yet, according to MedPAC, the home health industry did not seem to be adversely impacted as the number of home health agencies from 2010 to 2011 grew from 11,654 to 12,199 and the number of home health episodes from 2010 to 2011 grew similarly, with 6.8 million episodes in 2010 and 6.9 million episodes in 2011. /4/ Therefore, we do not expect that the rebasing adjustments for CY 2014 will have a significant impact but we will be monitoring the impact of rebasing on access to home health care.
   FOOTNOTE 4 MedPAC. "Chapter 9:
   Comment: One commenter argued that language in section 3143 of the Affordable Care Act prohibits CMS from implementing rate rebasing as proposed because it will result in the reduction of guaranteed home health benefits, and that the guaranteed home health benefits include reasonable access to a provider that accepts
   Response: Section 3143 of the Affordable Care Act reads that "Nothing in the provisions of, or amendments made by, this Act shall result in the reduction of guaranteed home health benefits under title XVIII of the Social Security Act." We interpret this to mean that with regards to the statutory language at 1814(a)(2)(C), 1835(a)(2)(A), 1861(m) and 1861(kk), there are to be no changes to the scope of coverage under the
   Comment: Commenters stated that the rebasing reductions will drive payments below costs in almost every state by 2017, causing access issues and impacting quality of care. Commenters stated that by setting the payment at costs, it guarantees that 50 percent of the HHAs will be paid less than cost by CY 2017 and that a margin is needed to meet normal business operational needs, such as the need for capital funding, keeping staff and attracting new staff, and investment in new technologies and care delivery models. One commenter stated that there is no precedent in payment adjustments that call for the estimation of profit margins regardless of type of entity and the "elimination of entire average, estimated margins" for the industry. The commenter recommended that CMS engage in an in-depth analysis and study of the economics at play in the home health marketplace in determining the level of profit/margin that is reasonable to offer and stated that home health agencies have little other revenue, such as commercial insurance revenue, to help counter reductions in
   Response: The rebasing methodology used to develop the proposed rebasing adjustments is very similar to the methodology used in 2000 where the episode rate and per-visit amounts were equated to the estimated costs per episode or per visit. Notably, in 2000, even though the episode and per-visit amounts were aligned with the expected cost for HH PPS episodes, there were high margins in the first year of the HH PPS, in large part due to HHAs providing fewer visits than anticipated. In addition, MedPAC stated in their
   While we calculated the proposed adjustments for rebasing by aligning payment to costs, we did not factor in potential opportunities for HHAs to increase efficiencies into the calculation of the rebasing adjustments. We also note that the rebasing adjustments to the national, standardized 60-day episode payment rate for CY 2014 through 2017 will be lower than the proposed adjustments given that we cannot implement a reduction that exceeds 3.5 percent of the CY 2010 national, standardized 60-day episode payment rate of
   In addition, the rebasing adjustments over the next four years will be partly offset by the HH PPS payment update percentage and, therefore, the net impact on HHAs will be smaller than payment reductions absorbed by the industry in previous years. We plan to monitor the impact of the rebasing adjustments for any unintended consequences. As noted above, as mandated in section 3131(a) of the Affordable Care Act, MedPAC will conduct a study on the rebasing implementation, which will include impact analysis on access to care, quality outcomes, the number of home health agencies, and rural, urban, for-profit, and non-profit agencies, and submit a Report to
   Comment: Commenters stated that the rural add-on only applies to episodes through
   Response: Thank you for the comment. We plan to continue to explore the costs associated with rural areas. We are currently in the process of implementing a "
   Comment: Commenters stated that the proposed rebasing policy will have unintended impacts for vulnerable patients, such as those with higher costs or more complex care needs. Commenters stated that CMS should not implement rebasing until the study required under section 3131(d) of the Affordable Care Act is completed and the report is delivered to the
   A commenter also asked if CMS considered the aging of the American and
   Response: We agree with the commenters that the case-mix system and home health study findings should be examined and addressed. However, the findings and recommendations of the study will not be final until spring of next year and section 3131(a) of the Affordable Care Act mandates that CMS implement rebasing starting in CY 2014. The home health study did take into account the findings from the VNAA Vulnerable Patient study and as noted, we recently awarded a contract to
   Comment: One commenter stated that there are negative margins associated with the provision of services to
   Response: While industry representatives contend that
   FOOTNOTE 5 MedPAC. "Chapter 7: Skilled Nursing Facility Services." Report to the Congress--Medicare Payment Policy.
   In addition, we examined the proportion of
   Comment: Several commenters opposed the use of 6,252 out of 10,327 cost reports for rebasing. One commenter stated that there were about 10 percent of home health agencies that participate in the
   Response: We appreciate the commenter's concern on the number of providers used in (or excluded from) the HHA rebasing analysis. As stated in the CY 2014 HH PPS proposed rule, 1,629 of the 10,327 cost reports were missing data on total
   We performed analysis on both the trimmed and untrimmed sample. We found that using the trimmed sample resulted in an estimated average cost per episode that was much higher than the estimated cost per episode using the untrimmed cost report sample. The estimated average cost per episode using the untrimmed cost report sample was
   Many of the edits applied are similar to those edits applied in other PPS systems and by MedPAC (including but not limited to, the exclusion of providers with missing Medicare Payments, missing
   Comment: Some commenters stated that the data used for rebasing are outdated and that 2012 cost report data should be used, arguing that the CY 2012 cost reports portray a more accurate picture of providers' financial state. A number of commenters cited that 2012 cost reports would better capture agency costs, such as but not limited to, those associated with the full implementation of face-to-face and therapy requirements and the CY 2012 recalibration. Commenters stated that the 2012 cost reports reflect declining average revenue, increased costs, and lower average margins, particularly among small home health agencies, and that
   Response: We disagree with the commenter's claim that the cost reports used are not the most current, complete data available for rebasing. As of
   In response to the commenter's claims that the CY 2012 cost reports portray a more accurate picture of providers' financial state, we calculated the average costs per visit for a matched sample of 2011 and 2012 providers using our rebasing sample of cost reports described in section IV.D.1 and in the CY 2014 HH PPS proposed rule (78 FR 40284) and preliminary 2012 home health agency
[TB] Table 18--Average Cost per Visit, 2011 and 2012 2011 2012 Skilled Nursing
   In addition, the calculations of the proposed CY 2014 rebasing adjustments include a 2.4 percent and a 2.3 percent increase to account for the market basket CY 2012 and CY 2013 updates, respectively. These updates reflect the latest forecast of the HHA market basket available at the time of rate setting. However, the actual (reflecting historical data rather than a forecast) HHA market basket increase for 2012 is now measured to be 1.7 percent (0.7 percentage points lower than the forecasted increase for CY 2012 of 2.4 percent). Preliminary data also suggests the CY 2013 market basket update of 2.3 percent was overstated by roughly 0.5 percentage points. The home health market basket percentage increases can be found here: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/mktbskt-summary.pdf. We would note that the CY 2012 market basket update was based on the 2003-based HHA market basket while the Web site reference above includes the 2010-based HHA market basket increase, which is used for CY 2013 and subsequent years.
   Comment: Several commenters stated that CMS should include all home health service costs in its calculation of the cost of care. Commenters stated that the overhead costs of hospital-based home health agencies were not factored into the cost calculations and also listed several costs that they stated are not reflected in the 2011 cost reports, such as new resources needed for the growth of Accountable Care Organizations (ACOs), bundled payment initiatives,
   Several commenters disagreed with CMS' exclusion of non-allowable costs which they state are part of operating a business, such as bad debt, taxes, franchise fees, fundraising costs in a non-profit, marketing costs and business development costs, full administrative and general costs including those that are non-reimbursable under
   Response: Overhead costs of hospital-based home health agencies were factored into the cost calculations as we used cost measures where both direct service and indirect (such as, administrative and general) costs have been allocated to the appropriate cost centers. Please see page 17 of the technical report titled "Analyses in Support of Rebasing & Updating the Medicare Home Health Payment Rates--CY 2014 Home Health Prospective Payment System Proposed Rule" available on the
   The 2011 HHA Medicare cost reports used in the rebasing analysis reflect the costs of complying with longstanding regulatory requirements, such as HIPAA, and the implementation of OASIS-C on
   With regards to the costs included in the rebasing methodology, section 1861(v)(1)(A) states that "The reasonable cost of any services shall be the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services." We also note that section 1895(e) of the Act governs the HH PPS and states that telehealth services are outside the scope of the
   Although commenters took issue with certain non-reimbursable costs not being included in the cost calculations, we note that the home health agency
   Comment: One commenter stated that there was an "order of operations" issue in the methodology used for rebasing. The commenter stated that when CMS first increased the estimated payment rate to account for the weight reductions (that is, the resetting of the average weight to 1.0000), it significantly increased the base to which the 3.5 percent cut was applied. If the same percentage cut were made to the lower pre-neutralized standardized rate, the 3.5 percent cut would have been about 1 percent lower, or
   Response: The starting point to which the rebasing adjustments are applied is the CY 2013 estimated average payment per episode, which we compare to the CY 2013 estimated average costs per episode. The increase in the CY 2012 national, standardized 60-day episode payment rate by the budget neutrality factor is used to estimate CY 2012 average payment. The CY 2012 average payment is then adjusted by the CY 2013 adjustments (nominal case-mix reduction and HH payment update percentage). The increase in the base rate must occur before the rebasing adjustments are applied, not afterwards, as the rebasing adjustment is calculated by comparing average payments to average costs. We also note that the rebasing adjustments cannot exceed 3.5 percent of the CY 2010 payment amounts in absolute terms.
   Comment: One commenter stated that CMS' approach ignores regional differences in home health operating margins. Another commenter stated that the methodology ignores the diversity in the home care industry and the populations they serve and that the populations served varies by geography, patient characteristics, case-mix, size, and payer makeup. The commenter stated that under the current rebasing methodology, CMS is making a false assumption that all home care agencies are operating under similar conditions with similar populations, and agencies with smaller margins will not be able to accommodate the lower payment rates. A commenter encouraged CMS to make distinctions between hospital-based and freestanding agencies, between for-profit and nonprofit agencies, and between the resource costs of urban and rural agencies, and that CMS should consider setting rates based upon averages among each of the primary groups of HH providers.
   Response: We disagree with the commenters claims that our rebasing adjustment methodology ignores the diversity in the home care industry and the populations they serve. First, our approach reflects case-mix which takes into consideration the characteristics of the patients. As always, we welcome suggestions for additional measures that could potentially improve the case-mix adjustment as we continue in our case mix research. Second, as described in section IV.D.1. of this rule, we used urban/rural classification, size class, and agency type (nonprofit, for-profit, government, and facility-based) weights to estimate the national average cost per visit. In addition, the payment system reflects geographic variation in cost by adjusting payments using the wage index and by rural agency payment adjustments. CMS does not design payment rates for different sizes of agencies for several reasons, including that this would weaken incentives for efficient organization of the home health industry by agency size and could impair the program's ability to benefit from economies of scale that affect agency costs.
   In addition, we note that in their 2013 Report to
   Comment: One commenter stated that the total
   Response: The methodology used the average costs per visit (obtained from the
   Comment: Commenters stated that the CY 2014 HH PPS proposed rule doesn't offer the mathematical calculation CMS used to divide the 13.63 percent difference between payments and costs into four reductions of 3.6 percent, stating that 13.63 divided by 4 is 3.4075. Commenters asked for an explanation of the calculation, indicating that a correction may be needed.
   Response: We calculated the 3.6 percent reduction in the CY 2014 HH PPS proposed rule using a CAGR formula. The CAGR formula used to get the 3.6 percent annual reduction for each of the four years was (
   FOOTNOTE 6 Due to rounding, there is a 0.01 percentage point difference between the calculated and reported numbers. END FOOTNOTE
   This method reflects compounding growth rates over time. We note that while we calculated a 3.6 percent reduction for the CY 2014 HH PPS proposed rule, as we discussed earlier in this section, the Affordable Care Act mandates that the rebasing adjustment to the amount (or amounts) be no more than 3.5 percent of the 2010 payment amounts. As noted previously, the maximum adjustment for rebasing the national, standardized 60-day payment rate has been determined to be
   Comment: One commenter stated that when developing the rebasing adjustment, CMS double counted factors that have already been accounted for in other reimbursement reductions since the enactment of the Affordable Care Act while excluding other factors that should have been considered. The commenter stated that CMS adjusted reimbursement rates multiple times based on the same factors. The commenter stated that the number of visits in a home health episode was already addressed. The commenter stated that between 1998 and 2001, the average number of home health visits per episode dropped from 31.6 to 21.4 and remained at this level through 2009 and that market forces have already corrected imbalances in the number of visits in a home health episode. The commenter also stated that in the CY 2013 HH PPS rule, CMS already considered case-mix data and determined that no further adjustment was necessary. The commenter stated that adjusting reimbursement rates based on case-mix or the mix of services again would be "double counting." In addition, the commenter stated that CMS already accounted for the level of intensity of services in a home health episode through the case-mix payment reductions and further reducing it would be double counting.
   Response: As we stated above, in their 2013 Report to
Table 2: Transition Period for the Liquidity Coverage Ratio Transition Period Liquidity coverage ratio Calendar year 2015 0.80 Calendar year 2016 0.90 Calendar year 2017 and thereafter 1.00
   Comment: A commenter stated that the methodology relies on proxies for payment and cost determinations when the information is readily available from cost report data. The commenter stated that the proxies CMS used are different than the actual episode costs and payments on the cost report and the combined difference between the actual and proxy calculation should lead to a lower rebasing adjustment than the adjustment proposed. The commenter recommended that CMS use direct data rather than the proxies used in the CY 2014 HH PPS proposed rule. The commenter also stated that the methodology fails to account for and address the wide range in revenue/cost per episode experienced by HHAs and that a single payment rate adjusted with the current "weak" adjusters leads to payment inaccuracies that require a rate "cushion" to maintain access to care. The commenter stated that CMS should look at all ways of calculating average costs of home health services, such as look into the median instead of the mean, and look into the multiple options for forecasting cost and payment trends. The commenter stated that all calculation options should be explored and evaluated and the option that would result in the "the greatest degree of financial stability" should be implemented. Another commenter urged CMS to ensure the methodology used to determine the rebasing adjustments is accurate.
   Response: We believe that
   With regards to the comment about using the median rather than the mean, the median is typically used in order to avoid having extreme values unduly influence the measure of the typical value. We have already trimmed the cost report sample to avoid having extreme values influence the average value to some degree. We also do not believe the upper and lower values, after the trimming, are skewing the mean but rather that the upper and lower values reflect legitimate payments obtained from cleaned up data and therefore, the mean should be used. Also, using an average accounts precisely for the costs incurred by the industry because the mean times the number of units equals the total costs. With a median, one may be accounting for more or less than the industry's total costs. In addition, the median calculated by the commenter was likely done at the agency level rather than the episode level, giving smaller agencies with higher costs more weight than the episode level average. In the rebasing methodology for this final rule, CMS makes use of the fact that much of the utilization is in lower-cost, large agencies, which would not be reflected if the median was used.
   We disagree with the commenter's suggestion that the
   Comment: A commenter stated that fraudulent payment should be excluded from the payment history statistics and recommended that CMS "restart" the rebasing efforts, consulting with specific working groups comprised of industry and patient advocacy groups.
   Response: Section 3131(a) of the ACA mandates that rebasing be implemented starting in CY 2014 so the rebasing adjustments must be implemented beginning on
   Comment: One commenter stated that in the CY 2014 HH PPS proposed rule, there was no indication whether the audited HHAs were provided appeals rights and that the limited audit is unreliable for use in calculating payment rates. The commenter recommended that CMS continue to reject a downward adjustment to the average costs per visit calculation as a result of the audit findings since the HHAs audited do not represent the universe of HHAs, the auditors' findings were not subject to review, and cost report auditing is "an ancient process which hasn't been done for years". In addition, a commenter stated that the 8 percent of costs were disallowed for unspecified reasons. Another commenter stated that home health agencies have no incentives for ensuring the accuracy of their cost reports and the data is inaccurate and not representative of the costs that agencies actually incur and that there is no way to determine the accuracy of the reports that CMS included in the sample. Commenters stated that the cost report does not separate costs between payers and the costs solely attributed to
   Response: We contracted with a Medicare Administrative Contractor (MAC) to conduct audits on 2010
   We disagree with the commenters' claim that home health agencies have no incentives for ensuring the accuracy of their cost reports and that the CR data are inaccurate and not representative of the costs that agencies actually incur. Each HH cost report is required to be certified by the Officer or Director of the home health agency. Specifically, the HHA Medicare Cost Report (MCR) Form (CMS-1728-94) states the following:
   "I HEREBY CERTIFY that I have read the above statement and that I have examined the accompanying Home Health Agency Cost Report and the Balance Sheet and Statement of Revenue and Expenses prepared by __ (provider name(s) and number(s) for the cost report beginning __ and ending __, and that to the best of my knowledge and belief, it is a true, correct and complete report prepared from the books and records of the provider in accordance with applicable instructions, except as noted. I further certify that I am familiar with the laws and regulations regarding the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations."
We also note that the HHA MCR referenced statement above includes the following:
   "Misrepresentation or falsification of any information contained in this cost report may be punishable by criminal, civil and administrative action, fine and/or imprisonment under federal law. Furthermore, if services identified in this report were provided or procured through the payment directly or indirectly of a kickback or were otherwise illegal, criminal, civil and administrative action, fines and/or imprisonment may result."
   As always, we encourage providers to fill out the
   Comment: Another commenter stated that CMS should look at the impact of the rebasing reductions on agencies that already have either negative or low margins. A commenter stated that MedPAC projected a smaller margin for freestanding HHAs than CMS calculated and that while the CMS projection is not an overall
   Response: It is important to note that the commenters' views on the impact of the rebasing reductions on margin are starkly different from MedPAC's predictions of HHA Medicare margins. As stated in their comment, MedPAC estimates that the cumulative net payment reduction to the national, standardized 60-day episode payment amount after four years will equal approximately 4 percent. MedPAC expressed concerns that the rebasing reductions were too modest and will do little to reduce home health agencies' unusually high profitability under
   We conducted analysis similar to that of the
   We note that the final rebasing adjustment to the national, standardized 60-day episode payment rate after incorporating complete 2012 claims data and comments received is an approximate reduction of 2.8 percent for 2014-2017 and the overall impact of all of the rebasing adjustments is about -2.7 percent. Re-running the margins analysis using the finalized payment changes and adjusting our predicted margins to account for differences we observed between previous predicted margins and actual margins, we estimated that approximately 40 percent of providers will have negative margins in CY 2017 and that of the 40 percent of providers predicted to have negative margins, 83 percent of these providers already reported negative margins in 2011.
   With regards to comments about the interim payment system, we note that in their 2013 Report to
   Comment: Commenters stated that CMS should look at the impact of rebasing on LUPA episodes. A commenter stated that patients receiving LUPAs may be vulnerable beneficiaries and that agencies with higher LUPA numbers may have lower or negative overall margins. In addition, the commenter stated that if the normal episodes are rebased to estimated cost, but the LUPA episodes are paid at less than cost, the overall effect on agencies with any LUPA episodes will be negative margins. One commenter stated that CMS should study LUPA services and payment and adjust overall payment to at least cover the costs incurred by agencies serving the patients. Specifically, commenters stated that the rebasing adjustments for LUPA per visit payments should be higher than 3.5 percent a year and that the 3.5 percent limit in the Affordable Care Act refers to the overall impact of the rebasing changes, not the individual rebasing adjustment amounts. Another commenter stated that CMS should closely review the statutory provision to determine whether there is flexibility to further raise the LUPA payments and if not, to seek legislative authority that would permit payments to be raised to the estimated level of cost, stating that LUPA episodes guard against the incentive to get a full 60-day episode payment for episodes with low visit counts. In contrast, one commenter stated that they were concerned the proposed increases to LUPA episodes may encourage HHAs to stint therapy services to
   Response: We believe that the better reading of the statute requires us to apply rebasing adjustments to the individual payment amounts, not aggregate amounts. Therefore, we are applying the rebasing adjustments to the individual payment amounts. In addition, given the interpretation of the 3.5 percent limit as of the date of enactment of the Affordable Care Act, as mentioned by a commenter, the LUPA per-visit amounts will be increased by the maximum dollar limit calculated using CY 2010 payment amounts, as shown in Table 14. This results in slightly lower increases to the LUPA rates than originally proposed in the CY 2014 HH PPS proposed rule. We share commenters' concerns about the incentive issues surrounding LUPA payments. We re-examined our LUPA add-on methodology but did not find a basis for revising our proposal for rebasing the add-on. We note that we plan to monitor LUPA episodes and further examine LUPA-related payment policies in the new contract awarded to
   Comment: Several commenters stated that they were concerned that the costs of NRS for hospital-based home health agencies were not captured since Form CMS-2552-10 doesn't allow the reporting of these
   Response: NRS costs for hospital-based HHAs were included in calculation of the 2011 average NRS cost per visit. These costs are to be reported on CMS form 2552-10, worksheet H, line 12.
   Comment: A commenter stated that in the CY 2014 HH PPS proposed rule, CMS states that there are a significant number of agencies that did not properly report NRS cost on their cost report, yet CMS seemed to use their data in rebasing the NRS Conversion Factor. The commenter urged CMS to either recalculate the NRS rebasing using validated, accurate data, or hold off on rebasing the NRS Conversion Factor until better data becomes available.
   Response: In the CY 2014 HH PPS proposed rule, we noted that a significant number of HHAs (1,756) listed charges for NRS on the home health claim, but did not list any NRS costs on the cost report (78 FR 40290). As we stated in the CY 2014 HH PPS proposed rule, we calculated the average NRS cost per visit using the same cost report sample used to calculate the other adjustments to the national, standardized 60-day episode payment amount and the national per-visit rates, thus maintaining a consistent approach (78 FR 40289). We remind the industry again that each home health cost report is required to be certified by the Officer or Director the home health agency. We also welcome suggestions for improving compliance and accuracy on cost reports within the current cost reporting forms.
   Comment: Commenters stated that the CY 2014 HH PPS proposed rule did not include a detailed and cumulative quantitative analysis of the impact and economic effects of the proposed provisions nor a cumulative cost analysis or quantification of the rule's projected future costs that is required for any economically significant regulation under Executive Orders 13563 and 12866. Commenters also stated that CMS should take into account the other Affordable Care Act mandated reductions (adjustments to the home health market basket updates, productivity adjustments, and outlier payment reduction), case-mix reductions, and sequestration, when developing the rebasing adjustments. A commenter stated that the impact analysis should look at access to care and should describe the locales where care is provided rather than gross aggregate impacts. The commenter stated that the impact analysis should look at the overall impact on the financial viability of HHAs rather than on the reduction in revenue and should look at the overall impact on
   Response: Executive Orders 13563 and 12866 require us to assess the costs, benefits, and transfer effects of rulemaking. Because the most quantifiable impact of the rule is the transfer effect associated with
    Order 13563 specifies, to the extent practicable, agencies should assess the costs of cumulative regulations. However, given potential utilization pattern changes, wage index changes, changes to the market basket forecasts, and unknowns regarding future policy changes, we believe it is neither practicable nor appropriate to forecast the cumulative impact of the rebasing adjustments on
   Comment: Commenters stated that contrary to the Regulatory Flexibility Act (RFA), the CY 2014 HH PPS proposed rule doesn't include a detailed analysis of its impact on small businesses. A commenter also cited the Data Quality Act, stating there are detailed analytic requirements on federal agencies prior to issuing economically significant regulations. Commenters noted that the CY 2014 HH PPS proposed rule was of sufficient concern to the
   Response: The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than
   While commenters mentioned the Data Quality Act (section 515(a) of the Treasury and General Government Appropriations Act for Fiscal Year 2001 (Pub. L. 106-554)) in public comments, they did not state that CMS was not in compliance. The Data Quality Act directed the OMB to issue government-wide guidelines that provide policy and procedural guidance to federal agencies for ensuring and maximizing the quality, objectivity, utility, and integrity of information, including statistical information, disseminated by federal agencies. We believe that we have complied with section 3131(a) of the Affordable Care Act in a straightforward and transparent manner and that we adhered to the principles of the Data Quality Act by ensuring that the information provided to the industry was of sufficient quality, objectivity, utility, and integrity. We provided the industry with detailed information on our calculations in the preamble of the CY 2014 HH PPS proposed rule as well supporting documentation in the form of a public use file and a technical rebasing report posted on the HHA Center Web site at: http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html.
   Comment: Another commenter recommended that CMS develop a detailed plan for monitoring the impact of any HH PPS payment reductions (such as by examining measures relating to beneficiary access, quality of care and beneficiary experience of care) and that CMS commit to reporting to Congressional Committees of jurisdiction, the
   Response: As we noted above, we recently awarded a contract to
   Final Decisions:
   Based on comments received, and section 3131(a) statutory language describing the maximum adjustment amounts for rebasing, we are finalizing a
   Similar to the rebasing adjustment for the national, standardized 60-day payment rate, we are finalizing equal dollar adjustments to the per-visit payment amounts for CY 2014 through CY 2017, as shown in Tables 14 and 15. The adjustments to the national per-visit payment rates are capped at 3.5 percent of the national per-visit payment amounts in CY 2010, which are lower than the CY 2013 per-visit amounts. Therefore, the maximum adjustments to the national per-visit payment rates allowed by statute, and finalized in this final rule, are lower than the adjustments we proposed.
   We are finalizing a reduction to the NRS conversion factor in each year from 2014 through 2017 of 2.82 percent, or
   Section IV.E.4 contains the finalized payment rates for CY 2014 for the National, Standardized 60-day Episode Payment Amount, LUPA Per-Visit Payment Amounts, and Nonroutine Medical Supply (NRS) Conversion Factor, accounting for the rebasing adjustments.
1. CY 2014 HH Market Basket Update
   Section 1895(b)(3)(B) of the Act, as amended by section 3401(e) of the Affordable Care Act, adds new clause (vi) which states, "After determining the home health market basket percentage increase . . . the Secretary shall reduce such percentage . . . for each of 2011, 2012, and 2013, by 1 percentage point. The application of this clause may result in the home health market basket percentage increase under clause (iii) being less than 0.0 for a year, and may result in payment rates under the system under this subsection for a year being less than such payment rates for the preceding year." Therefore, as mandated by the Affordable Care Act, for CYs 2011, 2012, and 2013, the HH market basket update was reduced by 1 percentage point. For CY 2014, there is no such percentage reduction. Therefore, the HH PPS payment update percentage increase to the CY 2014 payment rates will be the full HH market basket update.
   Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts for CY 2014 be increased by a factor equal to the applicable HH market basket update for those HHAs that submit quality data as required by the Secretary. The HH PPS market basket update for CY 2014 is 2.3 percent. This is based on
   The following is a summary of the comments we received regarding the home health market basket update.
   Comment: A commenter supports CMS's proposal to provide a full market basket increase. The commenter further requests that CMS support future market basket increases, which are important to HHAs feeling the impact of several years of market basket reductions. The commenter also states that providers are preparing for a productivity adjustment cut effective in 2015.
   Response: We appreciate the comment in support of using the full market basket update. The reductions to the market basket updates in previous years had been required by various statutes. Likewise, the productivity adjustment that would begin in CY 2015 is a statutory requirement and as such, we do not have the authority to waive the application of the productivity adjustment.
   Final Decision: For CY 2014, as required by section 1895(b)(3)(B) of the Act, the HH PPS payment update percentage will be 2.3 percent.
e. Home Health Care CAHPS(R) Survey (HHCAHPS(R))
   In the CY 2013 HH PPS final rule (77 FR 67094), we stated that the HH quality measures reporting requirements for
(1) Background and Description of HHCAHPS(R)
   As part of the HHS' Transparency Initiative, we have implemented a process to measure and publicly report patient experiences with home health care, using a survey developed by the
   Prior to this survey, there was no national standard for collecting information about patient experiences that will enable valid comparisons across all HHAs. The history and development process for HHCAHPS(R) has been described in previous rules and it also available on the official HHCAHPS(R) Web site at https://homehealthcahps.org and in the annually-updated HHCAHPS (R) Protocols and Guidelines Manual, which is downloadable from https://homehealthcahps.org.
   For public reporting purposes, we report five measures from the HHCAHPS(R) Survey--three composite measures and two global ratings of care that are derived from the questions on the HHCAHPS(R) survey. The publicly reported data are adjusted for differences in patient mix across HHAs. We update the HHCAHPS(R) data on Home Health Compare on www.medicare.gov quarterly. Each HHCAHPS(R) composite measure consists of four or more individual survey items regarding one of the following related topics:
    * Patient care (Q9, Q16, Q19, and Q24);
    * Communications between providers and patients (Q2, Q15, Q17, Q18, Q22, and Q23); and
    * Specific care issues on medications, home safety, and pain (Q3, Q4, Q5, Q10, Q12, Q13, and Q14).
   The two global ratings are the overall rating of care given by the HHA's care providers (Q20), and the patient's willingness to recommend the HHA to family and friends (Q25).
   The HHCAHPS(R) survey is currently available in English, Spanish, Chinese, Russian, and Vietnamese. The OMB Number on these surveys is the same (0938-1066). All of these surveys are on the Home Health Care CAHPS(R) Web site, https://homehealthcahps.org. We will continue to consider additional language translations of the HHCAHPS(R) in response to the needs of the home health patient population.
   All of the requirements about home health patient eligibility for the HHCAHPS(R) survey and conversely, which home health patients are ineligible for the HHCAHPS(R) survey are delineated and detailed in the HHCAHPS (R) Protocols and Guidelines Manual, which is downloadable at https://homehealthcahps.org. Home health patients are eligible for HHCAHPS(R) if they received at least two skilled home health visits in the past 2 months, which are paid for by
   Home health patients are ineligible for inclusion in HHCAHPS(R) surveys if one of these conditions pertains to them:
    * Are under the age of 18;
    * Are deceased prior to the date the sample is pulled;
    * Receive hospice care;
    * Receive routine maternity care only;
    * Are not considered survey eligible because the state in which the patient lives restricts release of patient information for a specific condition or illness that the patient has; or
    * No Publicity patients, defined as patients who on their own initiative at their first encounter with the HHAs make it very clear that no one outside of the agencies can be advised of their patient status, and no one outside of the HHAs can contact them for any reason.
   We stated in previous rules that
   HHCAHPS(R) survey vendors are required to attend introductory and all update trainings conducted by CMS and the HHCAHPS(R) Survey Coordination Team, as well as to pass a post-training certification test. We now have approximately 30 approved HHCAHPS(R) survey vendors. The list of approved HHCAHPS(R) survey vendors is available at https://homehealthcahps.org.
(2) HHCAHPS(R) Oversight Activities
   We stated in prior final rules that all approved HHCAHPS(R) survey vendors are required to participate in HHCAHPS(R) oversight activities to ensure compliance with HHCAHPS(R) protocols, guidelines, and survey requirements. The purpose of the oversight activities is to ensure that approved HHCAHPS(R) survey vendors follow the HHCAHPS (R) Protocols and Guidelines Manual. As stated previously in the CY 2010, CY 2011, CY 2012, and CY 2013 final rules, all approved survey vendors must develop a Quality Assurance Plan (QAP) for survey administration in accordance with the HHCAHPS (R) Protocols and Guidelines Manual. An HHCAHPS(R) survey vendor's first QAP must be submitted within 6 weeks of the data submission deadline date after the vendor's first quarterly data submission. The QAP must be updated and submitted annually thereafter and at any time that changes occur in staff or vendor capabilities or systems. A model QAP is included in the HHCAHPS (R) Protocols and Guidelines Manual. The QAP must include the following:
* Organizational Background and Staff Experience
* Work Plan
* Sampling Plan
* Survey Implementation Plan
* Data Security, Confidentiality and Privacy Plan
* Questionnaire Attachments
   As part of the oversight activities, the HHCAHPS(R) Survey Coordination Team conducts on-site visits to all approved HHCAHPS(R) survey vendors. The purpose of the site visits is to allow the HHCAHPS(R) Coordination Team to observe the entire HHCAHPS(R) Survey implementation process, from the sampling stage through file preparation and submission, as well as to assess data security and storage. The HHCAHPS(R) Survey Coordination Team reviews the HHCAHPS(R) survey vendor's survey systems, and assesses administration protocols based on the HHCAHPS (R) Protocols and Guidelines Manual posted at https://homehealthcahps.org. The systems and program site visit review includes, but is not limited to the following:
    * Survey management and data systems;
    * Printing and mailing materials and facilities;
    * Telephone call center facilities;
    * Data receipt, entry and storage facilities; and
    * Written documentation of survey processes.
   After the site visits, HHCAHPS(R) survey vendors are given a defined time period in which to correct any identified issues and provide follow-up documentation of corrections for review. HHCAHPS(R) survey vendors are subject to follow-up site visits on an as-needed basis.
   In the CY 2013 HH PPS final rule (77 FR 67094, 67164), we codified the current guideline that all approved HHCAHPS(R) survey vendors fully comply with all HHCAHPS(R) oversight activities. We included this survey requirement at
(3) HHCAHPS(R) Requirements for the CY 2015 APU
   In the CY 2013 HH PPS final rule (77 FR 67094), we stated that for the CY 2015 APU, we will require continued monthly HHCAHPS(R) data collection and reporting for 4 quarters. The data collection period for CY 2015 APU includes the second quarter 2013 through the first quarter 2014 (the months of
   We will continue to exempt HHAs receiving
   We require that all HHAs that had fewer than 60 HHCAHPS(R)-eligible unduplicated or unique patients in the period of
(4) HHCAHPS(R) Requirements for the CY 2016 APU
   For the CY 2016 APU, we require continued monthly HHCAHPS(R) data collection and reporting for 4 quarters. The data collection period for the CY 2016 APU includes the second quarter 2014 through the first quarter 2015 (the months of
   We will exempt HHAs receiving
   We require that all HHAs that had fewer than 60 HHCAHPS(R)-eligible unduplicated or unique patients in the period of
(5) HHCAHPS(R) Reconsiderations and Appeals Process
   HHAs should monitor their respective HHCAHPS(R) survey vendors to ensure that vendors submit their HHCAHPS(R) data on time, by accessing their HHCAHPS(R) Data Submission Reports on https://homehealthcahps.org. This will help HHAs ensure that their data are submitted in the proper format for data processing to the HHCAHPS(R) Data Center.
   We will continue the HHCAHPS(R) reconsiderations and appeals process that we have finalized and that we have used for the CY 2012 APU and for the CY 2013 APU. We have described the HHCAHPS(R) reconsiderations process requirements in the Technical Direction Letter that CMS sends to the affected HHAs, on or about the first Friday in September. HHAs have 30 days from their receipt of the Technical Direction Letter informing them that they did not meet the HHCAHPS requirements for the CY period, to send all documentation that supports their requests for reconsideration to CMS. It is important that the affected HHAs send in comprehensive information in their reconsideration letter/package because CMS will not contact the affected HHAs to request additional information or to clarify incomplete or inconclusive information. If clear evidence to support a finding of compliance is not present, the 2 percent reduction in the APU will be upheld. If clear evidence of compliance is present, the 2 percent reduction for the APU will be reversed. We will notify affected HHAs by about mid-December. If we determine to uphold the 2 percent reduction, the HHA may further appeal the 2 percent reduction via the
   The following is a summary of the comments we received regarding HHCAHPS(R):
   Comment: We received a comment that supported HHCAHPS(R) as a useful tool for quality improvement and for empowering patients as equal partners in their plans of health care. This commenter said that member providers have used the HHCAHPS(R) survey to identify high-risk patients and to provide additional care support to them in managing their illnesses.
   Response: We are very happy to hear these statements of support for HHCAHPS(R) and to learn about how providers are using the survey for quality improvement.
   Comment: We received a comment that HHCAHPS(R) is an unfunded administrative burden on HHAs as a mandate that requires significant time to work with CMS's approved vendor selected by the provider.
   Response: The collection of the patient's perspectives of care data for similar CAHPS(R) surveys, such as Hospital CAHPS(R), follow the same model where providers pay the approved survey vendors for the HHCAHPS(R) data collection, and CMS pays for the HHCAHPS(R) survey vendor approval process, survey vendor training, technical support and assistance for home health agencies and for the vendors, monitoring and oversight of the vendors, and data analysis and public reporting of the HHCAHPS(R) survey data. HHAs are strongly encouraged to report their respective HHCAHPS(R) costs on their cost reports but should note that the HHCAHPS(R) costs are not reimbursable under the HH PPS. CMS strongly encourages HHAs to shop around for the best cost value for them before choosing and contracting with an approved HHCAHPS(R) vendor to conduct the HHCAHPS(R) survey on their behalf.
   Comment: We received comments that CMS requires the use of external CMS-approved vendors but holds the home health agencies responsible for assuring that these vendors perform properly. These commenters emphasized that CMS should change this policy and monitor the performance of the outside vendors and penalize the vendors, not the home health agencies, if the vendors fail to perform.
   Response: We believe that HHAs must monitor their vendors to ensure that vendors submit data on time, by using the information that is available to them on the HHCAHPS(R) Data Submission Reports. This will also ensure that data is submitted in the proper format, and will subsequently be successfully submitted to the HHCAHPS(R) Data Center.
   If CMS or the
   Final Decision: We are not recommending any changes as a result of comments received.
f. Summary of Changes in CY 2014 for the HHCAHPS(R) Survey
   For the CY 2014 HH PPS Final Rule, we are finalizing the proposed requirements for HHCAHPS(R) as proposed in the CY 2014 HH PPS Proposed Rule.
g. For Further Information on the HHCAHPS(R) Survey
   We strongly encourage HHAs to learn about the survey and view the HHCAHPS(R) Survey Web site at the official Web site for the HHCAHPS(R) at https://homehealthcahps.org. HHAs can also send an email to the HHCAHPS(R) Survey Coordination Team at [email protected], or telephone toll-free (1-866-354-0985) for more information about HHCAHPS(R).
2. Home Health Quality Reporting Program (HHQRP)
a. General Considerations Used for Selection of Quality Measures for the HHQRP
   The successful development of the HH Quality Reporting Program (HHQRP) that promotes the delivery of high quality healthcare services is our paramount concern. We seek to adopt measures for the HHQRP that promote efficient and safer care. Our measure selection activities for the HHQRP takes into consideration input we receive from the
   To the extent practicable, we have sought to adopt measures that have been endorsed by the national consensus organization, under contract to endorse standardized healthcare quality measures pursuant to section 1890 of the Act, recommended by multi-stakeholder organizations, and developed with the input of providers, purchasers/payers, and other stakeholders.
b. Background and Quality Reporting Requirements
   Section 1895(b)(3)(B)(v)(II) of the Act states that "each home health agency shall submit to the Secretary such data that the Secretary determines are appropriate for the measurement of health care quality. Such data shall be submitted in a form and manner, and at a time, specified by the Secretary for purposes of this clause."
   In addition, section 1895(b)(3)(B)(v)(I) of the Act states that "for 2007 and each subsequent year, in the case of a home health agency (HHA) that does not submit data to the Secretary in accordance with subclause (II) with respect to such a year, the HH market basket percentage increase applicable under such clause for such year shall be reduced by 2 percentage points." This requirement has been codified in regulations at
   Section 1895(b)(3)(B)(v)(III) of the Act further states that "[t]he Secretary shall establish procedures for making data submitted under sub clause (II) available to the public. Such procedures shall ensure that a HHA has the opportunity to review the data that is to be made public with respect to the agency prior to such data being made public."
   As codified at
   As stated in the CY 2012 and CY2013 HH PPS final rules (76 FR 68575 and 77 FR 67093, respectively), we finalized that we will also use measures derived from
c. OASIS Data Submission and OASIS Data for Annual Payment Update
   The HH conditions of participation (CoPs) at
   It is important to note that to calculate quality measures from OASIS data, there must be a complete quality episode, which requires both a Start of Care (initial assessment) or Resumption of Care OASIS assessment and a Transfer or Discharge OASIS assessment. Failure to submit sufficient OASIS assessments to allow calculation of quality measures, including transfer and discharge assessments, is failure to comply with the CoPs.
   HHAs do not need to submit OASIS data for those patients who are excluded from the OASIS submission requirements under the HH CoPs SEC 484.1 through
    * Receiving only nonskilled services;
    * For whom neither
    * Receiving pre- or post-partum services; or
    * Under the age of 18 years.
   As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs that become
d. Home Health Care Quality Reporting Program Requirements for CY 2014 Payment and Subsequent Years
(1) Submission of OASIS Data
   For CY 2014, we proposed to consider OASIS assessments submitted by HHAs to CMS in compliance with HH CoPs and Conditions for Payment for episodes beginning on or after
   The following is a summary of the comments we received regarding the submission of OASIS assessments to fulfill one portion of the quality reporting requirement for CY 2014 Payment and Subsequent Years.
   Comment: Several commenters supported the proposals regarding considering OASIS assessments as fulfilling one portion of the quality reporting requirement for CY2014 and each subsequent year. We received no comments in opposition.
   Response: We appreciate the commenters' support for the proposals.
   Final Decision: After considering all of the comments we received, we are finalizing the proposals as proposed. CMS will consider OASIS assessments submitted by HHAs to CMS in compliance with the HH CoPs and Conditions for Payment for episodes beginning on or after
(2)
   We proposed to adopt two claims-based measures: (1) Rehospitalization during the first 30 days of HH; and (2) Emergency Department Use without Hospital Readmission during the first 30 days of HH. These measures were included on the Measures Under Consideration list reviewed by the MAP in
   We worked to develop a set of quality measures to report on HH patients who are recently hospitalized as these patients are at an increased risk of acute care hospital use, either through inpatient admission or emergency department use without inpatient admission. Addressing unplanned hospital readmissions is a high priority for HHS as our focus continues on promoting patient safety, eliminating healthcare associated infections, improving care transitions, and reducing the cost of healthcare. Readmissions are costly to the
   The measures of acute care utilization by previously hospitalized patients are developed out of the NQF endorsed claims-based measures: (1) Acute Care Hospitalization (NQF #0171); and (2) Emergency Department Use without Hospitalization (NQF #0173) to better capture acute care hospitalizations and use of an emergency department for patients who are recently discharged from the hospital. These rehospitalization measures are harmonized with NQF-endorsed Hospital-Wide Risk-Adjusted All-Cause Unplanned Readmission Measure (NQF #1789) (see http://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_All-Cause_Readmissions_Expedited_Review_2011.aspx) finalized for the Hospital IQR Program in the FY 2013 IPPS/LTCH PPS Final Rule (77 FR 53521 through 53528). Further, to the extent appropriate, the HH rehospitalization measures are harmonized with this measure and other measures of readmission rates developed for post-acute care (PAC) settings.
   We intend to seek NQF endorsement of the: (1) Rehospitalization during the first 30 days of HH; and (2) Emergency Department Use without Readmission during the first 30 days of HH measures. We proposed to begin reporting feedback to HHAs on performance on these measures in CY 2014. These measures will be added to Home Health Compare for public reporting in CY 2015. Additional details pertaining to these measures, including technical specifications, can be found at the HH Quality Initiative Web page located at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
   We solicited public comment on our proposed quality measures: (1) Rehospitalization during the first 30 days of HH; and (2) Emergency Department Use without Hospital Readmission during the first 30 days of HH. We also proposed to provide feedback to HHAs on performance of these measures in CY 2014. The following is a summary of the comments we received regarding these two quality measures:
   Comment: Several commenters stated that they support the addition of the proposed quality measures to the HHQRP. One commenter specifically supported the proposal for reporting feedback to HHAs on performance of these measures in CY 2014. We also received a number of comments stating that, according to the
   Response: We appreciate the commenters' support for the addition of the proposed quality measures to the HHQRP. We are finalizing the proposal to provide feedback to HHAs on performance of these measures in CY 2014. In
   Comment: One commenter requested that CMS clarify what course of action it would take if NQF fails to endorse the proposed quality measures. The commenter also stated that their understanding of section 1890 of the Act is that CMS is required to use endorsed measures in its quality reporting programs.
   Response: As noted in the response to the previous comment, we plan to submit the measures for NQF endorsement in the fourth quarter of CY 2013. However, based on our interpretation of section 1895(b)(3)(B)(v) of the Act, we may adopt measures for the HHQRP that are not NQF-endorsed. If NQF does not endorse the proposed quality measures, CMS will consider NQF's rationale for not endorsing the measures and decide how to proceed.
   Comment: Several commenters stated that the proposed quality measures are too similar to the existing Acute Care Hospitalization and Emergency Department Use without Hospitalization measures. Several additional commenters were uncertain about how the proposed measures differ from the measures of Acute Care Hospitalization and ED Use currently published on Home Health Compare or were unaware that the Acute Care Hospitalization and ED Use without Hospitalization are currently part of the HHQRP measure set. These commenters recommended that CMS modify the proposed measures so that they are more similar to the existing measures. We also received a number of comments stating that if we finalize the proposed quality measures we should consider removing the existing Acute Care Hospitalization and Emergency Department Use without Hospitalization measures from the HHQRP because publicly reporting all four measures might be confusing for HHAs and the public.
   Response: The two quality measures we proposed are different from the existing NQF-endorsed Acute Care Hospitalization and ED Use without Hospitalization measures. The proposed quality measures specifically target the previously hospitalized home health population, whereas the existing, NQF-endorsed Acute Care Hospitalization and Emergency Department Use without Hospitalization measures evaluate home health agencies on their care for all of their
   Comment: One commenter requested that CMS clarify the source of a statistic cited in the proposed rule, namely the 14.4 percent of HH patients experiencing an unplanned rehospitalization in the first 30 days of HH care and also requested that CMS clarify the reason for the difference between the national average rate of unplanned rehospitalization in the first 30 days of HH care (14.4 percent) and the national average rate for the Acute Care Hospitalization rate published on Home Health Compare (17 percent).
   Response: We appreciate the comments. The statistic that 14.4 percent of HH patients experience an unplanned rehospitalization in the first 30 days of HH care is calculated by applying the specifications for the Rehospitalization during the first 30 days of HH measure to 12 months of fee-for-service
   Comment: One commenter stated that CMS appears to take the position that 14.4 percent of HH patients experiencing an unplanned rehospitalization in the first 30 days of HH care is an unacceptable number. The commenter noted that a portion of those readmissions may be unavoidable.
   Response: We thank the commenter for the comment. We agree with the commenter that some readmissions to the hospital and emergency department visits may not be preventable. We believe that HHAs can provide the highest quality care and coordination of care for their patients so that the rate of preventable readmissions is reduced.
   Comment: With regards to the Emergency Department Use without Hospital Readmission during the first 30 days of HH measure, one commenter stated that CMS should take into account the increase in the number of urgent care centers in certain areas of the country, which could skew the performance rates for the Emergency Department Use without Hospital Readmission during the first 30 days of HH measure across different HHAs across the country.
   Response: We appreciate the comment. We are investigating the impact of urgent care centers on these measures. While we expect that urgent care sometimes substitutes for
   Comment: One commenter expressed concern that the proposed quality measures do not consider the length of time that the patient has been receiving HH care before requiring rehospitalization or treatment in the emergency department.
   Response: We appreciate the commenter's concern. We examined the relationship between time in home health and hospitalizations and found that home health patients experience a nearly constant hazard of hospitalization per day. By measuring rehospitalizations over a fixed 30 day window (rather than over the entire home health episode) the relationship between length of stay and rehospitalization is mitigated. While we acknowledge that other approaches could also be appropriate, we chose the fixed measurement window approach for simplicity and to be consistent with the existing NQF endorsed measures of Acute Care Hospitalization and ED Use.
   Comment: One commenter stated that they do not support the five-day timeframe used to specify the eligible patient population and encouraged further analysis of how the time interval between hospital discharge and home health admission impacts subsequent patient outcomes. The commenter expressed particular concern that some hospitals may delay home health admission until 3 days after hospital discharge in an attempt to maximize DRG reimbursement.
   Response: We appreciate the commenter's feedback. We believe that the five-day timeframe used to specify the eligible patient population for the measures is appropriate. Shortening the 5 day window is undesirable for several reasons. First, it would exclude some patients from the measures who are not cared for in any other post-acute setting. Additionally, a shorter window (such as a two-day window to be consistent with the CoPs) may encourage agencies to delay the start of care for particularly unstable patients so that they are not held accountable for the rehospitalization of such patients.
   Comment: One commenter asked how short Skilled Nursing Facility (SNF) stays occurring between hospital discharge and start of HH care are accounted for in the measures.
   Response: The measure specifications exclude patients who receive care from another post-acute setting, such as a SNF or an IRF between hospital discharge and start of home health are excluded from both measures.
   Comment: One commenter stated that HHAs may not be entirely responsible for a patient's return to an emergency room or inpatient acute care facility, since HHAs follow orders prescribed by the physician. The commenter stated that an HHA does not have the authority to override the physician's decision to admit the HH patient to an inpatient acute care facility.
   Response: We appreciate the commenter's concern. We understand that
   Comment: We received a number of comments stating that agencies should not be held responsible for patients who are readmitted to an acute-care setting within 30 days of entering HH, if these patients have been discharged from home health for appropriate reasons (for example, the patient is no longer homebound or is no longer in need of skilled services) within the 30-day period. One commenter requested that CMS clarify whether patients discharged from HH care within the 30-day measurement period would be included or excluded from the proposed quality measures.
   Response: We appreciate the comments. We believe that the care and education provided by HHAs can have a positive impact on the health status and self-care processes of many of the these patients, even if they were discharged due to appropriate reasons such as no longer being homebound and/or no longer in need of skilled care. Therefore home health care can reduce the likelihood of hospital readmission even after the patient is discharged from the HHA. Thus, as documented in the measure specifications, patients who are discharged from home health within the 30-day observation period are counted in the denominators of the quality measures.
   Comment: Two commenters stated that they are concerned about the impact of the increasing use of "observation stays" in lieu of inpatient admission on the rates of the proposed quality measures, since there may be significant variation in the use of observation stays versus inpatient admission within a state, region, or
   Response: We appreciate the commenters' concern. Observation stays that begin in a hospital emergency department will be captured on the Emergency Department Use without Hospital Readmission during the first 30 days of HH measure rather than in the Rehospitalization measure, as these events are billed to
   Comment: Two commenters expressed support for the proposed exclusions for both measures. We also received a number of comments stating that it is unclear whether and how CMS excludes planned hospitalizations from the proposed quality measures.
   Response: We appreciate the commenters' support for the exclusions. Additionally, we would like to point out that the specifications for the measures clarify that the measures exclude planned hospitalizations using the same algorithm as the NQF-endorsed Hospital-Wide All-Cause Unplanned Readmission (HWR) measure. This algorithm identifies planned hospitalizations based on diagnostic and procedural information available on claims data. Those specifications can be found at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
   Comment: One commenter requested that CMS clarify the term "risk-standardized" as it is used in the proposed rule to describe the proposed quality measures.
   Response: We would like to clarify that the term "risk-standardized," which appears in the section of the proposed rule that describes the proposed quality measures, is interchangeable with "risk-adjusted," that is, the quality measures are risk-adjusted to account for beneficiary factors that may affect rates of hospitalization but are outside of the HHA's control.
   Comment: Several commenters expressed concerns that the proposed quality measures do not appropriately take into account other settings where the patient may have received care.
   Response: We appreciate the commenters' concern. The specifications for the measures exclude home health stays in which the patient received treatment in another setting between hospital discharge and the start of home health as these patients' outcomes may be affected by this intervening care. In addition, the risk adjustment model takes into account settings in which the beneficiary received care prior to hospitalization by examining
   Comment: Several commenters stated that they support the proposed approach to risk adjustment. Additionally, we received a number of comments stating that CMS should include other risk factors in the risk adjustment model. One commenter stated that it is unclear why certain OASIS items have been included and others have been excluded.
   Response: We appreciate the commenters' support for the risk adjustment approach. We also appreciate the comment that additional data derived from OASIS may be useful as risk adjustment factors for the measures. Currently, CMS has chosen to include all the Activities of
   Comment: One commenter stated that CMS should take into account additional patient characteristics such as race, ethnicity, and religion, which may influence a patient's preference to be hospitalized, in the risk adjustment model.
   Response: While risk-adjustment is used to ensure that measured rates are comparable across agencies with different patient populations, CMS believes that adjusting for race, ethnicity, or religion would obscure disparities in outcomes between more advantaged and less advantaged groups. We note, however, that we have examined disparities between subpopulations defined by race, age, and gender for the measures; this information was included in the technical brief posted for public comment through the Measures Management Blueprint process on the CMS Quality Measures Public Comment from
   Comment: One commenter stated that CMS should make public a clear list of the risk adjustment factors used to calculate the proposed measures.
   Response: The technical specifications that were available for these measures at the time we issued the proposed rule included a list of types of risk factors that were included in a preliminary risk-adjustment model. We subsequently minimally refined the risk adjustment model in response to the public comments received during the Measures Management Blueprint process. The refinements involved statistical categorization and were not substantive; the types of risk factors are unchanged from those noted in the technical specifications. By
   Comment: Several commenters stated that they support alignment of the proposed quality measures with the readmission measures of hospitals and other post-acute care providers. We also received several comments stating that CMS should adopt disease-specific readmission measures to align disease specific quality improvement efforts in HHAs with hospitals and across care settings. Several commenters stated that the proposed quality measures do not align with the Hospital 30-day Readmission measure, which only includes three causes--Myocardial Infarction (MI), Heart Failure (HF), and Pneumonia.
   Response: We appreciate the support for the alignment of the quality measures with the readmission measures of hospitals and other post-acute care providers. Currently, the measures align with the NQF-endorsed Hospital-Wide All Cause Unplanned Readmission measure. We also appreciate the recommendation to develop disease-specific readmission measures across care settings. We will take into account the recommendation to develop disease-specific readmission measures across care settings as part of future measure development work.
   Comment: Several commenters stated that they support the use administrative claims data to calculate the proposed quality measures.
   Response: We thank the commenters for their support.
   Comment: We received a number of comments stating that CMS should seek broader input from the home health care community and public when developing the proposed quality measures and home health quality measures in general.
   Response: We thank the commenters for the comment. We do seek input from the home health community and the general public through the CMS Quality Measures Public Comment Page on cms.gov. Development of all four home health claims-based measures, including the two proposed measures, was also informed by outreach conducted for the 2011 Home Health Value-based Purchasing Report to
   Final Decision: After consideration of the comments received, we are finalizing the adoption of the two claims-based measures: (1) Re-hospitalization during the first 30 days of HH; and (2) Emergency Department Use without Hospital Readmission during the first 30 days of HH. We will provide feedback to HHAs on their measure rates in CY 2014.
(3) Elimination of Stratification by Episode Length Process Measures
   We are exploring ways to reduce the number of HH quality measures reported to HHAs on confidential CASPER reports. We proposed to reduce the total number of measures on the CASPER reports by beginning to report only all-episodes measures for 9 process measures currently also stratified by episode length. We solicited comments on this proposal to simplify the reporting of process measures, which is based on the recommendation from the MAP to achieve greater parsimony in these measures. Currently there are 97 quality measures included on the CASPER reports, of which 45 are process measures. This reduction will decrease the total number of HH quality measures to 79 and reduce the number of process measures from 45 to 27. This change will enable HHAs to obtain the information they require for quality improvement activities related to the process measures in a less burdensome manner. Reducing the number of measures also facilitates the future development and implementation of other superior HH measures.
   Nine measures currently stratified by episode length on CASPER reports include:
    * Depression Interventions Implemented.
    * Diabetic Foot Care and Patient/Caregiver Education Implemented.
    * Heart Failure Symptoms Addressed.
    * Pain Interventions Implemented.
    * Treatment of Pressure Ulcers Based on Principles of Moist Wound Healing Implemented.
    * Pressure Ulcer Prevention Implemented.
    * Drug Education on All Medications Provided to Patient/Caregiver.
    * Potential Medication Issues Identified and Timely Physician Contact.
    * Falls Prevention Steps Implemented.
   For each of these nine measures, three versions of each measure are currently included on CASPER reports. The three versions are: (1) Short term episodes of care; (2) long term episodes of care; and (3) all episodes of care. We proposed to eliminate the stratification by episode length, so that these measures are reported only for "all episodes of care". Thus, we proposed to eliminate the "short term" and "long term episodes of care" measures from CASPER reports. This will remove 18 process measures from the current CASPER reports. Of note, only the "short term episodes of care" measures are currently reported on HH Compare. These will be replaced with the analogous "all episodes of care" measures.
   No data will be lost in the elimination of the "short and long term episodes of care" measures as the "all episodes of care" measures capture all care interventions, regardless of episode length. Using only the "all episodes of care" measures will substantially increase the number of HHAs eligible for public reporting of these measures.
   The following is a summary of the comments we received regarding the proposal to eliminate stratification by episode length process measures.
   Comment: Several commenters stated that they support this proposal. We received no comments in opposition. We also received a few comments requesting that CMS give HHAs continued access to HHQRP data files to allow them to calculate their own short-term and long-term rates and to benchmark their performance on those rates against other HHAs.
   Response: We appreciate the commenters' feedback. We understand that the HHAs need access to detailed data to inform their quality improvement efforts. However, the CASPER system currently does not support access to patient-level data for process measures so agencies will not be able to calculate separate rates for short-term versus long-term patients. We will examine adding such functionality to future revisions of CASPER reports.
   Final Response: After consideration of the comments received, we are finalizing policies related to the reduction of the number of process measures as proposed. We will reduce the total number of measures on the CASPER reports by reporting only all-episode measures for 9 process measures currently also stratified by episode length. We will eliminate the stratification by episode length by removing the "short term" and "long term episodes of care" measures from the CASPER reports so that the measures are only reported for all episodes of care. The "short term episodes of care" measures currently publicly reported on Home Health Compare will be replaced with the analogous "all episodes of care" measures.
   To summarize, we are finalizing the proposals to continue to use a HHA's submission of OASIS assessments for episodes between
3. 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 HH services. For CY 2014, as in previous years, we are proposing to base the wage index adjustment to the labor portion of the HH PPS rates on the most recent pre-floor and pre-reclassified hospital wage index. 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). Previously, we determined each HHA's labor market area based on definitions of metropolitan statistical areas (MSAs) issued by the OMB. We have consistently used the pre-floor, pre-reclassified hospital wage index data to adjust the labor portion of the HH PPS rates. We believe the use of the pre-floor, pre-reclassified hospital wage index data results in an appropriate adjustment to the labor portion of the costs, as required by statute.
   In the CY 2006 HH PPS final rule for (70 FR 68132), we began adopting revised labor market area definitions as discussed in the OMB Bulletin No. 03-04 (
   For CY 2014, as in previous years, we will use the most recent pre-floor, pre-reclassified hospital wage index as the base for the wage index adjustment to the labor portion of the HH PPS rates. However, the FY 2014 pre-floor, pre-reclassified hospital wage index does not reflect OMB's new area delineations, based on the 2010 Census (outlined in OMB Bulletin 13-01, released on
   Finally, we will continue to use the methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to address those geographic areas in which there were no IPPS hospitals, and thus, no hospital wage data on which to base the calculation of the HH PPS wage index. For rural areas that do not have IPPS hospitals, and therefore, lack hospital wage data on which to base a wage index, we will use the average wage index from all contiguous CBSAs as a reasonable proxy. For rural
   The wage index values are available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html.
   The following is a summary of the comments we received regarding the home health wage index.
   Comment: Several commenters expressed concern that HHAs compete with hospitals and hospices for skilled clinicians, yet the wage indices for home health, hospice, and hospitals vary widely within a specific geographic region. While hospitals can reclassify to neighboring CBSAs or take advantage of the rural floor, HHAs do not have this ability. Commenters believed that this results in inadequate home health cost adjustments that negatively impact HHAs ability to recruit and retain nurses and therapists in a highly competitive health care labor market. Commenters suggested that CMS develop regulatory and legislative remedies to the continuing problem of wage index disparity. Commenters urge CMS to implement a policy to limit the wage index variations between provider types within CBSAs and adjacent markets. Commenters requested that CMS allow HHAs the same reclassification as hospitals if they provide services in the same service area. Commenters suggest that rural floors be set for HHAs.
   Response: As previously stated in the CY 2009 HH PPS final rule, (74 FR 58105), the regulations that govern the HH PPS do not provide a mechanism for allowing HHAs to seek geographic reclassification or to utilize the rural floor provisions that exist for IPPS hospitals. The rural floor provision in section 4410 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) is specific to hospitals. The reclassification provision found in section 1886(d)(10) of the Act is also specific to hospitals.
   Comment: A commenter believed that using the pre-floor, pre-reclassified hospital wage index is inadequate for adjusting home health costs. The commenter cites the unpredictable year-to-year swings in wage index values. The commenter stated that CMS's decision to switch from MSAs to CBSAs seven years ago has had serious financial ramifications for HHAs in various parts of the country. The commenter questioned the accuracy and completeness of hospital cost reports.
   Response: We believe that adjusting payments based on the
   Comment: A commenter requested that CMS publish the methodology for arriving at the wage index used by the HH PPS.
   Response: The HH PPS uses the pre-floor, pre-reclassified hospital wage index. The methodology for calculating the pre-floor, pre-reclassified hospital wage index is published annually in the IPPS final rule. The FY 2014 IPPS final rule is available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2014-IPPS-Final-Rule-Home-Page.html.
   Comment: A commenter urged CMS to expedite its review of the wage index and implement a system that not only recognizes variations between localities, but also treats all provider types within a local market equitably. Until such a system is in place, the commenter urged CMS to implement and adjust the 2014 wage index in such a way as to limit the wage index disparity between provider types within a given
   Response: The hospital wage index is updated in a budget neutral manner. Establishing limits on how much a wage index may increase or decrease from year-to-year is not consistent with budget neutrality. As noted above, the geographic reclassifications and adjustments that hospitals may apply for are not available to providers other than hospitals.
   Comment: A commenter stated that differences in the occupational personnel pool and costs between hospitals and HHAs make use of the hospital wage index inappropriate in the home health setting. The commenter further stated that using the hospital wage index is inappropriate because hospitals benefit from institutional efficiencies which HHAs are not afforded. The commenter asked CMS to develop a home health specific wage index. The commenter stated that until CMS develops a home health specific wage index, he will support CMS' proposal to incorporate OMB's new area delineations in the CY 2015 HH wage index as the improved specificity should provide some relief. In addition, several other commenters recommended that CMS reform or implement a new HH wage index system.
   Response: Our previous attempts at either proposing or developing a home health specific wage index were not well received by the home health industry. Generally, the volatility of the home health wage data, and the resources needed to audit and verify those data, make it difficult to ensure that such a wage index accurately reflects the wages and wage-related costs applicable providing home health services. We believe that a HH specific wage index should be more reflective of the wages and salaries in a specific area, be based upon stable data sources, and significantly improve our ability to determine HH payments without being overly burdensome.
   Comment: A commenter noted that dropping critical access hospitals (CAHs) from the calculation of the wage index, beginning in 2004, compromises the accuracy and appropriateness of using a hospital wage index to determine the labor costs of HHAs providing services in rural areas.
   Response: Although the pre-floor, pre-reclassified hospital wage index does not include data from CAHs, we believe it reflects the relative level of wages and wage-related costs applicable to providing home health services.
   Final Decision: For CY 2014, we will use the FY 2014 pre-floor, pre-reclassified hospital wage index as the wage index adjustment to the labor portion of the HH PPS rates.
4. CY 2014 Payment Update
a. National, Standardized 60-Day Episode Payment Rate
   The Medicare HH PPS has been in effect since
   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. The labor-related share of the case-mix adjusted 60-day episode rate will continue to be 78.535 percent and the non-labor-related share will continue to be 21.465 percent as set out in the CY 2013 HH PPS final rule (77 FR 67068). The CY 2014 HH PPS rates use the same case-mix methodology as set forth in the CY 2008 HH PPS final rule with comment period (72 FR 49762) and adjusted as described in section III.C. of this rule. The following are the steps we take to compute the case-mix and wage-adjusted 60-day episode rate:
   (1) Multiply the national 60-day episode rate by the patient's applicable case-mix weight.
   (2) Divide the case-mix adjusted amount into a labor (78.535 percent) and a non-labor portion (21.465 percent).
   (3) Multiply the labor portion by the applicable wage index based on the site of service of the beneficiary.
   (4) Add the wage-adjusted portion to the non-labor portion, yielding the case-mix and wage adjusted 60-day episode rate, subject to any additional applicable adjustments.
In accordance with section 1895(b)(3)(B) of the Act, this document constitutes the annual update of the HH PPS rates. Section 484.225 sets forth the specific annual percentage update methodology. In accordance with
   Medicare pays the national, standardized 60-day case-mix and wage-adjusted episode payment on a split percentage payment approach. The split percentage payment approach includes an initial percentage payment and a final percentage payment as set forth in
   We may also adjust the 60-day case-mix and wage-adjusted episode payment based on the information submitted on the claim to reflect the following:
    * A low utilization payment provided on a per-visit basis as set forth in
    * A partial episode payment adjustment as set forth in
    * An outlier payment as set forth in
b. CY 2014 National, Standardized 60-Day Episode Payment Rate
   The CY 2014 national, standardized 60-day episode payment rate will be
Table 1--Determination of Peak Net Contractual Outflow Day Non- Contrac- Cumula- Total Contrac- Cumula- Maximum Net maturity tual tive cumula- tual tive inflows cumula- cash cash contrac- tive cash contrac- permit- tive outflows outflows tual cash inflows tual ted cash (cons- with cash outflows with cash due to outflow tant) maturity outflows maturity inflows 75% date up with date up with inflow to and maturity to and maturity cap includ- date up includ- date up ing the to and ing the to and calcula- includ- calcula- includ- tion ing the tion ing the date calcula- date calcula- tion tion date date A B C D E F G H Day 1 200 100 100 300 90 90 225 210 Day 2 200 20 120 320 5 95 240 225 Day 3 200 10 120 330 5 100 248 230 Day 4 200 15 145 345 20 120 259 225 Day 5 200 20 165 365 15 135 274 230 Day 6 200 0 165 365 0 135 274 230 Day 7 200 0 165 365 0 135 274 230 Day 8 200 10 175 375 8 143 281 232 Day 9 200 15 190 390 7 150 293 240 Day 200 25 215 415 20 170 311 245 10 Day 200 35 250 450 5 175 338 275 11 Day 200 10 260 460 15 190 345 270 12 Day 200 0 260 460 0 190 345 270 13 Day 200 0 260 460 0 190 345 270 14 Day 200 5 265 465 5 195 349 270 15 Day 200 15 280 480 5 200 360 280 16 Day 200 5 285 485 5 205 364 280 17 Day 200 10 295 495 5 210 371 285 18 Day 200 15 310 510 20 230 383 280 19 Day 200 0 310 510 0 230 383 280 20 Day 200 0 310 510 0 230 383 280 21 Day 200 20 330 530 45 275 398 255 22 Day 200 20 350 550 40 315 413 235 23 Day 200 5 355 555 20 335 416 220 24 Day 200 40 395 595 5 340 446 255 25 Day 200 8 403 603 125 465 452 151 26 Day 200 0 403 603 0 465 452 151 27 Day 200 0 403 603 0 465 452 151 28 Day 200 5 408 608 10 475 456 152 29 Day 200 2 410 610 5 480 458 153 30
   The CY 2014 national, standardized 60-day episode payment rate for an HHA that does not submit the required quality data is updated by the CY 2014 HH market basket update (2.3 percent) minus 2 percentage points and is shown in Table 21.
Table 3--Revised Data Elements With Final Category Assignment and Confidentiality Determination Citation Data category Data element Data element assigned to description, as description, as during proposal proposed finalized 40 CFR Facility and If a facility does If the facility does 98.3(c)(1) Unit Identifier not have a physical not have a physical (proposed); 40 Information street address, then street address, then CFR 98.3(c)(1) the facility must the facility must (finalized) provide the latitude provide the latitude and longitude and longitude representing the representing the location of facility geographic centroid operations in decimal or center point of degree format facility operations in decimal degree format. 40 CFR Facility and For combustion units An indication of 98.3(c)(13) Unit Identifier used to generate whether the facility (proposed); 40 Information electricity for includes one or more CFR 98.3(c)(13) delivery to the grid, plant sites that have and (e.g., ORIS code for each been assigned a annual operation combustion unit "plant code" (as hours of the gas serving an electric defined under 40 CFR collection generator 98.6) by either the system Department of (98.346(i)(7)), Energy's (DOE) Energy 40 CFR Information 98.36(b)(11), 40 Administration (EIA) CFR 98.36 (c) or by the EPA's Clean (1)(xi), 40 CFR Air Markets Division 98.36 (c)(2)(x), (CAMD). 40 CFR 40 CFR 98.36 98.36(b)(11): Plant (c)(3)(x), 40 code (as defined in CFR 98.36 98.6), 40 CFR (d)(1)(x), 40 98.36(c)(1)(xi): CFR 98.36 Plant code (as (d)(2)(ii)(J), defined in 98.6), 40 and 40 CFR 98.36 CFR 98.36(c)(2)(x): (d)(2)(iii)(J) Plant code (as (finalized) defined in 98.6), 40 CFR 98.36(c)(3)(x): Plant code (as defined in 98.6), 40 CFR 98.36(d)(1)(x): Plant code (as defined in 98.6), 40 CFR 98.36(d)(2)(ii)(J): Plant code (as defined in 98.6), 40 CFR 98.36(d) (2)(iii)(J): Plant code (as defined in 98.6). 40 CFR Emissions For each CEMS For each CEMS 98.246(b)(4) monitoring location monitoring location (proposed); 40 that meets the that meets the CFR 98.246(b)(4) conditions in conditions in finalized paragraph (b)(2) or paragraph (b)(2) or (3) of this section, (3) of this section, provide an estimate provide an estimate based on engineering based on engineering judgment of the judgment of the fraction of the total fraction of the total CO[2] emissions CO[2] emissions that is attributable that results from to the petrochemical CO[2] directly process unit emitted by the petrochemical process unit plus CO[2] generated by the combustion of off-gas from the petrochemical process unit. 40 CFR Unit/process Start date of each Start date of each 98.326(r)(2)(pro Operating well and shaft well, shaft, and vent posed); 40 CFR Characteristics hole. 98.326(r)(2) That are Not (finalized) Inputs to Emission Equations; Not Emissions Data and Not CBI 40 CFR Close date of each Close date of each 98.326(r)(2) well and shaft well, shaft, and vent (proposed); 40 hole. CFR 98.326(r)(2) (finalized). 40 CFR Number of days each Number of days each 98.326(r)(3) or shaft was in well, shaft, or vent (proposed); 40 operation during the hole was in operation CFR 98.326(r)(3) reporting year during the reporting (finalized). year. 40 CFR 98.466(h) Emissions For landfills with For landfills with (proposed); 40 gas collection gas collection CFR 98.466(h)(1) systems, methane systems, methane (finalized) generation, using generation, adjusted equation TT-6 for oxidation, calculated using equation TT-6. 40 CFR 98.466(h) Inputs to For landfills with For landfills with (proposed); 40 Emission gas collection gas collection CFR 98.466(h)(2) Equations systems, oxidation systems, oxidation (finalized) factor factor used in Equation TT-6. 40 CFR Customer and LCDs: Annual volume LCDs: Annual volume 98.406(b)(7) Vendor in Mscf of natural in Mscf of natural Information gas delivered by the gas delivered by the LDC to each sales or LDC to each large transportation end-user as defined customer's facility in 40 CFR that received from 98.403(b)(2)(i). the LDC deliveries equal to or greater than 460,000 Mscf during the calendar year, if known; otherwise, the annual volume in Mscf of natural gas delivered by the LDC to each meter registering supply equal to or greater than 460,000 Mscf during the calendar year 40 CFR Customer and LCDs: Meter number LCDs: Meter number 98.406(b)(12) Vendor for each end-user for each large end- Information reported in paragraph user reported in (b)(7) paragraph (b)(7). 40 CFR Customer and LCDs: Whether the LCDs: Whether the 98.406(b)(12) Vendor quantity of natural quantity of natural Information gas reported in gas reported in paragraph (b)(7) is paragraph (b)(7) is the total quantity the total quantity delivered or the delivered or the quantity delivered to quantity delivered to a specific meter a large end-user's facility, or the quantity delivered to a specific meter located at the facility.
c. National
   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:
    * Home health aide (HH aide);
    *
    * Occupational therapy (OT);
    * Physical therapy (PT);
    * Skilled nursing (SN); and
    * Speech-language pathology (SLP).
To calculate the CY 2014 national per-visit rates, we start with the CY 2013 national per-visit rates. We then apply a wage index budget neutrality factor of 1.0006 to ensure budget neutrality for LUPA per-visit payments after applying the 2014 wage index, and increase each of the six per-visit rates by the maximum rebasing adjustments described in section IV.D of this rule. We calculate the wage index budget neutrality factor by simulating total payments for LUPA episodes using the 2014 wage index and comparing it to simulated total payments for LUPA episodes using the 2013 wage index. We note that the LUPA per-visit payments are not calculated using case-mix weights and therefore, there is no case-mix standardization factor needed to ensure budget neutrality in LUPA payments. Finally, the per-visit rates for each discipline are then updated by the CY 2014 HH payment update percentage of 2.3 percent. The national per-visit rates are adjusted by the wage index based on the site of service of the beneficiary. The per-visit payment amounts 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 2014 national per-visit rates are shown in Tables 22 and 23.
Table A-1 to Subpart A of Part 98--Global Warming Potentials [100-Year Time Horizon] Name CAS No. Chemical formula Global warming potential (100 yr.) Carbon dioxide 124-38-9 CO<2> 1 Methane 74-82-8 CH<4> *a 25 Nitrous oxide 10024-97-2 N<2> O *a 298 HFC-23 75-46-7 CHF<3> *a 14,800 HFC-32 75-10-5 CH<2> F<2> *a 675 HFC-41 593-53-3 CH<3> F *a 92 HFC-125 354-33-6 C<2> HF<5> *a 3,500 HFC-134 359-35-3 C<2> H<2> F<4> *a 1,100 HFC-134a 811-97-2 CH<2> FCF<3> *a 1,430 HFC-143 430-66-0 C<2> H<3> F<3> *a 353 HFC-143a 420-46-2 C<2> H<3> F<3> *a 4,470 HFC-152 624-72-6 CH<2> FCH<2> F 53 HFC-152a 75-37-6 CH<3> CHF<2> *a 124 HFC-161 353-36-6 CH<3> CH<2> F 12 HFC-227ea 431-89-0 C<3> HF<7> *a 3,220 HFC-236cb 677-56-5 CH<2> FCF<2> 1,340 CF<3> HFC-236ea 431-63-0 CHF<2> CHFCF<3> 1,370 HFC-236fa 690-39-1 C<3> H<2> F<6> *a 9,810 HFC-245ca 679-86-7 C<3> H<3> F<5> *a 693 HFC-245fa 460-73-1 CHF<2> CH<2> 1,030 CF<3> HFC-365mfc 406-58-6 CH<3> CF<2> 794 CH<2> CF<3> HFC-43-10mee 138495-42-8 CF<3> CFHCFHCF<2> *a 1,640 CF<3> Sulfur hexafluoride 2551-62-4 SF<6> *a 22,800 Trifluoromethyl 373-80-8 SF<5> CF<3> 17,700 sulphur pentafluoride Nitrogen trifluoride 7783-54-2 NF<3> 17,200 PFC-14 75-73-0 CF<4> *a 7,390 (Perfluoromethane) PFC-116 76-16-4 C<2> F<6> *a 12,200 (Perfluoroethane) PFC-218 76-19-7 C<3> F<8> *a 8,830 (Perfluoropropane) Perfluorocyclopropane 931-91-9 C-C<3> F<6> 17,340 PFC-3-1-10 355-25-9 C<4> F<10> *a 8,860 (Perfluorobutane) PFC-318 115-25-3 C-C< F<8> *a 10,300 (Perfluorocyclobutane) PFC-4-1-12 678-26-2 C<5> F<12> *a 9,160 (Perfluoropentane) PFC-5-1-14 355-42-0 C<6> F<14> *a 9,300 (Perfluorohexane, FC- 72) PFC-9-1-18 306-94-5 C<10> F<18> 7,500 HCFE-235da2 26675-46-7 CHF<2> OCHClCF<3> 350 (Isoflurane) HFE-43-10pccc (H- E1730133 CHF<2> OCF<2> 1,870 Galden 1040x, HG-11) OC<2> F<4> OCHF<2> HFE-125 3822-68-2 CHF<2> OCF<3> 14,900 HFE-134 (HG-00) 1691-17-4 CHF<2> OCHF<2> 6,320 HFE-143a 421-14-7 CH<3> OCF<3> 756 HFE-227ea 2356-62-9 CF<3> CHFOCF<3> 1,540 HFE-236ca12 (HG-10) 78522-47-1 CHF<2> OCF<2> 2,800 OCHF<2> HFE-236ea2 57041-67-5 CHF<2> OCHFCF<3> 989 (Desflurane) HFE-236fa 20193-67-3 CF<3> CH<2> 487 OCF<3> HFE-245cb2 22410-44-2 CH<3> OCF<2> 708 CF<3> HFE-245fa1 84011-15-4 CHF<2> CH<2> 286 OCF<3> HFE-245fa2 1885-48-9 CHF<2> OCH<2> 659 CF<3> HFE-254cb2 425-88-7 CH<3> OCF<2> 359 CHF<2> HFE-263fb2 460-43-5 CF<3> CH<2> 11 OCH<3> HFE-329mcc2 134769-21-4 CF<3> CF<2> 919 OCF<2> CHF<2> HFE-338mcf2 156053-88-2 CF<3> CF<2> 552 OCH<2> CF<3> HFE-338pcc13 (HG-01) 188690-78-0 CHF<2> OCF<2> 1,500 CF<2> OCHF<2> HFE-347mcc3 (HFE-7000) 375-03-1 CH<3> OCF<2> 575 CF<2> CF<3> HFE-347mcf2 171182-95-9 CF<3> CF<2> 374 OCH<2> CHF<2> HFE-347pcf2 406-78-0 CHF<2> CF<2> 580 OCH<2> CF<3> HFE-356mec3 382-34-3 CH<3> OCF<2> 101 CHFCF<3> HFE-356pcc3 160620-20-2 CH<3> OCF<2> 110 CF<2> CHF<2> HFE-356pcf2 50807-77-7 CHF<2> CH<2> 265 OCF<2> CHF<2> HFE-356pcf3 35042-99-0 CHF<2> OCH<2> 502 CF<2> CHF<2> HFE-365mcf3 378-16-5 CF<3> CF<2> 11 CH<2> OCH<3> HFE-374pc2 512-51-6 CH<3> CH<2> 557 OCF<2> CHF<2> HFE-449s1 (HFE-7100) 163702-07-6 C<4> F<9> 297 OCH<3> Chemical blend 163702-08-7 (CF<3>)<2> CFCF<2> OCH<3> HFE-569sf2 (HFE-7200) 163702-05-4 C<4> F<9> OC<2> 59 H<5> Chemical blend 163702-06-5 (CF<3>)<2> CFCF<2> OC<2> H<5> Sevoflurane (HFE- 28523-86-6 CH<2> 345 347mmz1) FOCH(CF<3>)<2> HFE-356mm1 13171-18-1 (CF<3>)<2> 27 CHOCH<3> HFE-338mmz1 26103-08-2 CHF<2> 380 OCH(CF<3>)<2> (Octafluorotetramethy- NA X-(CF<2>)<4> 73 lene) hydroxymethyl CH(OH)-X group HFE-347mmy1 22052-84-2 CH<3> 343 OCF(CF<3>)<2> Bis(trifluoromethyl)- 920-66-1 (CF<3>)<2> CHOH 195 methanol 2,2,3,3,3- 422-05-9 CF<3> CF<2> 42 pentafluoropropanol CH<2> OH PFPMIE (HT-70) NA CF<3> 10,300 OCF(CF<3>)CF<2> OCF<2> OCF<3> *a The GWP for this compound is different than the GWP in the version of Table A-1 to subpart A of part 98 published onOctober 30, 2009 .
   The CY 2014 per-visit payment rates for an HHA that does not submit the required quality data are updated by the CY 2014 HH payment update percentage (2.3 percent) minus 2 percentage points and is shown in Table 23.
[TB] Table 23--CY 2014 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
Discipline CY 2013 Wage index CY 2014 CY 2014 HH CY 2014
type Per-visit budget Rebasing Market Per-visit rates neutrality adjustment basket rates factor update minus 2 percentage points Home Health Aide
d. Low-Utilization Payment Adjustment (LUPA) Add-On Factor
   For episodes with four or fewer visits,
   The CY 2008 LUPA add-on amount was calculated using a large representative sample of claims from 2005 (72 FR 49848). The analysis examined minute data for skilled nursing, physical therapy, and speech-language pathology (SLP) as, per the Medicare CoPs at
Table 4--Estimated Annual Hours for LCR Calculation Activity Estimated start-up hours Estimated per institution ongoing hours per institution Develop and maintain 2,400 520 systems for LCR program Daily internal reporting 260 260 of LCR Training 100 20 Total 2,760 800
   For this final rule we used the same methodology used to establish the LUPA add-on amount for CY 2008. Specifically, we updated the analysis using 100 percent of LUPA episodes and a 20 percent sample of non-LUPA first episodes from CY 2012 claims data. The analysis shows that the average excess of minutes for the first visit in LUPA episodes that were the only episode or an initial LUPA in a sequence of adjacent episodes are 37.27 minutes for the first visit if SN, 31.69 minutes for the first visit if PT, and 31.56 minutes for the first visit if SLP. The average minutes for all non-first visits in non-LUPA episodes are 44.10 minutes for SN, 47.30 minutes for PT, and 50.37 minutes for SLP. Those excess minutes expressed as a proportion of the average minutes for all non-first visits in non-LUPA episodes are 84.51 percent for SN, 67.00 percent for PT, and 62.66 percent for SLP. We used these proportions to inflate the LUPA per-visit payment rates in Table 22 of
   In lieu of a single LUPA add-on payment amount of
   The following is a summary of the comments we received regarding the LUPA add-on factors.
   Comment: We received one comment that was supportive of the proposed LUPA add-on factors and no comments in opposition.
   Response: We appreciate the commenter's support and we believe that proposed creation of three LUPA add-on factors will result in more accurate LUPA add-on payments reflecting the discipline that performed the initial assessment visit.
   Final Decision: We are finalizing three LUPA add-on factors to be used in calculating the LUPA add-on payment amount. Those three factors are 1.8451 for skilled nursing, 1.6700 for physical therapy and 1.6266 for speech-language pathology when that discipline is the first skilled visit in a LUPA episode that occurs as the only episode or an initial episode in a sequence of adjacent episodes.
e. Nonroutine Medical Supply Conversion Factor Update
   Payments for NRS are computed by multiplying the relative weight for a particular severity level by the NRS conversion factor. To determine the CY 2014 NRS conversion factor, we start with the 2013 NRS conversion factor (
Table 5--Estimated Operational Costs for LCR Proposal Number of covered Estimated hours Estimated cost per Estimated total OCC institutions per institution operational costs institution 21 2,760$253,920 $5,332,320
   Using the CY 2014 NRS conversion factor (
Table 1--Examples of Affected Entities by Category Category NAICS Examples of affected facilities General Stationary Fuel Facilities operating Combustion Sources boilers, process heaters, incinerators, turbines, and internal combustion engines. 211 Extractors of crude petroleum and natural gas. 321 Manufacturers of lumber and wood products. 322 Pulp and paper mills. 325 Chemical manufacturers. 324 Petroleum refineries, and manufacturers of coal products. 316, 326, 339 Manufacturers of rubber and miscellaneous plastic products. 331 Steel works, blast furnaces. 332 Electroplating, plating, polishing, anodizing, and coloring. 336 Manufacturers of motor vehicle parts and accessories. 221 Electric, gas, and sanitary services. 622 Health services. 611 Educational services. Electricity Generation 221112 Fossil-fuel fired electric generating units, including units owned by federal and municipal governments and units located in Indian Country. Acid Gas Injection 211111 or 211112 Projects that inject Projects natural gas containing CO<2> underground. Adipic Acid Production 325199 Adipic acid manufacturing facilities. Aluminum Production 331312 Primary Aluminum production facilities. Ammonia Manufacturing 325311 Anhydrous and aqueous ammonia manufacturing facilities. Cement Production 327310 Portland cement manufacturing plants. CO<2> Enhanced Oil and 211 Oil and gas extraction Gas Recovery Projects projects using CO<2> enhanced oil and gas recovery. Electrical Equipment Use 221121 Electric bulk power transmission and control facilities. Electrical Equipment 33531 Power transmission and Manufacture or distribution switchgear Refurbishment and specialty transformers manufacturing facilities. Electronics Manufacturing 334111 Microcomputers manufacturing facilities. 334413 Semiconductor, photovoltaic (solid-state) device manufacturing facilities. 334419 LCD unit screens manufacturing facilities. MEMS manufacturing facilities. Ethanol Production 325193 Ethyl alcohol manufacturing facilities. Ferroalloy Production 331112 Ferroalloys manufacturing facilities. Fluorinated GHG 325120 Industrial gases Production manufacturing facilities. Food Processing 311611 Meat processing facilities. 311411 Frozen fruit, juice, and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities. Glass Production 327211 Flat glass manufacturing facilities. 327213 Glass container manufacturing facilities. 327212 Other pressed and blown glass and glassware manufacturing facilities. GS Sites NA CO<2> geologic sequestration projects. HFC-22 Production and 325120 Chlorodifluoromethane HFC-23 Destruction manufacturing facilities. Hydrogen Production 325120 Hydrogen manufacturing facilities. Importers and Exporters 423730 Air-conditioning of Pre-charged Equipment 333415 equipment (except room and Closed-Cell Foams units) merchant wholesalers. Air-conditioning equipment (except motor vehicle) manufacturing. 423620 Air-conditioners, room, merchant wholesalers. 443111 Household Appliance Stores. 326150 Polyurethane foam products manufacturing. 335313 Circuit breakers, power, manufacturing. 423610 Circuit breakers merchant wholesalers. Industrial Waste 562212 Solid waste landfills. Landfills 221320 Sewage treatment facilities. 322110 Pulp mills. 322121 Paper mills. 322122 Newsprint mills. 322130 Paperboard mills. 311611 Meat processing facilities. 311411 Frozen fruit, juice and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities. Industrial Wastewater 322110 Pulp mills. Treatment 322121 Paper mills. 322122 Newsprint mills. 322130 Paperboard mills. 311611 Meat processing facilities. 311411 Frozen fruit, juice, and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities. 325193 Ethanol manufacturing facilities. 324110 Petroleum refineries. Iron and Steel Production 331111 Integrated iron and steel mills, steel companies, sinter plants, blast furnaces, basic oxygen process furnace shops. Lead Production 331419 Primary lead smelting and refining facilities. 331492 Secondary lead smelting and refining facilities. Lime Production 327410 Calcium oxide, calcium hydroxide, dolomitic hydrates manufacturing facilities. Magnesium Production 331419 Primary refiners of nonferrous metals by electrolytic methods. Municipal Solid Waste 562212 Solid waste landfills. Landfills 221320 Sewage treatment facilities. Nitric Acid Production 325311 Nitric acid manufacturing facilities. Petrochemical Production 32511 Ethylene dichloride manufacturing facilities. 325199 Acrylonitrile, ethylene oxide, methanol manufacturing facilities. 325110 Ethylene manufacturing facilities. 325182 Carbon black manufacturing facilities. Petroleum Refineries 324110 Petroleum refineries. Petroleum and Natural Gas 486210 Pipeline transportation Systems of natural gas. 221210 Natural gas distribution facilities. 211 Extractors of crude petroleum and natural gas. 211112 Natural gas liquid extraction facilities. Phosphoric Acid 325312 Phosphoric acid Production manufacturing facilities. Pulp and Paper 322110 Pulp mills. Manufacturing 322121 Paper mills. 322130 Paperboard mills. Soda Ash Manufacturing 325181 Alkalies and chlorine manufacturing facilities. Silicon Carbide 327910 Silicon carbide abrasives Production manufacturing facilities. Sulfur Hexafluoride 221121 Electric bulk power (SF<6>) from Electrical transmission and control Equipment facilities. Titanium Dioxide 325188 Titanium dioxide Production manufacturing facilities. Underground Coal Mines 212113 Underground anthracite coal mining operations. 212112 Underground bituminous coal mining operations. Zinc Production 331419 Primary zinc refining facilities. 331492 Zinc dust reclaiming facilities, recovering from scrap and/or alloying purchased metals. Suppliers of Industrial 325120 Industrial gas Greenhouse Gases manufacturing facilities. Suppliers of Petroleum 324110 Petroleum refineries. Products Suppliers of Natural Gas 221210 Natural gas distribution and Natural Gas Liquids facilities. 211112 Natural gas liquid extraction facilities. Suppliers of Carbon 325120 Industrial gas Dioxide (CO<2>) manufacturing facilities.
   For HHAs that do not submit the required quality data, we again begin with the CY 2013 NRS conversion factor (
Table 2--GHGs With Revised GWPs for Table A-1 Name CAS No.(4M) Global warming potential Methane 74-82-8 25 Nitrous oxide 10024-97-2 298 HFC-23 75-46-7 14,800 HFC-32 75-10-5 675 HFC-41 593-53-3 92 HFC-125 354-33-6 3,500 HFC-134 359-35-3 1,100 HFC-134a 811-97-2 1,430 HFC-143 430-66-0 353 HFC-143a 420-46-2 4,470 HFC-152a 75-37-6 124 HFC-227ea 431-89-0 3,220 HFC-236fa 690-39-1 9,810 HFC-245ca 679-86-7 693 HFC-43-10mee 138495-42-8 1,640 Sulfur hexafluoride 2551-62-4 22,800 PFC-14 (Perfluoromethane) 75-73-0 7,390 PFC-116 (Perfluoroethane) 76-16-4 12,200 PFC-218 76-19-7 8,830 (Perfluoropropane) PFC-3-1-10 355-25-9 8,860 (Perfluorobutane) Perfluorocyclobutane 115-25-3 10,300 PFC-4-1-12 678-26-2 9,160 (Perfluoropentane) PFC-5-1-14 355-42-0 9,300 (Perfluorohexane)
   The payment amounts for the various severity levels based on the updated conversion factor for HHAs that do not submit quality data are calculated in Table 28.
[TB] Table 28--CY 2014 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data Severity level Points (scoring) Relative NRS weight Payment amount 1 0 0.2698
5. Rural Add-On
   Section 421(a) of the MMA required, for HH services furnished in a rural areas (as defined in section 1886(d)(2)(D) of the Act), for episodes or visits ending on or after
   Section 5201 of the DRA amended section 421(a) of the MMA. The amended section 421(a) of the MMA required, for HH services furnished in a rural area (as defined in section 1886(d)(2)(D) of the Act), on or after
   Section 3131(c) of the Affordable Care Act amended section 421(a) of the MMA to provide an increase of 3 percent of the payment amount otherwise made under section 1895 of the Act for HH services furnished in a rural area (as defined in section 1886(d)(2)(D) of the Act), for episodes and visits ending on or after
   Section 421 of the MMA, as amended, waives budget neutrality related to this provision, as the statute specifically states that the Secretary shall not reduce the standard prospective payment amount (or amounts) under section 1895 of the Act applicable to HH services furnished during a period to offset the increase in payments resulting in the application of this section of the statute. The following is a summary of the comments we received regarding HH services provided in rural areas.
   Comment: A commenter noted that heavy mileage, travel time, poor roads and other factors increase the expense of serving rural patients and stated that decreasing Medicare payments will impact HHA's ability to serve rural beneficiaries.
   Response: We believe that Medicare home health services are integral to the healthcare of many beneficiaries, including those who reside in rural areas. For episodes and visits ending on or after
   Comment: A commenter recommends that CMS implement a population density factor by zip code during the calculation of the labor portion of the payment amount to account for increased costs of providing services in less densely populated (primarily rural) areas. The commenter states that the population density adjustment would reduce excess reimbursement for services provided in densely populated urban areas and congregate living facilities. The commenter recommends that the adjustment be budget neutral or perhaps result in a cost savings.
   Response: We do not have evidence that a population density adjustment is appropriate. While rural HHAs cite the added cost of long distance travel to provide care for their patients, urban/non-rural HHAs cite added costs associated with needed security measures and traffic volume.
   Final Decision: For CY 2014, HH payment rates for services provided to beneficiaries in rural areas will be increased by 3 percent as mandated by section 3131(c) of the Affordable Care Act. The 3 percent rural add-on is applied to the national, standardized 60-day episode payment rate, national per-visit rates, and NRS conversion factor when HH services are provided in rural (non-CBSA) areas. Refer to Tables 29 through 32 for these payment rates.
Table 4--Cost Impacts of Final Amendments for Additional Reporters Subpart Number of Incremental cost Incremental cost additional impact for impact for reporters due to additional additional revised GWP reporters ( $/yr reporters ( $/yr for first year) for subsequent years) I--Electronics 4 129,500 237,000 Manufacturing W--Petroleum & 99 1,648,000 772,000 Natural Gas Systems HH--Municipal 57 246,000 182,200 Solid Waste Landfills II--Industrial 2 10,800 10,500 Wastewater OO--Industrial GHG 3 13,100 10,000 Suppliers TT--Industrial 19 112,000 98,050 Waste Landfills Total 184 2,195,400 1,316,750 *a Subpart HH cost impact includes the reporting costs for 43 closed landfills that will exit the reporting program later than expected. Similarly, subpart TT cost impact includes the cost for 8 closed facilities.
[TB] Table 30--CY 2014 Per-Visit Amounts for Services Provided in a Rural Area For HHAs that DO submit qual- For HHAs that DO NOT submit ity data quality data
    CY 2014 Multiply CY 2014 CY 2014 Multiply CY 2014
Discipline Per-visit by the 3 Rural per- Per-visit by the 3 Rural per- type rate percent visit rate rate percent visit rate rural add- rural add- on on
Aide
MSS 194.12 x 1.03 199.94 190.33 x 1.03 196.04
    133.30 x 1.03 137.30 130.70 x 1.03 134.62
    132.40 x 1.03 136.37 129.81 x 1.03 133.70
    121.10 x 1.03 124.73 118.73 x 1.03 122.29
SLP 143.88 x 1.03 148.20 141.06 x 1.03 145.29 [TE]
Table A-6 to Subpart A of Part 98--Data Elements that Are Inputs to Emission Equations and for Which the Reporting Deadline isMarch 31, 2013 Subpart Rule Specific data elements for which reporting date is citation March 31, 2013 ("All" means all data elements in (40 CFR part the cited paragraph are not required to be 98) reported until March 31, 2013) * * * * * * * HH 98.346(d)(1) Only degradable organic carbon (DOC) value, and fraction of DOC dissimilated (DOCF) values. * * * * * * * HH 98.346(e) Only fraction of CH<4> in landfill gas and methane correction factor (MCF) values. * * * * * * * HH 98.346(i)(5) Only annual operating hours for the destruction devices located at the landfill facility, and the destruction efficiency for the destruction devices associated with that measurement location. * * * * * * * HH 98.346(i)(7) Only surface area specified in Table HH-3, estimated gas collection system efficiency, and annual operating hours of the gas collection system for each measurement locations. * * * * * * * TT 98.466(d)(3) Only degradable organic carbon (DOCx) value for each waste stream used in calculations.
Table C-1 to Subpart C--Default CO<2> Emission Factors and High Heat Values for Various Types of Fuel Fuel type Default high heat Default CO<2> value emission factor Coal and coke mmBtu/short ton kg CO<2>/mmBtu Anthracite 25.09 103.69 Bituminous 24.93 93.28 Subbituminous 17.25 97.17 Lignite 14.21 97.72 Coal Coke 24.80 113.67 Mixed (Commercial sector) 21.39 94.27 Mixed (Industrial coking) 26.28 93.90 Mixed (Industrial sector) 22.35 94.67 Mixed (Electric Power sector) 19.73 95.52 Natural gas mmBtu/scf kg CO<2>/mmBtu (Weighted U.S. Average) 1.026 x 10-3 53.06 Petroleum products mmBtu/gallon kg CO<2>/mmBtu Distillate Fuel Oil No. 1 0.139 73.25 Distillate Fuel Oil No. 2 0.138 73.96 Distillate Fuel Oil No. 4 0.146 75.04 Residual Fuel Oil No. 5 0.140 72.93 Residual Fuel Oil No. 6 0.150 75.10 Used Oil 0.138 74.00 Kerosene 0.135 75.20 Liquefied petroleum gases (LPG) *1 0.092 61.71 Propane *1 0.091 62.87 Propylene *2 0.091 67.77 Ethane *1 0.068 59.60 Ethanol 0.084 68.44 Ethylene *2 0.058 65.96 Isobutane *1 0.099 64.94 Isobutylene *1 0.103 68.86 Butane *1 0.103 64.77 Butylene *1 0.105 68.72 Naphtha (<401 deg F) 0.125 68.02 Natural Gasoline 0.110 66.88 Other Oil (>401 deg F) 0.139 76.22 Pentanes Plus 0.110 70.02 Petrochemical Feedstocks 0.125 71.02 Petroleum Coke 0.143 102.41 Special Naphtha 0.125 72.34 Unfinished Oils 0.139 74.54 Heavy Gas Oils 0.148 74.92 Lubricants 0.144 74.27 Motor Gasoline 0.125 70.22 Aviation Gasoline 0.120 69.25 Kerosene-Type Jet Fuel 0.135 72.22 Asphalt and Road Oil 0.158 75.36 Crude Oil 0.138 74.54 Other fuels--solid mmBtu/short ton kg CO<2>/mmBtu Municipal Solid Waste 9.95 *3 90.7 Tires 28.00 85.97 Plastics 38.00 75.00 Petroleum Coke 30.00 102.41 Other fuels--gaseous mmBtu/scf kg CO<2>/mmBtu Blast Furnace Gas 0.092 x 10-3 274.32 Coke Oven Gas 0.599 x 10-3 46.85 Propane Gas 2.516 x 10-3 61.46 Fuel Gas *4 1.388 x 10-3 59.00 Biomass fuels--solid mmBtu/short ton kg CO<2>/mmBtu Wood and Wood Residuals (dry basis) 17.48 93.80 *5 Agricultural Byproducts 8.25 118.17 Peat 8.00 111.84 Solid Byproducts 10.39 105.51 Biomass fuels--gaseous mmBtu/scf kg CO<2>/mmBtu Landfill Gas 0.485 x 10-3 52.07 Other Biomass Gases 0.655 x 10-3 52.07 Biomass Fuels--Liquid mmBtu/gallon kg CO<2>/mmBtu Ethanol 0.084 68.44 Biodiesel (100%) 0.128 73.84 Rendered Animal Fat 0.125 71.06 Vegetable Oil 0.120 81.55 *1 The HHV for components of LPG determined at 60 [degrees] F and saturation pressure with the exception of ethylene. *2 Ethylene HHV determined at 41 [degrees] F (5 [degrees] C) and saturation pressure. *3 Use of this default HHV is allowed only for: (a) Units that combust MSW, do not generate steam, and are allowed to use Tier 1; (b) units that derive no more than 10 percent of their annual heat input from MSW and/or tires; and (c) small batch incinerators that combust no more than 1,000 tons of MSW per year. *4 Reporters subject to subpart X of this part that are complying with S. 98.243(d) or subpart Y of this part may only use the default HHV and the default CO<2> emission factor for fuel gas combustion under the conditions prescribed in S. 98.243(d)(2)(i) and (d)(2)(ii) and S. 98.252(a)(1) and (a)(2), respectively. Otherwise, reporters subject to subpart X or subpart Y shall use either Tier 3 (Equation C-5) or Tier 4. *5 Use the following formula to calculate a wet basis HHV for use in Equation C-1: HHV= ((100 - M)/100)*HHV where HHV = wet basis HHV, M = moisture content (percent) and HHV = dry basis HHV from Table C-1.
F. Outlier Policy
1. Background
   Section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the national, standardized 60-day case-mix and wage-adjusted episode payment amounts in the case of episodes that incur unusually high costs due to patient care needs. Prior to the enactment of the Affordable Care Act, section 1895(b)(5) of the Act stipulated that projected total outlier payments could not exceed 5 percent of total projected or estimated HH payments in a given year. In the Medicare Program; Prospective Payment System for Home Health Agencies final rule published on
2. Regulatory Update
   In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we discussed excessive growth in outlier payments, primarily the result of unusually high outlier payments in a few areas of the country. Despite program integrity efforts associated with excessive outlier payments in targeted areas of the country, we discovered that outlier expenditures still exceeded the 5 percent, target and, in the absence of corrective measures, would continue do to so. Consequently, we assessed the appropriateness of taking action to curb outlier abuse. To mitigate possible billing vulnerabilities associated with excessive outlier payments and adhere to our statutory limit on outlier payments, we adopted an outlier policy that included a 10 percent agency-level cap on outlier payments. This cap was implemented in concert with a reduced FDL ratio of 0.67. These policies resulted in a projected target outlier pool of approximately 2.5 percent. (The previous outlier pool was 5 percent of total HH expenditures.) For CY 2010, we first returned 5 percent of these dollars back into the national, standardized 60-day episode payment rates, the national per-visit rates, the LUPA add-on payment amount, and the NRS conversion factor. Then, we reduced the CY 2010 rates by 2.5 percent to account for the new outlier pool of 2.5 percent. This outlier policy was adopted for CY 2010 only.
3. Statutory Update
   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. As amended, the provision, "Adjustment for outliers," states that "The Secretary shall reduce the standard prospective payment amount (or amounts) under this paragraph applicable to HH services furnished during a period by such proportion as will result in an aggregate reduction in payments for the period equal to 5 percent of the total payments estimated to be made based on the prospective payment system under this subsection for the period." In addition, section 3131(b)(2) of the Affordable Care Act amended section 1895(b)(5) of the Act by re-designating the existing language as section 1895(b)(5)(A) of the Act, and revising it to state that the Secretary, "subject to [a 10 percent program-specific outlier cap], may provide for an addition or adjustment to the payment amount otherwise made in the case of outliers because of unusual variations in the type or amount of medically necessary care. The total amount of the additional payments or payment adjustments made under this paragraph with respect to a fiscal year or year may not exceed 2.5 percent of the total payments projected or estimated to be made based on the prospective payment system under this subsection in that year."
   As such, beginning in CY 2011, our HH PPS outlier policy is that we reduce payment rates by 5 percent and target 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 payment rates, the national per visit rates, the LUPA add-on payment amount, and the NRS conversion factor for CY 2010. Then, we 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 target up to 2.5 percent of estimated total payments to be paid as outlier payments, and apply a 10 percent agency-level outlier cap.
4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
   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 episodes that can receive outlier payments, but makes it possible to select a higher loss-sharing ratio, and therefore, increase outlier payments for outlier episodes. Alternatively, a lower FDL ratio means that more episodes can qualify for outlier payments, but outlier payments per episode must then be lower.
   The FDL ratio and the loss-sharing ratio must be 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 above the outlier threshold amount. We did not propose a change to the loss-sharing ratio in the HH PPS proposed rule (78 FR 40301). In the CY 2011 HH PPS final rule (75 FR 70398), in targeting total outlier payments as 2.5 percent of total HH PPS payments, we implemented an FDL ratio of 0.67, and we maintained that ratio in CY 2012. Simulations based on CY 2010 claims data completed for the CY 2013 HH PPS final rule showed that outlier payments were estimated to comprise approximately 2.18 percent of total HH PPS payments in CY 2013, and as such, we lowered the FDL ratio from 0.67 to 0.45. We stated that lowering the FDL ratio to 0.45, while maintaining a loss-sharing ratio of 0.80, achieved an effective balance of compensating for high-cost episodes while allowing more episodes to qualify as outlier payments (77 FR 67080). The national, standardized 60-day episode payment amount is multiplied by the FDL ratio. That amount is wage-adjusted to derive the wage-adjusted FDL amount, which is added to the case-mix and wage-adjusted 60-day episode payment amount to determine the outlier threshold amount that costs have to exceed before Medicare will pay 80 percent of the additional estimated costs.
   For this final rule, simulating payments using more complete CY 2012 claims data (a full year of data rather than preliminary data from the first half of 2012) and the CY 2013 payment rates (77 FR 67100 through 67105); we estimate that outlier payments in CY 2013 would comprise 1.79 percent of total payments. Based on simulations using CY 2012 claims data, the CY 2014 payments rates in section IV.E., and an FDL ratio of 0.45; we estimate that outlier payments in CY 2014 would comprise approximately 1.86 percent of total HH PPS payments in CY 2014. Given the increases to the CY 2014 national per-visit payment rates and the national, standardized 60-day episode payment rate as a result of making the case-mix adjustment in section IV.C budget neutral and the starting point for the rebasing calculations in section IV.D, our analysis estimates a 0.07 percentage point increase in outlier payments as a percent of total HH PPS payment. We further estimate that by the end of the 4-year phase-in period required by the Affordable Care Act, estimated outlier payments as a percent of total HH PPS payments will be approximately 2.07 percent. We did not propose a change to the FDL ratio or loss-sharing ratio for CY 2014 as we believed that maintaining an FDL of 0.45 and a loss-sharing ratio of 0.80 are appropriate given the percentage of outlier payments is estimated to increase as a result of the increasing the national per-visit amounts through the rebasing adjustments and the claims data showing any utilization changes that may have resulted from decreasing the FDL of 0.45 in CY 2013 would not be available for analysis until next year.
5. Outlier Relationship to the HH Payment Study
   As we discuss in section IV.G. of this final rule, section 3131(d) of the Affordable Care Act requires CMS to conduct a study and report on developing HH PPS payment revisions that will ensure access to care and payment for patients with high severity of illness. Our Report to Congress containing this study's recommendations is due no later than
   Although we did not propose any changes to the outlier policy, the following is a summary of the comments we received regarding outlier payments.
   Comment: Several commenters stated that estimated outlier payments as a percent of total payments for CY 2014 is below the budgeted amount of 2.5 percent and that the FDL ratio and/or loss-sharing ratio should be set so that estimated outlier payments as a percent of total payments would reach 2.5 percent. One commenter stated that because the national, standardized 60-day episode payment rate is increased as a result of the adjustment to the case-mix weights in section IV.C., fewer episodes qualify for outlier payments, contributing to estimated outlier payments falling short of 2.5 percent of total payments.
   Response: We did not propose a change to the FDL ratio for CY 2014 as the claims data showing any utilization changes that may have resulted from an FDL of 0.45 would not be available for analysis until next year. In addition, we note that the percentage of outlier payments is estimated to increase as a result of both increasing the national per-visit amounts over the next four years (which will increase an episode's imputed costs) and as a result of decreasing the national, standardized 60-day episode payment rate over the next four years (which will decrease the fixed-dollar loss threshold amount). We are also concerned that if we decreased the FDL ratio or increased the loss-sharing ratio we could potentially pay more than 2.5 percent of estimated total payments as outlier payments and that episodes without unusual variations in the type or amount of medically necessary care would qualify for outlier payments, which is contrary to the intent of the policy. Consequently, for the above stated reasons, we believe that we should not make any changes/revisions to our outlier payment methodology at this time.
   Comment: One commenter recommended that CMS eliminate outlier payments in their entirety and return the 2.5 percent withhold to the base payment rates.
   Response: We are required in section 1895(b)(5)(A) of the Act, to include an outlier pool of an amount that is 2.5 percent. We do believe that the statute allows the Secretary the discretion as to whether or not to have an outlier policy under the HH PPS. To date, analysis on the outlier policy has not been conducted. We plan to look into whether or not an outlier policy remains to be appropriate as well as ways to maintain an outlier policy for episodes that incur unusually high costs due to patient care needs without qualifying episodes of care that do not meet that criteria or are potentially fraudulent. We recently awarded a new contract to address any findings from the home health study required by section 3131(d) of the Affordable Care Act, monitor the potential impact of the rebasing adjustments and other recent payment changes, and develop payment options to ensure ongoing access to care for vulnerable populations, which may include potential revisions to the outlier payment methodology to better reflect costs of treating Medicare beneficiaries with high levels of severity of illness.
   Comment: A few commenters stated that they do not believe that the 10 percent agency-level cap on outlier payments is an effective fraud fighting policy and recommended that CMS exempt certain HHAs that serve high-cost patients with multiple clinical issues from the10 percent agency-level cap.
   Response: The 10 percent agency-level cap on outlier payments is a statutory requirement in section 1895(b)(5)(B) of the Act and thus we do not have the authority to rescind this policy or exempt HHAs from this provision.
   Final Decision: We are finalizing no change to the FDL ratio or loss sharing ratio for CY 2014. However, we will continue to monitor outlier payments and continue to explore ways to maintain an outlier policy for episodes that incur unusually high costs due to patient care needs without qualifying episodes of care that do not meet that criteria.
   
   In light of the OIG report, we conducted analysis and simulations performed on CY 2012 claims data. We found that nearly 44 percent of the episodes that would qualify for outlier payments had a primary diagnosis of diabetes and 16 percent of episodes that would quality for outlier payments had a primary diagnosis of "Diabetes mellitus without mention of complication, type II or unspecified type, not stated as uncontrolled." Our simulations also estimated that approximately 81 percent of outlier payments would be paid to proprietary agencies and that approximately two-thirds of outlier payments would be paid to HHAs located in Florida (27 percent), Texas (24 percent) and California (15 percent).
   We conducted additional analyses on episodes in our simulations that would have resulted in outlier payments over
   FOOTNOTE 7 This analysis simulated payments using CY 2012 claims data and CY 2012 payment rates. The simulations did not take into account the 10-percent outlier cap. Some episodes may have qualified for outlier payments in the simulations, but were not paid accordingly if the HHA was at or over its 10 percent cap on outlier payments as a percent of total payments. END FOOTNOTE
G. Payment Reform: Home Health Study and Report
   Section 3131(d) of the Affordable Care Act requires the Secretary to conduct a study on HHA costs involved with providing ongoing access to care to low-income Medicare beneficiaries or beneficiaries in medically underserved areas, and in treating beneficiaries with varying levels of severity of illness (specifically, beneficiaries with "high levels of severity of illness"). Section 3131(d) of the Affordable Care Act also gives the Secretary the authority to explore methods to revise the HH PPS to account for costs related to patient severity of illness or to improving beneficiary access to care and examine the potential impacts of any potential revisions to the payment system.
   As we stated in the CY 2013 HH PPS proposed rule (77 FR 41572), we awarded an initial contract to
   In
   The findings from the analysis of HHA costs and the survey on access to care for vulnerable patient populations may be used to develop recommendations on how to revise the current HH PPS to better account for costs and ensure access to care for these beneficiaries. Methods to revise the current HH PPS could include payment adjustments for services that involve either more or fewer resources, changes to reflect resources involved with providing HH services to low-income Medicare beneficiaries or Medicare beneficiaries residing in medically underserved area, and ways outlier payments could be revised to reflect costs of treating Medicare beneficiaries with high severity of illness. In addition, as part of the study, L&M may analyze operational issues involved with potential implementation of potential revisions to the HH payment system.
   The Affordable Care Act requires that the Secretary submit a Report to Congress regarding the study no later than
   The following is a summary of the comments we received regarding the Payment Reform: Home Health Study and Report.
   Comment: One commenter stated that physical therapists and other home health clinicians should be active participants in the collection of analysis of data gathering in the study and that CMS should provide updates to the stakeholder community on the plan and design of the study.
   Response: We are currently in the process of reviewing the study findings but thank the commenter for their interest in being part of the study. We plan to provide updates to the industry and stakeholder community once findings are finalized.
   Comment: Several commenters encouraged CMS to review the study results and address any clear access or cost concerns identified in the study in the 2014 rule through the grouper, the case-mix weights, and/or the outlier calculations. Some commenters encouraged CMS to incorporate the findings from the VNAA Vulnerable Patient Study into the case-mix system for CY 2014. Multiple commenters stated that the findings of CMS' home health study and the VNAA Vulnerable Patient Study should be taken into account when finalizing the rebasing provisions.
   Many commenters supported CMS' research on costs for vulnerable populations and stated that it is mainly the not-for-profit HHAs that treat the most vulnerable patients and that Medicare does not fully cover the cost of these patients. One commenter recommended that CMS expedite the study research and incorporate suitable adjustments to the HH PPS to ensure that beneficiaries with high levels of severity of illness or other vulnerable populations have appropriate access to home health services.
   Response: In
   Final Decision: We appreciate the comments on the home health study and will take the comments into consideration for the follow-on work under the new contract.
H. Cost Allocation of Survey Expenses
   In the CY 2013 HH PPS proposed rule (77 FR 41548), we proposed to amend SEC 431.610(g), Relations with standard-setting and survey agencies, to require that Medicaid state plans explicitly include Medicaid's appropriate contribution to the cost of HH surveys. We proposed to add a reference to HHAs, along with NFs and ICFs/IIDs at SEC 431.610(g).
   Surveys are required for determining a provider's or supplier's compliance with program participation requirements and the HHA surveys benefit both Medicare and Medicaid programs where the HHAs seek such dual certification. Thus, in accordance with OMB Circular A-87, the costs for surveys of HHAs that are certified for both Medicare and Medicaid should be shared between Medicare, Medicaid and state-only programs in proportion to the benefits received. However, to provide more time for dialogue with states and for any necessary adjustments to state Medicaid programs, we removed the proposed provision at SEC 431.610(g) in the CY 2013 HH PPS final rule (77 FR 67068). In the CY 2014 HH PPS proposed rule we again proposed to amend SEC 431.610(g) with additional explanation of our proposal and with updated cost information.
   We noted that a state Medicaid program must provide that, in certifying HHAs, the state's designated survey agency must carry out certain other responsibilities that already apply to surveys of nursing facilities and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID), including sharing in the cost of HHA surveys. Section 431.610(g) provides for the availability of federal financial participation (FFP) in the cost of such surveys, except for expenditures that the survey agency makes that are attributable to the state's overall responsibilities under state law and regulations. We believe that the principles articulated in OMB Circular A-87 require that HHA survey costs be allocated to Medicaid, Medicare and state-only programs in proportion to the benefits received. However, we also explained that the proposed amendment to SEC 431.610(g) would add clarity, and that the proposed rule would offer states and the public additional opportunity to comment or pose questions that will further aid adherence to the appropriate cost allocation principles. We further invited public comment on our proposed methods to ensure compliance with these requirements. Specifically, we proposed to review each state's allocation of costs for HHA surveys for adherence to OMB Circular A-87 principles and the statutes with the goal of ensuring full adherence by each state no later than
   An alternative to the proposed 50/50 method for allocating each state's Medicare/Medicaid HHA survey costs would be to fix each state's Medicaid share each year based on the proportion of Medicaid funding for HH services in the state compared to the combined Medicare and Medicaid total funding in the most recent years for which the data are reasonably complete. This is the method adopted for the disbursement of civil monetary penalties (CMPs) in the CY 2013 HH PPS final rule (77 FR 67078). However, the effective date of HHA CMPs is not until
   Based on such a 50/50 ratio for each state, and based upon the projected national HHA survey budget for FY 2014 of
   We received a total of 7 pertinent comments from 5 organizations regarding the Cost Allocation of Survey Expenses proposal. The following is a summary of the comments we received.
   Comment: Two organizations supported the proposed cost allocation and the proposed 50/50 split between Medicare and Medicaid for that proportion of the overall expense attributed to those programs. The commenters noted that the 50/50 split has been in long-standing use for the allocation of survey costs for skilled nursing facilities that are dually certified for Medicare and Medicaid.
   Response: These comments reflect the allocation methodology proposed in the notice of proposed rule-making. We concur with the comments.
 &#160; Comment: Another commenter agreed with the preamble statement that costs should be allocated in proportion to benefits received, but disputed that the costs should be split 50/50 between Medicare and Medicaid. The commenter expressed the belief that Medicaid receives less than 50 percent of the benefit on the grounds that (a) OASIS (Outcome and Assessment Information Set) drives much of S&C activity, and no State uses OASIS in rate setting; (b) Medicare requires that beneficiaries be homebound, in contrast to Medicaid home health policy mandates; (c) Medicare and its survey activities are focused on a medical model in contrast to Medicaid's focus on support for activities of daily living and heavy reliance on home health aides rather than skilled nurses; and (d) about 77 percent of the commenter's state Medicaid home health beneficiaries are under age 65, with children representing 34 percent of those beneficiaries receiving Medicaid home health services.
   Response: We appreciate the distinctions between Medicare and Medicaid that the commenter makes, but do not agree that these distinctions are particularly relevant to the issue of survey expenses. Medicare and Medicaid pay for survey expenses to assess a provider's compliance with Conditions of Participation (CoPs). HHAs providing services under Medicaid's home health benefit must meet the CoPs for Medicare, as specified at SEC 440.70(d). As articulated in the State Operations Manual at 2202.3E, if home care is provided by an entity required to meet the Medicare CoPs for any reason, then the entity must apply all the requirements of the CoPs, including the comprehensive assessment and OASIS data reporting requirements, to all patients of the agency, including patients treated under a Medicaid waiver or state plan, as applicable, with certain minor exceptions.
   In short, the CoPs expressed in 42 CFR part 484 benefit both Medicare and Medicaid patients. For example, the regulations begin with a focus on proper organization of the HHA and qualifications of personnel. The first full CoP delineates patient rights that apply equally to Medicare and Medicaid patients, such as informing patients of their rights in advance, the right to file a grievance and to have a grievance investigated, the right to be informed and participate in planning care and treatment, the right to have medical records held confidentially, and the right to have his or her property treated with respect. An entire CoP ( SEC 484.36) is dedicated to home health aides, an area that the commenter observes is particularly important for Medicaid. Similarly, SEC 484.55 obliges HHAs to conduct a timely and comprehensive assessment of the care and support needs of each individual. This is a basic expectation regardless of whether it is viewed through the lens of a medical model or daily living and support model.
   With regard to OASIS, some states do indeed use OASIS in their HHA rate-setting methodology, but such use is immaterial to the question at hand, since the survey process is concerned with application of the CoPs and quality of care, not enforcement of payment policy or the calculation of payment rates. Further, OASIS is an integral part of the comprehensive assessment process required at SEC 484.55. The comprehensive assessment regulation requires that HHAs use a standard core data set, that is, OASIS, when evaluating adult, non-maternity Medicare and Medicaid patients (except those receiving exclusively homemaker or chore services). OASIS data must be collected and reported for Medicaid as well as Medicare beneficiaries in accordance with SEC 484.20.
   Because the focus of the survey process is on compliance with the CoPs, and the CoPs apply to all patients served by the HHA, it is largely immaterial whether the majority of the work for either Medicare or Medicaid is done by registered nurses or home health aides, whether a medical model or daily living and support model predominates, or whether the majority of the clientele is under or over the age of 65.
   It is arguably the case that certain specific standards tend to apply to some groups more than to others. For example, SEC 484.55(c) requiring drug regimen review may most benefit those patients taking many medications, while SEC 484.34 governing medical social work may most benefit individuals who face challenging social and emotional factors related to health problems. However, the preponderance of standards benefits almost all patients regardless of payment source. This is particularly true of the most common area identified for deficiency citations by surveyors as a result of the onsite survey process. In FY 2012, for example, the most frequently-cited deficiencies were for failure to ensure that a written plan of care was established and periodically reviewed (8.6 percent of all agencies surveyed), the assessment included a review of all medications (6.1 percent), the plan of care covered applicable diagnoses and required services and visits (6.0 percent), a record of past and current findings was maintained (5.2 percent), and that care was provided in accordance with commonly-accepted professional standards (3.9 percent). Therefore, while there are differences between Medicare and Medicaid coverage, we do not agree that such differences materially affect the extent to which the CoPs benefit Medicare compared to Medicaid beneficiaries when the regulations are taken as a whole.
   Comment: Another commenter stated that the proposed rule would result in a loss of federal funds for the state and comes at a very inconvenient time, since the state survey agency's state funding in the past 3 years has been level-funded in the state budget while the survey agency's responsibilities have grown, the Medicare portion of survey agency funding has been reduced considerably, and the proposed rule would require changes in the state accounting system, which would add costs that should be recognized by CMS.
   Response: We very much appreciate the extraordinary fiscal constraints under which most states have recently labored. We also acknowledge that federal budget sequestration resulted in a decrease in federal funding for the Medicare portion of state survey agency responsibilities. Neither observation, however, directly affects the question of whether Medicare and Medicaid should both contribute to the cost of surveys, in accordance with the accounting principles articulated in OMB Circular A-87. We appreciate that there is some fiscal impact for states, but note that the Medicaid impact is mitigated by two major factors. First, Medicaid's share is treated as a Medicaid administrative cost, reimbursable at the professional staff rate of 75 percent. This means that the state Medicaid cost is limited to 25 percent of the Medicaid share. Second, we sought to provide states with considerable preparatory time. As discussed in the preamble, we first published a notice of proposed rule-making on this topic in 2012 (CY 2013 HH PPS proposed rule (77 FR 41548)), but postponed action on a final rule in order to provide more time for states. Further, in our latest proposal we delayed the proposed enforcement date until
   We appreciate that some states may need to make minor accounting system changes and will work with such states to accomplish the changes expeditiously. We expect that arrangements for Medicaid fair share contributions to the cost of the HHA surveys can easily be built on the procedures and requirements that are already in place for states to receive Medicaid federal financial participation for certain existing activities, such as the cost of surveys in nursing facilities. States already track the survey hours and costs associated with home health surveys. The 50/50 methodology specified in this rule for allocating expenses between Medicare and Medicaid simplifies the cost accounting. Further, states are already required under SEC 431.610(h)(2) to remove from federal reimbursement claims the costs of surveying for HHA compliance with state-only laws and regulations. We therefore expect that there already exists the appropriate infrastructure for proper cost accounting, but that some states may need to establish additional, internal cost accounting codes. We plan to work with states to make any accounting system changes in state cost accounting systems that are necessary to ensure there are proper audit trails and data to support claims for federal reimbursement.
   Comment: Another commenter observed that there was a number of different methods that CMS could use to arrive at an appropriate split between Medicare and Medicaid contributions, such as the proportion of aggregate Medicare or Medicaid spending to the combined total spending of the two programs. The commenter also stated that the volume of survey activity in a state should inform the cost-share assigned to a state.
   Response: We discussed the aggregate spending method in our notice of proposed rule-making, and explained that we were proposing the 50/50 split as an administratively simpler and appropriate alternative that has been in long-standing use with respect to surveys of SNF and NF. The commenter did not recommend the aggregate method, nor did any other commenter, but simply expressed the aggregate method as an acceptable alternative. We are therefore retaining the proposed 50/50 cost-allocation methodology. With regard to the comment that survey activity in a state should inform the cost-share assigned to a state, our methodology would incorporate that principle. The amount of Medicaid funding for HHA surveys in each state would be based on 50 percent of the total cost of surveys in the particular state in question that is attributable to the Medicare and Medicaid share of total cost (exclusive of any state-only cost attributable to state licensure requirements).
   Response Based on No Comments: CMS received no comments on whether the method of distribution for CMP receipts back to the states and to the U.S. Treasury should be changed to the same 50/50 methodology. If CMS does propose a change in the CMP receipt distribution methodology, we will propose the change in the CY 2015 HH PPS proposed rule.
   Final Decision: After careful consideration of the comments, we conclude that it is appropriate and warranted to publish in this final rule the regulatory changes we proposed to ensure that state Medicaid programs include explicit provision to contribute to the cost of HHA surveys in accordance with OMB Circular A-87, with the costs that are attributable to Medicare and Medicaid shared on a 50/50 basis between the two programs.
V. Collection of Information Requirements
   Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
    * The need for the information collection and its usefulness in carrying out the proper functions of our agency.
    * The accuracy of our estimate of the information collection burden.
    * The quality, utility, and clarity of the information to be collected.
    * Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
   ss otherwise noted, to derive average costs we used data from the
   In the
A. ICRs Regarding OASIS
   The information collection requirements and burden estimates associated with OASIS have been approved by OMB under OCN 0938-0760. While OASIS is discussed in preamble section IV.E.2.a, this rule does not revise any of its information collection requirements or burden estimates and, therefore, does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
B. Cost Allocation of Home Health Agency (HHA) Survey Expenses ( SEC 431.610)
   In SEC 431.610(g), HHAs have been added to the survey agency provision concerning state Medicaid programs. Since CMS already requires that state survey agencies have qualified personnel perform onsite inspections as appropriate, we believe that the requirement to use qualified staff is met in the current state Medicaid plans. As explained in the preamble (See section IV.H, Cost Allocation of Survey Expenses, of this final rule) and in the CY 2014 HH PPS proposed rule (78 FR 40302), we also expect that state Medicaid programs will provide for the appropriate Medicaid share of expenses for the conduct of HHA surveys. This is a budgeting and accounting task. Since state Medicaid plans already provide for the necessary relations with state survey agencies, we do not believe it will be necessary for states to submit a state plan amendment. We believe the responsibilities for Medicaid home health survey costs may be met through appropriate budgeting and accounting adjustments within the context of each state's current Medicaid plan. This rule will not revise any budget-related recordkeeping or reporting requirements or estimates for state Medicaid agencies and, therefore, does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
C. ICRs Regarding Home Health Care CAHPS(R) (HHCAHPS(R)) Survey
   In the proposed rule, CMS proposed to add the OMB number to the HHCAHPS Participation Exemption Request Form. CMS did not receive any comments about the proposed change, and CMS is moving forward with adding the OMB number to the Participation Exemption Request Form. This is discussed in the preamble in the section about the Home Health CAHPS (HHCAHPS) survey in the Quality Reporting Requirement section at IV.E.2.e. CMS implements the HHCAHPS(R) Survey to measure and to publicly report patients' experiences with home health care they receive from Medicare-certified agencies. Section 484.250, Patient Assessment Data, requires that HHAs submit to CMS, HHCAHPS(R) data in order to administer the payment rate methodologies described in SUBSEC 484.215, 484.230, and 484.235. The burden associated with this is the time and effort put forth by the HHAs to submit the HHCAHPS(R) data, the patients' burden to respond to the HHCAHPS(R) survey, and the cost to the HHAs to pay for the HHCAHPS(R) survey vendors to collect the data on their behalf. This burden is currently accounted for under OCN 0938-1066 (CMS-10275).
   CMS allows Medicare-certified home health agencies that serve 59 or fewer HHCAHPS(R) eligible patients, to request an exemption from participating in the HHCAHPS(R) survey. Currently, we have posted the HHCAHPS(R) Participation Exemption Request (PER) Form for the CY 2015 Annual Payment Update on https://homehealthcahps.org. The form is only to be used if home health agencies have 59 or fewer HHCAHPS(R) eligible patients in the count period that is referenced for a given calendar year. For the CY 2015 annual payment update, home health agencies with 59 or fewer HHCAHPS(R) patients in the period of
   The HHCAHPS(R) PER Form for the CY 2015 Annual Payment Update is a one-page form. We estimate that it will take 15 minutes to complete the form since it only has a few items to complete including one item concerning the count of HHCAHPS(R) eligible patients in an annual period. We believe that it will take an additional 20 minutes to count the patients and to verify the count. The annualized aggregated total burden to completion of the form is 1,170 hr ((15 min + 20 min)/60 x 2,000 Medicare-certified home health agencies) at a total estimated cost of
   In deriving these figures, we used the following hourly labor rates and time to complete each task:
D. Submission of PRA-Related Comments
   We have submitted a copy of this rule to OMB for its review of the rule's information collection and recordkeeping requirements. These requirements are not effective until they have been approved by the OMB.
   To obtain copies of the supporting statement and any related forms for the paperwork collections referenced above, access CMS' Web site at www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/, or call the Reports Clearance Office at 410-786-1326.
   We invite public comments on these information collection requirements. If you comment on these information collection and recordkeeping requirements, please submit your comments to the
   PRA-specific comments must be received on/by
VI. Waiver of Delay in Effective Date
   In the absence of an appropriation for FY 2014 or a Continuing Resolution, the federal government shut down on
VII. Regulatory Impact Analysis
A. Introduction
   We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (
   Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated as economically significant, under section 3(f)(1) of Executive Order 12866, and thus is a major rule under the Congressional Review Act. Accordingly, we have prepared a regulatory impact analysis (RIA) that to the best of our ability presents the costs and benefits of the rulemaking. Also, the rule has been reviewed by OMB.
B. Statement of Need
   Section 1895(b)(1) of the Act requires the Secretary to establish a HH PPS for all costs of HH services paid under Medicare. In addition, section 1895(b)(3)(A) of the Act requires (1) the computation of a standard prospective payment amount include all costs for HH services covered and paid for on a reasonable cost basis and that such amounts be initially based on the most recent audited cost report data available to the Secretary, and (2) the standardized prospective payment amount be adjusted to account for the effects of case-mix and wage levels among HHAs. Section 1895(b)(3)(B) of the Act addresses the annual update to the standard prospective payment amounts by the HH applicable percentage increase. Section 1895(b)(4) of the Act governs the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the standard prospective payment amount to be adjusted for case-mix and geographic differences in wage levels. Section 1895(b)(4)(B) of the Act requires the establishment of appropriate case-mix adjustment factors for significant variation in costs among different units of services. Lastly, section 1895(b)(4)(C) of the Act requires the establishment of wage adjustment factors that reflect the relative level of wages, and wage-related costs applicable to HH services furnished in a geographic area compared to the applicable national average level.
   Section 1895(b)(5) of the Act gives the Secretary the option to make changes to the payment amount otherwise paid in the case of outliers because of unusual variations in the type or amount of medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires HHAs to submit data for purposes of measuring health care quality, and links the quality data submission to the annual applicable percentage increase. Also, section 1886(d)(2)(D) of the Act requires that HH services furnished in a rural area for episodes and visits ending on or after
   Section 3131(a) of the Affordable Care Act mandates that starting in CY 2014, the Secretary must apply an adjustment to the national, standardized 60-day episode payment rate and other amounts applicable under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. In addition, section 3131(a) of the Affordable Care Act mandates that rebasing must be phased-in over a 4-year period in equal increments, not to exceed 3.5 percent of the amount (or amounts) as of the date of enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be fully implemented in CY 2017.
C. Overall Impact
   The update set forth in this rule applies to Medicare payments under HH PPS in CY 2014. Accordingly, the following analysis describes the impact in CY 2014 only. We estimate that the net impact of the proposals in this rule is approximately
   The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than
   Executive Order 13563 specifies, to the extent practicable, agencies should assess the costs of cumulative regulations. However, given potential utilization pattern changes, wage index changes, changes to the market basket forecasts, and unknowns regarding future policy changes, we believe it is neither practicable nor appropriate to forecast the cumulative impact of the rebasing adjustments on Medicare payments to HHAs for future years at this time. Changes to the Medicare program may continue to be made as a result of the Affordable Care Act, or new statutory provisions. Although these changes may not be specific to the HH PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes would make it difficult to predict accurately the full scope of the impact upon HHAs for future years beyond CY 2014. We note that the rebasing adjustments to the national, standardized 60-day episode payment rate and the national per-visit rates are capped at the statutory limit of 3.5 percent of the CY 2010 amounts (as described in the preamble in section IV.D) for each year, 2014 through 2017. The NRS rebasing adjustment will be -2.82 percent in each year, 2014 through 2017. As described in section IV.D of the preamble, the -2.82 percent rebasing adjustment will not exceed the statutory limit in CY 2014 and there is a very low likelihood that future adjustments of -2.82 percent in CY 2015 through 2017 would exceed the statutory limit.
   In addition, section 1102(b) of the Act requires us to prepare a RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. This final rule applies to HHAs. Therefore, the Secretary has determined that this rule will not have a significant economic impact on the operations of small rural hospitals.
   Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of
D. Detailed Economic Analysis
   This final rule sets forth updates to the HH PPS rates contained in the CY 2013 HH PPS final rule. The impact analysis of this rule presents the estimated expenditure effects of policy changes in this rule. We use the latest data and best analysis available, but we do not make adjustments for future changes in such variables as number of visits or case-mix.
   This analysis incorporates the latest estimates of growth in service use and payments under the Medicare HH benefit, based primarily on Medicare claims from 2012. We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, susceptible to errors resulting from other changes in the impact time period assessed. Some examples of such possible events are newly-legislated general Medicare program funding changes made by the Congress, or changes specifically related to HHAs. In addition, changes to the Medicare program may continue to be made as a result of the Affordable Care Act, or new statutory provisions. Although these changes may not be specific to the HH PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon HHAs.
   Table 33 represents how HHA Medicare revenues are likely to be affected by the policy changes in this rule. For this analysis, we used linked CY 2012 HH claims and OASIS assessments; the claims are for dates of service that ended in CY 2012. The first column of Table 33 classifies HHAs according to a number of characteristics including provider type, geographic region, and urban and rural locations. The second column shows the payment effects of the wage index. The third column shows the effects of the standardization factor. The forth column shows the effects of the ICD-9-CM Grouper scoring changes. The fifth column displays the effects of the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and NRS conversion factor as well as the effects of the LUPA add-on factors. The sixth column shows the effects of the market basket increase. The seventh column shows the payment effects of all the finalized policies.
   Overall, HHAs are anticipated to experience a 1.05 percent decrease in payment in CY 2014, with freestanding HHAs anticipated to experience a 1.10 percent decrease in payments while facility-based HHAs and non-profit HHAs are anticipated to experience a 0.58 percent and a 0.49 percent decrease in payments, respectively. Government-owned HHAs are anticipated to experience a 0.92 percent decrease in payments and proprietary HHAs are anticipated to experience a 1.27 percent decrease in payments. Rural HHAs are anticipated to experience a decrease in estimated payments ranging from 0.45 percent for facility-based non-profit HHAs to 1.08 for freestanding government-owned HHAs. Urban HHAs are anticipated to experience a decrease in estimated payments, ranging from 0.47 percent for freestanding non-profit HHAs to 1.29 percent for freestanding proprietary HHAs. The overall impact in the South is estimated to be a 1.56 percent decrease in payments whereas the overall impact to the "Other" category (for example, Puerto Rico, Guam, U.S.
[TB] Table 33--Home Health Agency Policy Impacts for CY 2014, by Facility Type and Area of the Country Number CY 2014 Stand- ICD-9-CM Rebasing CY 2014 Impact of Wage ardiza- Grouper *1 HH of all agencies index tion scoring (%) Payment CY 2014 (%) (%) changes update policies (%) percent- (%) age (%) All Agencies 11,620 -0.25 0.25 -0.62 -2.73 2.30 -1.05 Facility Type and Control Free- 1,057 0.10 0.22 -0.40 -2.71 2.30 -0.49 Standing/Other Vol/NP Free- 8,967 -0.37 0.25 -0.71 -2.74 2.30 -1.27 Standing/Other Proprietary Free- 421 -0.24 0.25 -0.50 -2.73 2.30 -0.92 Standing/Other Government Facility-Based 813 0.01 0.24 -0.33 -2.72 2.30 -0.50 Vol/NP Facility-Based 117 -0.17 0.25 -0.52 -2.77 2.30 -0.91 Proprietary Facility-Based 245 -0.34 0.25 -0.39 -2.75 2.30 -0.93 Government Subtotal: 10,445 -0.27 0.25 -0.65 -2.73 2.30 -1.10 Freestanding Subtotal: 1,175 -0.04 0.24 -0.35 -2.73 2.30 -0.58 Facility-based Subtotal: 1,870 0.07 0.23 -0.38 -2.71 2.30 -0.49 Vol/NP Subtotal: 9,084 -0.37 0.25 -0.71 -2.74 2.30 -1.27 Proprietary Subtotal: 666 -0.28 0.25 -0.45 -2.74 2.30 --0.92 Government Facility Type and Control: Rural Free- 205 -0.01 0.25 -0.31 -2.75 2.30 -0.52 Standing/Other Vol/NP Free- 142 -0.12 0.25 -0.43 -2.77 2.30 -0.77 Standing/Other Proprietary Free- 468 -0.29 0.26 -0.58 -2.77 2.30 -1.08 Standing/Other Government Facility-Based 262 0.10 0.24 -0.34 -2.75 2.30 -0.45 Vol/NP Facility-Based 35 0.18 0.24 -0.53 -2.77 2.30 -0.58 Proprietary Facility-Based 153 -0.21 0.26 -0.34 -2.77 2.30 -0.76 Government Facility Type and Control: Urban Free- 915 0.11 0.22 -0.40 -2.70 2.30 -0.47 Standing/Other Vol/NP Free- 8,652 -0.38 0.25 -0.72 -2.74 2.30 -1.29 Standing/Other Proprietary Free- 170 -0.32 0.26 -0.54 -2.74 2.30 -1.04 Standing/Other Government Facility-Based 551 -0.01 0.24 -0.33 -2.72 2.30 -0.52 Vol/NP Facility-Based 82 -0.25 0.26 -0.51 -2.77 2.30 -0.97 Proprietary Facility-Based 92 -0.40 0.25 -0.42 -2.73 2.30 -1.00 Government Facility Location: Urban or Rural Rural 1,158 -0.11 0.25 -0.46 -2.76 2.30 -0.78 Urban 10,462 -0.26 0.25 -0.62 -2.73 2.30 -1.06 Facility Location: Region of the Country North 874 0.47 0.20 -0.36 -2.70 2.30 -0.09 Midwest 3,107 -0.52 0.25 -0.53 -2.76 2.30 -1.26 South 5,727 -0.61 0.26 -0.77 -2.74 2.30 -1.56 West 1,862 0.62 0.23 -0.46 -2.69 2.30 0.00 Other 50 0.64 0.23 -0.22 -2.81 2.30 0.14 Facility Location: Region of the Country (
E. Alternatives Considered
   As described the proposed rule (78 FR 40307), we noted that additional factors were considered, but not incorporated into the methodology for calculating the rebasing adjustments. One such factor was a downward adjustment to the costs per-visit as a result of the findings from the audits of 98 Medicare HH cost reports. The results of the audits showed that agencies over-reported costs by an average of about 8 percent. More information on the analysis of the audit results can be found in the report titled: "Analyses in Support of Rebasing & Updating the Medicare Home Health Payment Rates--CY 2014 Home Health Prospective Payment System Proposed Rule" available on the
   We did not incorporate any of the options discussed above as those changes would not impact the final rebasing adjustments to the national, standardized 60-day episode payment rate or national per-visit payment rates as those adjustments are at the statutory limit (no more than 3.5 percent of the CY 2010 payment rates). We note that if we implemented the rebasing adjustments using the methodology described in the CY 2014 HH PPS proposed rule, the effects from the rebasing adjustments would have been a 3.4 percent reduction in payments to HHAs in CY 2014 compared to CY 2013 rather than a 2.7 percent reduction described above. We estimate that a 2.7 percent reduction versus a 3.4 percent reduction in payments results in an increase in payments to HHAs of
   In addition to the rebasing adjustments, we considered implementing a prospective reduction for nominal case-mix growth for CY 2014. In the past, various sources have suggested implementing a prospective nominal case-mix growth adjustment, which would attempt to predict the amount of nominal case-mix growth in future years and implement a reduction to prevent possible overpayments due to nominal case-mix growth. To date, we have implemented nominal case-mix growth adjustments retrospectively. That is, we use the most recent, complete data available--typically two to three years prior to the payment year--to identify nominal case-mix growth, and implement a payment reduction to account for the observed growth. The payment reductions to date for nominal case-mix growth do not attempt to re-coup overpayments made in previous years due to nominal case-mix growth. We plan to continue to monitor case-mix growth (both real and nominal case-mix growth) as more data become available.
F. Cost Allocation of Survey Expenses
   We project that aggregate Medicare and Medicaid HH survey costs in FY 2014 will be approximately
G. Accounting Statement and Table
   As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Tables 34 and 35, we have prepared an accounting statement showing the classification of the transfers associated with the provisions of this final rule. Table 34 provides our best estimate of the decrease in Medicare payments under the HH PPS as a result of the changes presented in this final rule.
Table AA-1 to Subpart AA of Part 98--Kraft Pulping Liquor Emissions Factors for Biomass-Based CO<2>, CH<4>, and N<2>O Biomass-based emissions factors (kg/mmBtu HHV) Wood furnish *a CH<4> N<2>O CO<2> North American Softwood 94.4 0.0019 0.00042 North American Hardwood 93.7 0.0019 0.00042 Bagasse 95.5 0.0019 0.00042 Bamboo 93.7 0.0019 0.00042 Straw 95.1 0.0019 0.00042 *a Includes emissions from both the recovery furnace and pulp mill lime kiln.
   Table 35 provides our best estimate of the changes in the classification of the cost allocation of survey expenses.
Table AA-2 to Subpart AA of Part 98--Kraft Lime Kiln and Calciner Emissions Factors for CH<4> and N<2>O Fossil fuel-based emissions factors (kg/mmBtu HHV) Kraft lime kilns Kraft calciners Fuel CH<4> N<2>O CH<4> N<2>O Residual Oil (any type) 0.0027 0 0.0027 0.0003 Distillate Oil (any type) 0.0027 0 0.0027 0.0004 Natural Gas 0.0027 0 0.0027 0.0001 Biogas 0.0027 0 0.0027 0.0001 Petroleum coke 0.0027 0 *a NA *a NA Other Fuels See Table 0 See Table See Table C-2 C-2 C-2 *a Emission factors for kraft calciners are not available.
H. Conclusion
   In conclusion, we estimate that the net impact of this rule is approximately
VII. Federalism Analysis
   Executive Order 13132 on Federalism (
List of Subjects in 42 CFR Part 431
   Grant programs-health, Health facilities, Medicaid, Privacy, and Reporting and recordkeeping requirements.
   For the reasons set forth in the preamble, the
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
   1. The authority citation for part 431 continues to read as follows:
   Authority: Sec. 1102 of the Social Security Act, (42 U.S.C. 1302).
   2. Section 431.610 is amended by revising paragraph (g) introductory text to read as follows:
SEC 431.610 Relations with standard-setting and survey agencies.
* * * * *
   (g) Responsibilities of survey agency. The plan must provide that, in certifying NFs, HHAs, and ICF-IIDs, the survey agency designated under paragraph (e) of this section will --
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--
   Dated:
Marilyn Tavenner,
Administrator,
   Approved:
Kathleen Sebelius,
Secretary,
[FR Doc. 2013-28457 Filed 11-22-13;
BILLING CODE 4120-01-P
Copyright: | (c) 2013 Federal Information & News Dispatch, Inc. |
Wordcount: | 62022 |
Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics,…
Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2015
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News