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Medicare Home Health Payment: Nonroutine Medical Supply Data Needed to Assess Payment Adjustments

GAO-03-878 Published: Aug 15, 2003. Publicly Released: Aug 15, 2003.
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Highlights

Under Medicare's prospective payment system (PPS), home health agencies receive a single payment, adjusted to reflect the care needs of different types of patients, for providing up to 60 days of home health care. Some home health industry representatives have suggested that certain nonroutine medical supplies (such as wound-care dressings) should be excluded from this payment and reimbursed separately because of their high cost. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 required GAO to examine home health agency payments for nonroutine medical supplies and recommend whether payment for any such supplies should be excluded from the PPS.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services In evaluating refinements to the PPS, the Administrator of CMS should collect and analyze patient-specific data on the cost and utilization of individual nonroutine medical supplies to determine whether the payment groups and adjustments appropriately reflect the differences in supply costs. The Administrator should also gather and evaluate evidence on whether there have been systematic disruptions in the care for some patients under the PPS. If these analyses indicate problems with the current PPS, the Administrator of CMS should modify the payment groups and adjustments to better account for these supply costs or minimize care disruptions. If such refinements cannot resolve identified problems, the Administrator should seek the necessary legislative changes to exclude selected nonroutine medical supplies from the episode payment.
Closed – Implemented
The Home Health Prospective Payment System (PPS) final rule, published August 29, 2007 (72 FR 49762) established new payment rates for non-routine medical supplies (NRS) and required home health agencies to report NRS data on claims. The new payment rates were developed by a CMS contractor through analysis of existing data on the cost and utilization of NRS. (For a description of the methodology, see the proposed final rule published on May 4, 2007, 72 FR 25427.) In the final rule, CMS announced that it would implement a 6 severity group methodology for payment of NRS within the PPS system, with payment rates for NRS ranging from about $14 for the lowest severity group to $551 for the highest severity group. The agency also announced that claims that lacked information about NRS costs, unless explicitly noting that there were no such costs, would be returned to the home health agency to furnish this information. Finally, CMS stated that it would monitor the accuracy of its methodology and explore alternative methods for accounting for NRS costs in the future. Both the revised payment rates and the new reporting requirements became effective January 1, 2008. According to a CMS official, GAO's analysis was part of the information that led the agency to analyze and modify its payment arrangements for NRS.

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Topics

Cost analysisData collectionHealth care costsHealth care programsHome health care servicesMedical suppliesMedicareProspective paymentsHome health carePatient care