[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 4229 Introduced in House (IH)]
104th CONGRESS
2d Session
H. R. 4229
To amend title XVIII of the Social Security Act to provide for
prospective payment for home health services under the Medicare
program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 27, 1996
Mrs. Johnson of Connecticut introduced the following bill; which was
referred to the Committee on Ways and Means, and in addition to the
Committee on Commerce, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for
prospective payment for home health services under the Medicare
program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Home Health Services
Prospective Payment Amendments of 1996''.
SEC. 2. PAYMENT FOR HOME HEALTH SERVICES.
(a) In General.--Title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.), as amended by section 202 of Public Law 104-191, is
amended by adding at the end the following new section:
``payment for home health services
``Sec. 1894. (a) In General.--Notwithstanding section 1861(v), the
Secretary shall provide for payments for home health services in
accordance with a prospective payment system as follows:
``(1) Per visit payments.--Subject to subsection (c), the
Secretary shall make per visit payments to a home health agency
in accordance with this section for each type of home health
service described in paragraph (2) furnished to an individual
who at the time the service is furnished is under a plan of
care by the home health agency under this title (without regard
to whether or not the item or service was furnished by the
agency or by others under arrangement with them made by the
agency, under any other contracting or consulting arrangement,
or otherwise).
``(2) Types of services.--The types of home health services
described in this paragraph are the following:
``(A) Part-time or intermittent nursing care
provided by or under the supervision of a registered
professional nurse.
``(B) Physical therapy.
``(C) Occupational therapy.
``(D) Speech-language pathology services.
``(E) Medical social services under the direction
of a physician.
``(F) To the extent permitted in regulations, part-
time or intermittent services of a home health aide who
has successfully completed a training program approved
by the Secretary.
``(b) Establishment of Per Visit Rate for Each Type of
Assistance.--
``(1) In general.--The Secretary shall, subject to
paragraph (3), establish a per visit payment rate for a home
health agency in an area (which shall be the same area used to
determine the area wage index applicable to hospitals under
section 1886(d)(3)(E)) for each type of home health service
described in subsection (a)(2). Such rate shall be equal to the
national per visit payment rate determined under paragraph (2)
for each such type, except that the labor-related portion of
such rate shall be adjusted by the area wage index applicable
under section 1886(d)(3)(E) for the area in which the agency is
located (as determined without regard to any reclassification
of the area under section 1886(d)(8)(B) or a decision of the
Medicare Geographic Classification Review Board or the
Secretary under section 1886(d)(10) for cost reporting periods
beginning after October 1, 1995).
``(2) National per visit payment rate.--The national per
visit payment rate for each type of service described in
subsection (a)(2)--
``(A) for fiscal year 1997, is an amount equal to
the national average amount reimbursed per visit under
this title to home health agencies for such type of
service (including medical supplies) during the most
recent 12-month cost reporting period ending on or
before December 31, 1994, updated by the home health
market basket percentage increase for each year before
the date in such fiscal year in which this section
first applies; and
``(B) for each subsequent fiscal year, is an amount
equal to the national per visit payment rate in effect
under this paragraph for the preceding fiscal year,
increased by the home health market basket percentage
increase for such subsequent fiscal year.
``(3) Payments above per visit rates.--
``(A) Election.--A home health agency may elect to
receive per visit payments in excess of the per visit
payment rate under paragraph (1) up to the per visit
payment limit under subparagraph (B) if the agency can
demonstrate to the satisfaction of the Secretary that
it can reasonably expect to incur such costs and that
total payments will not exceed the agency's aggregate
limit under subsection (c). The Secretary shall further
provide for exemptions, exceptions, and adjustments to
the per visit payment limit of this section on the same
basis as are provided under subsection (c)(3) with
respect to the limitations on final payment.
``(B) Per visit payment limit.--For fiscal year
1997, the per visit payment limit under this
subparagraph is calculated as established by section
1861(v)(1)(L). For each subsequent year, such payment
limit is equal to the limit for the preceding fiscal
year under this subparagraph increased by the home
health market basket index for the fiscal year
involved.
``(4) Home health market basket percentage increase.--For
purposes of this subsection, the term `home health market
basket percentage increase' means, with respect to a fiscal
year, a percentage (estimated by the Secretary before the
beginning of the fiscal year) determined and applied with
respect to the types of home health services described in
subsection (a)(2) in the same manner as the market basket
percentage increase under section 1886(b)(3)(B)(iii) is
determined and applied to inpatient hospital services for
discharges in the fiscal year.
``(c) Aggregate Limits.--
``(1) Phase i aggregate limit.--
``(A) In general.--Before the end of the second 12-
month period beginning on the effective date of this
section, except as provided in paragraphs (3) and (4),
a home health agency may not receive aggregate per
visit payments under subsection (a) for such a 12-month
period in excess of an amount equal to the product of--
``(i) the number of unduplicated medicare
beneficiaries receiving home health services
from the agency during the period; and
``(ii) the per patient limit determined for
such period.
``(B) Establishment of per patient limits for
initial year.--
``(i) In general.--For the initial 12-month
period, the per patient limit for an agency is
equal to the product of--
``(I) the sum of 75 percent of the
updated per visit costs described in
clause (ii) for the agency and 25
percent of the regional average
described in clause (iii) for the
agency; and
``(II) the average annual number of
medicare home health agency visits per
unduplicated medicare beneficiary for
fiscal year 1995.
``(ii) Updated per visit costs.--The
updated per visit costs described in this
clause, for a home health agency for a payment
period, is the average per visit reasonable
costs for home health services of the agency,
calculated for the base year, based on fiscal
year 1994 cost per visit, updated by the home
health market basket percentage increase
through the payment period involved.
``(iii) Regional average.--The regional
average described in this clause, for a home
health agency for a payment period, is the
average of the updated per visit costs
described in clause (ii) for the period for
home health agencies located in the same census
region in which the agency is located.
``(C) Establishment of per patient limits for
second year.--For the second 12-month period, the per
patient limit for an agency is equal to the product
of--
``(i) the sum of--
``(I) 50 percent of the updated per
visit costs described in subparagraph
(B)(ii) for the agency for the period,
and
``(II) 50 percent of the regional
average described in subparagraph
(B)(iii) for the agency for the period;
and
``(ii) the average annual number of
medicare home health agency visits per
unduplicated medicare beneficiary for fiscal
year 1995.
``(D) New providers and providers without base
year.--For a new home health agency or a home health
agency for which there is no base year under
subparagraph (B)(ii), the per patient limit shall be
equal to the mean of these limits applied to home
health agencies in the same census region in which the
agency is located as determined by the Secretary. A
home health agency shall not be treated as a new home
health agency by reason of any corporate restructuring
or change of name.
``(2) Phase ii aggregate limits.--
``(A) In general.--After the end of the second 12-
month period beginning on the effective date of this
section and until the effective date of any episodic
prospective payment system (including a system
developed under subsection (h)) that is enacted by the
Congress, except as provided in paragraphs (3) and (4),
a home health agency may not receive aggregate per
visit payments under subsection (a) for a 12-month
payment period in excess of an amount equal to the sum
of the following:
``(i) The sum (for all case-mix categories)
of the products (determined separately for each
such category) of--
``(I) the total number of episodes
for the category for which the agency
receives payments during the payment
period, and
``(II) the per episode limit
determined under subparagraph (B) for
the category and payment year.
``(ii) The product of--
``(I) the number of unduplicated
medicare beneficiaries receiving home
health services from the agency beyond
120 days during the payment year, and
``(II) the per patient limit for
services provided beyond 120 days, as
specified in subparagraph (E).
``(B) Establishment of per episode limits for first
120 days.--
``(i) In general.--The per episode limit
under this subparagraph for a payment year for
a case-mix category for the area in which a
home health agency is located (which shall be
the same area used to determine the area wage
index applicable to hospitals under section
1886(d)(3)(E)) is equal to the product of--
``(I) the mean number of visits for
each type of home health service
described in subsection (a)(2)
furnished during an episode of such
case-mix category in such area during
fiscal year 1995; and
``(II) the per visit payment rate
established under subsection (b) for
such type of home health service for
the fiscal year for which the
determination is being made.
``(ii) Determination of area.--In the case
of an area which the Secretary determines has
an insufficient number of home health agencies
to establish an appropriate per episode limit
under this subparagraph, the Secretary may
establish an area other than the area used to
determine the area wage under section
1886(d)(3)(E) for purposes of establishing an
appropriate per episode limit.
``(C) Case-mix category.--For purposes of this
paragraph, the term `case-mix category' means each of
the 18 case-mix categories established under the Home
Health Agency Prospective Payment Demonstration Project
conducted by the Health Care Financing Administration.
The Secretary may develop and apply a more accurate
methodology for determining case-mix categories subject
to prior public notice and comment under section 553 of
title 5, United States Code.
``(D) Episode.--
``(i) In general.--For purposes of this
paragraph, the term `episode' means the
continuous 120-day period that--
``(I) begins on the date of an
individual's first visit for a type of
home health service described in
subsection (a)(2) for a case-mix
category, and
``(II) is immediately preceded by a
45-day period in which the individual
did not receive visits for a type
of home health service described in subsection (a)(2).
``(ii) Proration of episode limit spanning
payment years.--The Secretary shall provide for
such rules as appropriate to prorate episode
limits under this paragraph which begin during
a payment year and end in a subsequent payment
year.
``(E) Establishment of a per patient annual limit
for services provided after 120 days.--
``(i) In general.--The per patient limit
for services provided by a home health agency
after 120 days for a payment period is equal to
the product of--
``(I) the sum of 50 percent of the
updated per visit costs described in
paragraph (1)(B)(ii) for the agency and
year and 50 percent of the regional
average described in paragraph
(1)(B)(iii) for the agency and year;
and
``(II) the average annual number of
medicare home health agency visits over
120 days per unduplicated medicare
beneficiary for fiscal year 1995.
``(ii) New providers and providers without
base year.--The provisions of subparagraph (D)
of paragraph (1) shall apply with respect to
clause (i)(I) in the same manner as they apply
to subparagraph (B)(ii) of paragraph (1).
``(3) Exemptions and exceptions.--
``(A) Extraordinary costs.--The Secretary shall
provide for an exemption from, or an exception and
adjustment to, at the request of the home health
agency, the methods under this subsection for
determining payment limits where events beyond the home
health agency's control or extraordinary circumstances,
including the case mix of such home health agency,
create reasonable costs for a payment year which exceed
the applicable payment limits.
``(B) Other factors.--The Secretary may provide for
such other exemptions from, and exceptions and
adjustments to, such methods, as the Secretary deems
appropriate, as determined by the Secretary.
``(C) Timely determination.--The Secretary shall
announce a decision on any request for an exemption,
exception, or adjustment under this paragraph not later
than 120 days after receiving a completed application
from the home health agency for such exemption,
exception, or adjustment, and shall include in such
decision a detailed explanation of the grounds on which
such request was approved or denied.
``(D) Limitation.--The cumulative expenditures for
exemptions and exceptions under this paragraph shall
not exceed the cumulative amount that would have been
payable under paragraph (4)(B) if the 10 percent
limitation under clause (ii) of such paragraph did not
apply.
``(4) Reconciliation of amounts.--
``(A) Payments in excess of limits.--If a home
health agency has received aggregate per visit payments
under subsection (a) for a fiscal year in excess of the
amount determined under paragraph (1) with respect to
such home health agency for such fiscal year, the
Secretary shall reduce payments under this section to
the home health agency in the following fiscal year in
such manner as the Secretary considers appropriate (including on an
installment basis) to recapture the amount of such excess.
``(B) Share of savings.--
``(i) Computation.--If a home health agency
has received aggregate per visit payments under
subsection (a) for a payment year in an amount
less than the limit determined under paragraph
(1) or (2) (as applicable) with respect to such
home health agency for such payment year and,
with respect only to paragraphs (1) and (2)(E),
the home health agency has an average payment
per unduplicated medicare beneficiary at or
below 125 percent of the regional average
(described in paragraph (1)(B)(iii) or
(2)(E)(iii), respectively), subject to clause
(ii), the Secretary shall pay such home health
agency a payment equal to 50 percent of the
difference between the aggregate payment and
each applicable limit under paragraphs (1),
(2)(B), or (2)(E).
``(ii) Limitation.--In no case shall
payments under clause (i) for an agency for a
year exceed 10 percent of the aggregate per
visit payments made to the agency for the year.
``(iii) Installment payments.--The
Secretary may make the payments to a home
health agency under clause (i) during a payment
year on an installment basis based on the
estimated payment that the agency would be
eligible to receive with respect to such
payment year.
``(d) Medical Review Process.--The Secretary shall implement a
medical review process for the system of payments described in this
section that shall provide an assessment of the pattern of care
furnished to individuals receiving home health services for which
payments are made under this section to ensure that such individuals
receive appropriate home health services.
``(e) Adjustments.--
``(1) In general.--The Secretary shall provide for
appropriate adjustments to payments to a home health agency
under this section to ensure that the agency does not engage in
the following for the purposes of circumventing the limits:
``(A) Discharging patients to another home health
agency or similar provider.
``(B) Altering corporate structure or name to avoid
being subject to this section or for the purpose of
increasing payments under this title.
``(2) Tracking of patients that switch home health
agencies.--
``(A) Development of system.--The Secretary shall
develop a system that tracks home health patients that
receive home health services described in subsection
(a)(2) from more than 1 home health agency.
``(B) Adjustment of limits.--The Secretary shall
adjust limits under this section to each home health
agency that furnishes an individual with a type of home
health service described in subsection (a)(2) to ensure
that aggregate payments on behalf of such individual
during such episode do not exceed the amount that would
be paid under this section if the individual received
such services from a single home health agency.
``(3) Monitoring low-cost cases.--
``(A) In general.--The Secretary shall develop and
implement a system designed to monitor significant
changes in the percentage distribution of low-cost and
high-cost patients for which home health services are
furnished by a home health agency over such percentage
distribution determined for the agency under
subparagraph (B).
``(B) Distribution.--The Secretary shall profile
home health service patients to determine the
distribution of patients for the purpose of determining
regional and national trends.
``(C) Low-cost and high-cost patients.--For
purposes of this paragraph, the Secretary shall define
a low-cost and high-cost patient in a manner that
provides that a home health agency has an incentive to
be cost efficient in delivering home health services
and that the volume of such services does not increase
as a result of factors other than patient needs.
``(D) Report on access.--The Secretary shall report
to Congress on an annual basis findings and
recommendations for ensuring access to appropriate home
health services.
``(f) Special Rule for Christian Science Providers.--
``(1) Payment permitted for services.--Notwithstanding any
other provision of this title, payment shall be made under this
title for home health services furnished by Christian Science
providers who meet applicable requirements of the First Church
of Christ, Scientist, Boston, Massachusetts, and are certified
for purposes of this title under criteria established by the
Secretary, in accordance with a payment methodology established
by the Secretary.
``(2) Effective date.--Paragraph (1) shall apply to
services furnished during cost reporting periods which begin
after the date on which the Secretary establishes the payment
methodology and the certification criteria described in
paragraph (1).
``(g) Report by Medicare Prospective Payment Review Commission.--
During the first 3 years in which payments are made under this section,
the Medicare Prospective Payment Review Commission shall annually
submit a report to Congress on the effectiveness of the payment
methodology established under this section that shall include
recommendations regarding the following:
``(1) Case-mix and volume increases.
``(2) Quality monitoring of home health agency practices.
``(3) Whether providers of service are adequately
reimbursed.
``(4) On the adequacy of the exemptions and exceptions to
the limits provided under subsection (c)(1)(E).
``(5) The appropriateness of the methods provided under
this section to adjust the aggregate limits and annual payment
updates to reflect changes in the mix of services, number of
visits, and assignment to case categories to reflect changing
patterns of home health care.
``(6) The geographic areas used to determine the per
episode and per patient limits.
``(h) Development of Episodic Prospective Payment System for Home
Health Services.--
``(1) In general.--The Secretary shall develop a method
payments for home health services under this title in
accordance with an episodic prospective payment system. In
developing the system, the Secretary shall take into
consideration--
``(A) the data and processes from subsection (c)(2)
that have proven valid and reliable, and
``(B) the degree of disruption resulting from
changing the payment system.
``(2) Additional considerations.--The per episode amount
under the system shall include all services covered and paid
under home health services under this title as of the date of
the enactment of this section, including medical supplies. In
defining an episode of care under the system, the Secretary
shall consider an appropriate length of time for an episode,
the use of services and the number of visits provided within an
episode, potential changes in the mix of services provided
within an episode and their cost, and a general system design
that will provide for continued access to quality services. The
per episode amount shall be based on the most current data
available to the Secretary and shall include consideration of
the cost of new regulatory requirements, changes in technology,
and new care practices.
``(3) Use of case mix adjuster.--Under the system the
Secretary shall employ an appropriate case mix adjuster that
explains a significant amount of the variation in cost.
``(4) Updates and labor adjustment.--Under the system, the
episode payment amount shall be updated annually by the home
health market basket index and the labor portion of the episode
amount shall be adjusted for geographic differences in labor-
related costs based on the most current hospital wage index.
``(5) Outliers.--Under the system the Secretary may
designate a payment provision for outliers, recognizing the
need to adjust payments due to unusual variations in the type
or amount of medically necessary care.
``(6) Coordination requirement.--Under the system, a home
health agency shall be responsible for coordinating all care
for a beneficiary under this title.
``(7) Input.--The system shall be developed with input from
and coordination with representatives from the home health
services industry and consumers of home health services.
``(8) Proposal.--The Secretary shall submit to Congress a
proposal for the system, consistent with this subsection, not
later than 4 years after the date of the enactment of this
section.
``(9) Implementation.--The system developed under this
subsection shall become effective only pursuant to an Act of
Congress. It is the intent of Congress that the effective date
of the system be not later than 18 months after the enactment
of such an Act.
``(i) Development of Data Base.--Within 60 days after the date of
the enactment of this section, the Secretary shall initiate the
development of a data base upon which a fair and accurate case mix
adjustor, as required by subsections (c)(2)(C) and (h)(3), can be
developed and implemented. The data base must--
``(1) be capable of linking case mix data with cost and
utilization data;
``(2) contain data from HCFA Forms 485 and UB-92;
``(3) contain additional data elements sufficient to
support the case-mix categories in subsection (c)(2)(C); and
``(4) contain any additional data elements determined
necessary by the Secretary in consultation with representatives
of the home health industry.''.
(b) Appeals to Provider Reimbursement Review Board.--Section
1878(a) of such Act (42 U.S.C. 1395oo(a)) is amended by inserting ``,
any home health agency which has received payment pursuant to section
1894 may obtain a hearing by the Board, with respect to such payment,''
after ``subsection (h)''.
(c) Sunset of Reasonable Cost Limitations.--Section 1861(v)(1)(L)
of such Act (42 U.S.C. 1395x(v)(1)(L)) is amended by adding at the end
the following new clause:
``(iv) This subparagraph shall apply only to services furnished by
home health agencies before the effective date of section 1894.''.
(d) Effective Date.--The amendments made by subsections (a) and (c)
shall apply to payment for home health services furnished on or after
such date (not later than 6 months after the date of the enactment of
this Act) as the Secretary of Health and Human Services specifies.
SEC. 3. REVIEW BY PEER REVIEW ORGANIZATION OF HOME HEALTH SERVICES.
(a) In general.--Section 1154 of the Social Security Act (42 U.S.C.
1320c-3) is amended following new subsections:
``(g)(1) Each contract under this part shall require that the
utilization and quality control peer review organization's review
responsibility pursuant to subsection (a)(1) will include review of the
level of care and quality of services provided individuals receiving
home health services pursuant to sections 1812(a)(3) and
1832(a)(2)(A)(i).
``(2) If--
``(A) a home health agency has determined that a patient
does not meet the conditions for payment of home health
services under section 1814 or section 1833,
``(B) the home health agency has determined that a patient
no longer requires home health services,
``(C) the home health agency has determined that a patient
requires a level of care which is inconsistent with the care
prescribed by the patient's attending physician, or
``(D) the patient has been authorized by the home health
agency to receive a level of care less than that considered by
the patient as appropriate to meet the patient's needs,
the home health agency shall provide the patient (or the patient's
representative) with a notice (meeting the conditions prescribed by the
Secretary under section 1879) of the determination.
``(3)(A) If the patient (or patient's representative)--
``(i) has received a notice under paragraph (2),
and
``(ii) requests the appropriate peer review
organization to review the determination,
the organization shall conduct a review under subsection (a) of
the validity of the home health agency's determination and
shall provide notice (by telephone and in writing) to the
patient or representative and the home health agency and attending
physician involved of the results of the review. Such review shall be
conducted regardless of whether the home health agency will charge for
continued home health services or whether the patient will be liable
for payment for such continued care.
``(B) If a patient (or a patient's representative) requests review
under subparagraph (A) while the patient is still a patient of the home
health agency and not later than noon of the first working day after
the date the patient receives the notice under paragraph (2), then--
``(i) the home health agency shall provide to the
appropriate peer review organization the records required to
review the determination by the close of business of such first
working day, and
``(ii) the peer review organization must provide the notice
under subparagraph (A) by not later than one full working day
after the date the organization has received the request and
such records.
``(4) If--
``(A) a request is made under paragraph (3)(A) not later
than noon of the first working day after the date that the
patient (or patient's representative) receives the notice under
paragraph (2), and
``(B) the conditions described in section 1879(a)(2) with
respect to the patient or representative are met,
the home health agency shall not charge the patient for home health
services furnished before noon of the day after the date the patient or
representative receives notice of the peer review organization's
decision.
``(5) In any review conducted under paragraph (2) or (3), the
organization shall solicit the views of the patient involved (or the
patient's representative).
``(h) The utilization and quality control peer review organization
shall monitor the delivery of home health services in a manner which
includes a review of home health agencies that present significant
variation in utilization.''.
(b) Hearing Rights.--Section 1155 of such Act (42 U.S.C. 1320c-4)
is amended by adding at the end the following: ``Notwithstanding the
previous provisions of this section, any beneficiary receiving home
health services subject to review under section 1154(g), and the
provider, who is dissatisfied with a determination, shall be entitled
to a hearing by the Secretary and to judicial review of any final
determination to the same extent as provided under section 1869.''.
(c) Elimination of Certain Fiscal Intermediary Responsibilities.--
Section 1816(j) of such Act (42 U.S.C. 1395h(j)) is amended by striking
``home health services,''.
(d) Effective Date.--The amendments made by subsections (a) and (c)
shall apply to contract years beginning after the date of the enactment
of this Act.
SEC. 4. RETROACTIVE REINSTATEMENT OF PRESUMPTIVE WAIVER OF LIABILITY.
(a) In General.--Section 9305(g)(3) of the Omnibus Budget
Reconciliation Act of 1986, as amended by section 426(d) of the
Medicare Catastrophic Coverage Act of 1988 and section 4207(b)(3) of
the Omnibus Budget Reconciliation Act of 1990 (as renumbered by section
160(d)(4) of the Social Security Act Amendments of 1994), is amended by
striking ``December 31, 1995'' and inserting ``the date of
implementation of a prospective payment system for home health care
services under section 1894(h) of the Social Security Act''.
(b) Presumption.--The second sentence of section 9205 of the
Consolidated Omnibus Budget Reconciliation Act of 1985 is amended by
striking ``December 31, 1995'' and inserting ``the date of
implementation of a prospective payment system for home health care
services under section 1894(h) of such Act''.
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