42 U.S.C. § 1395fff — Prospective payment for home health services

(a) In general: Despite section 1395x(v), for portions of cost-reporting periods on or after October 1, 2000, the Secretary^* must pay for home health services^* under a prospective payment system established under this section.

(b) System of prospective payment for home health services: (1) The Secretary must establish a prospective system covering all costs of home health services. Services covered and paid on reasonable cost as of August 5, 1997, including medical supplies, must instead be paid using a prospective amount for the services. The Secretary may phase in the system over no more than four years using agency-specific costs, but only if total payments do not exceed what they would have been without the phase-in. (2)(A) In setting the amount, the Secretary must consider an appropriate service unit; the number, type, and length of visits in it; possible changes in the service mix and its cost; and a design that keeps quality services available. (B) For home health units of service furnished during a year beginning with 2020, the unit must be 30 days. (3)(A)(i)(I) The initial standard amount must use the most recent audited cost reports and be calculated so the total for the first 12 months equals what would have been paid without this system and without section 1395x(v)(1)(L)(ix). (II) The next 12-month amount is the first amount updated under (B). (III) Later amounts are based on what the first calculation would have produced for fiscal year 2001 if the system and that provision had not existed but the 15-percent limit reduction in (ii) had existed, updated under (B), subject to (iii). Amounts must be standardized to remove case-mix and area-wage differences in a budget-neutral way. The Secretary may recognize regional and urban-area differences. (ii) The reduction is 15 percent of the cost and per-beneficiary limits in section 1395x(v)(1)(L) as they stood on September 30, 2000. (iii)(I) For 2014 and later, the Secretary must adjust the amount to reflect changes in visits, service mix, intensity, average episode cost, and other relevant factors. The Secretary may compare hospital-based and freestanding agencies, for-profit and nonprofit agencies, and urban and rural resource costs. The adjustment comes before the annual update. (II) It must be phased in equally over four years and fully apply in 2017. In each phase-in year it cannot exceed 3.5 percent of the applicable amount as of March 23, 2010. (iv) For units ending during the 12 months beginning January 1, 2020, the Secretary must calculate 30-day amounts so estimated spending equals what it would have been without the 30-day rule. This calculation comes before and does not change the annual update. The Secretary must assume possible behavior changes caused by the 30-day rule and case-mix factors and describe those assumptions in the notice-and-comment rulemaking. (B)(i) The Secretary must prospectively update the standard amount for fiscal years 2002 and 2003 and every later year using the home-health applicable increase percentage. (ii) That percentage is the home-health market-basket increase minus 1.1 points for 2002 and 2003; the increase itself for the last quarter of 2003 and first quarter of 2004; the increase minus 0.8 points for the last three quarters of 2004 and all of 2005; zero for 2006; and, subject to (v) and (vi), the increase for later years. (iii) “Home health market basket percentage increase” means the Secretary’s estimated percentage increase for the mix of goods and services used in home health, determined like the inpatient-hospital market-basket increase under section 1395ww(b)(3)(B)(iii). It is 1 percent for 2018 and 1.5 percent for 2020. (iv) If case-mix adjustments for a past year caused, or are expected to cause, higher or lower total payments because coding or classification changed without a real case-mix change, the Secretary may adjust later standard amounts to remove that effect. (v)(I) For 2007 and later, an agency that fails to submit required data gets a two-point reduction in that year’s market-basket increase. The reduction applies only that year and is not used in calculating later amounts. The Medicare Payment Advisory Commission must perform the related requirements in section 5201(d) of the Deficit Reduction Act of 2005. (II) For 2007 and later, each agency must submit health-quality data in the form, manner, and time the Secretary sets. (III) The Secretary must create procedures to make the submitted data public and give an agency a chance to review its data before publication. (IV)(aa) Beginning on the specified application date in section 1395lll(a)(2)(E), and each later year, agencies must also submit data on the quality measures and other data required under section 1395lll(d)(1). (bb) For 2019 and later, they must also submit standardized patient-assessment data required under section 1395lll(b)(1). (cc) Data under (aa) and (bb) must be submitted as the Secretary directs. (V) If (IV) duplicates data required under (II), the newer submission replaces the older one, unless the Secretary finds the exception needed to avoid delaying section 1395lll. (vi) After calculating the market-basket increase and applying (v), the Secretary must subtract the productivity adjustment for 2015 and later, except 2018 and 2020, and one point for 2011, 2012, and 2013. The result may be below zero, and payment rates may fall below the prior year. (C) The Secretary must reduce standard amounts for each period by the proportion needed to reduce estimated total payments by 5 percent for outlier services. (D)(i) For 2020 through 2026, the Secretary must annually measure how actual behavior differed from the behavior assumed under (A)(iv) and how that changed estimated spending. (ii) Through notice-and-comment rulemaking, the Secretary must make one or more prospective permanent increases or decreases to standard amounts to offset those spending changes. (iii) The Secretary must also make prospective temporary increases or decreases to a unit’s payment to offset them. Each temporary adjustment applies only to its year and is not used for a later year. (4)(A) A unit’s payment is the applicable standard amount adjusted for an appropriate case-mix factor and for geographic wage differences in the wage-related portion, using an area-wage factor for the service area or another area the Secretary specifies. (B)(i) Case-mix factors must explain a significant amount of cost differences among units. (ii) For 2020 and later, therapy thresholds cannot be used in those factors. (C) Area-wage factors must reflect area wages and wage-related costs compared with the national level; the Secretary may use the factors under section 1395ww(d)(3)(E). (5)(A) The Secretary may add to or adjust payment for unusual amounts or types of medically necessary care. Total such outlier adjustments for a year cannot exceed 2.5 percent of projected total payments. (B) Beginning in 2011, an agency’s estimated outlier additions or adjustments cannot exceed 10 percent of its estimated payments under this section before this paragraph. (6) If a beneficiary transfers to, or receives services from, another agency during the payment period, the payment must be divided between the agencies.

(c) Requirements for payment information: For home health services on or after October 1, 1998, a claim cannot be paid unless it has the unique identifier of the physician^*, nurse practitioner^*, clinical nurse specialist^*, or physician assistant who prescribed or certified the services; for a service visit listed in section 1395x(m)(1)–(4), it has the Secretary’s code or codes showing visit length in 15-minute units; and, for services on or after January 1, 2019, it has the code for the county or equivalent area where the service was furnished.

(d) Limitation on review: No administrative or judicial review is available under section 1395ff, section 1395oo, or otherwise for the transition period; the definition and use of payment units; the initial standard amounts, including the 15-percent reduction; the outlier adjustment under (b)(3)(C); case-mix and area-wage adjustments; or outlier adjustments under (b)(5).

(e) Construction related to home health services: (1) Telecommunications: This section does not prevent an agency from furnishing services through telecommunications for a paid home health unit if the telecommunications services do not replace in-person^* services ordered in a physician-, nurse-practitioner-, clinical-nurse-specialist-, or physician-assistant-certified plan of care, and are not treated as a home health visit for eligibility or payment. (2) Certification: This section does not waive the certification required by section 1395f(a)(2)(C) or 1395n(a)(2)(A), whether services are furnished in person or through telecommunications.