The Centers for Medicare & Medicaid Services (CMS) formally published the Proposed Rule on the 2011 Medicare home health payment rates in the Federal Register July 23. Effective January 1, 2011, the Proposed Rule includes several regulatory changes in addition to the payment rates. Today, we will share highlights from the payment updates mentioned in the Proposed Rule.

Base Episodic Rate
The proposed 2011 rate update reduces the base episodic rate by 2.5 percent, from $2,312.94 to $2,198.58, to reflect the elimination of the one-year shift of half of the outlier budget to the base rate.

Outlier Policy
In accordance with the Patient Protection and Affordable Care Act (PPACA), CMS proposes to continue the 10 percent outlier revenue cap introduced last year as well as the Fixed Dollar Loss Ratio at 0.67, which the Agency estimates will lead to no greater than spending the 2.5 percent outlier budget.

Home Health Market Basket Update
Under PPACA, the estimated 2.4 percent inflation update for calendar year (CY) 2011 is reduced by one point to 1.4 percent.

Case Mix Weight Adjustment
CMS proposes a case mix coding weight adjustment of 3.79 percent for 2011 and 2012, an increase from the scheduled 2.71 percent adjustment in 2011.

Rural Services
The base episodic rate for rural services is increased by 3 percent for episodes ending on or after April 1, 2010 and before January 1, 2016. With this rural add-on, the proposed base rate is set at $2,264.54 for providers furnishing home health services in rural areas.

LUPA Rates
Low-Utilization Payment Adjustment (LUPA) rates and the LUPA add-on are not affected by the 3.79 percent case mix weight adjustment, but they are reduced through the impact of the outlier budget shift and the inflation update.

LUPA rates are increased by 3 percent for patients located in rural areas. The LUPA add-on is proposed to be reduced from $94.72 to $91.74.

To submit a public comment on the Proposed Rule, click here to go directly to the online comment page on the Regulations.gov website. To access the Proposed Rule via the Federal Register and its additional instructions on submitting comments, click here. Public comments must be submitted no later than 5 p.m. Eastern Time on Sept. 14, 2010.