Do you know which rates to use when calculating payments for episodes that cross over from 2011 to 2012? When you receive your final payments for episodes that cross calendar years, you may not receive what you are expecting. Why might this occur? Case mix weight changes outlined in the recent annual update for 2012 are a likely reason why your episode payment calculations are inaccurate. Today, I will help you understand how payments are calculated based on these changes.

The Centers for Medicare & Medicaid Services (CMS) issued the annual update for 2012 on November 4, 2011. Included in the annual update is a change in the payment rates for episodes, LUPAs and non-routine medical supplies. Additionally, the wage index value for all CBSAs changed. These changes are effective with episodes ending on, or after, January 1, 2012. The 60-day episodes that started before January 1, 2012 and end on, or after, January 1, 2012 will be paid at the final claim based on the 2012 payment rates.

Normally, the only changes we see Medicare make on an annual basis are to the wage index values, standard rates and non-routine supply add-on. Medicare doesn't adjust case mix weights every year. In fact, Medicare last adjusted case mix weights in 2008 (when we went from 80 to 153 HHRGs). However, for the CY 2012 update, all 153 case mix weights have changed, and the diagnosis codes for hypertension (401.1 and 401.9) have been eliminated from case mix scoring. This brings up the question: Which case mix weight factor should agencies use for those crossover episodes?

In the case of episodes that cross over the year end (start in 2011 and end in 2012), the case mix scoring (grouper logic for the clinical, functional and service domains) that is used to determine the HIPPS code will be based on the OASIS MO090 date which would be the 2011 case mix scoring. However, the case mix weight that will be used to calculate final payment will be the 2012 weights. For example, an episode that starts in December 2011 and uses the 2011 case mix scoring system generates a HIPPS code of 1AFKS. The 2011 case mix weight for this code is 0.5827. Even though the RAP may be paid at this weight factor, the 2012 case mix weight for this HIPPS code is 0.8186. The final payment will be based on the 2012 weight. However, pay attention to the tricky part, which is the MO090 date - the date of the assessment completed for that episode. Let's use a recertification for example. If you have a recertification, you have to do the assessment in the last five days of the prior episode (Day 56-60). In this example, you completed an assessment for a patient recertification on December 30, 2011. Although the episode didn't actually start until January 2, 2012, the MO090 date is December 29. Therefore, the 2011 case mix scoring will be used for the HIPPS code and the case mix weight will be based on the 2012 weights.

What You Should Do:
1) Make sure you are aware of these changes and understand how you will be paid.
You may receive a final payment that is more or less than you expected on a final claim without any idea as to why this happened.

2) Check with your software provider.
Your software provider should have updated these calculations in their system. Kinnser Software, for example, has updated its home health software solution for the case mix weight adjustments outlined in the 2012 final rule. If you are not using Kinnser Software, make sure your software provider updates the case mix weights in their system and bases these weights on the MO090 date.

3) Understand how an episode calculates payments.
What should you do if you find yourself in a situation where you were expecting a $3,000 payment and you don't receive a $3,000 payment? Learn how to verify payments manually. You may need to verify whether your software is calculating payments correctly. Click here for my article with instructions on how to manually calculate a PPS episode payment.

4) Make sure MACs properly process the claims.

5) Understand the trends.
I did a side-by-side comparison of final case mix weights for episodes in 2011 and 2012. You may click here to view my chart.



Early episodes, which are 1st and 2nd episodes, have one set of weights, and 3rd or later have a different set of weights. The general trend is that weights for early episodes are increasing and late episodes are decreasing; low therapy weights are increasing and high therapy weights are decreasing.

For example, let's take a look at the first two groupings in this chart. In 2011, an episode with a HIPPS code of 1AFKS which is an early episode with 0 to 5 therapy visits is 0.5827. The same episode that is now a "late" episode is 0.6543, which is higher than indicated for the early episodes. The same two codes in 2012 will be 0.8186 for early and 0.6692 for late. The very high therapy (20+ visits) all decreased between 11.57% and 13.99%. The financial impact of these changes is very much agency-specific, i.e., depend upon the types of patients an agency serves and the normal length of stay. Some agencies could actually see an increase in reimbursement under this schema.

Again, the key is to make sure you are aware of these changes so you know how you will be paid on the 2011/2012 crossover episodes. Have you noticed any discrepancies in your payments? Please contact me or share your comments here on the Home Health Blog. Click here to read my next article which covers the steps you need to manually calculate a PPS episode payment.

About David Macke
David Macke, Shareholder, FHFMA, MBA, is the Director of Reimbursement Services at VonLehman CPA & Advisory Firm, a regional certified public accounting and management consulting firm established in 1946. The firm provides Medicare / Medicaid cost reporting services and reimbursement consulting services to home health agencies across the country. To reach Mr. Macke, call (859) 331-3300 or send an email to dmacke@vlcpa.com