Section: Outliers Page(s): 41012-013 Column(s): 2 & 3 Paragraph(s): 1 & 2+
Excerpted from Fed’l Reg:
… Prior to the enactment of the Affordable Care Act in March 2010, this section of the Act stipulated that total outlier payments could not exceed 5 percent of total projected or estimated HH payments in a given year…
… As outlined in the CY 2011 HH PPS final rule (75 FR 70397 through 70399), sections 3131(b)(1) and 3131(b)(2) of the Affordable Care Act amended sections 1895(b)(3)(C) and 1895(b)(5) of the Act. Specifically, section 3131(b)(2) of the Affordable Care Act amended section 1895(b)(5) of the Act by redesignating the existing language as section 1895(b)(5)(A) of the Act,…  the total amount of the additional payments or payment adjustments made under this paragraph with respect to a fiscal year or year may not exceed 2.5 percent of the total payments projected or estimated to be made based on the prospective payment system under this subsection in that year.’’
The result of these revisions was that, beginning in CY 2011, we reduced payment rates by 5 percent, targeted up to 2.5 percent of estimated total payments to be paid as outlier payments, and applied a 10 percent agency-level outlier cap.
… The FDL ratio and the loss-sharing ratio must be selected so that the estimated total outlier payments do not exceed the 2.5 percent aggregate level (as required by section 1895(b)(5)(A) of the Act).
… A preliminary look at partial CY 2010 Health Care Information System (HCIS) data indicates that, because the total outlier payments comprise approximately 2 percent of total payments,…
from: Table 18-Outlier Payment History pg 41013

Outlier Pmts Total HH PPS Pmts

2004                  309,198,604                        11,500,462,624                    2.69%

2005                  527,096,653                        12,885,434,951                    4.09%

2006                  701,945,386                        14,041,853,560                    5.00%

2007                  996,316,407                        15,677,329,001                    6.36%

2008               1,127,162,152                        17,114,906,875                    6.59%

2009               1,204,246,569                        18,895,476,901                    6.37%

TOTAL          4,865,965,771                        90,115,463,912                   5.40%
2010                   233,274,303                     13,878,411,396                    1.68%
Combined       5,099,240,074                    103,993,875,308                    4.90%

First, I would respectfully request that the Outlier provision be completely eliminated for numerous reasons:
  1. The Outlier provision has been extremely problematic, as identified by CMS
  2. The vast majority of agencies have continually over-funded the Outlier fund since its’ inception, even though CMS made the calculations in 2010 such that a greater number of episodes would receive Outlier payments than in years past (which could give the impression of greater manipulation by the industry when in fact that was not the case)
  3. Reimbursement for EVERY episode would be increased for EVERY agency by 5% compared to the Proposed Rule.
  4. Industry Reimbursement is being reduced 5% to fund the Outlier provision, yet Outlier reimbursement to the industry (in Total) is capped at 2.5% ; thereby creating an additional cut to industry reimbursement of 2.5%
  5. If so much of the Outlier funds go to HHAs with fraudulent and/or abusive practices, this change in the Outlier provision will have little to no impact on those agencies and will be extremely detrimental to the vast majority of HHAs in the industry that strive to ‘do the right thing’
Second, if you are not going to eliminate the Outlier Provision, please reduce the withhold to fund this provision from the proposed 5.0% to 2.5% to coincide with the statutory cap of Outlier payments which is also 2.5% as noted in the Proposed Rule.  To reduce the Episodic Rate applicable to the entire industry 5.0%, and yet set a cap of 2.5% for Outlier payments creates another reduction to the reimbursement to the entire industry that I do not believe is based on any legislative, statutory and/or regulatory basis (just another reduction to Medicare expenditures borne solely by the Home Health Industry).
Third, I do believe that there are a few agencies that have found a way to abuse this provision, so I don’t disagree with your contention, I just disagree with your actions to penalize the entire industry for the actions of a few; especially when you have the tools to deal with those HHAs that have questionable practices. What has been done at any of the HHAs that you identify as possibly gaming the Outlier provision to increase their reimbursement?  Has there been any on-site audits/reviews at any of those agencies to verify your conjecture or is the industry (across the board) going to continue to pay a price in reduced reimbursement because of the actions of a few that aren’t even inspected?
Lastly, if you are going to continue to utilize the Outlier provision, why not enlist the help of the industry in policing agency activities?  Who knows the Home Health Industry better than the owners’ and operators’ of HHAs?  The Cost Report and all information therein contained is public information.  Why not create a website (like Home Health Compare) that contains the Cost Reports for everyone across the country?  This could create a two-fold benefit to the industry assisting in the policing of the industry:
  1. Local HHAs know their market but not necessarily all the HHAs licensed in their market since that is generally a closed process.
  2. Peer pressure.  HHAs that know that their Cost Report is going to be scrutinized by their competitors are going to be less likely to stray
    very far into the grey-areas and would tend to run a tighter ship (many industries self-regulate like this, with Peer Reviews etc…).
I am not saying that this would eliminate fraud and abuse; unfortunately as long as the government is paying for something, there will be fraud and abuse there.  However, I think it would be a step in a positive direction, which would ultimately benefit the Medicare Program and the American Taxpayer that funds that program.