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Get ready for a totally revamped reimbursement process starting Jan. 1.

Big money changes are coming your way in three short months, but you don't need to stress as long as you're preparing yourself.

Medicare's current prospective payment system contains some major inequities, said consultant Mark Sharp in a Sept. 20 Eli-sponsored audioconference on the PPS changes. Some home health agencies have racked up major double-digit profit margins under current PPS, while others have gone into the red.

The revamped PPS will compensate agencies more fairly for patients based on their resource needs, predicted Sharp, of BKD in Springfield, MO. The Centers for Medicare & Medicaid Services' final rule published in the Aug. 29 Federal Register mostly contains "very good changes," Sharp praised.

The exception: The nearly 11 percent cut for alleged case mix creep is the one big negative in the rule, Sharp said. "I do not agree with this magnitude of case mix creep adjustments," he told listeners.

But the many agencies that protested the cuts in their comments on the proposed rule didn't make any headway. In fact, CMS increased the cut from 8.25 percent to 10.96 percent between the proposed and final rules.

"There were a lot of comments on the 2.75 percent decrease for three years, and what did that get us?" Sharp asked. "It got us an additional year of case mix creep adjustment."

CMS also cut PPS payment rates for hospitals and inpatient rehab facilities based on similar logic, Sharp noted. So there was little chance agencies were going to buck the trend.

Positives: Changes to case mix consideration of therapy and non-routine supplies (NRS) are major improvements over current PPS, Sharp maintained. And the overall increased complexity of the case mix model should help agencies obtain more accurate reimbursement for their patients.

"It may create a little bit of pain in the interim as we learn to adjust to the change," Sharp allowed. But "this is good for the industry on the whole."

Name change: One minor change is that CMS seems to be calling the current "domains"--Clinical, Functional and Service--"dimensions" now, Sharp highlighted in the session.

Case Weight Increase Means Higher Payments

The case mix model will significantly increase in complexity, Sharp pointed out. The number of OA-SIS items used to calculate payment remains almost the same--23 under the current model as opposed to 25 under the new mechanism (including three used for NRS reimbursement only).

But the number of home health resource groups will nearly double from the current 80 HHRGs to 153 groups.

Higher payments: The range of case mix weights will also change. Currently weights go from 0.5265 for C0F0S0 to 2.8113 for C3F4S3. Under the PPS revisions, they'll range from 0.5827 to 3.4872, Sharp pointed out. That's a noticeable increase to the lowest case mix group and a major jump for the highest group.

Still waiting: A big difference under PPS will be that your HHRG won't correspond to a single payment amount. That's because one HHRG will be worth different amounts in each "equation" of the model: early episode with 0-13 therapy visits, early episode with 13-20 therapy visits, later episode with 0-13 visits, later episode with 13-20 visits, and over 20 therapy visits.

The new system will assign a unique billing number to the HHRG in each equation, Sharp ex-plained. That will likely result in 153 separate numbers--one for each billing category, observers expect.

Still waiting: Despite strident requests for the billing codes and instructions, CMS had yet to issue them at press time.

Work Through Some Examples

A more sensitive payment system that takes patient characteristics further into account will mean a more complicated payment calculation mechanism for providers.

While the new calculation process will be much less straightforward than the old one, agencies won't have to manually calculate every payment, Sharp reminds. Your software will do the number crunching for you.

Do this: But you should understand what goes into determining payment. Sit down with your clinical and financial staff to work through some calculations so that everyone understands what drives payment under the new system, Sharp recommends. Make sure people grasp how case mix points often depend on a combination of diagnoses, patient characteristics or both.

Note: The final rule is at .